RFS combatants make final arguments in White House meetings

Source: Amanda Peterka, E&E reporter • Posted: Monday, September 29, 2014

Interest groups and companies with a stake in the renewable fuel industry have been lining up to visit the White House in the past three weeks as officials wrap up their review of a contentious rule setting the nation’s 2014 mandates for corn ethanol advanced biofuels.

Stakeholders have met with White House officials at least 12 times since Sept. 5 on U.S. EPA’s final rule, according to meeting records released this week by the Office of Management and Budget and separate reports of meetings by trade groups. Last week was the busiest, with OMB holding seven meetings, some of them back-to-back.

Most of the meetings have been with groups that have publicly opposed all or part of the renewable fuel standard, or RFS, the policy through which EPA sets the yearly mandates. About 40 representatives from groups or companies that have expressed concerns with the RFS have attended meetings in the last three weeks, compared with fewer than 10 representatives who are generally pro-RFS.

The rash of meetings represents a last-minute bid by groups to influence the Obama administration’s final decision on the renewable fuel standard. Last November, EPA took the unprecedented step of proposing to roll back the 2014 mandates for both corn ethanol and advanced biofuels, both compared with 2013 production and the levels that Congress wrote into the 2007 statute that created the RFS.

EPA based its proposal on the grounds that there’s a limit — the so-called blend wall — to the amount of ethanol that can be used in petroleum gasoline and on a slower-than-expected ramp-up of the domestic advanced biofuels industry. But in the months since issuing the proposal and after a firestorm of opposition from farm country, Obama administration officials have indicated that they would raise the mandates.

According to White House records, the meetings in the last few weeks at OMB have featured familiar RFS combatants, including prominent critics such as the American Petroleum Institute and members of the Smarter Fuel Future coalition of oil interests, livestock organizations and environmentalists. Vocal backers of biofuels such as the Renewable Fuels Association and Growth Energy have also made the trip to the White House.

But also among the list of attendees in the past few weeks are small refineries and a major airline that are seeking exemptions for oil operations that don’t have the capacity to blend their own biofuel. Those merchant refiners must instead show compliance with the mandates by purchasing credits from other refiners and biofuel blenders.

Wyoming Refining Co., a small refining outfit with a capacity of 14,000 barrels a day, told White House and EPA officials in a meeting Sept. 18 that it expected the cost of purchasing credits in 2013 and 2014 would rank among its top five operating expenses.

The RFS acts to “transfer wealth” from small refineries to large integrated refineries, Wyoming Refining told the officials in a 50-page handout. Small refiners are being “financially disadvantaged and destabilized and are not securing relief from EPA,” the company said.

On Sept. 10, OMB met with officials from Delta Air Lines Inc. and its refinery subsidiary Monroe Energy who had a similar message. They handed administration officials a copy of a petition filed in January that asked EPA to shift the compliance burden of the RFS away from refiners that don’t blend their own biofuel, according to the meeting records.

“Shifting the burden to blenders is the most efficient and effective way for EPA to place the RFS program on a manageable trajectory while supporting continued growth in renewable fuels over time,” Monroe Energy counsel David DeBruin wrote.

The American Petroleum Institute, which had three representatives attend a Sept. 15 meeting with White House officials, today continued to press EPA on the renewable fuel standard, arguing in a letter that because of delays, the agency lacked the authority to increase specifically the mandate for biodiesel, an advanced biofuel made from soybean coil, used cooking grease and animal fat. EPA in November 2013 proposed to set the biodiesel mandate at 1.28 billion gallons, the same level as the 2013 target, rather than raise it to reflect last year’s actual production of about 1.8 billion gallons.

The Clean Air Act, which contains the renewable fuel standard, treats biodiesel differently from other types of biofuels, requiring EPA to determine the yearly target a year before the mandates for other categories of biofuels. By statute, then, EPA was supposed to have finalized the 2014 biodiesel targets in the fall of 2012.

“The Clean Air Act expressly compels EPA to provide a 14-month lead time when modifying the mandate,” wrote Bob Greco, director of downstream activities for API. “Pursuant to the Clean Air Act’s unambiguous language, EPA was required to have finalized any increase to the 2014 biomass-based diesel mandate by October 31, 2012. Furthermore, political gamesmanship has delayed the 2014 requirements, and as a result EPA’s authority to increase the 2016 biomass-based diesel standard is soon to pass.”

The National Biodiesel Board, which represents biodiesel producers, has called on EPA to raise the 2014 biodiesel number.

“Unfortunately this is more of the same from API trying to play politics with the RFS,” said Anne Steckel, NBB’s vice president of federal affairs, in an email. “Clearly everyone wishes this process had moved faster but the courts have made clear that agencies can proceed with rule-makings even when statutory deadlines are not met.”

Fuels America, a coalition of biofuels, agriculture and national security interests, today launched a new ad charging that the Obama administration stands to leave the biofuels industry “at the mercy of the oil industry” if it does not increase its proposed mandates. A TV version of the ad will run Sunday through Tuesday in the Washington, D.C., area, while a radio version is scheduled to run for a week.