API Urges EPA to Reject Petitions to Move Point of Obligation Under RFS

The American Petroleum Institute (API) on Aug. 15 urged the Environmental Protection Agency (EPA) to deny petitions for a rulemaking that request EPA to move the current point of obligation under the Renewable Fuel Standard (RFS).

API’s opposition aligns with NATSO and its members, who prefer the current point of obligation because it results in a more diverse source of supply from which they can acquire product and then sell it to their customers.

In a letter to EPA Administrator Gina McCarthy, API President Jack Gerard said any adjustment to the point of obligation under the RFS would create uncertainty in the administration of the RFS and potentially in the Renewable Identification Number (RIN) market while increasing complexity for the association’s members. Gerard also said changing the point of obligation would not fix the point at which adding the EPA-mandated volume of ethanol to gasoline supplies would result in ethanol blends that exceed 10 percent – also known as the blendwall -- or have any meaningful impact on the volume of renewable fuel.

“Changing the point of obligation does not fix the blendwall problem, and the calls from a broad group of stakeholders to repeal or reform the outdated program will continue,” Gerard wrote.

Over the past several months, there has been a coordinated effort on the part of obligated parties to encourage policymakers to shift the point of obligation under the RFS from refiners and importers to "rack sellers."

Specifically, the American Fuel and Petrochemical Manufacturers petitioned EPA to shift the point of obligation from refiners to fuel marketers, and Valero Energy filed its own petition in June.

In comments filed with EPA in July, NATSO said EPA should explicitly reject the idea of revising the definition of obligated party under the RFS. Refiners and importers are obligated parties under the RFS to ensure that renewable fuels are integrated into the nation’s fuel supply. The current policy creates a strong incentive for fuel marketers to blend renewable fuels into the fuel supply while lowering the price at the pump for consumers. Changing the point of obligation would have the opposite effect of discouraging fuel marketers from integrating renewable fuels into the fuel supply while simultaneously raising prices at the pump.

In a recent statement, NATSO said that the entities seeking to shift the RIN compliance burden away from the refiners have spent considerable resources in recent years to repeal the RFS and therefore their claims that they have identified an effective way to improve the efficiency and functionality of the program should be “greeted with suspicion.”

“The fact that some marketers have made money by buying and blending renewable fuel into the fuel supply demonstrates that the RFS is working, not failing,” said NATSO Vice President of Government Affairs David Fialkov.

Tiffany Wlazlowski Neuman's photo

Tiffany Wlazlowski Neuman

Tiffany Wlazlowski Neuman develops and executes communications strategies to advance NATSO’s public relations and advocacy goals. Tiffany also develops and oversees partnerships related to the NATSO Foundation’s public outreach initiatives. Tiffany lives in the D.C. metro area with her husband and their two sons.More
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