EPA Abandons RFS Rulemaking for 2014

November 21, 2014

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by Jim Lane (Biofuels Digest) In Washington, the U.S. EPA announced it is delaying finalization of the long-awaited 2014 Renewable Fuel Standard Renewable Volume Obligations until 2015.
The proposed 2014 rule ran into a steamroller of opposition from renewable fuel groups, who said the proposed rule substantially cutting biofuels targets “pulled the rug” from underneath billions of dollars investment made in reliance upon targets. READ MORE and MORE (Environmental and Energy Study Institute) and MORE (Environmental Working Group) and MORE (The New York Times) and MORE (The Wall Street Journal) and MORE (Senator Charles Grassley (R-IA) and MORE (Iowa Biodiesel Board/EIN) and MORE (DTN The Progressive Farmer) and MORE (Biotechnology Industry Organization) and MORE (Biofuels Digest/Biotechnology Industry Organization) and MORE (Bloomberg Business Week) and MORE (DomesticFuel.com includes audio interview) and MORE (Renewable Fuels Association) and MORE (Ethanol Producer Magazine)

EPA's statement: The EPA Acting Assistant Administrator for the Office of Air and Radiation, Janet McCabe, signed the following document on 11/21/2014, and EPA is submitting it for publication in the Federal Register (FR). While we have taken steps to ensure the accuracy of this Internet version of the document, it is not the official version. Please refer to the official version in a forthcoming FR publication, which will appear on the Government Printing Office's FDSys website (www.gpo.gov/fdsys/search/home.action) and on Regulations.gov (www.regulations.gov) in Docket No. EPA-HQ-OAR-2013-0479. Once the official version of this document is published in the FR, this version will be removed from the Internet and replaced with a link to the official version.
ENVIRONMENTAL PROTECTION AGENCY
40 CFR Part 80
Notice of Delay in Issuing 2014 Standards for the Renewable Fuel Standard Program
AGENCY: Environmental Protection Agency (EPA).
ACTION: Notice.
SUMMARY: Today EPA is announcing that it will not be finalizing 2014 applicable percentage standards under the Renewable Fuel Standard (RFS) program before the end of 2014. In light of this delay in issuing the 2014 RFS standards, the compliance demonstration deadline for the 2013 RFS standards will take place in 2015. EPA will be making modifications to the EPAModerated Transaction System (EMTS) to ensure that Renewable Identification Numbers (RINs) generated in 2012 are valid for demonstrating compliance with the 2013 applicable standards.
FOR FURTHER INFORMATION CONTACT: Julia MacAllister, Office of Transportation and Air Quality, Assessment and Standards Division, Environmental Protection Agency, 2000 Traverwood Drive, Ann Arbor, MI 48105; Telephone number: (734) 214–4131; Fax number: (734) 214–4816; Email address: macallister.julia@epa.gov.
This document is a prepublication version, signed by EPA Acting Assistant Administrator for the Office of Air and Radiation, Janet McCabe, on 11/21/2014. We have taken steps to ensure the accuracy of this version, but it is not the official version.
SUPPLEMENTARY INFORMATION: On November 29, 2013, EPA published a notice of proposed rulemaking to establish the 2014 RFS standards.1
The proposal has generated significant comment and controversy, particularly about how volumes should be set in light of lower gasoline consumption than had been forecast at the time that the Energy Independence and Security Act was enacted, and whether and on what basis the statutory volumes should be waived. Most notably, commenters expressed concerns regarding the proposal’s ability to ensure continued progress towards achieving the volumes of renewable fuel targeted by the statute.
EPA has been evaluating these issues in light of the purposes of the statute and the Administration’s commitment to the goals of the statute to increase the use of renewable fuels, particularly cellulosic biofuels, which will reduce the greenhouse gases emitted from the consumption of transportation fuels and diversify the nation’s fuel supply.
Finalization of the 2014 standards rule has been significantly delayed. Due to this delay, and given ongoing consideration of the issues presented by the commenters, EPA is not in a position to finalize the 2014 RFS standards rule before the end of the year. Accordingly, we intend to take action on the 2014 standards rule in 2015 prior to or in conjunction with action on the 2015 standards rule.2
EPA intends to modify EMTS to permit the trading and retiring of 2012 vintage RINs beyond December 31, 2014. EPA will incorporate the modifications into EMTS version 4.1, which is scheduled to be deployed by April 1, 2015. From January 1, 2015 until the release of version 4.1, EMTS will not be able to support 2012 RIN transactions. Please note that 2012 RIN holding data stored in EMTS is safe and will be preserved even though it will not be accessible during
the period from January 1, 2015 until the release of version 4.1.
Janet G. McCabe Acting Assistant Administrator for Air and Radiation
178 FR 71732, November 29, 2013
2 EPA intends to adjust the schedule for compliance reporting for the 2014 RFS standards in 40 CFR 80.1451(a)(1) to reflect the delay in issuing the final 2014 RFS standards rule. No compliance reporting is necessary absent a final 2014 standards rule.
This document is a prepublication version, signed by EPA Acting Assistant Administrator for the
Office of Air and Radiation, Janet McCabe, on 11/21/2014. We have taken steps to ensure the accuracy of this version, but it is not the official version.
READ MORE

excerpt from Environmental and Energy Study Institute: ... The good news is today’s announcement to scratch the 2014 proposal signals the Administration’s recognition that the proposed reduction was seriously misguided. The fuel volumes in the proposal were not set based on actual production capacity, but instead, on refineries and the oil industries’ concerns surrounding the E10 ‘blend wall.’ According to EPA, last year’s proposed reduction was warranted due to an unanticipated decrease in gasoline consumption, as well as limitations in the distribution of higher ethanol blends such as E85 (85 percent ethanol, 15 percent gasoline). Yet, as obligated parties, refiners and the oil industry are supposed to bring these fuels to market, even if they make up more than 10 percent of the gasoline supply. Additionally, the tools to utilize higher blends, such as blender pumps for gasoline stations and FlexFuel Vehicles (capable of running on blends up to E85) are readily available compliance strategies. EPA and DOE have also certified the use of E15 in make and model year vehicles 2001 and newer, which represents at least 80 percent of the passenger vehicles on the road today. Therefore, far greater volumes of biofuels could be utilized in the market.
In previous years, the EPA has retroactively lowered the amount of cellulosic fuels in the mix, to line up with real world production levels. However, the 2014 proposal sought to cut not only the cellulosic fuels category, but also cut other categories that are already meeting – and exceeding RFS benchmarks, such as biodiesel. The lowering of biodiesel volumes is particularly curious – since biodiesel does not play a role in the gasoline ‘blend wall,’ and it has been shown that truck drivers and companies are eager for this cheaper, cleaner burning fuel.
...
Without renewable fuels, we simply return to the status quo -- dirty, toxic and expensive petroleum. Vehicles emit at least a third of all carbon monoxide and nitrogen dioxide, smog and haze forming compounds; the World Health Organization (WHO) estimates that air pollution is responsible for 7 million premature deaths worldwide. Tailpipe emissions from gasoline vehicles spew toxic substances such as polycyclic aromatic hydrocarbons (PAHs), which have been linked to an increase in developmental disorders, including autism and attention-deficit hyperactivity disorder. Going forward, biofuels remain critical to greening the transportation sector. READ MORE

excerpt from The Wall Street Journal: ... The future of the biofuels mandate may be driven more by lawsuits, including an announcement Friday by Mr. Drevna’s (Charlie Drevna, president of the American Fuel & Petrochemical Manufacturers, a trade association representing the nation’s refining industry) group on his intent to sue the EPA for not issuing the 2014 standard.
Though ethanol makers this year have profited thanks to a plentiful supply of cheap corn, a move by the EPA to ease the ethanol mandate could raise longer-term challenges for blenders of the fuel, said Joseph Agnese, analyst for S&P Capital IQ. For ethanol producers, he said, a lower “floor” from the EPA would mean greater uncertainty when overall demand slackens. READ MORE

excerpt from Biofuels Digest/Biotechnology Industry Organization: EPA should formally withdraw the proposed rule and issue a final rule as soon as possible, fully correcting their misinterpretation of waiver authority and methodology for setting the annual renewable fuel volumes. Setting renewable volume obligations according to the biofuel industry’s ability to produce is not only what Congress intended, but also the only way to encourage companies to make new investments in the growth of advanced and cellulosic biofuels in the United States.
The RFS was designed to increase advanced biofuel production and use – not to preserve the status quo of oil’s domination of the transportation fuel supply. If the volumes are based on gasoline consumption rather than biofuel production, it will fundamentally undermine the RFS’s policy support for advanced biofuel commercialization and put the program on a flat trajectory that only benefits oil refiners. READ MORE