WASHINGTON, May 13, 2015--If the EPA follows its court-ordered deadline, three years’ worth of Renewable Fuel Standard (RFS) volume requirements could be announced June 1, but what lies within that pending announcement is anyone’s guess.
In April, EPA announced that in accordance with a consent decree resulting from a lawsuit filed by the American Petroleum Institute (API) and the American Fuel and Petrochemical Manufacturers (AFPM), the agency will issue proposed RFS volume requirements for 2014 and 2015 by June 1 and a final rule by Nov. 30. EPA has also pledged to voluntarily announce 2016 requirements as well as 2017 biomass-based diesel requirements along the same timeline.
In a press conference on Capitol Hill last week focusing on how RFS delays have hit the biodiesel industry, a cohort of Democratic senators led by North Dakota’s Heidi Heitkamp said the updated timeline is great, but that doesn’t change the fact that the rule is already drastically behind schedule.
“A rule that comes out literally almost three years after it needed to come out is not timely, it’s not appropriate, especially when the statute gives clear guidance on what the responsibilities are,” Heitkamp said, pleading with President Barack Obama to get directly involved in the issue. “If you really are serious about a diverse energy mix, why do what we’re doing to the biodiesel industry?”
Last week, the EPA finalized its proposal and sent it to the White House Office of Management and Budget (OMB) for interagency review. OMB has up to 90 days to complete the review, a timeline that can be extended. Should the OMB use all 90 allotted days, the release of a final rule would be pushed back into early August.
“This is a deadline for once the government better not miss,” Chandler Goule, National Farmers Union senior vice president of programs, told Agri-Pulse.
But what will the agency propose? Will it cater to oil companies, renewable fuel advocates, or split the difference between the two? No one is sure, but proponents and opponents of renewable fuels are doing their best to make their voices heard.
“We’ve certainly reached out to them (EPA) . . . they know what our position is, there’s no confusion about that,” said Bob Dinneen, president and CEO of the Renewable Fuels Association, in an interview with Agri-Pulse. “But I am concerned that they’re not having stakeholder meetings and trying to figure out what’s the best pathway forward, because left to their own devices, they’re going to trip over themselves again.”
Make no mistake, most stakeholders are glad to see a firmer RFS timeline, but they all seem to be reserving their right to get too elated until they see announced figures. Jon Doggett, executive vice president of public policy for the National Corn Growers Association, said skepticism abounds whenever it comes to dealing with EPA.
“We won’t have the numbers until we have the numbers,” Doggett told Agri-Pulse. “I don’t know that people are necessarily going to be believing what EPA says, I think we’re going to have to wait and see what they do.”
Doggett added that NCGA staff and members are “pests at the EPA,” and express their RFS-related goals often, but he hadn’t been given any indication of what to expect in the upcoming announcement. Goule echoed Doggett’s sentiments, saying that an updated timeline is an improvement, but it can only do so much.
“We were sitting here planning with no information, no timeline, no nothing, so at least now we’ve got some timelines that we can hold them to,” Goule said. “I do think the EPA’s going to do everything they can to stay on (the timeline.) Let’s just hope they come out with the right answers.”
On the opposite side, the oil industry hasn’t been shy in pushing for more favorable RVOs, or renewable volume obligations, from its perspective. In a letter to EPA, API and AFPM said both organizations “support the use of ethanol as a gasoline additive in concentrations up to 10 percent” when it is used as a method of adding octane and extending gasoline supplies. However, they contend that a blend wall – a point where the gasoline supply is saturated with the maximum amount of ethanol it can handle – is being experienced at current 10 percent blends, suggesting that E15 or E85 is not viable in the marketplace and that EPA recommendations should reflect that.
The two organizations also suggest maintaining 2013 biomass-based diesel levels for 2014, 2015, and 2016 because of statutory requirements that volume levels be in place 14 months in advance.
Heitkamp said there is a “fundamental inequity” in pushing for new standards but then claiming those same new standards would be too late. She added that such a recommendation would punish the wrong parties for the delays already being experienced.
“(Ethanol and biodiesel producers) were not the ones that created the delay,” Heitkamp said. “They should not suffer the consequences of the failure of EPA to do a timely rule that’s consistent with the statute.”
The uncertainty couldn’t come at a worse time for renewable fuels. According to USDA and Energy Information Administration data compiled by Iowa State University, net returns per gallon of ethanol produced were actually negative in the first quarter of 2015. The downward trend was at its worst in February, when returns dropped to negative 14 cents per gallon. Figures for biodiesel are even worse; net returns in the industry have been negative for 11 of the last 15 months.
A common theme when discussing RFS delays has been confusion over the support that Obama gave to biofuels and the RFS as a U.S. senator. Many, including Obama’s former Senate colleague from Illinois, say it’s time for him to step in and back up that support.
“I’m a big fan of this administration . . . but there’s no excuse for what we’ve been going through,” Sen. Dick Durban, D-Ill., told reporters at a press conference. “It’s time for a decision.”
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