The Environmental Protection Agency (EPA) on Nov. 22 rejected proposals to change the current compliance structure under the Renewable Fuel Standard (RFS), ending a major push by merchant refiners and other obligated parties to shift what is commonly known as the point of obligation from refiners and importers to “rack sellers.”
Under current law, fuel refiners and importers are obligated to acquire "RINs" to demonstrate compliance under the RFS. A small segment of the refining industry has been pushing EPA to shift this obligation downstream to fuel marketers and blenders, including many NATSO members. NATSO strongly opposed this effort because it would impose costly burdens on many travel plaza operators, and increase the cost of fuel for all truckstops and their customers.
EPA's announcement marks a major victory for NATSO and a majority of the fuels sector, which for more than a year have fought against changing the point of obligation because it would discourage fuel marketers from integrating renewable fuels into the fuel supply while simultaneously raising prices at the pump.
NATSO, along with the Society of Independent Gasoline Marketers of America (SIGMA) and the National Association of Convenience Stores (NACS) applauded EPA Administrator Scott Pruitt for rejecting proposals to change the compliance structure and keeping an important incentive for bringing more renewable fuels into the motor fuel supply chain and ultimately keeping fuel prices lower at the pump.
“We are gratified that Administrator Pruitt and his team at EPA sided with American consumers and rejected efforts to move the RFS compliance responsibility away from refiners,” said NATSO Vice President of Government Affairs, David Fialkov. “By reaffirming the current compliance structure under the RFS, EPA has taken a critical step in ensuring that fuel marketers continue to have a strong incentive to blend renewable fuels into the fuel supply and that consumers will pay the lowest possible price at the pump.”
Valero Energy, the country's largest refiner, petitioned EPA in 2016 to begin a rulemaking to change the point of obligation to fuel marketers. Subsequently, the American Fuel and Petrochemical Manufacturers (AFPM) formally asked EPA to change the point of obligation.
Late last year, EPA proposed to reject these petitions, and NATSO filed detailed comments in support of this decision.
A diverse group of more than 35 organizations and companies led by NATSO and representing a majority of the fuel sector, including downstream blenders, fuel retailers, marketers and consumers at the federal and state levels, strongly opposed the shift.
Specifically, NATSO, NACS and SIGMA consistently noted in comments to the agency that they support the introduction of renewable fuel substitutes into the marketplace but shifting the compliance responsibility from businesses that make motor fuels (refiners and importers) to the businesses that buy fuel would reduce competition and lead to lower renewable fuel use and higher retail prices.
Keeping refiners and importers as obligated parties under the RFS ensures that renewable fuels are integrated into the nation's fuel supply. The current compliance structure is successfully achieving the agency’s objectives of displacing petroleum-based fuel with renewable substitutes, bolstering supply options for consumers and helping to stabilize prices. Changing the point of obligation would have discouraged fuel marketers from integrating renewable fuels into the fuel supply while simultaneously raising prices at the pump.
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