The House Energy & Commerce Committee's Subcommittee on Energy and Power held its much anticipated two-day hearing on the RFS, with 16 witnesses from both sides testifying. The following is the full list of witnesses:
• Mr. Jack N. Gerard, President and CEO, American Petroleum Institute
• Mr. Charles T. Drevna, President, American Fuel & Petrochemical Manufacturers
• Mr. Bob Dinneen, President and CEO, Renewable Fuels Association
• Mr. Michael McAdams, President, Advanced Biofuels Association
• Dr. Jeremy I. Martin, Senior Scientist, Clean Vehicles Program, Union of Concerned Scientists
• Mr. Tom Buis, CEO, Growth Energy
• Mr. Shane Karr, Vice President, Federal Government Affairs, The Alliance of Automobile Manufacturers
• Mr. Todd J. Teske, Chairman and CEO, Briggs & Stratton Corporation
• Mr. Robert Darbelnet, President and CEO, AAA
• Mr. Joseph H. Petrowski, CEO, The Cumberland Gulf Group, on behalf of Society of Independent Gasoline Marketers of America and National Association of Convenience Stores
• Mr. Joe Jobe, CEO, National Biodiesel Board
• Ms. Pam Johnson, President, National Corn Growers Association
• Mr. Bill Roenigk, Senior Vice President, National Chicken Council
• Mr. Ed Anderson, CEO, Wen-Gap, LLC, on behalf of National Council of Chain Restaurants
• Mr. Scott Faber, Vice President of Government Affairs, Environmental Working Group
• Mr. Chris Hurt, Professor, Department of Agricultural Economics, Purdue University
Information on the hearing and the witness statements are available online.
The Subcommittee's background memo on the hearing is available online.
The hearing follows the five white papers recently released by the Subcommittee requesting stakeholder input on various aspects of the RFS. It is believed that Subcommittee Chair Ed Whitfield (R-KY) is working to ultimately modify the RFS through the legislative process. In fact, on the first day of the hearing, Subcommittee Member John Shimkus (R-IL) asserted that the petroleum and biofuels industries must work toward advocating in good faith for constructive modifications to the law. He also mentioned that he does not believe there are enough votes to repeal the law. The petroleum industry is advocating for the law's repeal, while the biofuels industry generally is advocating that the RFS is working as intended and that any changes to it should be made under the existing law and within the regulatory process.
Witnesses representing these industries made these points during the hearing on July 23, 2013. On July 24, 2013, witnesses from the livestock industry argued that the RFS negatively impacts the cost and availability of feed. The livestock industry helped lead the charge for EPA to temporarily waive RFS requirements due to the drought which affected crops last year. EPA denied the waiver request, which came from governors of states heavily involved in the livestock industry. It found that the RFS requirements would not severely harm the economy or environment of a state, a region, or the United States. EPA's Fact Sheet on this waiver decision is available online.
On July 18, 2013, the Senate voted 59-40 to approve the nomination of Gina McCarthy to lead the U.S. Environmental Protection Agency (EPA). Six Republicans voted for the nomination, including Senators Lamar Alexander (R-TN); Kelly Ayotte (R-NH); Susan Collins (R-ME); Bob Corker (R-TN); and Jeff Flake (R-AZ). McCarthy was sworn in to her new position as EPA Administrator on July 19, 2013.
McCarthy's confirmation came after four months of debate, with several Republicans, including members of the Senate Committee on Environment and Public Works (EPW), opposing her nomination out of protest for the perceived lack of transparency at EPA as the Agency works to issue rules to promote alternative forms of energy and combat climate change. McCarthy's nomination moved forward after one of the key opponents, Senator David Vitter (R-LA), announced his satisfaction that EPA was making progress on this transparency issue.
McCarthy served as the Assistant EPA Administrator for Air and Radiation since 2009. Before that, she served as Connecticut's Environmental Commissioner during which time she played an instrumental role in the development of the Regional Greenhouse Gas Initiative (RGGI). The RGGI is an initiative among nine Northeastern states to reduce harmful greenhouse gas (GHG) emissions in that region. In her new role, McCarthy is expected to work diligently with all stakeholders to issue rules designed to carry out President Obama's new climate change plan. These rules will include new controls on GHG from new and existing power plants, as well as the final 2013 renewable volume obligations (RVO) under the federal Renewable Fuel Standard (RFS) and the proposed 2014 RFS RVOs.
Activity on the federal Renewable Fuel Standard (RFS) is in full swing on Capitol Hill. Last week, the House Energy & Commerce Committee's Subcommittee on Energy and Power issued its fifth and final white paper on the RFS seeking input from stakeholders on "implementation issues" with the policy. The white paper is available online.
The white paper follows the Subcommittee's hearing last month at which government witnesses testified on the effectiveness and implementation of the RFS. Specifically in this latest white paper, the Subcommittee is requesting, among other things, input on the effectiveness of EPA's annual process of setting the required volume obligations (RVO) for each of the four types of fuels under the RFS: biodiesel, conventional, advanced, and cellulosic. The questions appear to target oil industry criticisms that EPA sets the annual RVOs for cellulosic biofuels too high compared with the availability of those biofuels on the market.
On Monday, June 15, 2013, the Subcommittee announced that it will hold a two-day hearing on the RFS beginning on July 23, 2013, to examine stakeholder input on the policy. The hearing details, which will be updated closer to the hearing date, are available online. A witness list has not yet been published, but witnesses are expected to include representatives from all sides of the debate, including refiners, biofuel producers, and environmentalists. Comments made by Subcommittee Chair Ed Whitfield (R-CA), combined with the white papers and hearings, suggest that legislation may be introduced to modify the RFS.
Members of the Fuels America Coalition, including many in the biofuels industry, are working to avoid this result and protect the RFS in its current form. The group is advocating this message on Capitol Hill this week ahead of next week's House Subcommittee hearing, and as the Senate Energy and Natural Resources Committee this week held a hearing "to explore the effects of ongoing changes in domestic oil production, refining and distribution on U.S. gasoline and fuel prices." In response to expected criticisms during the hearing of the RFS and its impact on gas prices, members of the Fuels America Coalition made public statements attempting to "dispel the myths" the refiners portray about the policy, including its impact on gas prices. The group argues that the RFS has had only a positive effect on gas prices, with the increase in ethanol helping to reduce gas prices.
In the meantime this week, the refining industry announced that it is strengthening its campaign for the repeal of the RFS.
On July 12, 2013, the U.S. Court of Appeals for the District of Columbia issued its decision in Center for Biological Diversity v. EPA. In a 2-1 decision, the court vacated the U.S. Environmental Protection Agency's (EPA) rule (the Deferral Rule) exempting bioenergy and other biogenic sources of greenhouse gas emissions from new greenhouse gas permitting requirements under EPA's Tailoring Rule for a period of three years. This deferral was meant to allow EPA time to study and develop a proper method of accounting for greenhouse gas emissions from these sources. The court held that EPA did not meet the standards to justify its Deferral Rule under any of the four doctrines it had invoked.
According to EPA, biogenic carbon emissions are "emissions of CO2 from a stationary source directly resulting from the combustion or decomposition of biologically-based materials other than fossil fuels and mineral sources of carbon." Examples of biogenic CO2 include: CO2 generated from the biological decomposition of waste in landfills, fermentation during ethanol production, combustion of the biological fraction of municipal solid waste or biosolids, combustion of the biological fraction of tier-derived fuel, and combustion of biological material, including all types of wood and wood waste, forest residue, and agricultural material, among others. Therefore, carbon emissions from some facilities producing biofuels and renewable chemicals could be subject to these new permitting requirements under the Tailoring Rule. The requirements of the Tailoring Rule are triggered when stationary sources meet certain emissions thresholds.
This decision is important for industry and creates uncertainty going forward. Without future legal, legislative, or regulatory action, it appears likely that stationary sources meeting the emissions thresholds under the Tailoring Rule will be subject to the new permitting requirements.