Biofuels Score Victory

EPA Rejects Petitions to Change Point of Obligation in RFS

Todd Neeley
By  Todd Neeley , DTN Staff Reporter
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Refiners and importers of gasoline and diesel will continue to be the point of obligation in the Renewable Fuel Standard. (DTN file photo)

OMAHA (DTN) -- The U.S. Environmental Protection Agency rejected several petitions to change the point of obligation in the Renewable Fuel Standard in a notice released on Wednesday ahead of a posting in the Federal Register.

In the EPA notice, the agency said petitioners didn't prove their case.

"In evaluating this matter, EPA's primary consideration was whether or not a change in the point of obligation would improve the effectiveness of the program to achieve Congress's goals," the agency said. "EPA does not believe the petitioners or commenters on the matter have demonstrated that this would be the case. At the same time, EPA believes that a change in the point of obligation would unnecessarily increase the complexity of the program and undermine the success of the RFS program, especially in the short term, as a result of increasing instability and uncertainty in programmatic obligations."

The EPA said changing the point of obligation would "not address" the challenges associated with commercializing cellulosic biofuels.

Reports surfaced in February that President Donald Trump, along with his adviser at the time, billionaire energy investor Carl Icahn, had prepared an executive order to change the point of obligation in the RFS from refiners and importers of gasoline and diesel to ethanol blenders.

A White House spokesperson later denied to DTN that such an executive order existed, and the president has not issued such an order.

Ethanol industry representatives and some oil interests opposed to the switch have feared it would discourage expanded ethanol blending. Groups that support the switch claim that obligating blenders would spread compliance costs through the renewable identification number, or RIN, market. That market is designed to allow obligated parties to show compliance with the law by buying either physical gallons or the credits attached to actual gallons produced.

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In the past, EPA has opposed the switch because it would make the Renewable Fuel Standard more complex by expanding the number of companies required to comply from hundreds to thousands.

Growth Energy's Chief Executive Officer Emily Skor said in a statement to DTN that EPA's latest action was welcomed.

"We commend the EPA for laying to rest a year of attempts from a small group of oil refiners who have been using every trick in the book to change the established rules for tracking compliance with the Renewable Fuel Standard," she said.

"This one-sided handout would have added regulatory red tape, created havoc in the marketplace, and denied consumers access to more affordable fuels with higher blends of biofuels like E15."

Bob Dinneen, CEO and president of the Renewable Fuels Association, said in a statement to DTN, "Consistent with our previously stated position on the issue, RFA supports the current point of obligation. We believe the quickest path to the lower RIN prices sought by obligated parties is regulatory or legislative action to establish RVP parity for E15."

Sen. Deb Fischer, R-Neb., said in a press release that the agency's action provides certainty to rural America.

"Today President Trump and EPA Administrator Scott Pruitt demonstrated their commitment to the integrity of the Renewable Fuel Standard with this important decision," she said.

"This is a big victory for rural America. It will provide certainty, not only for hardworking producers in Nebraska and across the Heartland, but also for innovators who have invested in the future of renewable fuels."

Poet CEO Jeff Broin said the agency decision will allow the RFS to work as designed.

"Under the RFS, infrastructure for biofuel-blended fuel is expanding, with opportunities for additional consumer-driven growth," he said.

"The RFS works, evident from the numerous benefits it allows Americans to enjoy today: cleaner air, fewer carcinogens in gasoline, lower fuel costs and increased energy independence. President Trump has vowed to preserve the RFS. I applaud the president and EPA for standing up to special interest groups within the oil industry who seek to undermine American-made biofuels."

Read the EPA notice here: http://bit.ly/…

Todd Neeley can be reached at todd.neeley@dtn.com

Follow him on Twitter @toddneeleyDTN

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Todd Neeley