Ethanol, Ag Groups File RFS Comments

Source: By Todd Neeley, DTN Staff Reporter • Posted: Monday, February 7, 2022

Growth Energy Tells EPA Proposed RFS Cuts for 2020 ‘Plainly Unlawful’

Agriculture and biofuels groups have asked the EPA to pull its proposal to retroactively cut Renewable Fuel Standard volumes for 2020. (DTN file photo)
Agriculture and biofuels groups have asked the EPA to pull its proposal to retroactively cut Renewable Fuel Standard volumes for 2020. (DTN file photo)

LINCOLN, Neb. (DTN) — It was a record-setting year for both biofuels production and corn production in Iowa, despite what biofuels and agriculture groups say is ongoing confusion coming from EPA on the Renewable Fuel Standard and its place in growing biofuels markets.

In comments submitted Friday to EPA on the latest RFS proposal, the Iowa Corn Growers Association and the Iowa Renewable Fuels Association said farmers and biofuels producers in the state continue to roll along despite proposals by EPA to cut corn-ethanol’s portion of the RFS retroactively.

Iowa ethanol plants produced a record 4.4 billion gallons of ethanol in 2021, according to the groups’ comments, while Iowa biodiesel plants manufactured 340 million gallons of biodiesel. The combined 4.74 billion gallons of production in 2021 was an all-time record.

The groups said their work proves farmers and biofuels producers are ready to do more to reduce greenhouse gas emissions if given the green light by the Biden administration.

The proposal put forward in December would retroactively cut the corn-ethanol portion of RFS volumes below 15 billion gallons at 12.5 billion for 2020 and sets the level at 13.32 billion for 2021.

The proposal delivers a victory to oil producers who have been asking for cuts to conventional ethanol for some time. The agency would then increase corn-ethanol volumes to 15 billion gallons in 2022.

The negative RFS news for biofuels and agriculture was offset by EPA’s proposed rejection of the pending 65 small-refinery exemption requests for 2016 through 2021. As part of the announcement, EPA proposed a new method for determining who receives exemptions.

The ICGA and IRFA said the proposal to reopen the 2020 volumes gives biofuels producers the impression that any year’s RFS volumes is subject to change.

“However, if after years of insisting that it does not have the authority to reopen previously finalized RFS rules, EPA now finds the authority to do so because the impact of SREs (small-refinery exemptions) was improperly accounted for in 2020, why should we stop with reopening only the 2020 rule?” the groups said in comments.

“To be fair, why don’t we reopen the 2012-2019 finalized RVO rules as well, since none of those final rules properly accounted for the impact of SREs either? Why would EPA choose to reopen and retroactively reduce the one and only rule in which improper accounting of SREs benefited biofuel demand, while leaving the 2012-2019 rules in place where improper accounting of SREs destroyed over 4 billion gallons of biofuel demand? If the authority exists to go back in time to reopen a final rule, the authority must also clearly exist to reopen a closed compliance period for annual RVOs such as those in 2012-2019.”

The groups said the current proposal could be used to “rapidly accelerate its progress toward achieving the Biden administration’s ambitious targets” aimed at combating climate change.

“The multi-year proposed rulemaking currently under consideration is truly a case of the good, the bad and the ugly,” the groups said.

“EPA’s 2022 proposal along with the 250-million-gallon supplemental volume proposed in response to the Americans for Clean Energy remand is the good. EPA’s 2021 proposal, which falls short of both the volumes called for in the law as well as the actual volumes of biofuel used in 2021, is the bad. And finally, EPA’s unprecedented proposal to reopen and retroactively reduce the volumes in the finalized 2020 rule is the ugly.”

ICGA and IRFA asked EPA to withdraw the proposal to reopen and retroactively reduce the 2020 volumes.

“It is hard to imagine a more damaging action to undermine the current and future credibility and certainty of the RFS than the one being proposed here by EPA,” they said in comments.

RFS PROPOSAL ‘PLAINLY UNLAWFUL’

Growth Energy submitted a 643-page comments document to EPA on Friday. The group said the agency “must adopt a framework for performing a reset that is faithful” to the RFS program’s statutory structure and purpose.

“In proposing standards for 2020, 2021 and 2022 EPA invokes its reset authority for the first time,” Growth Energy stated.

“Contrary to EPA’s proposed approach, the reset is not a valid mechanism to re-open previously finalized standards, to override congressional directives and priorities, or to engage in an amorphous balancing of factors as it sees fit. Rather, Congress intended reset mechanism to be a targeted prospective correction for the specific conditions that triggered the reset. In conducting a reset, EPA must still establish volume requirements that, first and foremost, further Congress’s market-forcing policy and objectives, to the extent that a volume of renewable fuel use is feasible and will not cause important and severe harm of the type that would trigger another waiver.”

In addition, Growth Energy said EPA’s proposal to reset 2020 volumes is not legal.

“This is plainly unlawful,” the group said.

“EPA has no power to relieve obligated parties of their noncompliance simply because they did not comply. Doing so nullifies the RFS program. Congress designed the RFS program to force the market to use increasing volumes of renewable fuel each year, and the threat of penalties for noncompliance is the mechanism by which the program implements this design.”

DANGEROUS PRECEDENT

Geoff Cooper, president and CEO of the Renewable Fuels Association, said his group was “troubled” by the 2020 proposal because it runs contrary to what the agency has said about its power under the RFS.

“Doing so would set a dangerous precedent and contradict the agency’s long-held position that it does not have the authority to retroactively adjust RFS standards once finalized,” Cooper said in comments to the agency.

“Moreover, the action is unwarranted since the RVO includes a self-correcting mechanism that caused actual renewable fuel volume requirements to adjust lower with reduced gasoline and diesel consumption stemming from the effects of COVID-19 (e.g., the 15-billion-gallon conventional renewable fuels requirement automatically adjusted to about 13.2 billion gallons). Therefore, there is no rationale or legal basis for the proposed cuts to the 2020 RVO.”

Cooper said if proposed cuts for 2020 and 2021 were finalized, they would have “devastating results” for the economy and environment.

“The proposed cuts could potentially erase 2.9 billion gallons of conventional renewable fuel blending requirements, reduce corn demand by 1.05 billion bushels, and increase gasoline consumption by as much as 2 billion gallons,” he said.

“If finalized, the proposed volumes could increase GHG emissions by an estimated 10.3 million metric tons — equivalent to the annual emissions of three coal-fired power plants or 2.1 million passenger cars.”

“EPA’s proposed use of the ‘reset’ authority to establish the 2021 RVO and retroactively adjust the final 2020 RVO is beyond the agency’s statutory authority, runs contrary to statutory intent, and is inconsistent with past positions and actions taken by the agency.”

AMERICAN COALITION FOR ETHANOL

Brian Jennings, CEO of the American Coalition for Ethanol, said in comments that EPA has not enforced the RFS as was intended by Congress.

“When it comes to setting annual blending obligations under the RFS, it appears EPA’s strategy in previous rulemakings has been to make sure neither biofuel producers nor oil refiners were satisfied, leading the agency to mistakenly believe it got the volumes ‘just right,'” Jennings said.

“Make no mistake, this is how refiners have repeatedly lulled EPA into helping them escape their legal responsibility to blend increasing volumes of renewable fuel. Congress knew better. When the RFS was enacted, refiners were deemed ‘obligated parties’ because Congress recognized that, left to their own devices, refiners would not reduce the carbon intensity of gasoline or provide consumer access to blends above E10.

“It is disappointing EPA does not also see through the refiners’ crocodile tears.”

Read more on DTN:

“EPA Proposes Corn-Ethanol Cuts to RFS,” https://www.dtnpf.com/…

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

 

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