NACS Member Educates Congress on Point of Obligation

Chronister Oil’s Bryce Rawers encourages the EPA to preserve the Renewable Fuel Standard and keep the point of obligation compliance structure in place.

February 27, 2017

WASHINGTON – Bryce Rawers, director of fuel procurement at Chronister Oil Company, DBA Qik’n’EZ, penned an op-ed in a Capitol Hill newspaper that is read widely by members of Congress and staff on keeping the current point of obligation compliance structure in place under the Renewable Fuel Standard (RFS).

Rawers writes in The Hill that the “marriage of renewable and fossil fuels” since the RFS was established more than a decade ago, has lowered the cost of gasoline and diesel, supported domestic agricultural products, improved air quality by reducing emissions and reduced reliance on foreign oil.

“In other words, the RFS has worked as intended,” Rawers said. “Now it’s under threat.”

That threat came to a head in late November 2016, when the U.S. Environmental Protection Agency (EPA) asked for public comments regarding its proposed denial of a petition from a small group of merchant refiners for EPA to begin a rulemaking to shift the point of obligation from the refiner, manufacturer or importer of the fuel to the position holder, the entity that holds title to product immediately prior to sale of those fuels at the terminal. Obligated parties are responsible for demonstrating compliance with the RFS’s annual renewable volume obligations.

NACS and most fuels value chain stakeholders, including the Society of Independent Gasoline Marketers of America (SIGMA), the National Association of Truck Stop Operators (NATSO), Growth Energy, the Renewable Fuels Association (RFA), the Advanced Biofuels Association (ABA) and the American Petroleum Institute (API) oppose changing the point of obligation. Last week NACS submitted its comments to EPA in support of the agency’s proposal to deny the petition. “Changing the point of obligation would undermine the RFS and lead to higher prices at the pump for consumers,” said NACS.

In his op-ed, Rawers notes that changing the point of obligation would discourage the use of renewable fuel and punish the companies that have played by the rules over the last decade.” In fact, just a handful of companies will benefit from a change. They have no interest in renewable energy or in seeing it benefit American consumers at the pump. …This small group points to only one side of the balance sheet to make the case for why its compliance costs should shift to others. Those refiners claim that companies that blend fuels are receiving windfall profits from selling renewable fuel credits, called RINs.

“The truth is that when refiners sell petroleum products they factor in the cost of RINs as well as the cost of crude oil, utilities and labor…This small special interest group is lobbying to change the point of obligation to anyone but them, but shifting the point of obligation is the fastest route to destroying the RFS program without an act of Congress. Renewable fuel blending has increased because refiners and importers, as obligated parties, brought to market fossil fuels, which are amenable to renewable fuel blending.”

Without an obligation, notes Rawers, “these same companies have no incentive to make available fossil fuel products that blend with renewable fuels, because renewable fuels compete directly for market share with fossil fuel products. The resulting shortfall in blending, and the burden on retailers in a setting where compliance is impossible, would result in chaos in the fuel markets, higher prices at the pumps, and an end to the RFS.”

Additionally, Rawers writes that shifting the point of obligation “from relatively few refiners and importers to a plethora of blenders and distributors creates a regulatory nightmare, which is at odds with a Republican agenda. The EPA would need to create a larger enforcement program to handle a more complex network of obligated parties, exhausting more taxpayer dollars on resources and man hours.”

Rawers encouraged the EPA to preserve the RFS and ensure it continues to work as intended.

“The point of obligation should remain with refiners and importers because that is most fair to the businesses that have played by the rules for years, to investors who have supported our nation’s long-term energy strategy, and, most of all, to the American people who don’t need another appointed bureaucrat trying to increase their cost of living to appease a special interest.”

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