By Lynn L. Bergeson
On June 4, 2018, several biofuel and agricultural groups, including the Renewable Fuels Association, the Biotechnology Innovation Organization, the American Coalition for Ethanol (ACE), and the National Biodiesel Board, among others, petitioned the U.S. Environmental Protection Agency (EPA) regarding EPA’s Renewable Fuel Standard (RFS) obligations. The ACE announcement states that the petition asks EPA to “change its regulations to account for lost volumes of renewable fuel resulting from the unprecedented number of retroactive small refinery exemptions from [RFS] obligations recently granted by EPA.” The petition states that Section 211(o)(2)(a)(i) of the Clean Air Act “requires EPA to ensure that the annual required volumes of renewable fuel are introduced into the nation’s transportation fuel supply,” and that EPA’s “suddenly reversing its prior policy and granting retroactive exemptions to so many small refineries without adjusting its Annual Standard Equations to account for the resulting lost volumes,” means that EPA is “failing to meet its statutory obligation to ‘ensure’ that transportation fuels in the United States contain the applicable volumes of renewable fuel.” The petition requests EPA to (1) convene a proceeding to reconsider the annual standard equations in 40 C.F.R. § 80.1405(c); and (2) convene a proceeding to reconsider its final action entitled “Periodic Reviews for the Renewable Fuel Standard Program” (82 Fed. Reg. 58364 (Dec. 12, 2017)).
By Lynn L. Bergeson
On June 8, 2018, petitioners in the District of Columbia Circuit (D.C. Circuit) case Coffeyville Resources Refining, et al. v. EPA filed their final briefs in the case challenging EPA’s final rule that established: (1) the annual percentage standards for cellulosic biofuel, biomass-based diesel (BBD), advanced biofuel, and total renewable fuel that apply to all motor vehicle gasoline and diesel produced or imported in the year 2017; and (2) the applicable volume of BBD for 2018. 81 Fed. Reg. 89746 (Dec. 12, 2016). Final briefs were filed by petitioners Coffeyville Resources Refining & Marketing, LLC, et al. and the National Biodiesel Board (NBB). The lengthy briefs reiterate the petitioners’ arguments that EPA acted arbitrarily and capriciously in relying on incomplete and flawed information and methodology when setting the cellulosic biofuel requirements and other 2017 obligations, and that EPA violated 42 U.S.C. § 7545(o)(2)(B)(ii) when it set the 2018 BBD volume based on factors that are not among those Congress instructed the Agency to consider, including the 2018 advanced-biofuel volume. Respondent EPA and intervenors for EPA also filed final briefs. EPA argued that its use of the cellulosic waiver was reasonable and reasonably used and applied; the D.C. Circuit has previously upheld its cellulosic biofuel projection methodology; and it properly assessed and set the BBD volumes for 2018. Oral argument in this case has not yet been scheduled. All of the briefs are available on Inside EPA’s website (subscription required).
By Lynn L. Bergeson
On May 11, 2018, the U.S. Environmental Protection Agency (EPA) sent a proposed renewable fuel standard (RFS) biofuel volumes rule for 2019 to the White House Office of Management and Budget (OMB) for pre-publication review. The proposed rule addresses 2019 renewable blending obligations for cellulosic biofuel, advanced biofuel, and total biofuel, with a proposed 2020 percentage standard for biomass-based diesel. The 2019 blending requirement for biomass-based diesel is 2.1 billion gallons and was included in a final rule from 2017.
By Lynn L. Bergeson
On May 8, 2018, President Trump met with a group of Republican Senators and told them that he is considering allowing exported ethanol to count toward the volumes mandated by the Renewable Fuel Standard (RFS). During this meeting, Mr. Trump also reiterated support for expanding sales of E15, and withdrew his verbal proposal to cap the price of RINs, which had been widely criticized by the ethanol industry. These announcements came after increasing concern about the future stability of the RFS after the U.S. Environmental Protection Agency (EPA) recently granted over two dozen hardship waivers to small refineries for 2017, a drastic increase from EPA’s prior practice of granting between six to eight hardship waivers annually.
The ethanol industry reacted favorably to some of these proposals, with the Biotechnology Innovation Organization (BIO), a member of the Biobased and Renewable Products Advocacy Group (BRAG®), releasing a statement thanking President Trump for rejecting the RIN cap and for his support of year round sales of E15. Brent Erickson, Executive Vice President of BIO’s Industrial & Environmental Section, stated: “Ensuring that E15 can be sold year round in states and regions where it is already approved will give advanced and cellulosic ethanol more opportunity to compete in the market in coming years. E15 reduces the price of gasoline by 5 to 15 cents per gallon, and it lowers tailpipe and greenhouse gas emissions all year round. . . . BIO and its members continue to oppose unnecessary changes to the Renewable Fuel Standard. EPA has already provided unwarranted waivers to oil refiners that are destroying demand for all biofuels and undercutting industry investments. We thank Senators Grassley and Ernst for standing with us in opposition to the damaging proposal for a cap on RIN prices.” Mr. Trump’s proposal to allow RINs from exported ethanol to count towards mandated volumes under the RFS was greeted with more caution, with Erickson stating: “We remain concerned about the impact counting RINs from exported renewable fuels would have on the development of advanced biofuels and we look forward to working with the Senators to ensure the RFS continues to promote production and use of homegrown biofuels.” Kevin Skunes, President of the National Corn Growers Association, was also distrustful of this proposal, stating: “Offering RIN credits, which are supposed to be derived from a domestic renewable fuel use, for ethanol exports would threaten trade markets and impact corn farmers’ economic livelihoods.”
By Lynn L. Bergeson
On May 3, 2018, the Advanced Biofuels Association (ABFA) announced that it had submitted a petition in the U.S. Court of Appeals for the D.C. Circuit to review EPA Administrator Scott Pruitt’s decision to provide waivers from RFS requirements. Michael McAdams, President of ABFA, stated:
“We have seen reports that the number of small refinery exemptions recently granted for compliance years 2016 and 2017 have doubled compared to previous years. ABFA members are concerned that Administrator Pruitt is granting these exemptions in an arbitrary and capricious manner to undisclosed parties behind closed doors with no accountability for its decision-making process.”
“The news reports about these exemptions have had immediate and significant market impacts on the prices of Renewable Identification Numbers (RINs) for the biomass-based diesel (D4) and overall renewable fuel (D6) pools,” continued McAdams. “Dropping RIN prices disincentivize blending, causing economic harm to ABFA’s members and posing a threat to the integrity of the RFS program at large.
These concerns originated when a large oil refinery, Andeavor, was granted a hardship waiver, which is typically given to small refineries producing less than 75,000 barrels per day that suffer a disproportionate economic hardship from the cost of RFS compliance. For more information, see “Open Letter From Iowan Biofuel Producers Urges Protection Of RFS” on the BRAG blog.
By Lynn L. Bergeson
On April 6, 2018, a coalition of biofuel producers wrote to Senator Chuck Grassley (R-IA) and Senator Joni Ernst (R-IA) urging them to reach out to President Trump to protect the Renewable Fuel Standard (RFS) program. EPA, under the direction of Administrator Scott Pruitt, recently provided a large oil refining company, Andeavor, with a hardship waiver. These waivers are typically given to small refineries producing less than 75,000 barrels per day that would suffer a “disproportionate economic hardship” from the costs of RFS compliance. Since Andeavor’s exemption was reported, Renewable Identification Number (RIN) prices have fallen significantly, questions have arisen regarding the legality of such an exemption for a large company, and doubt has been cast onto the future stability of the RFS program.
The producers’ letter states:
Based on the data that has been made public about 2016 exemptions, IRFA estimates that the 25 exemptions for 2017 likely equate to over one billion gallons of demand destruction taken directly from the 15-billion-gallon RFS level for last year.
This represents an unprecedented attack on the RFS and the President’s commitment to defending the 15-billion-gallon level. The small refinery exemption provision of the RFS was clearly intended for small refiners who could prove disproportionate economic harm. Such waivers were, as one would expect, few and far between during the Bush and Obama Administrations. We are now seeing that Pruitt has weaponized the small refinery exemption provision in an effort to effectively render the RFS useless.
In addition to concern over Andeavor’s hardship waiver, the biofuel producers also request that the senators push the President to refuse any waiver or price cap on RINs and order Administrator Pruitt to approve year-round E15 sales, increasing the amount of RFS credits generated and driving price of RINs down.
By Lynn L. Bergeson
On March 8, 2018, Senator Tom Udall (D-NM) and Representative Peter Welch (D-VT) introduced companion legislation (S. 2519, H.R. 5212) in the U.S. Senate and U.S. House of Representatives, respectively, to reform the Renewable Fuel Standard (RFS). The Growing Renewable Energy through Existing and New Environmentally Responsible (GREENER) Fuels Act aims to:
- Phase out the corn ethanol mandate and immediately reduce the amount of ethanol in fuel by as much as one billion gallons by capping the amount of ethanol that can be blended into conventional gasoline at 9.7 percent;
- Help farmers return cornfields to pasture and wildlife habitat through a ten cents per renewable identification number (RIN) fee to fund a new private land protection and restoration fund in the U.S. Treasury; and
- Extend the cellulosic next generation biofuel mandate until two billion gallons of annual production is achieved or 2037, whichever is soonest, and improve the way the mandate is implemented to produce liquid transportation fuels that dramatically reduce greenhouse gas (GHG) emissions.
According to Representative Welch, the “legislation reforms the mandate to dramatically reduce its environmental impact and to support the continued growth of advanced biofuels.”
By Lauren M. Graham, Ph.D.
On December 27, 2017, the U.S. Environmental Protection Agency (EPA) proposed to approve new fuel pathways under the Renewable Fuel Standard (RFS) program. Specifically, EPA is proposing to amend RFS regulations to define the term “distillers sorghum oil” and to add approved pathways from the production of biodiesel and heating oil from distillers sorghum oil via a transesterification process, and renewable diesel, jet fuel, heating oil, naphtha, and liquefied petroleum gas (LPG) produced from distillers sorghum oil via a hydrotreating process. Distillers sorghum oil is grain sorghum oil extracted at any point downstream from sorghum grinding at dry mill ethanol plants.
The proposed rule outlines EPA’s analysis of the lifecycle greenhouse gas (GHG) emissions associated with certain biofuels produced from distiller sorghum oil. Based on its assessment, EPA determined that using distillers sorghum oil as feedstock results in no significant agricultural sector GHG emissions, and that biodiesel and heating oil produced from distillers sorghum oil via a transesterification process, and renewable diesel, jet fuel, heating oil, naphtha, and LPG produced from distillers sorghum oil via a hydrotreating process, would meet the lifecycle GHG emissions reduction threshold of 50 percent required for advanced biofuels and biomass-based diesel under the RFS program. Comments on the analysis are due by January 26, 2018.
In addition to EPA approval of the new pathway, producers may wish to confirm that the final sorghum-based product and all intermediates are listed on the Toxic Substances Control Act (TSCA) Inventory or covered by an exemption prior to commercialization. While naturally occurring substances are automatically added to the TSCA Inventory, the TSCA “naturally occurring exemption” is very narrow. Specifically, a naturally occurring substance includes “any chemical substance which is naturally occurring and: (1) [w]hich is (i) unprocessed or (ii) processed only by manual, mechanical, or gravitational means; by dissolution in water; by flotation; or by heating solely to remove water; or (2) [w]hich is extracted from air by any means.”
By Lauren M. Graham, Ph.D.
On December 12, 2017, the U.S. Environmental Protection Agency (EPA) published in the Federal Register the Renewable Fuel Standard (RFS) Program: Standards for 2018 and Biomass-Based Diesel Volume for 2019 final rule. This final rule sets the annual percentage standards for cellulosic biofuel, advanced biofuel, and total renewable fuel for motor vehicle gasoline and diesel produced or imported in 2018, as well as biomass-based diesel for 2019. As reported in the Biobased and Renewable Products Advocacy Group (BRAG®) blog post EPA Issues Final 2018 RFS Requirements, the final volume requirements are:
- Cellulosic biofuel, from 311 million gallons in 2017 to 288 million gallons in 2018;
- Advanced biofuel, from 4.28 billion gallons in 2017 to 4.29 billion gallons in 2018;
- Renewable fuel, from 19.28 billion gallons in 2017 to 19.29 billion gallons in 2018; and
- Biomass-based diesel, 2.1 billion gallons in 2018 and 2019.
These final volumes change the percentage standards to 0.159 percent for cellulosic biofuel, 2.37 percent for advanced biofuel, 10.67 percent for renewable fuel, and 1.74 percent for biomass-based diesel. This final rule becomes effective on February 12, 2018.
Additionally, EPA announced the availability of its “Periodic Reviews for the Renewable Fuel Standard Program.” Pursuant to the Clean Air Act (CAA), EPA must conduct periodic reviews of certain aspects of the RFS program. In the report, EPA describes its interpretation of the statutory requirement to conduct periodic reviews, and prior actions that EPA has taken to fulfill its obligations to conduct such reviews.