Iowa to Pruitt: Don't change RFS point of obligation

By Iowa Renewable Fuels Assoc. | February 16, 2017

With the U.S. Senate on the cusp of approving Scott Pruitt as Administrator of the U.S. Environmental Protection Agency (EPA), a broad coalition of Iowa farmers, renewable fuel producers, and retailers urged Pruitt to protect the Renewable Fuel Standard (RFS) by rejecting the petition to change the successful program’s point of obligation.  The request would change the RFS obligated parties from mostly large petroleum refiners to many fuel retailers. 

Under the Obama Administration, the EPA proposed to reject the request, but the public comment period on the proposed rejection is still open meaning the final decision will be up to President Donald Trump’s EPA.  Iowa entities urging Pruitt to finalize the pending rejection include Iowa Renewable Fuels Association (IRFA), Iowa Corn Growers Association (ICGA), Petroleum Marketers and Convenience Stores of Iowa (PMCI), Iowa Biodiesel Board (IBB), Truckstops of Iowa, and Kum & Go.

“We have a slogan in the renewable fuels family that says ‘Don’t mess with the RFS,’” said IRFA Executive Director Monte Shaw. “Let me make this perfectly clear: changing the point of obligation is most definitely messing with the RFS in a significantly harmful manner. Iowa’s ethanol and biodiesel producers oppose it and will fight hard to defeat it.  We are calling on the Trump Administration to uphold the President’s commitment to protect the RFS.” 

“We thank President Trump for supporting the corn and ethanol industry and for recognizing the RFS's impact in stabilizing our rural economy, creating American jobs and energy independence,” said ICGA President Kurt Hora, a farmer from Washington. “With massive corn surpluses and corn prices below the cost of production, the last thing farmers need is disruption in a key market. Therefore, we remain committed to ensuring the RFS’s point of obligation be maintained.” 

“The RFS was designed for one set of circumstances, one that involved a manageable number of obligated parties to work with the EPA. To change the point of obligation at this time, simply because certain businesses chose Wall Street over the regulation, would be devastating to the wholesalers and retailers who have invested heavily in supporting the RFS and everything it stands for,” according to Dawn Carlson, President and CEO of the PMCI. “Moving the point of obligation would pull thousands of companies into this requirement ultimately impacting consumers negatively as pricing dynamics at fuel terminals would change.”

“The Trump Administration has made American manufacturing and jobs a top priority, and the RFS is a shining success story in that regard,” said Grant Kimberley, Iowa Biodiesel Board executive director. “Rocking the boat now based on a few vocal self-interested detractors could cause disastrous upheaval for this program, which is working as an economic driver in Iowa and beyond. We support the wholesale fuel providers who have worked for years to commit to biodiesel and the RFS. We agree with EPA, which is on record that the current structure of the RFS program is working to incentivize the production, distribution, and use of renewable transportation fuels in the United States, while providing obligated parties a number of options for acquiring the RINs they need to comply with the RFS standards.”

Delia Moon, President of Truckstops of Iowa, stressed: “It does not make sense to change the monitoring of renewable fuel use from 50 large refiners to 100,000 or more independent retailers.   Changing the point of obligation will create a significant bureaucratic burden on these retailers and it will be an auditing nightmare for the EPA.” 

Quad County Corn Processors is currently the largest cellulosic ethanol producer under the RFS.  Quad’s CEO Delayne Johnson added:  “Changing the point of obligation 11 years into the program would create unnecessary chaos and delay.  It would essentially push pause on the program for more than a year, which would undermine investments in cellulosic ethanol.” 

Western Dubuque Biodiesel general manager Tom Brooks concluded:  “As a young industry competing against the entrenched petroleum industry that has benefited from more than 100 years of federal tax preferences, biodiesel needs stability in the RFS and the RIN market.  Moving the point of obligation invites only uncertainty and confusion.”

The public comment period on the proposed rejection of the petition to change the point of obligation closes on February 22, 2017.  After reviewing the public comments, the Trump EPA will make the final decision.