RFS Reform Bill May Be Attached to Debt Ceiling Package

Source: Rachel Gantz, OPIS • Posted: Thursday, August 29, 2013

If the House Energy and Commerce Committee opts to reform the renewable fuel standard (RFS2), House Majority Leader Eric Cantor (R-Va.) may attach it to a debt ceiling package, OPIS has confirmed. That would essentially fast-track RFS reform for passage.

“The Majority Leader listed a number of options to fix this issue [of the RFS], and one option was if we came up with a good bipartisan reform agreement out of the Energy & Commerce Committee, then maybe we could try attaching it to a must pass bill like the debt ceiling,” Cantor spokeswoman Megan Whittemore told OPIS this morning. She did not elaborate on what other options were being considered.

Cantor made the comments during a July 25 meeting between himself and a handful of top petroleum industry executives, including those representing Valero, Marathon Petroleum, Tesoro, Phillips 66, Chevron, ExxonMobil and PBF Energy, several sources confirmed to OPIS. Additionally, American Petroleum Institute President Jack Gerard and American Fuel & Petrochemical Manufacturers President Charles Drevna were in attendance.

The July 25 Capitol Hill fly-in was held for oil industry executives to discuss the need to end the RFS.

There is growing interest in addressing what many view as problems associated with the RFS, including the recent climb in Renewable Identification Number prices, the impending ethanol blendwall (the point at which 10% ethanol blends become saturated) and the slower-than-expected production growth in cellulosic biofuel. In its recently announced finalized 2013 RFS figures, EPA acknowledged concerns over the impending ethanol blendwall, noting it plans to propose reductions to both the advanced biofuel and total renewable fuel figures for 2014.

Additionally, a slew of bills to either repeal or reduce the RFS have been introduced, and the House Energy and Commerce Committee is working on a legislative compromise that would likely reduce the overall biofuels provision.

According to a source in attendance at the July 25 meeting, Cantor said he was aware of RFS reform discussions hosted by House Energy and Commerce Committee Chairman Fred Upton (R-Mich.) and would support what Upton decided. According to the source, Cantor said he supported full RFS repeal, but reiterated he would defer to what his colleagues in the energy committee decided.

Meanwhile, the Treasury Department has moved up the estimated arrival of the debt ceiling, or when the U.S. reaches its $16.7 trillion borrowing limit, to mid-October, adding pressure to lawmakers and the administration working towards a solution. “The debt ceiling is a pretty controversial issue by itself. It then becomes a loaded proposition” with the attached RFS reform bill, the source in attendance at the July meeting noted.

During its August recess this month, a handful of House Energy and Commerce Committee members have been working on possible RFS compromise options. Once Congress returns early next month, those lawmakers will “put together a policy framework of options” to fellow energy committee members,” a source familiar with the issue told OPIS. The options will likely run the gambit from full repeal to compromise reductions, the source said. “It’s clear they’ve got to do something,” the source added.

“The Energy and Commerce Committee has clearly crossed the Rubicon on the need to legislate on the RFS,” the source familiar with the issue continued. “The problems are self-evident and the consequences of doing nothing pose political, as well as economic, dangers in an election year (2014). For that reason, the White House (OMB, in particular) and EPA are fairly unified in their desire to move purposefully on the blend wall,” the source continued. “We have the potential here for bipartisan, compromise legislation developed the old-fashioned way — rational policy discussions and the constructive engagement by all stakeholders toward a solution. Who would have thought that was possible these days in Washington?” the source added.

For its part, the White House has publicly said it supports the RFS. Speaking in July at a policy briefing hosted by The Hill, Heather Zichal, President Obama’s top energy and climate advisor, said that “[t]he backbone of the [climate] policy is the RFS” and that “calls to repeal the RFS are nothing but shortsighted.” However, she didn’t mention how the administration feels about efforts to reduce or alter the biofuels provision, which will likely be more legislatively successful than a full outright repeal.