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EPA Proposes Denying Oil Refiners’ Renewable Fuel Standard Petition

gas stationThe EPA has proposed denying several petitions by oil refiners to change the point of obligation under the Renewable Fuel Standard (RFS).

Under the current RFS rules, oil refiners are the parties obligated to blend more renewable fuel into the nation’s transportation fuel supply. The refiners want the EPA to change the obligated party from the refinery to the owners of the gasoline before it is blended for retail sale.

“EPA believes that a change in the point of obligation would be a substantial disruption that has the potential to undermine the success of the RFS program, as a result of increasing instability and uncertainty in programmatic obligations,” the EPA said in its proposed denial, issued yesterday. “We believe that the proponents of such a change bear the burden of demonstrating that the benefits are sufficiently large and likely that the disruption associated with such a transition would be worthwhile. 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…”

The EPA is also seeking public comments on its proposed denial of the requests to initiate rulemaking.

“The EPA has made the correct decision in proposing to deny this petition,” said Emily Skor, CEO of Growth Energy, which represents ethanol producers. “The RFS is working and refiners have had over 11 years to comply with it. The current structure appropriately incentivizes marketers to blend additional biofuels, and encourages the availability of higher-level ethanol blends to retailers who wish to sell them. The bottom line is that the current point of obligation encourages consumer choice and cost savings at the pump, and any change would undermine the intent of the RFS and reward those parties who have refused to comply with the intent of the law.”

While several different industry groups are counting the agency’s proposed denial as a victory — ethanol producers, retail stores and gasoline suppliers, among others — oil refiners say the open public comment period proves that their petitions have merit.

“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,” said American Fuel and Petrochemical Manufacturers president Chet Thompson. AFPM is one of the groups that submitted a petition to the EPA seeking to change the point of obligation. “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.”

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