Rumored Point of Obligation Deal Proves to Be False – For Now

Conflicting reports surfaced about whether the Trump Administration would issue an executive order which would move the point of obligation under the Renewable Fuel Standard (RFS) from refiners/importers to position holders at the terminal rack. News of the potential changes have sent RIN prices tumbling. Moving the point of obligation to position holders at the terminal level will not confer obligated party status on marketers who blend below the rack. Also, marketers who hold title to fuel in a terminal, but who are not position holders themselves, will not be captured as obligated parties under the proposed changes.

While an executive order may still be issued, changes in the RFS will not be effective immediately. In order to move the point of obligation, the U.S. EPA would be required to conduct a formal rulemaking, including public notice and comment period, which is likely to take a year or more to complete. Also, opponents of the move are likely to sue in federal court to keep the point of obligation at the refiner level, further delaying the impact of the executive order.

Meanwhile, in exchange for moving the point of obligation to the position holder at the terminal rack, there has been speculation that EPA would grant a one pound RVP waiver for E15. PMAA opposes any initiative to apply the one pound waiver for E15 because the entire existing motor fuels distribution system cannot legally distribute E15. Federal, state, and local laws and regulations, national and international fire codes, as well as all commercial insurance policies, require the use of Underwriters Laboratories (UL) certified storage and dispensing equipment or specific documentation proving the equipment is compatible with E15. More importantly, only Congress has the authority to expand the waiver for E15, therefore, it cannot be done through regulation.