EPA highlights expected RFS rulemaking schedule during hearing

By Erin Voegele | December 12, 2014

On Dec. 10, the House Committee on Oversight and Government Reform Subcommittee on Energy Policy, HealthCare and Entitlements held a hearing focused on the U.S. EPA’s implementation of the renewable fuels standard (RFS).

Rep. James Lankford, R-Okla., opened the hearing with a statement criticizing the RFS, claiming we were living in a different world when the RFS was established in 2005 and expanded in 2007. In the years since the RFS became law, he said gasoline demand has dropped and while the U.S. has undergone an energy boom spurred by advanced drilling practices. In his statement, Lankford also spoke about the blend wall, E15 and a lack of E85 demand in his state. He also criticized the EPA for its recent decision not to finalize the 2014 RFS volume obligations until 2015

Janet McCabe, acting assistant administrator for EPA’s Office of Air and Radiation, testified at the hearing. In her written testimony, McCabe stressed that the primary objectives of the RFS are to increase energy security and decrease greenhouse gas (GHG) emissions.

According to McCabe, annual RFS rules for past years have generally reflected statutory targets, with the exception of the cellulosic targets. She also noted that reduced gasoline demand is a trend that has impacted the RFS program in recent years.

Within her testimony, McCabe also outlined the EPA’s rationale in reducing cellulosic, advanced biofuel and renewable fuel volumes from statutory requirements in its original proposal for the 2014 RFS.

“The proposal generated significant comment, and diverging views, particularly about how volumes should be set in light of lower gasoline consumption, and whether and on what basis the statutory volumes for renewable fuels should be lowered. Most notably, commenters expressed concerns regarding the ability of the proposed approach to provide continued progress towards achieving the volumes of renewable fuel targeted by the statute. The hearing and the more than 340,000 comments submitted demonstrated the high level of public interest in the program as well as the wide diversity in views on the proposal,” said McCabe in her written testimony.

“EPA, in consultation with other federal agencies, has been evaluating these issues in light of the purposes of the statute and the Administration’s commitment to its goals. These issues are both very challenging and very important to the future of the RFS program. We recognize that our consideration of them has delayed issuance of the 2014 standards. Accordingly, and as stated in the announcement we made on November 21, EPA intends to take action on the 2014 standards in 2015. In the same timeframe, we plan to take action on RFS standards for both 2015 and 2016. We will take this opportunity to set standards for 2015 and 2016 so that the RFS program can continue to spur growth and provide greater certainty to investors and other market participants,” McCabe continued.

“The EPA recognizes that the delay in issuing the 2014 standards has exacerbated uncertainty in the market for both renewable fuel producers and obligated parties. We will also take action on the 2015 and 2016 RFS standards next year so that we get back on a more predictable, timely schedule for issuing such rules. Issuing rules every year has proven to be a 6 significant implementation challenge, particularly in the last several years as cellulosic biofuels have continued to face challenges in scaling up to commercial production and the fuel pool has become saturated with E10, raising concerns about the E10 blendwall. Resolving the fundamental issues that we are facing as part of the 2014 standards rulemaking should go a long way to enabling EPA to complete annual rulemakings on time,” she said.

Brian Jennings, executive vice president for the American Coalition for Ethanol weighed in on the hearing, indicating that while it’s important for the EPA to put the annual RFS rulemaking process back on schedule, it’s much more important for the agency to get it right. “EPA was right to reconsider their original proposal to limit the 2014 RFS to the amount of ethanol that oil companies were willing to blend with their gasoline, because that plan would have violated the Clean Air Act and congressional intent.  We look forward to working with EPA to ensure they use their authority to hold oil companies legally responsible for making cleaner and less expensive renewable fuel choices, such as E15 and E85, available to consumers as they issue the final 2014 rule, and RFS proposals for 2015 and 2016,” he said.

Growth Energy CEO Tom Buis also stressed that while the delay from EPA is frustrating to stakeholders and Congress, it’s important that the EPA gets its methodology and the final RFS number for 2014 right. “The EPA’s proposed rule was flawed from the beginning. There was no way the methodology in the proposed rule would ever work, as it went against the very purpose and policy goals of the RFS. Hopefully, the EPA can get back on track, establish certainty among stakeholders and implement the RFS as it was originally envisioned,” Buis said.

“I encourage the EPA to act swiftly to produce a final rule that ensures that the methodology allows our industry to move forward and invest in the additional production of biofuels, which will help grow an American industry that creates jobs, reduces our dependence on foreign oil and fossil fuels, reduces carbon pollution and creates new economic opportunities all over the country,”