Economist dissects arguments on RFS, EPA’s final rule

By Susanne Retka Schill | January 19, 2016

The U.S. EPA’s definition of the term “supply” raises significant questions. University of Illinois economist Jonathan Coppess examined the issues surrounding the discussion in a recent FarmDoc Daily post, “Questioning the Final RFS Rule, Part 2: the Meaning of the Word Supply.”

Coppess outlines the EPA’s argument that Congress’ use of ambiguous terms provides some degree of reasonable delegation to the agency. He summarizes EPA’s argument regarding its waiver authority for when “there is an inadequate domestic supply.” He provides links to the legislative history regarding the Senate and House versions, where the House included “domestic supply or distribution capacity,” while the Senate struck the term “or distribution capacity.” The conference committee accepted the Senate’s version. “The ethanol industry has argued that Congress intentionally removed the phrase so it would not be a consideration,” Coppess writes. He adds that the provisions of the RFS “are conspicuous for the absence of both the ultimate consumer and distribution capacity, which may weigh against EPA’s interpretation.”

In Part 1 of Coppess’ discussion, he reviewed the establishment of the RFS, Congressional intent and legal precedent on interpreting that intent. In his post, he outlines the discussion around EPA’s use of the waiver authority and whether the agency has properly interpreted its authority.

The economist’s discussion of the issues comes in the wake of the ethanol industry and its supporters filing a petition with the U.S. court of appeals to review the U.S. EPA’s final rule setting for the 2014, 2015 and 2016 renewable volume obligations under the RFS.