As previously reported, "hardship waivers" were intended for refineries producing 75,000 bpd or less and suffered "disproportionate economic hardship" from the costs of RFS compliance.
The waiver frees the refineries from an obligation to provide the EPA with biofuels credits proving compliance. (Source: WHTC Radio, Reuters,3 April, 2018)
Contact: Andeavor, (210) 626-6000, www.andeavor.com; Philadelphia Energy Solutions, www.pes-companies.com
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"While PES continues to blame the RFS for its woes, the fact is, the bankruptcy is a mess of its own making," said Kurt Kovarik, NBB's VP of Federal Affairs. "Poor management and a failure to respond to changes in the crude oil market is to blame. PES should not be rewarded for deliberately failing to comply with the decade-old Renewable Fuel Standard. Doing so is akin to rewarding a toddler in the midst of a temper tantrum. Instead, the government should hold PES to the same renewable volume obligation as all other refiners. Not doing so could severely hinder the RFS's goals of enhancing energy security, protecting the environment and building our nation’s rural economy."
NBB highlighted two key components in comments to the DOJ submitted March 26. First, the RFS holds parent companies liable for the compliance obligations of their subsidiaries. Thus, PES's corporate parents Carlyle and Sunoco can be required to comply with the RFS obligations incurred by PES. EPA has not explained why it is abandoning that avenue for ensuring complete fulfillment of PES's obligations. Second, the renewable volume obligations (RVOs) under the RFS cannot be discharged in bankruptcy. The RFS creates an affirmative duty for obligated parties to blend or use biofuels or to buy credits from others who have done so. Such a duty persists through the bankruptcy because it cannot be resolved by a payment to the government.
(Source: National Biodiesel Board, 27 Mar., 2018)
Contact: National Biodiesel Board, Kurt Kovarik, VP of Federal Affairs, 800) 841-5849, www.biodiesel.org; Philadelphia Energy Solutions, www.pes-companies.com
More Low-Carbon Energy News National Biodiesel Board, PES, Point of Obligation, RFS, Biofuel Blend, NBB, RFS,
As previously reported, PES' plan to exit it Chapter 11 bankruptcy is dependent upon its shedding existing biofuel "point-of-obligation" biofuel blending costs under the US DOE Renewable Fuels Standard.
The company claims its 2016-17 biofuels obligation totaled $185 million, and the cost of RINs in 2017 alone was $218 million, according to Reuters. (Source: PES, Reuters, Various Media, Feb., 2018) Contact: Philadelphia Energy Solutions, www.pes-companies.com
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The EPA has the authority to grant exemptions from the program to small capacity refineries if the company can demonstrate financial hardship. but the agency has been reluctant to do so in the past.
In the four years ended in 2016, the agency reportedly granted a total of 29 small-refiner exemptions, according to data provided to Reuters by the EPA in response to a Freedom of Information Act request.
(Source: NASDAQ, Reuters, Others, 25 Jan., 2018)
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In its decision released Wednesday, EPA said "a change in the point of obligation would unnecessarily increase the complexity of the program and undermine the success of the RFS program."
Iowas Sen. Chuck Grassley (R) said "Keeping the point of obligation where it is now, with refiners and importers, has worked and makes sense. Moving the point of obligation from a handful of refiners to hundreds or thousands of small fuel retailers would undermine the integrity and viability of this successful program."
The EPA is slated to announce the volume requirements -- the amount of biofuels that must be blended with the nation's fuel supply -- by the end of the month.
In July, EPA proposed volume requirements for cellulosic biofuel, advanced biofuel and total renewable fuel that are lower than 2017 requirements.
(Source: EPA, The Des Moines Register, 24 Nov., 2017) Contact: Sen. Chuck Grassley, https://twitter.com/ChuckGrassley
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The proposed changes were widely opposed by farm-state legislators and ethanol producers.
The EPA's formal declaration satisfies EPA Administrator Scott Pruitt's pledge to retain the current structure of the RFS requiring refiners and importers to blend biofuels into petroleum transportation fuels.
Refiners are reportedly affected unevenly by the current mandate -- those without sufficient infrastructure to blend in biofuels themselves must instead buy credits to comply while other companies that blend transportation fuels, but do not own refineries and therefore are not required to satisfy annual biofuel quotas, can sell those tradable credits.
(Source: EPA, Industry Week, Bloomberg, 23 Nov., 2017)
Contact: Valero Energy, (800) 324-8464, www.valero.com; EPA Scott Pruitt, www.facebook.com/EPAScottPruitt; www.epa.gov/aboutepa/about-office-administrator
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Biofuels producers have claimed that shifting the 'point of obligation' away from refiners would cause "years of industry upheaval." The American Petroleum Institute (API) has opposed the change, saying it would be a "distraction from the kind of overhaul or full-on repeal the program needs."
(Sourc: EPA, FSM News, Others, 4 Aug., 2017)
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The video is intended to dispel the widespread confusion created within the marketplace by a handful of merchant refiners and investors who have petitioned the EPA to shift the compliance requirements. Doing so would undercut RFS efforts to sustain the use of renewable fuels in gasoline and diesel fuel, according to the video.
NACS, NATSO, SIGMA and a coalition of more than 35 organizations and companies representing the entire fuel supply chain, from refiners to retailers to renewable fuels groups, oppose shifting the compliance responsibility on the grounds that it would create disruption in the marketplace and ultimately raise prices at the pump.
(Source: NACS, 23 May, 2017) Contact: NATSO, Lisa Mullings, Pres., CEO, David Fialkov, VP Gov. Affairs, (703) 549-2100, www.natso.com; NACS, www.nacsonline.com; SIGMA, www.sigma.org;
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"The challenge facing the Nebraska ethanol industry today is access to the consumer. RFN supports measures that would eliminate barriers to the increased sale of E15 and open new markets for domestic renewable fuels."
RFN represents ethanol producers in the state of Nebraska, which produces approximately 2.5 billion gpy at 25 plants. (Source: Renewable Fuels Nebraska, Mar., 2017) Contact: Renewable Fuels Nebraska, Mark Palmer, Exec. Dir., www.ethanolrfa.org
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The possible Executive Order is reportedly the culmination of a "backroom" deal between Trump Administration advisor Carl Icahn and the Renewable Fuels Association that would shift the obligation under the Renewable Fuel Standard (RFS) from refiners to fuel retailers.
A White House spokesperson reportedly denied rumors of a change to the ethanol mandate and said "there isn't an ethanol Executive Order in the works."
(Source: Association for Convenience & Fuel Retailing, Various Others, 1 Mar., 2017)
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The Renewable Fuels Assocoation (RFA) has come out in opposition to such a change. "We were told the point-of-obligation change was going to happen, whether we were involved or not," RFA Communication Director Rachel Gantz told DTN. "We wanted to make sure E15 RVP parity was addressed." Then, the RFA offered a statement from its President and Chief Executive Officer Bob Dinneen, who said his group remains opposed to changing the point of obligation. "We received a call from an official with the Trump administration, informing us that a pending executive order would change the point of obligation from refiners to position holders at the terminal, a potentially small increase in the number of obligated parties, but one which would distribute the obligation more equitably," Dinneen said. Dinneen added, "Despite our continued opposition to the move, we were told the executive order was not negotiable."
The Wall Street Journal reported on Tuesday quoted a White House spokesperson as saying "there are no pending executive orders related to ethanol." (Source: Various Sources, DTN Progressive Farmer, Mar., 2017)
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In its initial rulemaking, the EPA defined an obligated party as a refiner or importer and explained then that they considered placing the point of obligation at the terminal. The EPA now says the RFS would be maintained, but responsibility for compliance would be shifted from refiners to fuel blenders.
Fuels America apparently took umbridge to RFA CEO Bob Dinneen's recent statement that the association "received a call from an official with the Trump administration" informing it that a pending White House order would remove oil refiner's obligation to blend ethanol with gasoline. (Source: Fuels Amercia, 2 Mar., 2017) Contact: Renewable Fuels Association, (202) 289-3835, www.ethanolrfa.org;
Fuels America Coalition, www.fuelsamerica.org
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The RFS has been a point of contention between major players in the fuel industry. A handful of refiners and investors have petitioned the EPA to shift compliance requirements down the supply chain which, according to NATSO, would undercut the program's efforts to sustain the use of renewable fuels in gasoline and diesel fuel.
The current structure creates a strong incentive for blenders, retailers and marketers to integrate renewable fuels into the supply chain, as well as increase gas prices for consumers as downstream players' ability to satisfy their obligations would be dictated by upstream counterparts, who have the leverage and incentive to raise prices, NATSO says. The change would also add significant compliance costs and burdens to freight shippers, which would ultimately raise the cost of consumer goods through higher shipping costs.
NATSO claims that changing the point of obligation would hinder the program's objective of displacing traditional fuel and replacing it with renewable substitutes to promote stable supply and prices.
(Source: NATSO, 22 February, 2017) Contact: NATSO, Lisa Mullings, Pres., CEO, David Fialkov, VP Gov. Affairs, (703) 549-2100, www.natso.com
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