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API Launches Campaign to Repeal or Reform Renewable Fuel Standard

The American Petroleum Institute (API) has launched a campaign encouraging Congress to repeal or reform the Renewable Fuel Standard (RFS), on the grounds that the program is outdated and that its higher ethanol mandates will hurt American consumers.

During a press conference Tuesday, API Downstream Group Director Frank Macchiarola said the campaign was focused on at least 11 states, with the organization purchasing ad time on television and creating advertising online and on social media.

"We've seen a good deal of progress on the issue," Macchiarola said. "It's becoming quite apparent to policymakers on Capitol Hill that this is a broken policy that needs to change. The time between the passage of the RFS and today has only shown that the policy doesn't work."

Congress enacted the RFS program through two pieces of legislation. Under the Energy Policy Act of 2005, the Environmental Protection Agency (EPA) was tasked with promulgating regulations that ensure all gasoline sold in the U.S. contained a minimum level of renewable fuel. The program was expanded with the passage of the Energy Independence and Security Act of 2007.

Most gasoline currently sold in the U.S. contains 10% ethanol by volume. But Macchiarola said American consumers would be harmed if EPA requires higher amounts of ethanol in gasoline, in part because automakers have warned that gasoline with higher blends of ethanol could damage fuel engines and void car warranties. The RFS program was also enacted before a surge in domestic oil production, made possible by the shale revolution.

"These new ads will help further inform voters about the potential dangers of the broken ethanol mandate, and increase calls on Congress to fix the RFS," Macchiarola said.

Macchiarola declined to disclose how much API was spending on the campaign. He also initially hesitated to say where the organization was doing ad buys, but then conceded it was in "a wide swath" of states, including Florida, Illinois, Kentucky, Maryland, Michigan, Nevada, New Jersey, North Carolina, Ohio, Pennsylvania and Virginia.

Differs with AFPM

Although the American Fuel & Petrochemical Manufacturers (AFPM) filed apetition for rulemaking last week with the EPA, urging the agency to move the point of compliance obligations from refiners to third party rack sellers, Macchiarola said the API disagreed with AFPM's strategy and opposes the move, saying it "creates additional complexity in an already complex program."

"We feel very strongly that the right approach to the RFS is repeal or significant reform to the program," Macchiarola said. "For a number of reasons, we think that moving the point of obligation falls short of a significant reform. It doesn't alleviate any of the infrastructure constraints that would remain throughout the distribution. It won't increase the number of vehicles that are able to use higher ethanol content fuels. It won't change consumer behavior. We're also concerned that it will shift the compliance responsibility to a much broader number of entities than current.

"It's a broken program, but moving the point of obligation does nothing to fix it."

Congress has a bill, but time is running out

Macchiarola said API's "preferred legislation" is abillthat was introduced by Rep. Bill Flores (R-TX) last May. HR 5180, also known as the Food and Fuel Consumer Protection Act of 2016, would limit the amount of ethanol blended into gasoline at 9.7%. The bill, which has 103 co-sponsors, including 10 Democrats, was referred to the House Subcommittee on Energy and Power.

"We like that bill for a couple of reasons," Macchiarola said. "It sets a hard blend wall cap at 9.7% [and] requires the EPA to provide greater certainty to the marketplace by finalizing the regulations on time, or reverting back to the prior year's volumes. That provides a much better level of certainty to our members. We're optimistic that we're going to continue to get co-sponsors and continue to build momentum on the bill, and we're hopeful that Congress acts on it."

But Macchiarola conceded that time was running out for the current Congress to pass the bill. "We're going to push as hard as we can toward the end of this Congress," he said. "We want to pick up momentum, so that if it doesn't get done in this legislative calendar we can pick up immediately in the next Congress and the new administration with this same momentum and the same group of bipartisan members that want to push."

Macchiarola also said the campaign is not targeting incumbent lawmakers who may be opposed to reforming the RFS.

"The goal of this is to further inform the consumer about the RFS," Macchiarola said. "Clearly, the American people, to the extent that they're aware of the RFS, don't like it. We're going to continue to deliver the message why they shouldn't like it and why we need to fix it.

"Ultimately, it's going to be those consumers that weigh in with their representatives [in Congress] that continue to push momentum on this issue."

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