EPA flooded with comments on RFS proposal

Source: Amanda Peterka, E&E reporter • Posted: Monday, August 3, 2015

U.S. EPA yesterday wrapped up a public comment period on a contentious proposal to set renewable fuel blending requirements for 2014, 2015 and 2016, as well as the 2017 biodiesel target.

As of this morning, the federal docket listed 48,510 comments, but that number is expected to rise as more comments are tallied. Biofuel advocates yesterday said they had collected more than 250,000 comments in opposition to the proposed rule, while oil industry group the American Petroleum Institute touted that it had gathered 287,000 comments through its network of supporters around the country.

A separate coalition of boating, motorcycle and taxpayer advocates opposed to expanding corn ethanol use this morning said that it had provided the agency with at least 71,800 comments.

In its proposal published in June, EPA had urged stakeholders to keep their comments “concise” so that it could meet a Nov. 30 deadline to finalize the rule. The deadline is meant to put the long-delayed annual requirements back on a statutory timeline and is part of a settlement agreement the agency reached with API and refining group American Fuel & Petrochemical Manufacturers.

“EPA is eager to hear all comments on our proposed standards. Agency staff will be reviewing comments provided by the public, and addressing these comments in the final rule,” EPA said. “The final standards will be based on the best information and data available, and will be finalized by Nov. 30.”

EPA’s proposal calls for year-over-year increases in ethanol and advanced biofuels but falls short of the levels Congress wrote into the 2007 statute that created the renewable fuel standard. It would require refiners to surpass the “blend wall” in 2016 — or the 10 percent ethanol saturation level in the gasoline pool.

EPA has defended the proposal as “ambitious” but in line with market realities: short-term limits to more ethanol being added to gasoline and a slower-than-expected ramp up in the domestic advanced biofuel sector.

Most of the comments submitted by stakeholder groups opposed the proposal.

Corn growers and biofuel organizations argue that the rule underestimates the amount of ethanol and advanced biofuel that will be available this year and next. They also say EPA has relied on questionable legal assumptions to waive the levels that Congress wrote into law and that the agency’s action would put the program in the hands of an oil industry that doesn’t want to use more ethanol.

Ethanol trade group Growth Energy slammed the agency for proposing volumes that would trigger the renewable fuel standard’s “reset” provisions. Congress wrote into the program a reset provision that lets EPA rejigger the congressional volumes of renewable fuels starting in 2016 if the agency has reduced any of the mandates by at least 20 percent for two consecutive years or by at least 50 percent for a single year.

“There is a strong basis to conclude that EPA specifically and improperly set the proposed 2015 and 2016 renewable fuel volume requirements in order to trigger its reset authority,” the trade group wrote in its 192-page comment.

The Advanced Biofuels Business Council, which represents next-generation fuel companies, said it had “serious concerns” that the proposal would negatively affect the development of advanced biofuels.

EPA’s use of waivers in the rule would hurt advanced biofuel companies’ health, the council wrote, by increasing the risk for investors.

“A regulation is only as effective as its waiver provisions — because these provisions establish under what conditions obligated parties can escape their obligations under the law,” the council wrote. “If waivers are too lenient — or worse, are based on market dynamics that obligated parties control — then the regulation will not drive investment because the risk of stranded investment will be too high.”

In a 150-page comment letter, the National Biodiesel Board said it was pleased that EPA increased the targets from a prior unsuccessful proposal but urged the agency to set more robust requirements.

EPA proposed to require 1.8 billion gallons of biodiesel in 2016 and 1.9 billion gallons in 2017; the National Biodiesel Board argued that the industry would be able to supply 2.4 billion gallons in 2016 and 2.7 billion in 2017.

“We believe any volume less than 2 billion gallons and annual increases of less than 300 million gallons through 2017 would be unreasonable, particularly when you consider the availability of prior year [fuel credits],” the trade group wrote.

EPA allows refiners to bank credits, known as renewable identification numbers (RINs), to comply with RFS targets in future years. Ethanol groups also complained that EPA had not factored banked RINs into its calculations of how much renewable fuel refiners would be able to use in the coming years.

‘Divorced from reality’

Refining groups also took aim at the proposal. In a joint comment, the American Petroleum Institute and American Fuel & Petrochemical Manufacturers slammed the proposal for surpassing the ethanol blend wall in 2016. They say that neither the infrastructure nor consumer demand is there to increase the amount of ethanol in the market above that level.

The oil trade groups also said in their 57-page comment that EPA was overestimating the amount of E85, or gasoline for flex-fuel vehicles that contains up to 85 percent ethanol, that would be consumed in the market in the next few years. EPA said it expected that the fuel would be available for refiners to meet the 2016 target.

“EPA’s decision to establish a 2016 standard that requires ethanol to be blended with gasoline in amounts that exceed the [blend wall] is divorced from market reality,” the oil groups wrote.

The coalition opposed to increasing corn ethanol requirements also includes small-engine users, such as motorcyclists and boaters, who are able to run only on 10 percent ethanol. They argue that adding more ethanol to the fuel system would increase the chances of misfueling with higher-ethanol blends that are corrosive to engines.

Environmentalists, chicken farmers and chain restaurants are also part of the coalition opposed to greater ethanol use.

One of the ethanol industry’s strongest champions in Congress, Sen. Chuck Grassley (R-Iowa), blasted EPA’s proposal in his own comment letter yesterday. He charged that EPA had “continued to fall for Big Oil’s argument that the infrastructure isn’t in place to handle the fuel volumes required by law.”

Grassley questioned EPA’s authority to waive the congressional targets.

“Anything less will undermine our efforts toward a vibrant, successful domestic biofuels industry,” he wrote.