Senators urge Trump to maintain RFS point of obligation

By EPM Staff | March 16, 2017

Nearly two dozen U.S. senators have signed a letter advising President Trump not to change the federal biofuels program's longtime compliance protocol.

Sen. Chuck Grassley, R-Iowa, and Sen. Amy Klobuchar, D-Minn., today led 23 senators in a bipartisan letter urging President Trump to maintain the Renewable Fuels Standard’s point of obligation and reject proposed changes that, they say, would upend the current system.

“We believe such changes are unwarranted and indefensible,” the senators wrote to Trump. “We appreciate the commitment you have made to support the RFS. We strongly urge you to steer clear of administrative changes to the policy that would undermine the program and run contrary to your goals of promoting domestic energy independence and more choices at the pump. We look forward to working with you to ensure the RFS continues to provide the stability and predictability that is creating jobs and economic growth across the country.”

The senators outlined the detrimental effects of changing the point of obligation from refiners to blenders, marketers or retailers, as one prominent refiner is suggesting. The letter said shifting the point of obligation would give refiners little incentive to produce necessary fuel blends, making it difficult for downstream entities to comply.

Changing the point of obligation also would “result in a massive, costly, time-consuming shift in compliance” because small businesses, especially in rural areas, lack the resources needed to comply. Administration of the program would become complicated and “unnecessarily result in significant uncertainty and market disruptions,” the senators wrote.

Such a change is widely opposed—by fuel marketers, retailers, truck stop operators, petroleum producers and renewable fuel producers—because of the added complexity and the undermining of investments that businesses have made to comply, the senators wrote. “The overwhelming majority of transportation fuel market participants oppose any change to the point of obligation because it would cause massive disruptions and could lead to higher prices for consumers,” the letter states.

Responding to the letter immediately, Brooke Coleman, executive director of the Advanced Biofuels Business Council, said, “We applaud champions in the Senate for rallying against changes to the RFS that would harm consumers, threaten the growth of U.S. biofuels and jeopardize investments in clean, American energy."

Coleman continued, "The RFS has worked effectively for more than 11 years to foster market access for homegrown biofuels, and efforts to rewrite the point of obligation are categorically opposed by a broad coalition of biofuel producers, retailers, consumers, and other market participants. Restructuring the program would halt any progress under the RFS, creating regulatory chaos for retailers and dragging down economic growth in rural America.”

Growth Energy CEO Emily Skor issued the following statement in response to the letter: 

“Growth Energy thanks Sen. Grassley, Sen. Klobuchar, and the other 21 senators leading this important effort to support the Renewable Fuel Standard, the nation’s most successful energy policy. The point of obligation is a vital component of the RFS and is working as intended to make sure that consumers have a choice of fuel at the gas pump. Growth Energy has consistently opposed any change in the point of obligation.

“The fact is, shifting the point of obligation from refiners and importers to fuel marketers, convenience stores, railroads, truck stops and trucking companies, and even consumer service companies like FedEx and UPS, would throw the RFS into chaos. A change would immediately trigger long and complicated rulemaking that would take years to complete. It would create long-term uncertainty in the entire marketplace and reduce consumer choice at the gas pump by removing the economic incentive for retailers to offer higher biofuel blends, ultimately raising prices on consumers.

“The vast majority of the industry remains united in its opposition to any change to the point of obligation. An America-first energy policy means American consumers can access cleaner, more affordable biofuel options at every gas station nationwide. This is an issue where there is no room to equivocate or barter – preserving the point of obligation is essential to maintaining a strong RFS and growing ethanol demand in the U.S.

“We stand proudly with these 23 senators in opposition to this change and will continue to fight for the ethanol industry and rural America.” 

The senators’ letter is available here