Greenwire’s Stecker discusses next legal, legislative battles for RFS

Source: Monica Trauzzi, E&E • Posted: Monday, December 7, 2015

Following days of debate on the merits and impacts of U.S. EPA’s final renewable fuel standard volume obligations for 2014 through 2016, what is next for the legal and legislative challenges to the rule? On today’s The Cutting Edge, Greenwirereporter Tiffany Stecker discusses the legal arguments facing the agency and explains how the final 2014-2016 numbers could preview the agency’s next steps on the rule.

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Monica Trauzzi: Welcome to The Cutting Edge. Following days of debate on the merits and impacts of EPA’s final RFS volume numbers for 2014 through 2016, what’s next for the legal and legislative challenges ahead? Greenwire‘s Tiffany Stecker joins me. Tiffany, EPA released its much-anticipated numbers on Monday. It was the court-determined deadline. Were there any surprises in the final rule, and whose arguments were reflected in the changes that we actually saw from the agency?

Tiffany Stecker: So, Monica, as you said, EPA finalized their rule on Monday for 2014, 2015, 2016, with an additional biodiesel mandate for 2017. And I think there are two take-aways from this rule. The first is that EPA has increased the volumes from what they proposed earlier this year. This isn’t necessarily surprising in itself because the federal projections have said that gasoline supply is gonna be higher, and so they matched up the ethanol supply to sort of move up with that. However, EPA did increase the blend wall. They broke through the blend wall, which is the 10 percent limit that the oil industry says is kind of the maximum that ethanol should be added in the fuel supply. So, that’s interesting, and that is kind of a win for the biofuels because that sort of supports their argument that there should be more effort in trying to get more biodiesel or, I’m sorry, biofuel in the general fuel supply through higher blends like E15 and E85.

The second take-away, I think, is that even though EPA did increase the numbers, this is still below what Congress mandated in 2007. And that’s gonna play out in the courts. Should they have cut that much? This is the first time that EPA is cutting for ethanol for conventional biofuel. So, that’s something we should keep an eye out.

Monica Trauzzi: How do these numbers tee up what we might see next from the agency?

Tiffany Stecker: So, the agency, I think, at this point is trying to stand by their rule and justify it. One thing that is interesting is that according to the 2007 law that expanded the RFS, EPA has to rewrite the statutory mandates if they cut volumes, I think, by 20 percent for two consecutive years, or 50 percent in one year. They didn’t trigger that for the conventional biofuel, but they did trigger that for the advanced biofuel. So a lot of people are saying EPA has to go and do a rulemaking to address that reset provision. It doesn’t seem at this point like they’ve been working on it, so we’ll just have to wait and see how and if they address that.

Monica Trauzzi: So, once the final rule is published to the Federal Register, we expect legal action to commence. What are the chief arguments that are materializing?

Tiffany Stecker: So, RFS has already gone to court, I’m sure you know. They were challenged by the oil industry. This point forward, they could be challenged by oil industry or the biofuels folks, or both. Biofuels are saying that EPA did not interpret the statute correctly when they looked at inadequate fuel supply. The EPA interpreted that as saying that, well, the blended fuel, so the ethanol plus the gasoline, that might not have — there might not be the infrastructure to get that to consumers. Biofuels are saying that’s not how the statute needs to be read. It needs to be seen as what can be produced by biofuel makers. So that’s something that’s likely to be challenged. On the oil industry side, I’m sure they’ll challenge the blend wall. In addition, they might challenge the biodiesel mandates, because biodiesel has really increased a lot in the RFS between now and 2017, and some people are saying that the blenders, the refiners didn’t get enough notice. So that’s another thing to look out for.

Monica Trauzzi: On the Hill, there’s already been a tremendous amount of action on the RFS. We’re expecting that debate to continue. What do the latest efforts look like?

Tiffany Stecker: So, there were some amendments that were added to the energy bill that passed yesterday through the House. They didn’t make it in the final bill, but they show that there’s still a willingness to bring this issue to the forefront, whether it’s an outright repeal or as a reform. And I think that these efforts are perennial. They’re gonna keep coming up. There’s a willingness, I think, for lawmakers to bring this up; whether it goes anywhere is anyone’s guess.

Monica Trauzzi: All right. We’ll keep watching it. Thanks, Tiffany.

Tiffany Stecker: Thank you.

Monica Trauzzi: More Cutting Edge coming next Friday. We’ll see you then.

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