Regulations

EPA denies petition to change “point of obligation” under U.S. Renewable Fuels Standards program

EPA denies petition to change “point of obligation” under U.S. Renewable Fuels Standards program
Photo courtesy of U.S. EPA.

The U.S. Environmental Protection Agency (EPA) announced that it has denied requests to initiate a rulemaking to change the point of obligation for compliance, under the Renewable Fuels Standards (RFS) program.

“Based on a wide range of stakeholder input and information provided as a part of the public comment period, the agency has determined that changing the regulatory point of obligation for compliance with the RFS program is not appropriate,” the EPA announced on its website.

Major oil companies had earlier petitioned to relieve refiners of their obligation to fulfill annual biofuel quotas under the RFS program, a move that encountered strong opposition from the biofuel industry and lawmakers in farm states such as Iowa.

Under the RFS system, fuel refiners without sufficient infrastructure to blend in biofuels themselves must instead buy credits or renewable identification numbers (RINs), to comply with biofuel blending quotas.

A surge in the price of RINs prompted some refineries to petition the EPA for a shift in the point of obligation to companies closer to consumers, such as blenders, according to Bloomberg.

Prior to this, EPA proposed to deny requests from petitioners to initiate a rulemaking to change the point of obligation for compliance under the RFS program.

EPA said that “Due to the importance, complexity, and broad stakeholder interest in this issue, the agency took public comment on the proposed denials to ensure we received input from the wide variety of stakeholders that could be affected.”

“We believe that 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 they need to comply with the RFS standards,” the EPA Notice of Denial of Petitions said.

“We do not believe that petitioners have demonstrated that changing the point of obligation would likely result in increased use of renewable fuels. Changing the point of obligation would not address challenges associated with commercializing cellulosic biofuel technologies and the marketplace dynamics that inhibit the greater use of fuels containing higher levels of ethanol, two of the primary issues that inhibit the rate of growth in the supply of renewable fuels today.”

“Changing the point of obligation could also disrupt investments reasonably made by participants in the fuels industry in reliance on the regulatory structure the agency established in 2007 and reaffirmed in 2010.”

EPA Administrator Scott Pruitt signed the notice denying the petition on November 22, 2017.

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