Frequent Questions

In the case of a refinery which is sold during the course of an annual averaging period (i.e., other than at midnight on December 31), how does EPA view the responsibilities of the seller refiner and the buyer refiner with regard to meeting the RFG and an

Under § 80.65(c), each refiner of RFG is responsible for meeting the RFG standards for each batch of RFG produced by that refiner, and under § 80.67(b) in the case of RFG the refiner designates for compliance on average the refiner must meet the applicable RFG standards separately for the RFG produced by that refiner at each refinery over each calendar year averaging period. Under § 80.101 each refiner of conventional gasoline is responsible for meeting the antidumping
standards for all conventional gasoline produced by that refiner at each refinery over each calendar year averaging period. In addition, each refiner is responsible for meeting all other refiner requirements for the gasoline produced at each refinery (sampling and testing, record keeping, reporting, etc.) and under § 80.65(h) each refiner is responsible for the completion of a compliance audit for the gasoline produced at each refinery during each calendar year.

In the case of a refinery that is sold during an averaging period, therefore, both the seller refiner and the buyer refiner would independently be responsible for meeting the applicable RFG and anti-dumping standards for the RFG and conventional gasoline produced at that refinery during the period that party owns the refinery, and for meeting all other refiner requirements for the gasoline produced. For example, if a refinery is sold on April 1, 1996, the seller refiner would be responsible for meeting the RFG and anti-dumping standards for the RFG and conventional gasoline produced at the refinery during the period January 1, 1996 through March 31, 1996, and the buyer refiner would be responsible for meeting the RFG and anti-dumping standards for the RFG and conventional gasoline produced at the refinery during the period April 1, 1996 through December 31, 1996. Each refiner also would be responsible for meeting all other refiner requirements for their periods of ownership, including sampling and testing, independent sampling and testing, record keeping, reporting, and attest engagements. This responsibility to meet RFG standards would apply regardless of whether the RFG produced by one refiner or the other is designated for meeting standards on average or on a per-gallon basis. Moreover, each refiner could designate the RFG produced during the period that party owns the refinery as meeting the RFG standards on average or on a per-gallon basis, and the buyer refiner could make an aggregation election for the refinery under § 80.101(h).

For those standards and requirements that rely on the refinery's 1990 baseline volume, such as the compliance baseline for conventional gasoline under § 80.101(f)(4), the refinery's baseline volume would be allocated to the relative periods of time the seller refiner and the buyer refiner own the refinery. For example, if a refinery with a baseline volume of 500 million gallons is sold on April 1, the seller refiner would receive a baseline volume of 123.29 million gallons ({90/365}*500 million), and the buyer refiner of 376.71 million gallons ({275/365}*500 million).

EPA recognizes there are seasonal differences in some RFG and anti-dumping standards calculations (e.g., the different toxics equations for summer versus winter) which, depending upon when a refinery is sold, could have an impact on either the seller or buyer refiner meeting these standards when met on average. As a result, in a case where a refinery is sold during an averaging period, and where either the seller or buyer refiner fails to meet an RFG or conventional gasoline standard which is met on average, EPA will evaluate the gasoline produced at the refinery by both the seller and the buyer refiner together. If this evaluation shows that the applicable RFG and conventional gasoline average standards have been met for all the gasoline produced at the refinery during the averaging period, EPA will treat both refiners as having met these standards, regardless of the separate compliance calculations of these parties. This collective evaluation would not be appropriate and would not be conducted, however, in a case where the standard in question is one that may be met by aggregating refineries (i.e., all anti-dumping standards, and in the case of RFG under the simple model, sulfur, T-90 and olefins) and where the refiner who failed to meet the standard has elected to aggregate the refinery in question with other refineries.

EPA believes that the considerations discussed in this answer should be taken into account when a refiner enters into a transaction to sell or buy a refinery, particularly to the extent a refiner would intend to rely on the collective evaluation approach. For example, a refiner who sells a refinery in April and who is counting on summer gasoline to meet RFG or conventional gasoline toxics standards should ensure that the buyer refiner will produce gasoline of sufficient quality that the toxics standards are met for the refinery overall for the calendar year averaging period. (8/29/95)

This question and answer is posted at http://www.epa.gov/otaq/regs/fuels/rfg/qa/420r03009.pdf. The original was posted in the Q&A posted on 8/29/95 which can found at http://www.epa.gov/otaq/rfg_qa.htm" See Question ID 3857 for RFG (Taken from the first question on http://www.epa.gov/otaq/regs/fuels/rfg/qa/420r03009.pdf)
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