NACS, Fuel Marketers, Comment on EPA’s RIN Market Proposal

The groups call on the agency to focus on enhancing disclosure requirements, not modifying market behavior. 

May 01, 2019

ALEXANDRIA, Va. — NATSO, the national association representing truckstops and travel plazas, along with the National Association of Convenience Stores (NACS) and the Society of Independent Gasoline Marketers of America (SIGMA), told the Environmental Protection Agency (EPA) that its proposed RIN Market Reform regulations are unnecessary solutions in search of problems, and that EPA should finalize only those aspects of the proposal that enhance disclosure requirements and set aside for future reconsideration those aspects that would modify market behavior.

The trade associations Monday filed public comments in response to EPA’s proposed rule that would allow E-15 to be sold year-round subject to certain restrictions and also impose significant reforms in the market for Renewable Identification Numbers (RINs), which are the credits that EPA uses to ensure that refiners satisfy their obligations under the Renewable Fuel Standard (RFS). The associations told EPA that if finalized, the proposed rule would inject significant instability into the RIN market and suppress demand for renewable fuels.

"The proposed reforms are based on a false premise and are inconsistent with explicit statements made by the agency as well as the Commodity Futures Trading Commission. The proposed reforms presume that RIN markets are structurally flawed and need to be fixed. This is false,” the associations, which represent more than 90% of retail fuel sales, said in comments filed with the agency.

The Renewable Fuel Standard (RFS) was designed to encourage more renewable fuel blending by making such blending financially attractive. Some of the changes that the agency is proposing would fundamentally alter RIN markets, making it more difficult for fuel retailers to acquire and pass along the value that can be realized by blending renewable fuels.

The associations expressed serious concern with EPA issuing new regulations that would fundamentally alter market participants’ behavior. In issuing the proposed rule, EPA explicitly acknowledged that it has not seen any “data-based evidence” of RIN market manipulation that would necessitate these reforms.

The groups reminded the agency that the primary source of volatility and manipulation in RIN markets are dubiously sourced media reports and uncertainty and opaqueness surrounding small refinery exemptions. “This has led to a situation where political rumors and media speculation about agency policy decisions have seemingly overtaken market fundamentals for purposes of RIN Valuation....All of this uncertainty has introduced volatility and risk into the RIN market, thereby benefitting the same anti-RFS entities that have urged the agency to explore the RIN market reforms associated with this proposal.”

“As EPA finalizes the proposal, the associations encourage the agency to be guided by the principal of ‘symmetry.’ For example, any disclosure obligations imposed upon RIN-long obligated parties must apply in a fully parallel fashion to RIN-short obligated parties,” the associations wrote. “Neither position is more or less ‘manipulative’ of the market than the other.”