EPA Poised to Deny Requests to Move Point of Obligation Under the RFS

The EPA is set to deny petitions for rulemaking seeking to move the point of obligation under the Renewable Fuel Standard (RFS) from refiners to position holders at the terminal rack. An official announcement is expected within the next week. The petitions for rulemaking were filed by merchant refiners who do not blend renewable fuel but instead rely on the volatile and costly RIN market to purchase credits to meet their annual volumetric blending mandates under the RFS.

The petitioners argue that position holders at the terminal rack, many of whom are retailers themselves, are using the huge profits gained from RIN sales to undercut prices at the pump. In addition, they say the combination of high RIN costs and below market pricing at the pump are threatening the long- term viability of their operations. Moving the point of obligation downstream to position holders at the terminal rack would eliminate their RIN costs and make prices more competitive at the pump, the petitioners argue.

The petitioners cause gained momentum after the 2016 presidential election brought the Trump administration to power along with its close political ties to one of the merchant refiners asking for the move. In the end, those ties didn’t pan out in the face of strong opposition from renewable fuel producers, major oil companies and other groups urged the EPA to maintain the point of obligation at the refiner level.

Initially, PMAA supported keeping the point of obligation at the refiner level but changed to a neutral position to reflect the differing opinions on the issue among petroleum marketers.