Pruitt declines point of obligation comment | TSLN.com

Pruitt declines point of obligation comment

SAN DIEGO — At his confirmation hearing in Washington today Scott Pruitt, the Oklahoma attorney general who is President-elect Donald Trump's nominee for EPA administrator, declined to take a position on on whether EPA should change the point of obligation that determines what party should be obligated to comply with the Renewable Fuel Standard, but the issue has been one of discussion here at the National Biodiesel Board annual meeting.

A coalition of railroad, trucking and driver organizations urged that the point of obligation remain the same.

At the present time, the EPA has defined the obligated party as a refiner or importer, but the agency is taking comments until February on changing the point of obligation to other parties. The issue has arisen due to conflicts over costs and profits related to the renewable identification numbers (RIN) that represent the amount of biofuels blended into fossil fuels and are at the heart of the compliance system.

Under questioning from Sen. Tammy Duckworth, D-Ill., Pruitt declined to comment on the issue because it is in the comment period at EPA, Politico reported.

“Virtually the entire fuel supply chain, with the exception of a small handful of refining companies led by Carl Icahn, opposes changing the point of obligation under the RFS.”David Fialkov, vice president for government relations at the National Association of Truck Stop Operators

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NBB CEO Donnell Rehagen told reporters here that NBB is "just watching that issue" and has no plans to file comments because it does not affect its members directly. Rehagen noted that the oil industry, which uses the RIN system, is split on whether it should be changed.

The question has arisen as Joe Jobe, the former NBB president, has written an extensive article in Biofuels International, a British publication, urging the industry to change the point of obligation to the "rack seller" at the terminal.

In addition, Carl Icahn, an investor Trump has named as an adviser, has said the point of obligation — known as the POV — should be changed. These concerns led a coalition of railroad, trucking, and driver organizations to submit a letter to EPA Tuesday evening urging the agency to reject petitions to move the point of obligation under the RFS. The letter will also be forwarded to Trump and Vice President-elect-Mike Pence, according to Matt Herrick of Story Partners, who represents the coalition.

The coalition maintains that shifting RFS compliance requirements downstream would "disrupt the fuels markets, raise consumer fuel prices, and do so with no added benefit to the consumer or the program."

"Virtually the entire fuel supply chain, with the exception of a small handful of refining companies led by Carl Icahn, opposes changing the point of obligation under the RFS," David Fialkov, vice president for government relations at the National Association of Truck Stop Operators (NATSO) said in an email.

But Jobe, in his article in the November/December issue of Biofuels International that was distributed to all participants in the National Biodiesel Conference and Expo here, wrote that changing the POV "goes to the heart of addressing the real reason that EPA proposed using its waiver authority in 2013, delayed finalizing three years of rules, and ultimately set low volume obligations in all categories moving forward."

In the article, Jobe acknowledged that, as president of Rock House Advisors, a consulting firm he founded after leaving NBB, he is providing advice on the issue for "an independent refiner," but said most of his work is still for biofuels groups and has concluded that changing the POV "would be beneficial to biofuels as well as most other stakeholders, consumers, and the RFS in general."

Jobe also wrote that, based on articles published by Reuters, the reason that the Obama administration was slow to finalize volumetric requirements under the RFS was that it was "convinced that the bankruptcy and shut-down of two refineries in close proximity on the Mid-Atlantic region was imminent without taking some action, and would create fuel shortages to the East Coast as well as the loss of hundreds of union jobs."

Rehagen noted that Jobe is now an independent consultant and wrote in that context. The article is available online only to Biofuels International subscribers.

–The Hagstrom Report