OREANDA-NEWS. November 11, 2016. Changes to federal biofuel mandates sought by US independent refiners could consolidate control of the fuel industry or complicate the program into futility, the US Environmental Protection Agency (EPA) said today.

The agency proposed denying refiners' request that EPA shift the burden of complying with the Renewable Fuel Standard (RFS) closer to the companies that blend biofuels into the US transportation fuel supply.

But EPA would seek public comment into the next presidential administration before making a final decision, a move immediately cheered by refiners seeking the change.

"The fact that they opened up a comment period is astounding," said Jack Lipinski, chief executive of US independent refiner CVR Energy. "It means their body language is different than their words — if they absolutely thought there was nothing to be done here, then when would they open up the comment period?"

US biofuel mandates require that refiners, importers and other companies adding to the US transportation fuel supply ensure that rising volumes of biofuels blend into the domestic pool. EPA in May proposed such companies next year add renewable fuels equal to 10.44pc of their conventional production. Final volumes were expected later this month.

Obligated companies collect renewable identification numbers (RINs) to prove compliance with the law. Companies can either generate their own RINs by blending biofuels and conventional fuels or purchase the credits from other parties.

Merchant refiners, which largely lack sufficient infrastructure to blend their full production, have argued that the program encourages blenders to profit from RINs rather than invest to expand consumer access to higher volumes of biofuel. Valero, PBF Energy and other US independent refiners have pushed EPA in petitions, in Congress and in court to shift the point of obligation closer to blenders.

But refiners had not proven that case, EPA said in its 50-page proposed denial. The agency found little data supporting the idea that changing obligated parties would spur more biofuel blending.

EPA instead determined no relationship between a company's obligation under the mandates and the likelihood it would increase blending. A move could instead spur an increase in inexperienced, out-of-compliance companies in the marketplace. Or the change could drive out competition and consolidate blending into the hands of obligated refiners, the agency warned.

"We believe the parties requesting this change significantly underestimate the scope and impacts of the changes that would result from the number and nature of additional parties that would become obligated parties if the point of obligation ," the agency said in its proposed denial.

Opponents of the proposal quickly cited EPA's wariness of the change. Renewable Fuel Association chief executive Bob Dinneen supported EPA's proposed denial as well as the decision to open the matter to public comment.

"We are grateful that EPA wholeheartedly agrees with us," National Association of Truck Stop Operators chief executive Lisa Mullings said.

Valero considered the decision to open discussion on the proposal a good step.

"We look forward to working closely with EPA on RINs issues even as the agency transitions to new leadership," the company said today. "When all of the information is in the docket, we believe EPA will have no choice but to move the point of obligation."

EPA objections to the proposal were "dead wrong" and ignored the risk that markets could lose fuel supply if refiners shut production to manage compliance costs, Lipinski said.

The agency said overproduction of fuel and poor refining margins were a greater economic burden than the mandates.

A 60-day public comment period would begin when EPA publishes the proposal in the Federal Register. Such timing would likely mean the period would continue into the administration of president-elect Donald Trump, who took actions encouraging both sides of the issue on the campaign trail.

The American Petroleum Institute and refiners including Marathon Petroleum have preferred a complete elmination of the mandates, though not ethanol as a blendstock.

CVR, which through an associated business produces fertilzer and supplies fuel to agribusinesses, does not favor repeal of the program under the new administration, Lipinski said.

But a Trump administration could mean more business savvy regulators, Lipinski said.