Oil industry will ‘vigorously challenge’ EPA proposal

Source: By Marc Heller, E&E News reporter • Posted: Monday, December 2, 2019

Petroleum companies looking to scale back federal biofuel blending mandates won’t make much progress with Congress anytime soon — but they might have better luck with EPA, an industry group said today.

The outlook for congressional action on the renewable fuel standard is “very limited,” said Frank Macchiarola, senior vice president of policy, economics and regulatory affairs at the American Petroleum Institute, in a conference call with reporters as EPA closes out a public comment period on proposed tweaks to the RFS.

Last Friday’s deadline for public comments on the proposal marked the end of one chapter of an intense lobbying campaign among biofuel industry groups, petroleum companies looking to scale back ethanol-blending requirements and lawmakers aligned with either side. Officials will now consider how and whether to change the proposal, although the timing of a final decision is uncertain.

Two main proposals are in play. One lays out the annual volumes of biofuel to be blended into the fuel supply next year, including 20.4 billion gallons of total renewable fuel, 5.04 billion gallons of advanced biofuel and 0.54 billion gallons of cellulosic biofuel.

That proposal assumes a conventional biofuel volume of 15 billion gallons, meeting congressional mandates.

The other, more contentious issue is an October supplemental proposal addressing the volumes of biofuel associated with refineries that EPA exempts from the requirements for reasons of economic hardship. The agency proposed to reallocate those gallons among other refineries, although biofuel advocates say the exact wording might not result in a gallon-for-gallon redistribution.

Macchiarola said the regulatory route appears to have more promise than legislation for API’s priorities, especially given some Republican retirements in the House, where the party already is in the minority.

While API has broad objections to biofuel policy, the group isn’t opposed to ethanol in the marketplace, he said. It’s mainly targeting the proposal to reallocate waived biofuel volumes — an idea the API will “vigorously challenge,” he added.

“We think we have a strong challenge to this rule,” Macchiarola said.

Biofuel groups have also criticized that part of the proposed regulations. They say EPA should base volume reallocations on a more accurate representation of gallons waived.

“EPA’s proposal does not ensure sufficiently accurate projections for waived gallons and, therefore, will continue to shortchange the RFS when waivers are granted,” said Kevin Ross, president of the National Corn Growers Association, in a statement.

As a final flurry of comments arrived at EPA, Senate Environment and Public Works Chairman John Barrasso (R-Wyo.) also weighed in, echoing his past criticism of the program.

Barrasso called EPA’s proposal to reallocate waived volumes of biofuel illegal, saying in a letter to EPA Administrator Andrew Wheeler that Congress never gave the agency authority to do so.

Instead, Barrasso said, the legislation creating the renewable fuel standard bars EPA from reallocating those volumes to other refineries. And Wheeler’s own past testimony to Congress suggests the agency didn’t believe it had the authority to take the action it’s now proposing, he said.

“In the end, I can’t help but view EPA’s recent proposal not only as illegal and arbitrary, but incoherent and without any legitimate purpose,” Barrasso said. “The agency should scrap it in its entirety.”

EPA’s supplemental proposal may delay a final decision on biofuel volumes as well, and industry representatives aren’t sure whether they’ll see a final rule by year’s end, Macchiarola said.

“Clearly they’re going to need additional time,” he said. “It’s sort of uncharted territory.”