Suit Seeks to Shift RFS Point of Obligation

RFS

Refiner Valero Energy is suing the US Environmental Protection Agency (EPA) in federal district court in Texas eyeing an alternate way to force the agency to shift the Renewable Fuel Standard (RFS) compliance mandate, or “point of obligation,” from fuel refiners and importers to blenders, saying EPA has failed to meet a Clean Air Act mandate to ensure the duty is “appropriate.”

The suit, filed Jan. 18 in the U.S. District Court for the Northern District of Texas, follows another case that the company has pending in the U.S. Court of Appeals for the District of Columbia Circuit. The appellate case differs because it is a broader challenge to the agency’s final RFS volumes rule for compliance years 2014 through 2016, in which Valero is urging the court to force EPA to shift the compliance burden as part of its attacks on that rule.

Under the RFS, obligated parties — importers and refiners — are required to blend increasing volumes of biofuels into the fuel supply each year. The parties must surrender to EPA sufficient biofuel credits known as renewable identification numbers (RINs) to cover their blending mandates. Refiners can either generate RINs themselves by blending, or buy potentially expensive RINs from other companies if they lack enough blending capacity themselves.

Valero and other refiners have long argued that the point of obligation is unfair, because only some obligated parties have to buy RINs — whereas others can sell them. These critics say that blenders should instead be required to surrender RINs, but the EPA has rejected formal petitions to change the obligation.

Valero’s district court suit challenges EPA for alleged failure to discharge what it claims is a nondiscretionary duty to re-examine the point of obligation annually, and wants a court order to force the review.

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