For the first time in history, oil interests and biofuel interests are aligning in a singular effort regarding the law that mandates biofuels in the fuel supply.
An unprecedented coalition of energy associations is asking the Environmental Protection Agency to deny a request that would shift the “point of obligation” for ethanol to wholesalers and retailers.
The American Fuel & Petrochemical Manufacturers, a group of refiners, filed a petition with the EPA asking to move the “point of obligation” under the Renewable Fuel Standard — shifting it from refiners.
To help encourage the adaptation to biofuels, the RFS says refineries that don’t meet the biofuels requirements have to purchase credits called Renewable Identification Numbers, or RINs.
“They are complaining they have to buy RINs to show compliance and it’s costing them a lot of money,” said R. Timothy Columbus, a partner with Steptoe & Johnson, a firm that provides counsel to clients in the fuel marketing industry. “They recover that in the wholesale market for prices. They would like to shift that downstream.”
Despite the EPA issuing a document saying it should deny the petition, the Obama administration also opted to give a 60-day comment period on that conclusion.
That prompted a coalition of groups that basically disagree on everything about the RFS to join together in opposing the change the petition seeks, Columbus said.
The groups include the American Petroleum Institute, the Advanced Biofuels Association, Growth Energy, the National Association of Convenience Stores, the National Association of Truck Stop Operators, the Petroleum Marketers Association of America, and the Society of Independent Gasoline Markers of America.
All signed a letter to EPA Administrator Gina McCarthy, saying: “There is no sound public policy rationale for moving the point of obligation and further, such a change would add complexity and uncertainty to the current RFS program.”
“To have that diversity of groups have that common position and express it in a single document is unprecedented in the last 40 years,” Columbus told Trade Only Today. “The real point in this letter is to draw very starkly for anyone, whether they are in the incoming administration or on the Hill or in the EPA, the remarkable isolation of petitioners with respect to their proposal.”
Though the issue wouldn’t likely directly affect boating interests, Columbus believes shifting the responsibility would drive the price of gasoline up for boaters.
Michael Lewan, senior grass-roots and government relations manager for the National Marine Manufacturers Association, said the issue shows yet another reason that the “RFS is broken.”
“Once again, the EPA is having to open up a portion of the regulation and possibly change the way it is administered,” Lewan told Trade Only Today, arguing it is further proof that the RFS is a difficult and costly law for the EPA to administer.
“Coinciding with the two GAO reports released this week … it’s clear that Congress needs to step in and make fixes to an outdated law,” he said.
At the same time, the NMMA’s grassroots advocacy group, Boating United, is urging the boating industry to call on the incoming Trump administration to reform the RFS. The group argues that the EPA has the latitude to mandate levels of ethanol lower than mandated in the RFS, passed in 2007 under the Bush administration.
To date, the EPA has drawn criticism from ethanol advocates and opponents for raising the ethanol levels in the overall fuel supply annually, though not as much as the law calls for.
The NMMA has been sharply critical of the Obama administration’s EPA for increasing its initial proposal and requiring the increase that is laid out in the 2007 law, saying the new levels pose a “direct threat to the safety of millions of recreational boaters.”
The group is asking boating industry stakeholders to sign a petition that will be delivered to President-elect Donald Trump when he takes office in January. Afterward, signors will be prompted to send a similar message to members of Congress.