NACS Asks Retailers for Comments on RIN Market Reforms
The Environmental Protection Agency has proposed allowing the year-round sale of E15 in non-reformulated gasoline markets, as well as making several changes to the RIN market.
Apr 03, 2019
WASHINGTON, D.C. -- On March 21, the U.S. Environmental Protection Agency (EPA) published its proposed rule to allow for the year-round sale of E15 in non-reformulated gasoline markets and make several changes to the Renewable Fuel Standard (RFS) Program’s renewable identification number (RIN) market. Comments on the proposal are due April 29, while a public hearing on the matter was held on March 29 in Ypsilanti, Mich.
The proposal is the result of President Trump’s October 11 statement to “uphold his commitment to ethanol and the Renewable Fuel Standard program…and increase transparency in the RIN market.” Of particular relevance to NACS members are the proposed reforms to the RIN market. Although the agency itself implied the proposed reforms were likely unnecessary as it has no “data-based evidence” that manipulation is occurring in the RIN market, the agency nevertheless has proposed four reforms.
These reforms, which would primarily affect the D6 (ethanol) RIN market, as opposed to the D4 and D5 (biodiesel and advanced biofuel) market, include:
- Requiring public disclosure when holdings of separated D6 RINs held by an individual actor exceed specified limits;
- Requiring obligated parties to retire RINs quarterly, instead of annually;
- Limiting the length of time a non-obligated party could hold separated D6 RINs to a quarterly basis; and
- Prohibiting entities other than obligated parties from purchasing separated RINs (this would not apply to blenders who have “contracts to deliver separated RINs to an obligated party for the purpose of compliance”).
The reforms appear to inject asymmetry in the marketplace and, if enacted as proposed, could reduce liquidity, increase volatility and make the RIN market function less efficiently. In short, the proposed reforms could disrupt and distort the RIN market and, as a consequence, undermine the RFS.
NACS plans to submit comments on the proposal and welcomes feedback from its members on the impact of the proposed rule on the RFS, the RIN market and the fuel market generally. NACS members should reach out to Paige Anderson at (703) 518-4221 or [email protected], or NACS Counsel Eva Rigamonti at (202) 429-6457 or [email protected].
Motor Fuels
