David Fialkov, vice president of government affairs at NATSO, said current policy creates a strong incentive for fuel marketers to blend renewable fuels into the fuel supply while lowering the price at the pump. “Changing the point of obligation would have the opposite effect of discouraging fuel marketers from integrating renewable fuels into the fuel supply while simultaneously raising prices at the pump,” he said.

Fialkov stressed that it is important to remember that the entities seeking to shift the renewable identification number (RIN) compliance burden away from refiners have spent considerable resources in recent years to repeal the RFS. “Now, suddenly, they claim to have discovered the secret to making it more effective,” he continued. “Their claims today that they have identified an effective way to improve the efficiency and functionality of the program should be greeted with suspicion.”

According to Fialkov, NATSO filed comments with the EPA in July detailing how fuel marketers, including its members, prefer the current point of obligation because it results in a more diverse source of supply from which they can acquire product and then sell it to their customers. The fact that some marketers have made money by buying and blending renewable fuel into the fuel supply demonstrates that the RFS is working, not failing, he said.

“The RFS was designed to create financial incentives for private actors to engage in behavior that policymakers have determined is beneficial for society at large,” Fialkov said. “It has done this, and should be allowed to continue doing this.”

On Aug. 4, the American Fuel & Petrochemical Manufacturers filed a petition for rulemaking with the U.S. EPA, asking the agency to move the point of obligation to the owner of hydrocarbons at the rack, which is the same point where fuel excise taxes are collected.

Valero Energy Corp. has also asked the EPA to redefine obligated party under the RFS. On June 13, Valero issued a petition to U.S. EPA Administrator Gina McCarthy asking the agency to redefine obligated party under the RFS. Valero made a similar request in February.

On June 22, the House Energy and Commerce Committee’s Energy and Power Subcommittee held a hearing on the RFS, during which Janet McCabe, acting EPA assistant administrator, was asked a variety of questions related to RFS regulation, rulemaking and program implementation, including questions related to RFS obligated parties and the potential to redefine the point of regulation under the program. 

She said the issue of point of obligation is currently being addressed by the agency, noting that several petitions have been summited in support of changing the point of obligation from refiners to other parties. While McCabe was unable to offer a timeline for EPA’s response to those petitions, she indicated EPA would have the authority to make changes to the point of obligation via rulemaking.