The New Renewable Fuel Standard is Out, Now What?

By OPW | Jan 29, 2016
It’s hard to believe, but a decade has passed since Congress adopted the Renewable Fuel Standard (RFS). In the years since, the RFS has successfully increased the percentage of gasoline and diesel blended with renewable energy sources (e.g., ethanol, vegetable oil). However, the market has been unable to keep pace with the volume requirements set by the RFS. Because of this, the U.S. Environmental Protection Agency recently released revised standards for the RFS for 2014, 2015, and 2016 and the biomass-produced diesel volume for 2017. So, what are the revised requirements, what entities do they affect and what do they mean? 

The final volume requirements, as set by the EPA, are as follows:
 

Final Volume Requirementsa

2014 2015 2016 2017
Cellulosic biofuel (million gallons) 33 123 230 N/A
Biomass-based diesel (billion gallons) 1.63 1.73 1.90 2.00
Advanced biofuel (billion gallons) 2.67 2.88 3.61 N/A
Renewable fuel (billon gallons) 16.28 16.93 18.11 N/A

aAll values are ethanol-equivalent on an energy basis content basis, except for BBD, which is biodiesel-equivalent.
Source: Federal Register, Vol. 80, No. 239, Monday, December 14, 2015, Part II Environmental Protection Agency

Many petroleum marketers are unsure if and how these revisions affect them. The following table, which should only be used as a guide, offers insight into who will be impacted by the revised standards. Anyone who is unsure if the changes require action should carefully review the Federal Register or consult with the appropriate authority.

Non-Exhaustive List Of Potentially Affected Entities

Category NAICS1 Codes SIC2 Codes Examples of Potentially Regulated Entities
Industry 324110 2911 Petroleum refineries
Industry 325193 2869 Ethyl alcohol manufacturing
Industry 325199 2869 Other basic organic chemical manufacturing
Industry 424690 5169 Chemical and allied products merchant wholesalers
Industry 424710 5171 Petroleum bulk stations and terminals
Industry 424720 5172 Petroleum & petroleum products merchant wholesalers
Industry 221210 4925 Manufactured gas production and distribution
Industry 454319 5989 Other fuel dealers

1 North American Industry Classification System (NAICS)
2 Standard Industrial Classification (SIC)
Source: Federal Register, Vol. 80, No. 239, Monday, December 14, 2015, Part II Environmental Protection Agency

So, what do these new requirements mean? It means that although the EPA's expectations of the market did not occur, the U.S. government is not giving up on the idea of the RFS. Why? Because the EPA believes the RFS can reduce greenhouse gases by utilizing cleaner fuels and, in the process, diversify the country's fuel supply, which increases energy security.

In addition to revising volume requirements, the EPA decided to restructure many of its deadlines for required annual compliance reports. The decision came after the EPA reviewed industry comments and acknowledged subsequent EPA fuel program registration and reporting requirements could make it difficult for obligated parties to comply. The EPA also cited its own staff constraints and the limited number of qualified certified public accountants (CPAs) and certified internal auditors (CIAs) available to review submitted documents as reasons for the restructure.

For the finalized deadlines for annual compliance and attest engagement, see the charts below:

Annual Compliance And Attest Engagement Reporting Deadlines By Regulated Category For The 2013, 2014, And 2015 Compliance Years

Regulated party category Revised annual compliance deadline Revised attest engagement reporting deadline
2013 Compliance Year
RIN-generating renewable fuel produces and importers; other parties owning RINs N/A March 1, 2016
Independent third-party auditors N/A N/A
Renewable fuel exporters March 1, 2016 June 1, 2016
Obligated parties March 1, 2016 June 1, 2016

Source: Federal Register, Vol. 80, No. 239, Monday, December 14, 2015, Part II Environmental Protection Agency

Regulated party category Revised annual compliance deadline Revised attest engagement reporting deadline
2014 Compliance Year
RIN-generating renewable fuel produces and importers; other parties owning RINs N/A March 1, 2016
Independent third-party auditors N/A March 1, 2016
Renewable fuel exporters Partial report: March 31, 2015 Partial report: June 1, 2015
January-September 16, 2014 Full report: March 1, 2016 Full report: June 1, 2016
September 17-December 31, 2014 March 31, 2015 June 1, 2015
Obligated parties August 1, 2016 December 1, 2016

Source: Federal Register, Vol. 80, No. 239, Monday, December 14, 2015, Part II Environmental Protection Agency

Regulated party category Revised annual compliance deadline Revised attest engagement reporting deadline
2015 Compliance Year
RIN-generating renewable fuel produces and importers; other parties owning RINs N/A June 1, 2016
Independent third-party auditors N/A June 1, 2016
Renewable fuel exporters March 31, 2016 June 1, 2016
Obligated parties December 1, 2016 March 1, 2017

Source: Federal Register, Vol. 80, No. 239, Monday, December 14, 2015, Part II Environmental Protection Agency

It is too early to tell if the EPA will have to again revise volume requirements and/or reporting deadlines. However, as long as fossil fuels are used to power automobiles, it is safe to assume the EPA will continue to push for the use of blended fuels – including, E15 gasoline blends. 

Any fuel station owner thinking of a renovation, a replacement, or new construction should carefully review the latest in blended-fuel compatibility for nozzles and dispensers. The Petroleum Marketers Association of America (PMAA) estimates the average cost to retrofit a retail gasoline station to sell E10-plus blends is $200,000 per site. Thankfully, OPW already has a large selection of approved nozzles available that could prevent unnecessary retrofits. To view the latest information on OPW nozzles, view our website.