The Environmental Protection Agency has formally decided against a technical change to the governance of the Renewable Fuel Standard, following through on a pledge its leader made to lawmakers in October.
The move makes official EPA’s decision to reject a petition that would have changed the point of obligation under the RFS. EPA Administrator Scott Pruitt said in a letter to seven farm state senators in October that he would direct his staff to finalize the decision within 30 days.
In the notice signed Wednesday by Pruitt, the EPA argued changing the point of obligation would not have improved the effectiveness of the RFS, nor would it have met the intent of Congress when administering the legislation.
“At the same time, EPA believes that a change in the point of obligation would unnecessarily increase the complexity of the program and undermine the success of the RFS program, especially in the short term, as a result of increasing instability and uncertainty in programmatic obligations,” EPA said in a Federal Register filing.
Oil companies and refiners requested the change during the Obama administration, but decided against that request last November. However, the comment period on EPA’s decision did not close until the early days of the Trump administration. The change would have ultimately changed the obligated party responsible for the generation and purchase of Renewable Identification Numbers from refiners and importers to blenders of transportation fuel.
Renewable fuels supporters were not in favor of the switch as demonstrated by statements released Wednesday afternoon. Growth Energy CEO Emily Skor said refiners had for a year been using “every trick in the book” to try and change the provision and thanked EPA for ultimately ruling against a modification.
“This one-sided handout would have added regulatory red tape, created havoc in the marketplace, and denied consumers access to more affordable fuels with higher blends of biofuels like E15,” she said.
Sen. Deb Fischer, R-Neb., also applauded the move, saying the news is “a big victory for rural America.
“It will provide certainty, not only for hardworking producers in Nebraska and across the Heartland, but also for innovators who have invested in the future of renewable fuels,” Fischer, one of the senators who met with Pruitt earlier this year, said in a statement.
Another senator in the room for the meeting with Pruitt, Iowa Republican Chuck Grassley, said the decision was "the right policy conclusion."
"This decision puts the issue to bed, and certainty is so important,” Grassley said. “It’s a decision from the EPA that sides with the integrity of the RFS.”
The point of obligation switch took on a life of its own earlier this year, when Carl Icahn, then a special advisor to President Donald Trump, struck a deal with Renewable Fuels Association President and CEO Bob Dinneen to trade an executive order changing the point of obligation in exchange for action that would allow E15 to be sold during the summer months through a Reid Vapor Pressure waiver. Others in the renewable fuels industry spoke out against the deal, and the executive order never materialized.
Icahn ultimately resigned from his role as special advisor. In a statement, Dinneen reiterated that RFA’s longstanding position is “the current point of obligation.”
"We believe the quickest path to the lower RIN prices sought by obligated parties is regulatory or legislative action to establish RVP parity for E15," Dinneen said.
Rejecting the point of obligation switch was one of four promises made to senators in Pruitt’s letter: He also pledged to look into the RVP waiver, not pursue action that would allow RINS to be associated with exported biofuels, and to release 2018 blending levels under the RFS “equal to or greater than the proposed amounts.” By law, that announcement must happen by the end of November.
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