Biofuel trade groups comment on EPA’s proposed consent decree

By Erin Voegele | May 21, 2015

The Biotechnology Industry Organization and Renewable Fuels Association are among the organizations that have submitted comments to the U.S. EPA with regard to its recently announced proposed legal agreement that sets specific deadlines for establishing 2014, 2015 and 2016 volume requirements under the renewable fuel standard (RFS).

On April 10, the EPA announced that the renewable volume requirements (RVOs) for the 2014, 2015 and 2016 RFS, along with the 2017 volume requirement for biomass-based diesel, will be finalized by Nov. 30. A portion of the new compliance schedule is the result of a proposed consent decree in litigation brought against EPA by the American Petrochemical Institute and American Fuel and Petrochemical Manufacturers. 

Under the proposed consent decree, the EPA said that it will propose 2015 RFS volume requirements by June 1 and finalize volume requirements for 2014 and 2015 by Nov. 30. Also under the decree, the EPA will resolve a pending waiver petition for 2014

Outside the scope of the decree, the EPA has committed to propose RFS volume requirements for 2016 by June 1 and finalize them by Nov. 30. The agency also said it will finalize the RFS biomass-based diesel volume requirements for 2017 on the same schedule. Regarding the 2014 standard, the EPA said it will re-propose 2014 volume requirements by June 1 that reflect the volumes of renewable fuel that were actually used in 2014.

The consent decree relates to a lawsuit filed against the EPA by the API and AFPM on March 18 in the U.S. District Court for the District of Columbia. In the compliant, the oil groups allege the EPA has violated a nondiscretionary duty under the Clean Air Act to establish renewable fuels obligations for 2014 and 2015 and to approve or disapprove a petition filed by the API and AFPM to waive, in part, the 2014 RFS. That waiver petition was submitted to the EPA in August 2013.

In April, the EPA indicated the consent decree would not be finalized until members of the public were given the opportunity to provide written comments. Following the public comment period, if none of the comments disclose facts or considerations which indicate that the decree is inappropriate, improper, inadequate, or inconsistent with the CCA requirements, the EPA administrator will request that the court enter the decree.

In its comments, BIO said it is supportive of the EPA’s commitments made in the proposed consent decree. “EPA should withdraw its proposed 2014 RFS rule and reissue it by June 1, 2015, to include advanced and total renewable biofuel volumes that are consistent with the RFS statute,” said Brent Erickson, executive vice president of BIO’s Industrial and Environmental Section.

“Just as the cellulosic and advanced biofuel producers began to successfully commercialize new technologies, EPA rulemaking delays generated instability in the RFS program and intolerable investment uncertainty. The policy instability is responsible for chilling as much as $13.7 billion in investments that the advanced biofuel industry needed to build capacity to meet the RFS goals,” Erickson added.

BIO recently released an analysis showing that instability in EPA’s administration of the RFS is responsible for chilling as much as $13.7 billion in investments that the advanced biofuel industry needed to build capacity to meet the RFS goals. The chill in investment has had the heaviest impact on cellulosic biofuel developers. The delays in rulemaking have also undercut the industry’s ability to create new employment opportunities, resulting in the loss of more than 80,000 direct jobs. 

In its comments, the RFA encouraged the EPA to abandon the unlawful “blend wall” methodology it used for the original 2014 RFS proposal. “The methodology previously used by EPA for the suspended 2014 RVO proposal ultimately rewards the intransigence of oil refiners to invest in renewable fuels infrastructure, protects their market share, and thus blocks increased volumes of cleaner and more sustainable renewable fuels from entering the marketplace. Adopting the same methodology for RVOs in 2015 and beyond would continue to reward oil companies for their stubborn refusal to follow the spirit and intent of the RFS as adopted by Congress,” said the RFA in its comments.

The RFA’s letter contains a detailed legal analysis of EPA’s waiver authorities and underscores that the Agency does not have the ability to adjust statutory RFS requirements on the basis of the so-called “ethanol blend wall” or issues associated with renewable fuel consumption. The statute clearly allows EPA to issue a general waiver only in cases where the supply of renewable fuel and RIN credits is inadequate to meet the statutory requirements. Additionally, attached to the RFA comment letter is a new statistical analysis by Informa Economics demonstrating that retail gas prices continue to be unaffected by prices for RIN credits.