EPA Renewable Fuel Standard Management Scrutinized at Hearing

by Anna Simet (Biomass Magazine) U.S. EPA Acting Assistant Administrator Janet McCabe fielded dozens of hard questions and endured heavy scrutiny during a June 18 hearing held to discuss the agency’s management of the federal renewable fuel standard (RFS).

Chairing the hearing was Sen. James Lankford, R-Oklahoma, chairman of the subcommittee of the Senate's Homeland Security and Governmental Affairs Committee. Lankford began the discussion by pointing to the EPA’s inability to meet deadlines since 2009, calling the program “unworkable in its current form,” with “a lot of controversy around it, a lot of opinions circling, and a lot of emotion around this particular issue.”

..."But we need to take a serious look at why these delays are unavoidable every year now, under current law,” Lankford said, calling the EPA’s decision to work from actual volumes from 2014 to craft the volumes for 2015 and 2016 wise, but emphasized that the likelihood that the cellulosic and advanced fuels volume requirements would have to be reset by EPA starting next year has increased regulatory uncertainty, and questioned McCabe as to how the agency plans to begin preparing for that.

Sen. Lankford also referenced the food-verses-fuel debate by alluding to the highly-contested idea that the RFS has resulted in increased food and gas prices.

North Dakota Sen. Heidi Heitkamp explained the importance of the RFS to home state and others, saying she wished there wasn’t a question of the EPA’s management of RFS, or the agency’s ability to implement it as Congress intended.

She added that the proposal continues to ignore congressional intent, and reduces congressional mandated blended volumes citing reasons for a lack of distribution capacity, which EPA was never authorized to do. “The statue only allows for an inadequate supply waiver for domestic biofuel supply, and not a distribution capacity waiver,” she said. “In fact, in 2005, the House included a waiver provision for distribution capacity, but final bill passed by the House and Senate did not. I hope when EPA puts out final rule this November, it will toss out this flawed reasoning and return to management of program to the way Congress originally intended. If they do this, the program will work just fine, as it did in the first few years of the RFS.”

... Sen. Joni Ernst, D-Iowa, described the EPA’s decision to use lack of infrastructure as an excuse for setting biofuel levels lower than originally mandated as a move that “flies in the face of the law….you cite lack of available refueling structure as justification as not setting RVOs higher. However, when Congress passed RFS in 2005, there were only two type of waiver authorities included—a lack of supply, and severe economic harm. That conference committee rejected available refueling infrastructure, which would have severely limited consumer choice and ability to get more biofuels into the marketplace.”

Sen. Gary Peters, D-Michigan, also referenced EPA’s decision to use blending distribution as a reason to decrease RVO volumes, saying that it is outside of the agency’s waiver authority, and that the conditions of said waiver authorities are “clearly defined.”

“A couple of things happened that made 2014 particularly challenging, which led to significant delays,” she said.

McCabe was vague when explaining what those reasons were, but offered one was as being that the E10 blendwall was broken in 2014, and attributed it as one factor in the lateness of that year’s numbers. While she did not detail the second reason, she said the agency had learned a lot from past rulemaking ....

Heitkamp asked McCabe if EPA considered the disruption its recent rulemaking would have on the RIN market and what it would mean in the long term, and wondered if EPA knows how it will deal with the issue in the future. “Your latest proposal talks about the lack of correlation between RIN prices and gas prices, as well as the need for higher RIN prices to drive investment and infrastructure. However, your proposal had the opposite effect…” READ MORE and MORE (Washington Examiner) and MORE (Reuters) and MORE (Environmental and Energy Study Institute)

Excerpt from Environmental and Energy Study Institute: Senator Ernst (R-IA) remarked, “I find it very ironic that this administration’s public focus has been very much on clean environment and reducing greenhouse emissions, and yet, what you’re proposing is a direction that will increase those carbon emissions by less utilization of these biofuels.”

Senators reminded McCabe of the 17.4 million FlexFuel vehicles on the road today but a disconnect between fueling stations offering higher blends that these vehicles can utilize. During the discussion on infrastructure, the role of the oil industry was notably absent from the discussion. The oil industry’s insistence on sticking to an E10 (10 percent ethanol, 90 percent gasoline) “blend wall,” and its cartel-like hold over the U.S. fuels marketplace was perhaps the elephant in the room.

The Big Five (Shell, BP, Chevron, ExxonMobil, and ConocoPhillips) have repeatedly claimed that they have no control over the offerings at individual retail gas stations, saying they are mostly individually and not refinery-owned. However, a Renewable Fuels Association white paper in 2014 showed that the Big Five refineries hold extremely restrictive fuel contracts containing prohibitions or, at best, disincentives to prevent gas station owners from offering mid-blends to consumers, thus contributing to the E10 “blend wall”. In essence, individual gas station owners are required to sell “only the fuels that the oil companies choose to make available.” READ MORE