The Biobased and Renewable Products Advocacy Group (BRAG) helps members develop and bring to market their innovative biobased and renewable chemical products through insightful policy and regulatory advocacy. BRAG is managed by B&C® Consortia Management, L.L.C., an affiliate of Bergeson & Campbell, P.C.

By Lauren M. Graham, Ph.D.

On August 31, 2017, the U.S. Environmental Protection Agency (EPA) announced that requirements for reformulated gasoline and low volatility gasoline would be waived through September 15, 2017, for Alabama, Florida, Georgia, Kentucky, Maryland, Mississippi, North Carolina, South Carolina, Tennessee, Virginia, Texas, Louisiana, and the District of Columbia.  EPA exercised its emergency fuel waiver authority to help ensure an adequate supply of fuel throughout the South, Southeast, and the Mid-Atlantic in the wake of Hurricane Harvey.  As required by law, EPA and the Department of Energy (DOE) evaluated the impacts of Hurricane Harvey on refineries in the Gulf Coast based on strict criteria provided in the Clean Air Act (CAA) and determined that granting a short-term waiver was consistent with the public interest.  The CAA requires that waivers be limited as much as possible in terms of their geographic scope and duration.  EPA and DOE continue to monitor the fuel supply situation and will act if it is determined that extreme and unusual supply circumstances exist in other areas.


 

By Lauren M. Graham, Ph.D.

On August 15, 2017, the U.S. Court of Appeals for the Tenth Circuit ruled two to one that the U.S. Environmental Protection Agency (EPA) exceeded its statutory authority under the Clean Air Act (CAA) when it denied Sinclair Oil Corporation’s request for a hardship exemption from the Renewable Fuel Standard (RFS) program.  The statute requires that EPA grant exemptions on a case-by-case basis to small refiners that would suffer a “disproportionate economic hardship” in complying with the RFS program.  According to the court ruling, EPA’s interpretation that there needed to be a threat to the refinery’s survival as an ongoing operation to be eligible for the exemption is outside the range of permissible interpretations of the statute and, therefore, inconsistent with Congress’s statutory mandate.  To support its ruling, the court cited the U.S. Department of Energy’s (DOE) matrix analysis that lists three viability metrics that determine hardships, including reduced profitability, temporary negative events, and risk of closure.  As a result of the ruling, EPA will have to reconsider Sinclair’s request for an exemption.
 
Justice Lucero respectfully dissented, stating that the majority decision did not consider EPA’s lengthy discussion, which demonstrates that the Agency considered all of the viability factors.


 

By Lauren M. Graham, Ph.D.

In a paper forthcoming in the American Journal of Agricultural Economics, Iowa State researchers demonstrate that their tractable multi-market equilibrium model designed to evaluate alternative biofuel policies confirms that the current RFS program benefits the agriculture sector, and leads to overall welfare gains for the U.S.  The model considers biodiesel and ethanol markets and is simulated to analyze alternative scenarios, including the repeal of all RFS mandates, the 2015 level of mandates, and the projected 2022 RFS mandates.  The analysis shows that the U.S. benefited from lower gasoline, crude oil, and crude oil import prices.  Researchers estimated a welfare gain of $2.6 billion to the U.S. from the RFS program, primarily due to the impact of the policies on trade.  
 
Additionally, the analysis predicts that full implementation of the 2022 statutory mandates will be costly and produce limited welfare gains, stating that the agricultural terms of trade are a significant contribution to the RFS generating a positive impact.  To compensate for this, researchers recommend the mandate for corn-based ethanol production expand beyond the 15 billion gallon cap envisioned by the Energy Independence and Security Act of 2007 (EISA).  The report also recommends a reduction of biodiesel production from current levels, and no cellulosic biofuel production.


 

By Lauren M. Graham, Ph.D.

On August 1, 2017, the U.S. Environmental Protection Agency (EPA) held a public hearing to hear from all segments of the fuel industry on the proposed rule to set the 2018 renewable volume obligations (RVO) under the Renewable Fuel Standard (RFS) program.  Among the nearly 150 individuals and organizations scheduled to testify at the hearing were numerous biofuel industry stakeholders who praised EPA for issuing the proposed rule on time and for maintaining the statutory 15 billion gallon volume requirement for conventional renewable fuels, but urged the agency to increase the proposed requirements for advanced and cellulosic fuels. 
 
During its testimony, the Renewable Fuels Association (RFA) stated that it believes that EPA “erred on the side of pessimism with regard to the potential for significant growth in cellulosic ethanol commercialization.”  According to Bob Dinneen, Chief Executive Officer (CEO) of the RFA, many plants are in the process of adding bolt-on fiber conversion technology to their existing facilities, which could dramatically increase cellulosic ethanol production next year.  RFA intends to provide EPA with updated projections for cellulosic fuel before the comment period ends.  Dinneen also highlighted concerns with Renewable Identification Number (RIN) market manipulation and suggested that EPA continue to allow imported biofuels to help comply with the RFS program.
 
With a group of approximately 20 speakers, the National Biodiesel Board (NBB) highlighted key data and information regarding market realities and underutilized capacity, and the impacts on small businesses and manufacturing, feedstock availability, and consumer choice.  Donnell Rehagen, NBB CEO, stated that the “current numbers shortchange the progress we have made. They are a step back for the RFS, job creation, small businesses and rural economies.”  Rehagen clarified that “these steps backwards are not about paper but people.”
 
The Renewable Energy Group (REG) informed EPA that ample feedstocks, technology and quality advances, and subsidized imported biofuel are three reasons why the agency should increase the biomass-based diesel and advanced biofuel minimum volumes.  Derek Winkel, Executive Director of Manufacturing, stated that “investments [into the biofuel sector] would not have been made without increasing demand for biodiesel and renewable diesel.  This demand, in part, is supported by a strong, growing and consistent RVO and RFS.”  Paul Nees, Executive Director of REG’s Operations Control Team, testified that “[t]he domestic biodiesel industry is ready and able to fulfill demand gaps with low-cost, high-quality fuel with no market disruption.”
 
During its testimony, the Iowa Renewable Fuels Association (IRFA) suggested that the recent verdict in Americans for Clean Energy v. EPA should radically alter the factors EPA considers when determining RFS levels this year and going forward.  “The Court clearly affirmed that Congress’ intent for the RFS from the very beginning was to crack the petroleum monopoly and to push biofuels into the marketplace,” stated Monte Shaw, IRFA Executive Director.  “Whether in a reset discussion or in setting biodiesel and ethanol levels, the EPA must act according to the clear directive from the Court.”
 
The American Coalition for Ethanol's (ACE) testimony highlighted its view on conventional biofuel levels, the general waiver authority as it relates to inadequate domestic supply, the use of the reset provisions, and updating the greenhouse gas modeling for corn ethanol as it relates to Brazilian sugarcane ethanol.  The Coalition intends to detail its position on these topics in written comments.  Jonathon Lehman, ACE legislative counsel, also praised Nebraska Governor Pete Ricketts and Iowa Governor Kim Reynolds for their strong public support for keeping the RFS on track.
 
Stakeholders representing the oil industry were also present to testify to the problems they see with the RFS program, including the representatives from the American Petroleum Institute (API), the American Fuel and Petrochemical Manufacturers (AFPM), and Valero. 
 
Written statements and supporting information concerning the proposed rule are available under Docket ID No. EPA-HQ-OAR-2017-0091.  As stated in the Federal Register notice, EPA will consider the written comments with the same weight as any oral comments presented at the public hearing.


 

By Kathleen M. Roberts

On July 18, 2017, the U.S. Environmental Protection Agency (EPA) published in the Federal Register its proposed rule on the Renewable Fuel Standard (RFS) Program:  Standards for 2018 and Biomass-Based Diesel Volume for 2019.  The rulemaking proposes 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 in 2019, as reported in the Biobased and Renewable Products Advocacy Group’s (BRAG®) blog post EPA Releases Proposed 2018 RFS Volume Requirements.  The proposed volume requirements are:

  • 238 million gallons for cellulosic biofuel in 2018, down from 311 million gallons in 2017; 
  • 4.24 billion gallons for advanced biofuel in 2018, down from 4.28 billion gallons in 2017;
  • 19.24 billion gallons for renewable fuel in 2018, down from 19.28 billion gallons in 2017; and
  • 2.1 billion gallons for biomass-based diesel in 2018 and 2019.
These volumes would set the percentage standards at 0.131 percent for cellulosic biofuel, 2.34 percent for advanced biofuel, 10.62 percent for renewable fuel, and 1.74 percent for biomass-based diesel.  Comments on the proposed rule must be received by August 31, 2017.
 
While the proposed reduction in the amount of renewable fuel is relatively small, many in the biofuels industry are concerned that it sends the signal to the market that the U.S. renewable fuel industry will no longer grow.  The proposed volume requirements may undercut the Administration’s goal of reducing U.S. reliance on foreign energy and reviving U.S. manufacturing, despite President Trump’s repeated pledge to support the ethanol industry.
 
As previously reported in the BRAG blog post EPA Announces Public Hearing On RFS Program, EPA will hold a Public Hearing for Standards for 2018 and Biomass-Based Diesel Volume for 2019 Under the RFS Program to listen to arguments from all interested stakeholders to inform future rulemakings on the volume requirements.  The hearing will take place at 9:00 a.m. on August 1, 2017, in Washington, D.C.  EPA has until November 30, 2017, to issue the rulemaking in final.
Tags: EPA, RFS, 2018, Biofuel

 

By Kathleen M. Roberts

The U.S. Environmental Protection Agency (EPA) will hold a public hearing on the Renewable Fuel Standard [RFS] Program: Standards for 2018 and Biomass-Based Diesel Volume for 2019 proposed rule.  The hearing will take place at 9:00 a.m. on August 1, 2017, and will provide an opportunity for EPA to gather data, views, and arguments on the proposed rulemaking from interested stakeholders.  While EPA does not plan to respond to presentations, the Agency may ask clarifying questions.  EPA intends to use the information to inform a future rulemaking to reset the statutory volumes for cellulosic, advanced, and total biofuels pursuant to the Clean Air Act.  In resetting the mandatory biofuel production requirements under the RFS program, EPA will need to review the implementation of the program during previous years and coordinate with the Secretary of Energy and the Secretary of Agriculture.  Factors that EPA must consider in its analysis include:

  • The impact of renewable fuels on the environment; 
  • The impact of the fuels on energy security; 
  • Production rates of fuels;
  • Economic impacts of fuels; and
  • The impact of renewable fuel on U.S. infrastructure. 

Stakeholders interested in testifying during the hearing should contact Julia MacAllister (.(JavaScript must be enabled to view this email address)) by July 25, 2017.

Tags: EPA, RFS, Hearing

 

By Lauren M. Graham, Ph.D.

On July 11, 2017, the Energy Information Administration (EIA) issued its June Short-Term Energy Outlook (STEO).  EIA considered EPA’s recent rulemakings on the 2017 RFS volume requirements and proposed 2018 RFS volume requirements when developing its STEO for 2017 and 2018
 
Biodiesel production averaged 101,000 barrels per day (b/d) in 2016, and, according to EIA, is expected to increase to an average of 105,000 b/d in 2017 and to 109,000 b/d in 2018.  Biomass-based diesel imports are expected to fall from 54,000 b/d in 2016 to 53,000 b/d in 2017 but rise to 59,000 b/d in 2018.
 
Ethanol production averaged 1.0 million b/d in 2016 and is expected to average slightly above 1.0 million b/d in 2017, which would be a record, but will likely decline slightly in 2018.  Ethanol consumption averaged about 940,000 b/d in 2016 and is forecast to increase slightly in 2017 and 2018.  As a result, the ethanol share of the total gasoline pool will increase to nearly 10.1% in both 2017 and 2018.  Only marginal increases in higher-level ethanol blends are assumed to occur during the STEO forecast period.


 

By Kathleen M. Roberts

On July 5, 2017, the U.S. Environmental Protection Agency (EPA) issued proposed volume requirements under the Renewable Fuel Standard (RFS) program for cellulosic biofuel, advanced biofuel, and total renewable fuel for 2018, as well as biomass-based diesel for 2019.  The proposal lowers the blending requirement for all renewable fuel with the exception of biomass-based diesel, which maintains the 2017 blending requirement.  The proposed volume requirements are:

Cellulosic biofuel, from 311 million gallons in 2017 to 238 million gallons in 2018;
Advanced biofuel, from 4.28 billion gallons in 2017 to 4.24 billion gallons in 2018;
Renewable fuel, from 19.28 billion gallons in 2017 to 19.24 billion gallons in 2018; and
Biomass-based diesel, 2.1 billion gallons in 2018 and 2019.


These volumes would set the percentage standards at 0.131 percent for cellulosic biofuel, 2.34 percent for advanced biofuel, 10.62 percent for renewable fuel, and 1.74 percent for biomass-based diesel.  The proposed rule will be open for comment for 45 days following the official publication in the Federal Register.

Tags: EPA, RFS, Biofuel, 2018

 

By Lauren M. Graham, Ph.D.

On April 24, 2017, U.S. Department of Justice (DOJ) attorneys representing the U.S. Environmental Protection Agency (EPA) and the renewable fuels and petroleum industries presented oral arguments before a three-judge panel of the U.S. Court of Appeals for the D.C. Circuit regarding the petition to review the renewable volume obligations (RVO) for 2014-2016.  The petition, which was filed on January 8, 2016, by seven biofuel and agricultural groups, challenged EPA’s authority to set volume requirements for biofuel blending below standards put forth in the 2007 Renewable Fuel Standard (RFS) law.  During the oral arguments, Samara Spence, a DOJ attorney, argued that insufficient infrastructure prevented EPA from setting a higher advanced biofuel standard in the 2014-2016 final rule.  Seth Waxman, an attorney representing Americans for Clean Energy, argued that EPA misunderstood its authority under the statute.  According to statements from the federal appeals court judges, scaling back the blending requirements may be viewed as an abuse of EPA’s authority. 
 
In a joint statement in response to the oral arguments, the American Coalition for Ethanol, BIO, Growth Energy, the National Corn Growers Association, the National Sorghum Producers, and the Renewable Fuels Association stated that they are “optimistic that the Court will honor Congress’ intent and remove these and other obstacles EPA has impermissibly erected to cleaner and more sustainable renewable fuels from entering the marketplace.”  More information on the petition to review the RFS for 2014, 2015, and 2016 is available in the Biobased and Renewable Products Advocacy Group (BRAG®) blog post “Biofuel, Corn, And Sorghum Farmers Challenge Lowered RFS Volumes.”

Tags: DOJ, EPA, RVO, RFS, Biofuel

 

On March 16, 2017, 23 Senators, including Senator Chuck Grassley (R-IA) and Senator Amy Klobuchar (D-MN), sent President Trump a bipartisan letter requesting that he maintain the point of obligation under the Renewable Fuel Standard (RFS) program.  In the letter, the Senators remind Trump that the RFS program was adopted to provide stability for renewable fuel producers and that the U.S. Environmental Protection Agency (EPA) determined that, to meet this goal, the point of obligation should be placed on refiners and importers.  Shifting the point of obligation downstream would create little incentive for refiners to produce the necessary blendstocks, which would make downstream entities unable to comply.  The letter outlines the detrimental effects that changing the point of obligation would have on refiners, blenders, marketers and retailers, and states that the proposed changes are broadly opposed by the majority of the transportation fuel market.  The Senators acknowledge Trump’s commitment to the RFS program and state that they look forward to working with Trump to ensure the RFS program continues to aid in job creation and economic growth across the country.


 
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