US EPA pleads for some RFS understanding

Source: By Herman Wang, Platts' The Barrel Blog • Posted: Wednesday, February 25, 2015

Attendees of the National Ethanol Conference in suburban Dallas last week who were hoping to hear, at long last, what biofuels volumes the US Environmental Protection Agency would require in the overdue 2014 and 2015 Renewable Fuel Standards likely left disappointed.

No such proclamations were issued, beyond a familiar-sounding promise from Chris Grundler, director of the EPA’s Office of Transportation and Air Quality, that the 2014, 2015, and 2016 rules would be released this spring.

What they did get from Grundler, though, was a heartfelt apology for the EPA’s chronic inability to issue the annual RFS rules on time – and a plea for understanding.

“I wanted to come to Texas and personally tell you how sorry I am that we did not get our work done,” Grundler said in his remarks at the conference.

He then went on to explain that his staff of about a dozen, stung from attrition due to recent budget cuts, has been beleaguered not only with trying to finalize the 2014 RFS, but also with lawsuit threats from both the oil and biofuels industries over the biofuels blending mandate and other fuels-related regulations.

“Defending those lawsuits will take up my people’s time and my lawyers’ time,” he said, calling them “distractions.”

Of course, it was the EPA’s decision to cut the blending mandate for 2014 that unleashed a flood of comments, lawsuit threats and Freedom of Information Act document requests that appear to have overwhelmed Grundler’s office.

Grundler had, at last year’s National Ethanol Conference in Orlando, pledged to finalize the 2014 rule by that spring, a goal obviously missed.

That proposed 2014 RFS, which called for 15.21 billion gallons of biofuels to be blended, down from 16.55 billion gallons in the 2013 rule, has since been tabled indefinitely, and the EPA has gone on to miss the statutory deadline to finalize the 2015 RFS, leaving many conference attendees frustrated.

Renewable Fuels Association President and CEO Bob Dinneen, in his keynote address just before Grundler took the stage, minced no words in criticizing the EPA for how it has handled the RFS.

“Every day the agency allows the RFS to drift in a sea of uncertainty is a day the agency is in violation of the law,” Dinneen said, adding that the delays could jeopardize more than $30 billion in ethanol investments. “It is not a trivial violation.”

Dinneen characterized the proposed 2014 RFS cut as “a devastatingly negative signal … sent to farmers making planting decisions, marketers weighing whether or not to install blender pumps to enable E15, and investors determining the efficacy of cellulosic ethanol market opportunities.”

Speaking to reporters after his speech, Grundler acknowledged the criticism but said setting the annual RFS blending volumes is not easy. In fact, if it were up to him, the RFS would not be an annual rule, as required by Congress, he said.

“These policy decisions about fuels and biofuels intersect so many parts of public policy outside of EPA’s sphere – trade policy, foreign policy, economic policy, agriculture policy, environmental policy,” Grundler said. “For Bob to say, ‘This is all easy, what’s wrong with EPA?’ I don’t take offense, but it’s not easy to deal with these annual rulemakings and to do it through a public process.”

To the attendees at the conference, Grundler concluded his speech with another plea – this time, for civility, as the EPA attempts to, in his words, get the RFS “back on track.”

“The RFS debate in Washington has gotten overheated,” he said. “It’s gotten ugly at times. My hope is that we can find a way to have a civil discourse and find a practical way forward that will work for everyone.”

Given how contentious the RFS has become – calls in Congress to reform the statute have grown louder with the delays – that’s likely another of Grundler’s wishes that will go unheeded.