WASHINGTON – This week, the public comment period on the Point of Obligation Petition under the Renewable Fuel Standard (RFS) closed, with many retailers and marketers, including NACS, sending in comments urging the U.S. Environmental Protection Agency (EPA) to not change the point of obligation.
In late November, EPA asked for public comments regarding its denial of a petition from a small group of merchant refiners for EPA to begin a rulemaking on shifting 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.
On Wednesday, 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.
NACS comments also responded to claims by some refiners that the costs of acquiring the credits for showing compliance with the RFS, so-called Renewable Identification Numbers (RINs), are too onerous for them. Based on data from a report prepared by Argus Media Group Consulting Services, NACS explained that “obligated parties consistently incorporate expected RINs costs into their obligated products pricing.” In other words, those refiners are not being threatened by overly burdensome RINs compliance costs.
NACS also rebutted incorrect assertions that large retailers are making windfall profits from RINs sales and that small retailers are placed at a disadvantage to large retailers because of the current RFS structure. “RIN value is passed along to consumers in the form of more competitively priced (less expensive) retail fuel to entice the customer to stop for gas and come into the store,” NACS said.
Many large retailers do sell RINs and pass along the value to the consumer—something small retailers could also do, “presuming they are not stymied by a supplier,” NACS said. Small retailers could work with organizations that exist today to help them realize benefits from blending renewable fuels and RIN trading. Despite assertions to the contrary, “the fact that some small retailers are now at a disadvantage because their branded suppliers have chosen not to pass along values obtained from renewable fuel blending is not something that will be fixed by changing the point of obligation.” Changing the point of obligation would inject massive disruptions into the fuels marketplace that will hurt large and small retailers alike, and the American consumer most of all.
In addition to NACS, 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. These groups are joined in their opposition by important fuel end-users, including truckers, railroads, and the American Highway Users Alliance, which represents millions of U.S. drivers—all of whom understand the negative effects that would be brought about by a change in the point of obligation.
A bipartisan group of lawmakers also sent a letter to EPA opposing efforts to change the point of obligation. U.S. Senators Joni Ernst (R-IA), Deb Fischer (R-NE), Tammy Duckworth (D-IL) and Ed Markey (D-MA) told the agency that the RFS “as it is structured currently, has been remarkably successful at driving significant investments in the biofuels sector” and urged EPA to finalize its decision to reject the petitions for rulemaking to change the RFS structure as soon as possible.
Read the NACS comments to EPA.