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 October 31, 2017, the U.S. Environmental Protection Agency (EPA) sent its final rule to set the Renewable Fuel Standard (RFS) volumes for 2018 and 2019 to the U.S. Office of Management and Budget (OMB) for review.  Under the Clean Air Act (CAA), EPA must issue a final rule to set standards for cellulosic biofuel, biomass-based diesel, advanced biofuel, and total renewable fuel by November 30, 2017.  Typically, OMB review is the last step before the final rule is published in the Federal Register and takes 30 days. Timely issuance of the final volume requirements is critical for preventing uncertainty in the biofuel industry. In previous years, delays in the establishment of volume requirements resulted in a decrease in production and investments in the biofuel industry.

  • 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.
Many in the biofuels industry were concerned with the proposed reduction in the amount of renewable fuel, compared to previous years.  In an October 19, 2017, letter to Republican Senators, EPA Administrator Scott Pruitt indicated that the final Renewable Volume Obligation (RVO) amounts would be set at levels equal to or greater than the proposed amounts.  More information on the proposed requirements is available in the Biobased and Renewable Products Advocacy Group’s (BRAG®) blog post, “EPA Publishes Proposed 2018 RFS Requirements.”
Tags: EPA, RFS, Biofuel

 

By Kathleen M. Roberts

On October 19, 2017, the U.S. Environmental Protection Agency (EPA) Administrator Scott Pruitt sent a letter to Senators Joni Ernst (R-IA), Charles Grassley (R-IA), Pat Roberts (R-KS), John Thune (R-SD), Mike Rounds (R-SD), Deb Fischer (R-NE), and Ben Sasse (R-NE) to confirm his commitment to support the spirit and the letter of the Renewable Fuel Standard (RFS) program.  In the letter, Pruitt stated that, following a detailed analysis, numerous stakeholder meetings, and review of public comments, it was determined that EPA would not grant the petition to move the point of obligation to blenders.  Additionally, EPA intends to issue a final Renewable Volume Obligation (RVO) rulemaking by the statutory deadline of November 30, 2017.  While the rulemaking process is ongoing, Pruitt indicated that the final RVO amounts would be set at levels equal to or greater than the proposed amounts.  Finally, Pruitt highlighted EPA’s willingness to work with Congress on a nationwide Reid Vapor Pressure (RVP) waiver for E15.  Senators Ernst, Grassley, Thune, and Fischer each released statements to confirm their commitment to working collaboratively with EPA on these issues.

Tags: EPA, RFS, Senate

 

By Lauren M. Graham, Ph.D.

Last week, Senators Chuck Grassley (R-IA) and Joni Ernst (R-IA) responded to the U.S. Environmental Protection Agency’s (EPA) Notice of Data Availability (NODA) regarding the Renewable Fuel Standard (RFS) volume requirements (see EPA Issues NODA Regarding RFS Program).  On September 27, 2017, Ernst sent a letter to President Trump expressing concern over the proposed reduction in the volume requirements for 2018 and 2019.  In the letter, Ernst highlights the importance of renewable fuel with regard to jobs in rural America, and energy security for the U.S. Additionally, the letter states that “[w]hile the [NODA] technically ‘provides the public notice and an opportunity to comment,’ in reality it serves to make the case for substantially lowering the volumes for U.S. produced biodiesel, just as domestic producers are making investments to bring unused capacity back online.” 
 
In a September 26, 2017, statement, Grassley described the proposed reduction in renewable fuel volumes as a “bait-and-switch from the EPA’s prior proposal and from assurances from the President himself and Cabinet secretaries in [Grassley’s] office prior to confirmation for their strong support of renewable fuels.”  According to Grassley, reducing the volume requirements would undermine domestic renewable fuel production, which contradicts the goal of America first, employing U.S. workers, and improving the U.S. economy and meeting the country’s fuel needs.
 
Additionally, industry representatives have raised concerns over Trump’s nomination of William Wehrum to be the EPA Assistant Administrator for the Office of Air and Radiation (OAR).  In a statement regarding the Senate Committee on Environment and Public Works hearing on the nomination of Wehrum, Growth Energy CEO Emily Skor highlighted the essential role the Assistant Administrator plays in managing EPA’s fuel policies and the need for assurance that EPA remains in sync with Trump and his commitment to renewable fuels.  Skor urged the Senate to ensure that Wehrum would carry out the duties of the position in a manner that expands on the progress made since the RFS was passed. 

Tags: Iowa, RFS, Response

 

By Lauren M. Graham, Ph.D.

On October 4, 2017, EPA issued a NODA in the Federal Register to provide supplemental information and an opportunity for further public comment on potential reductions in the 2018 biomass-based diesel, advanced biofuel, and total renewable fuel volumes, and/or the 2019 biomass-based diesel volume under the RFS program.  The NODA follows the Agency’s July 21, 2017, proposed rulemaking on the volume requirements and provides additional information on production, imports, and cost of renewable fuel, and several options for how EPA may consider such data in establishing the final volume requirements. 
 
In the notice, EPA acknowledges its authority under the Clean Air Act to waive a portion of the biomass-based diesel standard if there is a significant renewable feedstock disruption or other market circumstance that would make the price of biomass-based diesel fuel increase significantly, and to make related reductions in the advanced biofuel and total renewable fuel volume requirements.  EPA is seeking comments on whether it is appropriate to use this waiver authority in the final rule.  Additionally, EPA invites comments on whether it is appropriate to consider possible impacts of the volumes of domestic production and imports on U.S. energy independence and security in setting the applicable standards under the RFS program, and on appropriate ways to determine the applicable volume requirements for 2018, and the biomass-based diesel volume requirement for 2019.
 
Comments are due October 19, 2017.

Tags: EPA, NODA, RFS, CAA

 

 

By Lauren M. Graham, Ph.D.

On September 11, 2017, the U.S. Environmental Protection Agency (EPA) Administrator Scott Pruitt sent a letter to Senator Sheldon Whitehouse (D-RI) in response to the request by Senator Whitehouse and four other Democratic Senators to explain Carl Icahn’s role in shaping the Renewable Fuel Standard (RFS) program.  According to Pruitt, Icahn did not exercise excessive influence on the U.S. biofuels policy while acting as an advisor of President Trump.  The letter states that Icahn was one of many advisors that Trump met with during his confirmation and no assurances were made regarding any substantive issue, including the point of obligation.  Following an investigation into the e-mails of 39 of EPA’s senior leadership, EPA’s Office of Environmental Information (OEI) found no correspondence to or from Icahn or his company, CVR Energy, between February and August.  A spokesman for Senator Whitehouse stated that the letter was being reviewed “for accuracy and to determine whether additional steps are warranted.”

Tags: EPA, RFS, Ichan

 

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.


 
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