EPA denies petitions to move RFS compliance point, but invites comments

The US Environmental Protection Agency proposed denying petitions to consider moving the compliance point for renewable fuel credits under the Renewable Fuel Standard, but solicited comments on the action.

“Due to the importance, complexity, and broad stakeholder interest in this issue, the agency is taking public comment on the proposed denials to ensure we receive input from the wide variety of stakeholders that could be affected,” a spokeswoman said on Nov. 10.

The action came days after one petitioner, Valero Energy Corp., notified EPA that it intended to sue the agency for not considering its request to move the obligation point under EPA’s Research Identification Number (RIN) program (OGJ Online, Nov. 4, 2016).

EPA’s action was an agreement to open a docket allowing for a robust consideration of moving the renewable fuels obligation point, Valero said.

“[The] decision seems to respond to the growing consensus of independent refiners, small-business retailers, interest legislators, technical experts and other third parties that favor moving the point of obligation,” the San Antonio-based independent refiner-marketer said.

The current obligation point is at a place which causes intense speculation and fraud in the market for the trade-able credits known as RINs, it said. “High RIN prices create competitive disadvantages for small retail businesses and [causes] strain on independent refiners that could result in gasoline price spikes for consumers,” Valero said.

‘Merits full consideration’

“The situation is serious and merits full consideration by EPA,” it maintained. “Today’s decision by the agency creates an administrative mechanism for that full consideration. We look forward to working closely with EPA on RINs issues even as the agency transitions to new leadership.”

The American Fuel & Petrochemical Manufacturers, which also supports moving the RINs obligation, also applauded EPA’s Nov. 10 move. “We are pleased that EPA made the extraordinary decision to seek public comment on our point of obligation petition, which they would not have done unless they saw merit in our position,” AFPM Pres. Chet Thompson said.

AFPM has called for moving the obligation point from refiners and imports to rack jobbers, where excise taxes are collected already. “We are confident that after going through this process the agency will agree that moving the point of obligation will improve the program until such time that Congress either repeals or reforms this badly flawed law,” Thompson said.

In his response, American Petroleum Institute Downstream Group Director Frank Macchiarola said EPA’s proposal to deny the petitions was the right call. Now the focus should be on aggressively reforming or repealing the RFS itself, he said.

“Passing this burdensome requirement from one entity to another would add complexity and have negative impacts to a program that we believe is already deeply flawed. In short, moving the point of obligation would be irresponsible, and EPA’s proposal confirms this,” said Macchiarola.

“Requiring businesses to blend increasing amounts of ethanol into gasoline, which consumers have demonstrated they don’t particularly want or need, is the central flaw of the RFS mandate that must be addressed,” he said.

Contact Nick Snow at nicks@pennwell.com.

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