Fuel Retailers, Oil Majors Form Coalition Opposed to RFS Obligation Move

Source: By Jeff Barber, OPIS • Posted: Friday, April 7, 2017

Several fuel retailer and marketer trade organizations along with two major oil companies Wednesday launched a new organization – the Main Street Energy Alliance – to urge EPA against moving the Renewable Fuel Standard’s (RFS) point of obligation from refiners and fuel importers to blenders.┬áThe alliance members include the National Association of Convenience Stores (NACS), NATSO, which represents truck stops and travel plazas, the Society of Independent Gasoline Marketers of America (SIGMA) and Shell and BP.

The group’s website also listed as members a number of individual fuel retailers, including Kum & Go, Kwik Trip, Cumberland Farms, Casey’s General Stores, 7-11 and Sheetz.

In a statement, the group said it opposes “efforts of a small group of special interests who are trying to alter the point of obligation requirement under the [RFS] in order to serve their own narrow business interests.”

“A small group of refiners and their investors are trying to push through changes to the RFS to line their pockets at the expense of consumers and small businesses,” Michael Steel, an official with Hamilton Place Strategies who is serving as spokesman for the group, said in a statement.

“Shifting the point of obligation would add complexity for businesses, decrease the use of biofuels, and potentially increase costs for consumers. Many energy businesses and consumers on Main Streets across this country could be negatively impacted by this effort to reward just a small few.”

The alliance said the RFS system currently places compliance requirements on the parties that control the composition of fuels, refiners and their investors, creating “a strong incentive for downstream fuel blenders, retailers, and marketers to blend renewable fuels into the supply chain while lowering prices at the pump.”

The group said that in addition to small businesses and consumers, changing the point of obligation would hurt farmers by causing demand for agricultural products to “plummet” and would “punish responsible companies who played by the rules.”

In addition, the group said moving the point of obligation would lead to “more EPA regulation, complexity and fraud.”

Several merchant refiners, including Valero Energy, and the American Fuel and Petrochemical Manufacturers last year petitioned EPA to move the point of obligation, saying rising compliance costs were threatening their operations and arguing that shifting compliance to a point on the fuel terminal rack would create greater incentive for expanding the use of biofuels.

The agency in November proposed to reject the petition, saying such a move would increase the RFS program’s complexity, while providing few benefits. EPA, however, said it would accept public comment on the proposed decision. The public comment period closed in February.

Businessman Carl Icahn, who owns an 82% stake in independent refiner CVR Energy, and serves at regulatory adviser to the Trump White House, has continued to press for the change and in late February reached a deal with the Renewable Fuel Association (RFA) that would see the ethanol group drop its opposition to the shift in exchange for a RVP waiver for E15 that would allow the higher ethanol blend to be sold year-round.

Word of the agreement led to a number of biofuel trade groups to criticize RFA and the White House quickly issued a statement denying reports that an executive order directing EPA to make the change was in the works.