With EPA officials now evaluating what are likely to be tens of thousands of comments on the agency’s proposal to reduce biofuel blending requirements under the Renewable Fuel Standard (RFS) this year, the only known outcome is that any decision the agency makes will be taken to court.
The public comment closed yesterday and the agency has reportedly received some 15,000 comments (though EPA declined to disclose how many comments were received, or how they break down among those favoring the proposal, opposing the proposal or requesting something in between). The biofuels industry pushed its constituencies hard to register their displeasure with the EPA plan.
Analysts say any deviation from the 2.95-billion-gallon decrease called for in the EPA proposal released back in November would be a surprise as big as the shock sustained by the biofuels industry plan was announced.
“EPA had been pretty strong in its defense of the RFS since it was expanded by [the Energy Independence and Security Act of 2007, or EISA],” said a consultant who works closely with the industry. “They’ve fended off (RFS) waiver requests from some pretty powerful interests. And they have been pretty vigorous in defending the RFS in court. So, when EPA called for such big reductions in the blending mandates this year, it caught the [biofuels industry] by surprise. And unfortunately for the sector, historically speaking, EPA has virtually never backed off something that it puts out for a final rule.”
If, in fact, EPA insists on implementing its proposal, the Renewable Fuels Association (RFA) has long made clear that it will take the agency to court. It would not be a surprising move, given the economic repercussions of an agency proposal that would lower the requirement for corn-based ethanol from the 14.4-billion-gallon level set by EISA down to 13.01 billion gallons, a total even less than the 13.8 billion gallons of ethanol blended in 2013.
The RFA legal action would be based on EPA’s proposed reduction in the total RFS requirement – 2.95 billion gallons compared to the reduction in cellulosic ethanol called for by the agency. EPA’s proposal would drop the cellulosic biofuel requirement from the 1.75 billion gallons called for by EISA down to a mere 17 million gallons, a drop of a bit less than 1.5 billion gallons. The RFA say provisions in the Clean Air Act that give EPA the authority to make adjustments to RFS prevent the industry from dropping the total blending level by an amount greater than the reduction it makes in the cellulosic fuel requirement, which is subject to the “the projected volume available during that calendar year.”
EPA’s proposed cut of 2.95 billion gallons in the total RFS 2014 mandate, the RFA says, violates Clean Air Act language that would prohibit cutting the total mandate by an amount greater than the drop in cellulosic biofuels proposed for this year.
The RFA also says EPA’s proposal is specifically designed to address the so-called “blend wall,” the point where the oil industry says the decline in demand for gasoline has reduced the supply in which ethanol can be economically blended. The ethanol trade group dismisses the blend wall argument, contending that the oil industry has failed to install the pumps and build the infrastructure to accommodate blends higher than the 10 percent level (E10) currently dominating the fuel market, like E15 or E85. And the RFA says the blend wall does not meet Clean Air Act criteria under which the RFS mandates could be reduced, including the potential for severe economic or environmental harm, or an insufficient supply of renewable fuel.
The oil industry, through trade groups like the American Petroleum Institute and the American Fuel and Petrochemical Manufacturers, are also expected to challenge the EPA 2014 proposal in federal court, arguing the reductions are insufficient to address the economic repercussions of the blend wall the industry says is driving up fuel costs.
But Bob Dinneen, RFA president and CEO, says that “by rewriting the statute and redefining the conditions upon which a waiver from the RFS can be granted, EPA is proposing to place the nation’s renewable energy policy in the hands of the oil companies.”
Dinneen says that a reduction in the RFS “would be the death of innovation and evolution in our motor fuel markets, thus increasing consumer costs at the pump and the environmental cost of energy production.”
Biofuel supporters in Congress weighed in with letters to EPA Administrator Gina McCarthy supporting the RFA position and calling on the agency to “modify” its RFS proposal.
While the RFS provides EPA with “significant authority” to adjust biofuel levels, “for the first time, (EPA) adjusts the 2014 overall volumes based on criteria not clearly identified in the law below anticipated production levels of biofuels and even below previous years’ RFS levels,” said letters from 31 senators and 31 House members.
The lawmakers called on EPA to revise the proposal “in a manner that promotes investments in the next generation of biofuels and the infrastructure necessary to deploy those fuels into the market.”
The week leading up to yesterday’s public comment deadline brought with it a flurry of public support for the RFS as set out by EISA, and opposition to the EPA proposals from dozens of farm, renewable energy and rural advocacy groups.
“This [proposal] strikes a blow to conventional ethanol production and dampens the prospects for the further development of advanced biofuels,” said Dale Moore, executive director of public policy for the American Farm Bureau Federation, the nation’s largest farm group. “EPA’s proposal will severely move away from achieving the goals that were set by Congress to create a more robust renewable fuels industry as well as a pathway to achieving energy independence from unstable regions of the world.”
Moore said renewable fuels “have been a tremendous success story for the nation as a whole, as well as to the rural economy” by increasing farm incomes and providing "good paying jobs within rural America.”
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