EPA Nears Release Of Key RFS ‘Set’ Plan As OMB Commences Review

Source: By Stuart Parker, Inside EPA • Posted: Sunday, November 13, 2022

According to OMB’s website, EPA sent the rule for review Nov. 9. Typically, OMB review can take up to 90 days, but can be faster or slower, depending on the circumstances.

The set rule will determine biofuels blending mandates for refiners for all categories of biofuel under EPA’s own authority for the first time, after statutory blending targets expire at the end of the year. EPA already relies on its own regulatory authority to set biodiesel volumes, but the set rule will extend this to other categories of fuel, including the conventional ethanol that still satisfies most of the RFS’ overall mandate.

The rule is already over a year late according to Clean Air Act deadlines. It is expected to set blending volumes for all types of biofuel covered by the RFS for 2023 and 2024 at a minimum, and is also anticipated to grant RFS compliance credits for the first time for electric power generated from biomass and used in transportation. Therefore, the regulation will be precedent-setting for the long-term future of the RFS.

Biofuels groups and their supporters in Congress are pressing EPA to set the highest possible blending volumes and to maintain its policy of refusing economic hardship waivers for small refineries.

But biofuels groups are also wary of how EPA will award compliance credits, known as renewable identification numbers (RINs), to producers of electricity from biomass, such as biogas producers using landfill gas to generate power. Liquid biofuels groups warn that any system for allocation of such “eRINs” must guard against fraud, and not diminish the blending volumes for liquid biofuels. It remains unclear exactly which entities would earn eRINs.

Biofuels supporters also want EPA to focus on approving more liquid cellulosic biofuels to earn credit under the RFS, and to clear a backlog of pending applications for production techniques or “pathways” to earn RINs.

“Before the agency entertains new pathways” to the creation of eRINs, “let’s address the backlog” of existing applications for EPA-approved pathways for liquid cellulosic RIN generation, said Emily Skor, CEO of biofuels group Growth Energy, on a Sept. 22 press call.

Refining sector groups, meanwhile, are pressing EPA to use the set rule as an opportunity to reduce blending volumes on a long-term basis.

And some environmentalists are opposing issuance of eRINs as part of their general opposition to the RFS, which they say fails to achieve its statutory purpose of reducing greenhouse gases, causes water and air pollution, and promotes land-use change that threatens the habitats of several species.

In a May 23 letter to EPA, 11 groups including Center for Biological Diversity, Earthjustice, Friends of the Earth, National Wildlife Federation and Sierra Club warned the agency not to support steps that will increase biofuels use.

With regard to eRINs, the groups wrote, “Regardless of how the program is designed or who is awarded the credit, new problems with RIN verification and potentially RIN fraud are probable. In climate and environmental terms, the likely electric feedstocks under the cellulosic mandate would become yet another conduit for federal subsidies to harmful sources of bioenergy.”

Election Delay

Biofuels industry sources have expected that EPA would wait until well after the Nov. 8 midterm elections to release the set proposal, in order to avoid controversy over the issue as voters go to the polls.

Under a consent decree with Growth Energy, EPA was due to release the proposal Nov. 16 and finalize it by June 14.

The parties recently agreed to extend the proposal date until Nov. 30, but kept the deadline for the final rule unchanged.

The parties said in a legal filing that the extension is agreed on the “understanding that EPA does not intend to seek further extensions of any deadline for action established by the decree and will make best efforts to sign a final rule in advance of the current deadline of June 14, 2023.”

Growth Energy’s Skor said, “Should the new proposal deadline pass without EPA action, Growth Energy stands ready to pursue further enforcement with the court.”

In the set rule, EPA will for the first time set biofuel blending volumes under its own authority for all types of biofuel under the RFS, rather aiming for statutory targets, after the targets expire this year.

Previously, the agency had to rely on waiver authority or “reset” mechanisms to depart from statutory blending volumes. The exception is biomass-based diesel, for which statutory volumes already expired several years ago, and therefore EPA has been setting this volume under its own authority for some time.

EPA must however take into account several statutory factors as it sets blending volumes, including production and consumption of renewable fuels, environmental and economic impacts, and energy security.