API calls for RFS repeal rather than point of obligation change

By Erin Voegele | September 15, 2016

The American Petroleum Institute recently spoke out against efforts to move the point of obligation under the renewable fuel standard (RFS). The American Fuel and Petrochemical Manufacturers and Valero Energy Corp. have each filed petitions in recent months asking the U.S. EPA to redefine the definition of obligated party under the RFS.

Rather that changes to the point of obligation, the API is again calling for repeal or significant reform of the RFS program. “We need fundamental change to the RFS, and moving the point of obligation adds complexity to an already broken program and undermines efforts at real reform,” said Frank Macchiarola, API downstream group director.

In June, Valero issued a petition to 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.

In August, the American Fuel & Petrochemical Manufacturers filed a petition for rulemaking with the EPA, asking the agency to move the point of obligation under the RFS to the owner of hydrocarbons at the rack, which is the same point where fuel excise taxes are collected. 

Later that month, the National Association of Truck Stop Operators issued a statement opposing efforts to move the point of obligation under the renewable fuel standard (RFS) from refiners and importers to rack sellers.

David Fialkov, vice president of government affairs at NATSO, said current policy creates a strong incentive for fuel marketers to blend renewable fuels into the fuel supply while lowering the price at the pump. “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,” he said.

Fialkov stressed that it is important to remember that the entities seeking to shift the renewable identification number (RIN) compliance burden away from refiners have spent considerable resources in recent years to repeal the RFS. “Now, suddenly, they claim to have discovered the secret to making it more effective,” he continued. “Their claims today that they have identified an effective way to improve the efficiency and functionality of the program should be greeted with suspicion.”