WASHINGTON, Feb. 28, 2017 – Talk of a “not negotiable” executive order that would change the point of obligation under the Renewable Fuel Standard has sent the renewable fuels industry in a tizzy.
Statements from renewable fuels groups on Tuesday offered differing opinions on the potential executive order, but according to media reports, the White House is denying any such order is in the works. In the meantime, the market for Renewable Identification Numbers (RINs), the credits that demonstrate compliance with the RFS, has tumbled about 35 percent.
Based on statements from industry organizations, an executive order has been drafted that would have changed the point of obligation under the RFS in exchange for administrative assistance on a Reid vapor Pressure (RVP) waiver that would allow E15 – a gasoline blend with 15 percent ethanol – to be sold during the summer months.
Renewable Fuels Association President and CEO Bob Dinneen said in a statement that RFA “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.”
A spokesperson for RFA declined to elaborate on when the call took place, the Trump administration official on the call, and who – specifically – would be subject to the point of obligation under such an order.
As the group’s statement later points out, RFA has long been opposed to a change the RFS point of obligation from refiners – where the obligation currently lies – over to fuel marketers. Last June, Dinneen told Agri-Pulse that changing the point of obligation in that way would “put the power of the program in the hands of the people who are most interested in killing the program.”
“If they change the obligation, they are rewarding the people (the refiners) that didn’t make (infrastructure investments) and have tried not to make the program work,” he said in an interview with Agri-Pulse after a House hearing on implementation issues with the RFS.
“That just doesn’t make a great deal of sense to me,” he added.
RFA and others are opposed to a switch, in part, because of the greatly expanded enforcement that would be required to monitor fuel marketers, which are much greater in number than fuel refiners. However, in a statement Tuesday, Dinneen said RFA was told “the executive order was not negotiable.”
The statement doesn’t explicitly mention a deal with the Trump administration to address RVP issues, but it does mention that ensuring year-round sale of E15 is “our top priority this year” and that the group wants the administration “to help cut through the red tape on this unnecessary regulation.”
Other ethanol groups as well as the National Farmers Union were not pleased.
Growth Energy released a fiery statement decrying the “backroom deal” between RFA and Trump adviser and billionaire investor Carl Icahn.
“If true, this proposal would eviscerate America’s progress under the RFS and impose indefensible costs on consumers,” said Emily Skor, CEO of Growth Energy. “Neither RFA nor Carl Icahn have the authority to strike a ‘deal.’ Mr. Icahn does not work for the U.S. government; he owns CVR Refining, which would profit directly from this change.
“RFA does not represent a majority of the biofuels industry,” she continued, “RFA’s largest member is an oil refiner, which would also profit directly from such a change. They’re negotiating for the same side – and that is not the side of the ethanol industry or the American farmer.”
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Skor also noted that the RVP issue is “a change that already has strong bipartisan support because it is a common-sense solution that would increase summer sales of higher ethanol blends.”
Brian Jennings, executive vice president of the American Coalition for Ethanol, said this “is not a done deal and not a take-it-or-leave-it scenario.” He said a change in the point of obligation and RVP relief “will both require EPA rulemaking and public comments.”
Jennings said ACE is in favor of RVP relief, but “doing so in a tradeoff which would reward Carl Icahn and help refiners like Valero (Energy) avoid their legal responsibilities under the Clean Air Act.”
National Farmers Union President Roger Johnson also noted that “any attempt by the administration to change the point of obligation through an executive order would unnecessarily complicate compliance and undermine the underpinnings of the RFS.”
The renewable fuels groups opposed to a shift in the point of obligation appear to have an unlikely ally in an RFS-related discussion: the American Petroleum Institute. In February, API filed comments opposing a change in the point of obligation, saying the “(RFS) is broken, and changing the point of obligation only pushes these problems to a different group of entities.”
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