RFS hearing finds new issues to dig into

Source: By Spencer Chase, AgriPulse • Posted: Friday, June 24, 2016

WASHINGTON, June 22, 2016 – There’s little that’s new about congressional examination of the Renewable Fuel Standard, but a House Energy and Commerce subcommittee gave it another try and found a few unturned rocks along the way.

Wednesday’s hearing was scheduled to examine “implementation issues” with the RFS, but there was little discussion about the conflicts that led to three years’ worth of blending requirements being issued at once last November. Instead, the questions and statements from lawmakers touched on issues with the program as a whole, as they offered familiar talking points from both sides of the RFS argument.

But the hearing also took deeper dives on some issues that hadn’t previously received much attention including: changes in land use that could be a result of the RFS, and whether refiners or marketers should be the program’s obligated parties.

When it comes to land use, Colin O’Mara, president and CEO of the National Wildlife Federation, testified that a University of Wisconsin study had shown that 7.3 million acres of land had been brought into production between 2008-2012 (He added that because the study only counted parcels of land 15 acres or larger, the number could be “very close” to 8 million acres). He said 67 percent of that land was previously considered “marginal or unsuited for cultivation” and could have been a good source of wildlife habitat. O’Mara specifically mentioned 1.6 million acres of native grasslands that were lost, potentially to produce the necessary feedstock for ethanol and other biofuels.

However, Brooke Coleman, executive director of the Advanced Biofuels Business Council, took issue with the findings.

He cited USDA studies that show the “agricultural footprint in this country continues to decline from an acreage perspective.” He said there was potential for problems in specific regions, but said land use issues being blamed solely on the RFS is a correlation and causation error, pointing rather to issues with funding for USDA conservation programs as perhaps a bigger culprit.

The hearing’s point of obligation discussion signaled a potential point of agreement between Republicans and the EPA. Janet McCabe, EPA’s acting administrator in the Office of Air and Radiation, said the agency had “several petitions” asking it to go through rulemaking to change the point of RFS compliance from refiners to marketers and that the issue is “very much on our minds at the moment.” She said the EPA plans to address the petitions, but didn’t offer a timetable as to when that might happen.

She also said the EPA believes that if it wants to make this switch, it could do so through regulation rather than legislation. While Republicans typically get riled up at the thought of the EPA working without their approval, no lawmaker voiced opposition.

Renewable fuels stakeholders, however, are leery of a potential change. Anne Steckel, vice president of federal affairs with the National Biodiesel Board, told Agri-Pulse that her members “don’t think that there’s really anything wrong right now with the point of obligation where it is.”

Bob Dinneen, president and CEO of the Renewable Fuels Association, said moving the point of obligation would “put the power of the program in the hands of the people who are most interested in killing the program.” He said it opens the door for refiners to simply decide against sending the right product to the newly obligated parties, whose hands would then be tied.

“If they change the obligation, they are rewarding the people that didn’t make (infrastructure investments) and have tried not to make the program work,” he said in an interview with Agri-Pulse. “That just doesn’t make a great deal of sense to me.”

Dinneen added that it would greatly expand the scope of required enforcement on the part of the EPA because there are more marketers than there are refiners. While RFA’s issues with the EPA are well-known (the group is currently party to litigation against the agency for use of a waiver in setting the most recent blending requirements), Dinneen says EPA has done “a decent job” with this part of RFS enforcement.

Supporters and opponents of the RFS agreed that the EPA needed to update carbon and environmental impact reports due to outdated science used in previous studies.

The EPA is currently accepting comment on the proposed 2017 RFS Renewable Volume Obligations. The comment period closes July 11.