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Fleet Owners, Retailers Tell EPA to Keep Renewable Fuel Standard Compliance Model

gas pumpUPS, 7-Eleven and Casey’s General Store are among the three dozen companies and trade organizations urging the EPA to keep the current compliance standard under the Renewable Fuel Standard (RFS).

The public comment period on the biofuel blending mandate ended yesterday.

Last year a group of oil refiners petitioned the EPA to change the “point of obligation” under the Renewable Fuel Standard. 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.

In November, the Obama administration’s EPA proposed denying the refiners’ request. But the final decision will be up to President Donald Trump’s EPA, now headed by Scott Pruitt. And the oil industry, which is central to the Oklahoma economy that Pruitt had represented as his state’s attorney general, is hoping for more sympathetic rules under the new leadership.

On Tuesday, as the RFS public comment period came to a close, a group of truck drivers, railroads, renewable fuel groups and fuel retailers, organized by the National Association of Truck Stop Operators (NATSO), told the agency that shifting the point of obligation downstream in the supply chain would undermine the purpose of the renewable fuel mandate and raise prices at the pump.

“The RFS is working as intended by creating stable gas prices and encouraging renewable fuels in our gas supply,” said Tim Columbus, general counsel of the National Association of Convenience Stores and SIGMA. “But if the EPA shifts compliance, it would unnecessarily complicate the program, needlessly disrupt the markets for motor fuels, and hurt consumers most.”

The change would also add significant compliance costs and burdens to freight shippers, the groups said. For example, if the compliance changes, Class I railroads would need to expend between $112.5 million and $214 million just to acquire Renewable Identification Numbers (RINs) to comply with 2016 Renewable Volume Obligations, based on 2016 numbers.

The American Trucking Associations said it opposes shifting the point of obligation because it would raise fuel costs and create obligated parties that do not refine or sell fuel under the RFS.

“Fuel is one of the top two operating expenses for most motor carriers and can be as much as 39 percent of total operating costs,” wrote Glen P. Kedzie, ATA vice president, energy and environmental counsel, in comments submitted to the EPA. “Trucking fleets will be paying more for the substantial fuel purchases they make below the rack, which will lead to higher costs to ship products across the US and result in higher retail costs for consumers. Raising fuel costs for motor carriers increases shipping costs for the more than 70 percent of freight tonnage moved in the US via trucks.”

The EPA will make its final decision after reviewing the public comments.

 

 

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