Opinion: SCOTUS, EPA & the future of biofuels

Posted: Thursday, September 22, 2022

The Supreme Court’s recent decision in West Virginia v. EPA has left many clean energy advocates with more questions than answers. Depending on who you ask, West Virginia is either a long-overdue check against Environmental Protection Agency (EPA) overreach or a devastating blow to the Biden administration’s climate agenda. Whatever the merits of the decision, the long-term impact of West Virginia on the biofuels industry will not be fully apparent for some time. Near-term, however, there’s a strong case to be made that the West Virginia decision only elevates the importance of the Renewable Fuel Standard (RFS) as the best tool for EPA to address climate change, given the clear and compelling directive from Congress to expand low-carbon biofuels.
 
Background on West Virginia v. EPA
 
West Virginia dealt with EPA’s authority to regulate greenhouse gas (GHG) emissions from power plants. Under the Clean Air Act, EPA is required to establish “performance standards” for certain pollutants from power plants that incorporate the “best system of emissions reduction” or BSER. Under the Obama administration’s Clean Power Plan (CPP), EPA determined that the BSER for power plants included both onsite technologies and “generation shifting” – essentially requiring power plants to cut output, build or invest in alternative power sources, or purchase emissions credits under a “cap-and-trade” scheme.
 
The Court held that because the CPP would have a transformative effect on the nation’s power sector, it raised a “major question” that EPA could not implement without clear congressional authorization. The Court also determined that EPA could not make decisions of “vast economic and political significance” based on sections of the Clean Air Act that, in the Court’s view, represented a vague “backwater.” In short, the Court held that EPA could force power plants to choose better technologies for cleaning up power plants, but not push them to change fuels or shut down.
 
Impact of West Virginia on biofuels industry
 
Fortunately, West Virginia does not directly limit EPA’s authority on biofuels. Unlike some statutes, the RFS provides clear direction from Congress when it comes to combating climate change through renewable fuels. For 17 years, the RFS stood the test of time and reshaped the entire transportation fuel sector. It explicitly directs EPA to “ensure” annual renewable volume obligations (RVOs) are blended into our nation’s transportation fuels. It also empowers EPA to determine which entities are required to satisfy those obligations and establishes clear deadlines to implement these directives.

Other impacts of West Virginia
 
In other areas of climate change regulation, the West Virginia decision may give challengers powerful ammunition against EPA authority. For example, the major questions doctrine announced in West Virginia could fuel cases against EPA’s waiver of federal preemption of California’s Advanced Clean Car program, EPA’s light-duty vehicle GHG emission regulations, and the U.S. Securities and Exchange Commission’s recent GHG disclosure rule.
 
Moving Forward on Clean Energy
 

It is much more difficult to argue that the “major questions” doctrine stands in the way of continued progress for biofuels under the RFS. If anything, EPA has more authority starting in 2023. Until now, Congress provided EPA with specific numerical targets for biofuel blending. Starting in 2023, however, EPA is required to move beyond those volumes, establishing RVOs through a “Set” based on six factors that include climate change, rural economic development, and energy security.
 
As a result, even in the wake of West Virginia v. EPA, the Biden administration has a well-established tool that requires no further action by Congress to decarbonize the nation’s transportation fuels. That’s good news for rural workers and farmers across the U.S. who are ready to end the nation’s reliance on expensive fossil fuels.

Joe Kakesh is General Counsel at Growth Energy, the nation’s largest association of ethanol producers and supporters.

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