b'Member NewsRules & RegulationsTHE ENDANGERMENT FINDING MOVE: A Potential Checkmate in the Regulatory Resetregulatory authority over vehicle standards but could also openRelief or Fragmentation?the door to reevaluating GHG requirements for refineries. ThatFor Western petroleum marketers, the consequences may cut possibility sets the stage for examining what the move couldboth ways. On one hand, the withdrawal of the Endangerment mean in the West.Finding would certainly slow the pace of fleet electrification, Implications for the West easing downward pressure on demand for liquid fuels, and could In the Western states, where energy markets are already underprovide relief for oil refineries. On the other, it risks state-by-state stress, implications are multifaceted. First, the withdrawalfragmentationan especially acute problem in the Westfur-would mean EPA could no longer impose federal GHG limits onther complicating fuel distribution in a supply chain that crosses tailpipe emissions. While the agency claims that states would notmultiple state borders. be able to regulate vehicle emissions due to preemption, WesternFor a region already balancing supply contraction, stringent states may test the boundaries of that doctrine. They could biofuel blending obligations, and pipeline infrastructure chal-argue that if GHGs are no longer regulated under the CAA,lenges, monitoring the implications of EPAs checkmate move state-level programs are not preempted and do not requireis a commercial imperative. As the regulatory reset plays out, federal approval. Marketers could then face regulation by apetroleum marketers should view EPAs proposal not just as a patchwork of state standards.Washington headline but as a strategic crossroads for fuel mar-Regarding market constraints, two major refineries in the regionkets in the West. After all, pulling the Endangerment Finding out are set to close in the next year, tightening fuel supply. Thatmay bring some walls downbut it could also leave the house contraction amplifies the role of regulatory costs in shapingwithout a roof if state policies do not carefully balance environ-fuel availability and price. If GHG obligations on refineries aremental priorities with energy economics. ultimately rolled back, operators in the West could see some regulatory relief at a stressful time. While other permitting and ESG initiatives will remain a challenge for increasing capacity, investors would certainly take note of such a rollback. Finally, states like Oregon, Washington, and California areratcheting up low-carbon fuel standard requirements that act as de facto GHG rules. If EPA withdraws its Endangerment Find-ing, it wont stop these state mandates. In fact, it may incentivize states to rely even more on biofuel regulatory frameworks as the least risky path for carbon reduction policy, given uncertainties about federal preemption. SWPMA News / Fall 202527'