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EPA's final RFS actions offer mixed bag

TAGS: Policy
Justin Sullivan/Getty Images Trump’s Proposed Budget Cuts EPA Funding
Rulemaking looks at E15 revisions, air quality impacts and seeks comments on RFS waiver petitions.

The Environmental Protection Agency announced Jan. 15 it was proposing a rule for public comment that covered unresolved biofuels issues ranging from requests for Renewable Fuel Standard waivers, to delaying RFS compliance deadlines, to possible changes to labeling and infrastructure requirements for E15 retailers.

In a week where many in the biofuels industry feared the worst with rumors of EPA granting additional small refinery exemptions, Friday’s announcement had many still holding their breath hoping no additional harm comes to ethanol demand.

Related: Rumors of last-minute RFS waivers concerning

“While the wording in today’s announcement appears to rule out the granting of further illegal RFS exemptions as had been rumored this week, we will remain vigilant until the clock strikes noon on January 20. Ultimately this multifaceted rule will be adjudicated by the Biden EPA and we are ready to work with them to improve and finalize the portions of this rule that follow the law, make common sense and increase access to biofuels,” says Monte Shaw, executive director at the Iowa Renewable Fuels Association.

Growth Energy CEO Emily Skor explains, “Despite this potential progress on E15, important work remains to defeat the offensive attempt by refiners to avoid their biofuel blending obligations through general waivers. Given President-elect Biden’s commitments on the campaign trail, we‘re confident his incoming team will uphold the integrity of the RFS and reject these oil-backed waiver requests before rural recovery is derailed. We’ve seen the courts reject this kind of abuse before and urge the incoming administration to ensure refiners meet their blending obligations.” 

Waiver requests

First, in next Tuesday’s Federal Register, EPA will announce it is seeking public comments on requests from refiners and oil state governors to provide a general waiver from 2019 and 2020 RFS renewable volume obligations due to COVID-19.

“The parties requesting these waivers admit that the problems facing refiners today are driven by COVID-19 and a volatile crude oil market, not the RFS. These same factors are impacting the ethanol industry as well, and to an even greater extent: at the height of the COVID-19 lockdowns, nearly half of the nation’s ethanol production capacity was idled as a result of falling gasoline demand,” says Renewable Fuels Association President and CEO Geoff Cooper.

“The governors and refiners asking for a waiver also apparently have forgotten about the record supply of banked compliance credits (RINs) available to refiners,” Cooper adds. “COVID-19 is exactly the sort of market disruption that EPA had in mind when it developed the RIN credit trading market mechanism.”

American Coalition for Ethanol CEO Brian Jennings adds that the RFS statute is clear. “To secure a general waiver of the RFS, a petitioner must provide evidence to EPA that implementation of the RFS itself is the cause of severe economic harm, not outside factors such as COVID-19. In fact, the waiver requests from refiners and oil-state governors complain about the economic fallout of the coronavirus pandemic but fail to admit the fact that ethanol producers also experienced a collapse in demand due to COVID-19.

“By choosing to seek comment on the RFS waivers instead of denying them outright, EPA is creating uncertainty about RFS blend levels and downward pressure on RIN prices, which in turn, will reduce incentives to blend E15 and E85 and increase gas prices for consumers,” Jennings adds.

E15 proposal praised

Next Tuesday’s Federal Register will also include a proposal from EPA for removing certain barriers to expanded sales of E15, a gasoline blend containing 15% ethanol which could provide some good could come from Friday’s proposals to improve or, preferably, eliminate altogether, the mandatory federal E15 label, explains Shaw.

“I’ve long been calling for EPA to take action to expand access to higher blends of biofuel, like E15, and to provide more choice at the pump. This proposed rule would help remove barriers to increase sales of E15 by addressing issues with the label at the pump and underground storage tanks. On behalf of Iowa’s biofuel community, I’m glad to see EPA take this step; and, as the saying goes, ‘better late than never,’” says Sen. Joni Ernst, R-Iowa, who has advocated for the E15 changes.

“Perhaps even more importantly is the small step included that recognizes that much of the existing fueling infrastructure is compatible with E15 blends, even if current regulations don’t recognize it as such. Eliminating this unnecessary barrier to market access for E15 would be a true game changer, but today’s rule does not go far enough,” Shaw adds.

Related: Supreme Court will review case on small refinery exemptions

Cooper adds RFA has long supported reforms and changes to the E15 pump label, which has deterred American drivers from using the lower-carbon, lower-cost, more-efficient E15 blend. “We continue to analyze the E15 proposal and are working with the retail sector to understand how these proposed changes may affect the marketplace,” he says.

Skor notes: “With 95% of vehicles approved for E15 and over 18 billion miles driven on the fuel, the best outcome for this rulemaking is to remove the label entirely. As the rulemaking process advances, we look forward to working with the incoming Biden Administration to ensure that the final rule addresses any remaining retail and infrastructure barriers that currently hold back cleaner, more affordable options at the fuel pump.”

Compliance deadlines

Also in a Jan. 15 Federal Register publication, EPA proposed to extend compliance deadlines for 2019 and 2020 renewable volume obligations.

RFA’s Cooper responds: “EPA’s proposal to extend compliance deadlines is based on the premise that the Agency should await direction from the Supreme Court with regard to small refinery exemptions before deciding what to do with the pending 2019 and 2020 annual standards. While we don’t agree that EPA needs to wait as long as it is proposing, particularly for the 2020 compliance year, we do agree with EPA that the outgoing administration should refrain from any further action on the pending small refinery petitions.

“To that end, we see EPA’s statement in this proposal that it is not taking a position on 2019 SREs as a good sign, and we’re hopeful it means EPA will not attempt to unlawfully grant midnight-hour SREs in the last five days of the Trump administration,” he adds.

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