The Environmental Protection Agency (EPA) announced Nov. 10 that it is proposing to deny recent requests to change the "point of obligation" under the Renewable Fuel Standard (RFS) from refiners and importers downstream to "position holders" at the rack, including many fuel marketers and blenders. The decision marks an important positive development for NATSO members.
NATSO has spent more than a year educating EPA and the entire fuel marketing community on this issue and urging EPA to maintain the current point of of obligation as it represents the most effective means of achieving the RFS’s obligation.
The current policy where refiners and importers are obligated parties has led to a system where companies that introduce more renewable fuels into commerce are able to make money while at the same time sell fuel to consumers at a lower cost.
EPA's announcement, which is a proposed notice and request for public comment, wholeheartedly agreed, and adopted many of the positions that NATSO has been advocating.
"We believe the current structure of the RFS program is working to incentivize the production, distribution, and use of renewable transportation fuels in the United States, while providing obligated parties a number of options for acquiring the RINs [Renewable Identification Numbers] they need to comply with the RFS standards," EPA said. "We do not believe that the petitioners have demonstrated that changing the point of obligation would likely result in increased use of renewable fuels."
The petitions were filed by Valero and the American Fuel and Petrochemical Manufacturers, which represents many merchant refiners.
In a statement issued Nov. 10, NATSO President and CEO Lisa Mullings said, "In evaluating the efficacy of the RFS compliance structure, EPA has determined that the current point of obligation is successfully achieving the agency’s objectives of displacing petroleum-based fuel with renewable substitutes in a manner that stabilizes price, deepens supply options, all while incentivizing fuel marketers to blend and sell renewable fuels.
"We are grateful that EPA wholeheartedly agrees with us. Not only did EPA reach the same conclusion on the question of who should be the 'obligated party,' but the agency’s analysis supporting this conclusion is comprehensive and sound."
EPA's notice commences a 60-day public comment period, after which the agency will take final action on the petition. The final decision is expected to be made after President-elect Trump is in office. Although Trump has indicated previously that he may be inclined to reform the RFS's structure, it will be difficult for a Trump EPA to wholeheartedly reverse the current EPA's position on this topic -- and inject massive disruption into the motor fuels market -- so soon after taking office.
In all likelihood, the ground for this ongoing battle will now shift from EPA to Congress, where those who support changing the point of obligation will undoubtedly seek legislation directing EPA institute such a change.
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