Valero petitions EPA to redefine RFS obligated party

By Erin Voegele | June 16, 2016

On June 13, Valero Energy Corp. issued a petition to U.S. EPA Administrator Gina McCarthy asking the agency to redefine obligated party under the renewable fuel standard (RFS). In February, Valero made a similar request.

Valero is asking EPA to redefine obligated party as “the entity that holds title to the gasoline or diesel fuel, immediately prior to the sale from the bulk transfer/terminal system…to a wholesaler, retailer or ultimate consumer.” Refiners and importers are currently considered obligated parties under the RFS.

According to Valero, “currently the obligation for RFS is placed on refiners and importers—the point of obligation is the refinery gate and the entity that imports—regardless whether the refiner or importer have the ability to affect the amount of renewable fuels blended and sold to consumers.” Valero claims this placement has created problems that impair the RFS program’s proper functioning and prevent it from ensuring that renewables enter the transportation fuel market. “The inefficiencies of the point of obligation’s current placement harm renewable fuel producers, independent refiners, retailers and U.S. consumers,” said Valero in the letter. “Among the most significant is that, because it prevents the value of renewable identification numbers (RINs) from being passed through to consumers, it only minimally encourages renewable fuel consumption.”

Valero claims the change would enable the market to more readily respond to the annual renewable volume obligation (RVO) standards, begin to address the structural constraints that EPA identified in its 2015 RFS rulemaking, and eliminate barriers that prevent RIN value from being passed through to consumers.

Valero owns and operates 13 petroleum refineries in the U.S., with a combined capacity of approximately 2.9 million barrels per day. The company is also a fuel importer that has refineries in Canada and the U.K, as well as a wholesaler. In addition, Valero owns 11 ethanol plants and is the third largest ethanol producer in the U.S. The company also owns Diamond Green Diesel and is the largest renewable diesel producer in the U.S.