RFS Runaround

EPA Punts on Renewable Fuel Law Until 2015

Todd Neeley
By  Todd Neeley , DTN Staff Reporter
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EPA has not released Renewable Fuel Standard volumes on time since 2009. The agency announced Friday it hopes to get back on the annual statutory timeline by addressing 2014, 2015, and 2016 standards in the next calendar year. (DTN file photo)

OMAHA (DTN) -- EPA will not finalize the 2014 Renewable Fuel Standard before the end of the year, the agency said in a statement Friday morning, announcing plans to complete the RFS for 2014, 2015 and 2016 all next year.

"The proposed rule, issued in November 2013, generated a significant number of comments, particularly on the proposal's ability to ensure continued progress toward achieving the law's renewable fuel targets," EPA said.

"Due to the delay in finalizing the standards for 2014, and given ongoing consideration of the issues presented by the commenters, the agency intends to take action on the 2014 standards rule in 2015. Looking forward, one of EPA's objectives is to get back on the annual statutory timeline by addressing 2014, 2015, and 2016 standards in the next calendar year."

EPA has not released RFS volumes on time since 2009. The 2010 rule was due on Nov. 30, 2009, and finalized on March 26, 2010. The 2011 final rule was due Nov. 30, 2010, and finalized Dec. 9, 2011. The 2012 final rule was due Nov. 30, 2011, but was finalized on Jan. 9, 2012. The 2013 final rule was due on Nov. 30, 2012, and finalized on Aug. 15, 2013. The 2015 final rule is due Nov. 30, 2014.

Biofuels groups, though disappointed, said the decision allows EPA to fix a proposal that would have hurt the agriculture and biofuels industries.

Bob Dinneen, president and CEO of the Renewable Fuels Association, said the downside of the decision is that ethanol and advanced biofuels companies will continue to face uncertainty.

"Nevertheless, the administration has taken a major step by walking away from a proposed rule that was wrong on the law, wrong on the market impacts, wrong for innovation, and wrong for consumers," he said in a statement.

"Moreover, it is clear that one of the reasons we find ourselves in this position is that the oil industry has steadfastly refused to make the investments in infrastructure or allow their marketers to offer higher ethanol blends like E85 or E15. In the absence of their dogged efforts to undermine the RFS, this would be far simpler for EPA... Refiners will continue to resist the competition from biofuels."

One of the major concerns coming from industry officials was that continued delay of the RFS is threatening a budding cellulosic ethanol industry.

Advanced Ethanol Council Executive Director Brooke Coleman said the EPA's decision may indicate that the administration understands the RFS may be threatening the future of advanced biofuels.

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"While the cellulosic biofuel industry will not get the policy certainty it needs from this decision, it does suggest that the administration is listening when it comes to our concerns about giving oil companies too much power to avoid its obligations under the RFS going forward," he said in a statement. "This battle was never about the 2014 volumes for the oil industry, and we appreciate the administration's willingness to pivot in the right direction this late in the game. The key now for advanced biofuel investment is to move quickly to fix what needs to be fixed administratively so we can re-establish the RFS as the global gold standard for advanced biofuel policy."

Tom Buis, chief executive officer of Growth Energy, said the delay is frustrating yet necessary.

"The decision to withdraw the rule is a win for the renewable fuels industry," he said in a statement. "While a further delay is unwelcome news, at the end of the day, the most important aspect is that the EPA gets the final rule right. The EPA must implement the RFS as it was originally envisioned and supported by a bipartisan majority in Congress."

Several agriculture groups also expressed frustration over EPA's delay in finalizing the RFS.

In a news release issued Friday, American Soybean Association President Ray Gaesser stated that the continued delays create uncertainty for the biodiesel industry and soybean farmers and limit the industry's ability to invest and expand.

"The proposed rule was unacceptable and would have taken biodiesel backward from the amounts produced and utilized in 2013," Gaesser stated in the release. "However, ASA believes that EPA can and should finalize a 2014 rule that sets the biomass-based diesel volumes at or above the nearly 1.8 billion gallons that were produced and consumed in the U.S. in 2013."

National Chicken Council President Mike Brown said EPA's indecision makes it difficult for farmers to plan for next year.

"Instead of providing the market some clarity by adhering to the statutory deadlines, EPA waited to see if the consumption of gasoline would go up this year as a tactic to inflate ethanol production," he said in a statement.

"EPA Administrator Gina McCarthy said EPA would use the 'most up to date' numbers to set the 2014 standards --- that was in April, nearly five months into the compliance year, and more than six months ago. Waiting to set the standards after the fact is irresponsible and discriminatory, but unfortunately, the standard practice. This seesaw process by which the EPA proposes an up-and-down, now-and-later moving target as the compliance year unfolds leaves poultry and livestock producers unable to plan and budget effectively.

Although the price of corn has fallen during the past year, Brown said "volatility and uncertainty are the true business-killers... What more evidence does the administration and Congress need to prove the RFS -- and the administration of it -- is broken beyond repair?"

If anything, Brown said the RFS chaos of the past year shows the biofuels industry can thrive without the law. "And for a program that was billed as being created to end our dependence on foreign oil, the ethanol industry is exporting its product at a rate faster than snow falling this week in Buffalo," he said.

USDA estimates show the ethanol industry will use 5.15 billion bushels of corn, or about 36% of the total U.S. corn crop. When the original RFS was implemented in the 2005-2006 crop year, ethanol consumed about 15% of the corn crop. Brown said since the RFS was enacted, chicken producers incurred more than $44 billion in higher feed costs from the RFS.

American Petroleum Institute President and Chief Executive Officer Jack Gerard said the EPA's decision shows the RFS is unworkable.

"The rule is already a year overdue and the administration has no intention of finalizing this year's requirements before the year ends," he said in a statement. "It is unacceptable to expect refiners to provide the fuels Americans need with so much regulatory uncertainty. This is an example of government at its worst.

"The Renewable Fuel Standard was flawed from the beginning, horribly mismanaged, and is now broken. The only real solution is for Congress to scrap the program and let consumers, not the federal government, choose the best fuel to put in their tanks."

API on Friday filed a notice of intent to sue EPA for failure to issue the 2014 Renewable Fuel Standard. The required notice under the Clean Air Act is the first step in initiating formal litigation over the agency's failure to set the annual renewable fuel volumes in the RFS by Nov. 30 of the preceding year, meaning the agency should have finalized the 2014 RFS rule on or before Nov. 30, 2013.

Todd Neeley can be reached at todd.neeley@dtn.com

Follow Todd on Twitter @toddneeleyDTN

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Todd Neeley

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