RFA: EPA Moving in Right Direction on RFS, but Must Reconsider Retroactive Cut to 2020 RVO

January 04, 2022

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(Renewable Fuels Association) In a virtual hearing on the U.S. Environmental Protection Agency’s proposed renewable volume obligations for 2020 through 2022, Renewable Fuels Association President and CEO Geoff Cooper noted that EPA’s proposal marks “an important and long-awaited step toward restoring order, integrity and stability to the Renewable Fuel Standard program.” However, Cooper noted in his testimony, there is plenty of room to improve the proposal before it is finalized.

“RFA supports the proposed volumes for 2022 for all categories of renewable fuel, and we specifically commend EPA for proposing to set the implied requirement for conventional renewable fuels at the statutory level of 15 billion gallons,” Cooper said. “We also support EPA’s proposal to account for projected exempt volumes from small refineries when setting RVO percentages. And, RFA agrees with EPA that, ‘in the interest of transparency,’ the Agency should release basic information about entities seeking exemptions from RFS compliance.” Cooper also voiced RFA’s strong support for EPA’s related proposal to deny 65 pending small refinery exemption petitions.

Unfortunately, however, EPA’s proposed RVO for 2021 misses the mark and the proposed retroactive revision of the 2020 RVO would set a “dangerous precedent,” Cooper said.

“As for the 2021 RVO and the proposed revision to the 2020 RVO, we have serious concerns about EPA’s questionable use of its ‘reset’ authority,” Cooper said. “While we understand EPA has a statutory obligation to consider resetting future RFS volumes when certain thresholds are met, it does not appear that Congress intended for EPA to use its reset authority for the purpose of retroactively addressing unforeseen market anomalies like COVID or weather-related disasters.”

Even if EPA's use of its reset authority to lower 2020 and 2021 volumes was justified, the agency grossly underestimated actual conventional ethanol consumption in 2021, Cooper said. The Energy Information Administration’s latest data suggest 13.73 billion gallons of conventional ethanol were consumed domestically in 2021, more than 400 million gallons higher than assumed by EPA.

When it comes to the impact of COVID on 2020 RFS compliance, the RVO already includes a self-correcting mechanism that caused actual renewable fuel volume requirements to adjust lower with reduced gasoline and diesel consumption. In addition, EPA has long been on the record opposing retroactive reductions in volumes. EPA has repeatedly stated that “Congress…did not provide a means for correcting the percentage standards after November to ensure that the applicable volumes of renewable fuel are exactly met in a given compliance year.” The agency has also previously taken the position that “…periodically and retroactively altering the standards would…inappropriately render the standards a moving target.”

Also testifying at today’s hearing are RFA Board Secretary Rick Schwarck of Absolute Energy and board members Jeff Oestmann of Granite Falls Energy, David Sovereign of Golden Grain Energy and Derek Peine of Western Plan Energy, as well as Lindsay Fitzgerald of member company Gevo. READ MORE

Biofuels industry testifies on proposed RFS reset (Farm Progress)

NBB Voices Biodiesel Comments on EPA Proposals (Energy.AgWired.com; includes AUDIO)

Ethanol Industry Testifies on EPA RFS Proposals (Energy.AgWired.com; includes AUDIO)

Biofuel groups testify in support of a strong RFS (Ethanol Producer Magazine)

BOTH SIDES OF RFS ISSUE TESTIFY BEFORE EPA HEARING TUESDAY (Brownfield Ag News)

Refiners, Biofuels Groups Spar At Hearing Over RFS Blending Proposals (Inside EPA)

Biofuels to EPA: Pull '20 RFS Proposal -- Biofuels, Ag Interests Press EPA Not to Reset 2020 RFS Volumes (DTN Progressive Farmer)

Biofuel, oil interests wave warning flags at RFS public hearing (Agri-Pulse)

BIOFUEL BACKLASH: EPA drew some pointed criticism from industry groups on all sides of the biofuels debate (Politico's Morning Energy)

Biodiesel Board Testifies on Proposed RFS Reset for 2020, 2021, and 2022 (GrainNet)

Ethanol Coalition's Testimony Encourages EPA to Revise RFS Proposal to Support the Statute and Decarbonization Goals (GrainNet)

NBB Testifies on Proposed RFS Reset for 2020, 2021 and 2022 (National Biodiesel Board)

Corn and biofuel groups testify to EPA on RFS (KIWA Radio)

Renewable Fuels Association reacts to the EPA's newest rules (RFD TV; includes VIDEO)

EPA hears two-sided protest to blending mandate changes (Argus Media)

EPA takes comments on RVO proposal (Iowa PBS; includes VIDEO)

Editorial: Biden supports ethanol (Storm Lake Times)

Off-base claim on RFS (Storm Lake Times)

NACS Comments on Annual RFS Obligations: The association supports the proposed RVOs but stresses that biofuels obligations must be set to avoid the blend wall. (NACS)

Excerpt from Farm Progress: “During the previous administration, the small refinery exemption program undercut the goals of the RFS, preventing EPA from ensuring the RVO was met each year,” adds Growth Energy CEO Emily Skor. “We appreciate the agency’s work to end this abuse and return to a true implied conventional volume of 15 billion gallons in 2022, along with promoting strong growth in advanced biofuels. We are also pleased that the agency has finally proposed to restore the first 250 million gallons illegally waived in the 2016 RVO with a commitment on the second 250 million gallons for 2023.

RFS reset causing concern

Skor adds EPA’s proposal has some serious flaws that need to be addressed. “It sets an extremely troubling precedent of revising finalized volumes for 2020 and back-setting volumes for 2021 rather than driving growth in renewable fuels. The proposed retroactive cuts to 2020 exceed EPA’s legal authority, and negatively impact the entire agriculture and fuel supply chains,” Skor says.

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American Coalition for Ethanol CEO Brian Jenning's testimony highlights how refiners “lull EPA into helping them escape their legal responsibility to blend increasing volumes of renewable fuel. When viewed in isolation, certain provisions in the proposal are a positive shift away from EPA’s prior mismanagement of the RFS, but the proposal in totality neglects to emphasize the role grain-based ethanol can play in helping meet the administration’s decarbonization goals.”

“… EPA’s ongoing obsession with maximum compliance flexibility for refiners means excess RINs can be used to meet future obligations instead of the physical blending of E15 and higher blends,” Jennings states in his testimony.

Skor suggests EPA should return integrity to the RFS program and remove hurdles to the use of higher biofuel blends by first leaving 2020 RVOs as finalized in 2019, set the conventional 2021 and 2022 RVOs in line with the statute, and finalize the rulemaking as expeditiously as possible.

Additionally, on Monday, Growth Energy submitted comments to EPA on its Nov. 18, 2021 proposal to extend RVO compliance deadlines for 2019, 2020 and 2021 RVOs. The 2019 RVO compliance deadline for small refineries was set for Nov. 30, 2021, and the 2020 RVO compliance deadline for all obligated parties is currently set for Jan. 31, 2022.

Also testifying at Tuesday’s hearing are RFA Board Secretary Rick Schwarck of Absolute Energy and board members Jeff Oestmann of Granite Falls Energy, David Sovereign of Golden Grain Energy and Derek Peine of Western Plan Energy, as well as Lindsay Fitzgerald of member company Gevo.

Biodiesel interests want RFS back on track
Member company representatives and staff of the National Biodiesel Board also says it seeks to work with EPA to get the RFS program back on track. The industry representatives welcomed proposed growth for 2022, urged EPA to maintain the integrity of the program, and asked the agency to avoid further or future delays in setting annual volumes.

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NBB and its members also emphasized the uncertainty created by EPA’s proposed reset of 2020 volumes and proposed – rather than outright – denial of small refinery exemptions. “Today’s proposal -- while positive for future years’ growth -- continues to undermine the industry and bow to the pressures of the refiners,” states David Cobb, NBB’s director of federal affairs. “The fact that this proposed rule opens another comment period for SREs just adds additional delays in finalizing a rule that is already late.”

NBB further urged EPA to quickly propose 2023 RFS volumes, which were due under the statute on Nov. 30, 2021. READ MORE

Excerpt from Ethanol Producer Magazine: “Some say I should focus on how the proposed rule gets the RFS back on track for 2022,” Shaw (Monte Shaw, executive director of the Iowa Renewable Fuels Association) added. “Really? How would I know? Under the precedent proposed today, this rule, which will be ‘finalized’ in a few months, could be reopened in a year or two by the EPA and the RFS levels could be reduced citing ‘reset’ or ‘set’ or some other authority. If I can have no confidence in the 2020 final rule, why should I put any confidence in the proposed 2022 numbers?”

Shaw urged the EPA to reconsider the proposed changes to the 2020 RVO. “You have the ability to set the RFS on a solid foundation going forward. Restoring the 2016 gallons is a positive step in that direction. But reopening the 2020 rule would rip apart the credibility of the RFS just like the 2016 rule,” he said.

Written comments on the EPA’s proposed rule to set RVOs for 2020, 2021 and 2022 can be filed through Feb. 4. Additional information is available on the Federal Register website. READ MORE

Excerpt from Storm Lake Times: The entire Iowa delegation expressed disappointment in certain parts of the recently proposed RFS rule. Rep. Cindy Axne, a Democrat, stated: “the proposed decision to retroactively lower the 2020 [RFS] target does not reflect a sufficient commitment to renewable fuels and family farmers.” While some Republican elected officials might have used stronger language, the point was the same.

It’s not surprising the Iowa federal delegation stood united in pushing for improvements to the proposed rule. After all, they are just representing their constituents. The Iowa Farm Bureau, Iowa Corn Growers Association, Iowa Soybean Association, Iowa Biodiesel Board, and Iowa Renewable Fuels Association all expressed concerns with portions of the proposed rule – just as they had when the Trump EPA undercut the RFS.

The Biden EPA’s proposal included some good, some bad, and some ugly. It is misleading to use quotes from groups regarding the good portions of the proposed rule to try to undercut Grassley and Ernst’s comments on the bad and ugly portions of the proposed rule.

Here are the facts. Over four years, the Trump EPA destroyed demand for about 4.5 billion gallons of biofuels through the use of unjustified refinery exemptions. The Biden EPA’s proposed rule would destroy demand for about 3.3 billion gallons. Ironically, in view of Cullen’s charges, part of the proposed demand destruction would be achieved by illegally (we believe) reopening and lowering the final 2020 RFS levels put in place by the Trump EPA.

But as this is still just a proposed rule, there is a chance to see it improved. That is why we are thankful that the entire Iowa delegation is stepping up and speaking out. They should be applauded, not mocked.

There is no nice way to say this. Cullen’s editorial was factually incorrect, used cherry-picked half-truths to push a false narrative, and should be retracted. Quite frankly Mr. Cullen, you owe Iowa’s senators an apology. READ MORE