Will congressional opposition to RFS rule lead to reform?

Source: Tiffany Stecker, E&E reporter • Posted: Tuesday, December 1, 2015

The ink on U.S. EPA’s final rule for the renewable fuel standard is barely dry, but long-standing foes in Congress are already aiming to block the biofuels program.

Yesterday, Rep. Bill Flores (R-Texas), who spearheaded a letter with Rep. Peter Welch (D-Vt.) last month to stop the annual increase of biofuels in the U.S. gasoline supply, offered an amendment to the House’s comprehensive energy bill (see related story). The language would prevent implementation of the program if the RFS calls for biofuel blending to exceed 10 percent — a “blend wall” that limits overall ethanol concentration to a level that minimizes potential risks of the biofuel corroding the inside of older vehicles and small engines.

Rep. Ron DeSantis (R-Fla.) also introduced an amendment last week to repeal the RFS, as well as one to require a Government Accountability Office report on the program. Rep. Bob Goodlatte (R-Va.), another long-standing foe, used the rule’s announcement to tout his own “RFS Reform Act” (H.R. 704), which would strike corn ethanol from the program and reduce the levels to be blended in the fuel supply.

“Since the EPA refuses to keep RFS volumes below the blendwall, Congress must act to fix this broken ethanol mandate,” Goodlatte said in a press release. “The RFS Reform Act is a solution to the problems created by the ethanol mandate, and our bill would finally provide much-needed, long-term relief for those impacted by the failures of this policy.”

EPA’s final rule sets the level of required volumes of biofuel for 2014, 2015 and 2016, with an additional 2017 requirement for biodiesel only. The overall program, created in 2005 and expanded with the 2007 Energy Independence and Security Act, seeks to boost annual biofuel production to 36 billion gallons per year by 2022.

The program receives broad support from the biofuel manufacturing and agriculture sector, but has been heavily criticized by the petroleum industry — which is responsible for blending the plant-based fuels into the fossil fuel supply — as well as some environmentalists, food companies, the livestock sector and small-engine manufacturers.

Under the rule, U.S. fuel blenders will be required to mix 16.93 billion gallons of biofuels into fossil fuels in 2015 and 18.11 billion gallons in 2016, a 4 percent increase from the amounts in the proposed rule issued in May but less than what Congress intended when it expanded the RFS program eight years ago.

Of that, conventional corn ethanol will make up 14.05 billion gallons in 2015 and 14.5 billion gallons in 2016, making up the bulk of the biofuel blended into the U.S. gasoline supply. This requirement breaks through the 10 percent blend wall in 2016, when the U.S. Energy Information Administration expects the overall fuel demand to be at least 140 billion gallons of gasoline (E&ENews PM, Nov. 30).

Lawmakers have dabbled with the idea of RFS reform for several years, holding numerous hearings and introducing several bills. It’s unclear at this point whether EPA’s final rule will propel the idea of reform further than before.

“There are many members that are not pleased with the renewable fuel standard, and I do think that kind of emphasis does encourage people to do something,” said Rep. Ed Whitfield (R-Ky.).

But Whitfield, who heads the House Energy and Commerce Subcommittee on Energy and Power, isn’t one to go to bat on the issue.

“It’s not a priority for me,” he said.

On the Senate side, Environment and Public Works Chairman James Inhofe (R-Okla.) is a long-standing opponent of the RFS. But even he is unsure if the issue will gain much traction in Congress.

“This is one of the few issues where there’s nothing partisan about it; it’s all geography,” Inhofe told E&E Daily.

When asked how RFS reform compares to other hot-button environmental issues like EPA’s Waters of the U.S. rule or the Clean Power Plan, Inhofe said “it ranks a poor third, because people are just not emotionally involved in it.”

Regardless of what happens on Capitol Hill, the final rule is likely to be challenged on both sides in the courts. Opponents will challenge the breach of the blend wall, while supporters are likely to argue that EPA misused its waiver authority to change the circumstances for when a petroleum refiner can opt out of the program’s requirements. The final rule allows refiners to waive the requirements based on infrastructural issues, allowing them more leverage in deciding whether the increasing levels of biofuels will make it to the nation’s fuel pumps.

“You can’t rewrite the statute in a regulatory process, and that is what the agency has done here,” said Bob Dinneen, president and CEO of the Renewable Fuels Association.

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