EPA proposes RIN market changes

US refiners and fuel importers must prove compliance with federal fuel blending laws more frequently and in an associated credit market with fewer participants under proposals made today by the Environmental Protection Agency (EPA).

Restrictions the agency proposed today would limit compliance credit trading by companies not obligated to prove each year that the US has met federal targets for renewable fuel blending. EPA paired the rule with an expansion to year-round sales of 15pc ethanol blends of gasoline sought by US ethanol producers.

Blenders and refiners that sell credits called renewable identification numbers (RINs) used to prove compliance warned the changes upend the compliance market and punish companies that invested to meet the mandates. Ethanol trade groups consider the rule a critical expansion of access to the domestic fuel supply. Refiners have warned that EPA lacks the authority to make this change and plan to challenge the rule in court.

Refiners, importers and certain other companies must each year ensure that minimum volumes of renewables blend into the gasoline and diesel they add to the US transportation supply.

EPA would prohibit certain companies not facing those obligations from buying RINs, limit how long they may hold the credits and require disclosures when a party acquires a certain volume of RINs. Obligated parties, who today almost all prove compliance once a year, would be required to submit RINs to the EPA on a quarterly basis.

EPA administrator Andrew Wheeler said yesterday at the IHS-CERAWeek conference in Houston that the rule sought a fair, less volatile market for the compliance credits.

"We want to keep the RIN prices low and stable, and to quit having the wild fluctuations in the market," Wheeler said.

The rule will need 30 days of public comment and at least a week to be then published in the Federal Register to become effective. EPA plans a 29 March public hearing but has not yet set a location.

President Donald Trump last fall directed the EPA to issue a rule allowing the year-round sale of E15 and changing how the market trading credits needed to comply with annual federal fuel blending mandates. Ethanol groups and supporting legislators have lobbied hard to expand the sale of the blend, which in certain markets fails to meet summer fuel standards. Wheeler, pressed on the rulemaking ahead of his confirmation last month, had warned that the December and January government shutdown had made meeting a summer driving season deadline more difficult.