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WASHINGTON, D.C. — Just prior to the June 1 court-imposed deadline, the U.S. Environmental Protection Agency (EPA) issued its long-awaited revised Renewable Volume Obligation figures under the Renewable Fuel Standard (RFS). The proposal calls for refiners to use 17.4 billion gallons of renewable fuels in 2016, with approximately 14 billion gallons coming from traditional corn-based ethanol and 3.4 billion gallons coming from advanced biofuels.
The revised figures are not only drawing ire, but they are reportedly opening up the possibility for lawsuits.
When the RFS was first passed in 2007, a target of 22.25 billion gallons from renewable fuels was set. The EPA proposed a 16.3-billion gallon quota for 2015, also much lower than the original 20.5-billion gallon target set in 2007.
Several ethanol groups slammed the new EPA proposal. "[Friday's] proposals are better than EPA's initial proposed rule for 2014, but they still need significant improvement," said Tom Buis, CEO of Growth Energy. "We have sincere concerns that these proposed numbers are not moving forward to the degree that Congress has intended for the RFS."
The EPA proposal "gives in to Big Oil's lies and turns its back on consumers, fuel choice and the environment," added Iowa Renewable Fuels Association Executive Director Monte Shaw. "The Obama Administration has no legal authority to reduce the ethanol numbers. For conventional biofuels, this is a path to nowhere. The proposed ethanol level for 2016 is less than what we already produced in 2014. This proposal will not crack the petroleum monopoly and will not allow consumers to benefit from the choice of lower-cost E15 and E85. As we’ve done over the past year, we’ll continue to work with all parties to fix this proposal.”
Buis stressed, however, that these are proposed rules, not yet law. In fact, the EPA will hold a public hearing on its proposed Renewable Volume Obligation numbers on June 25 in Kansas City, Kan., with public comments open until July 27. The EPA does not expect to finalize the standards until approximately Nov. 30.
The proposal is likely to invite lawsuits, Stephen Brown, vice president of federal government affairs for Tesoro Corp. told FuelFix.
“If the goal of the administration was to set the stage for protracted and complex litigation over the rule when finalized later this year, today’s proposal is a giant step toward that objective.” Brown said. “One has to wonder whether the proposed 2016 volumes are anything more than an invitation by EPA to Congress to intervene via reform legislation.”
Bill Day, vice president of communications for Valero Energy Corp., added that legislation will be needed to overhaul the RFS.
“If there’s going to be a mandate, the mandate needs to be realistic and achievable, and based on actual fuel usage,” Day told the news outlet. “The targets shouldn’t be based on ambitions, and the mandate shouldn’t pick winners and losers among industries.”
One source of a potential lawsuit could be the National Corn Growers Association, which said the EPA has chosen to "ignore the law," reported Bloomberg.
“We are evaluating our legal options for defending the law and protecting the rights of farmers and consumers,” Chip Bowling, president of the trade organization, said in a statement. “We will fight to protect and build profitable demand for corn.”
THE OTHER SIDE
Janet McCabe, acting assistant administrator for EPA's Office of Air and Radiation, told reporters the Renewable Volume Obligation proposals are fair based upon the marketplace.
"Even as we recognize the success of the program so far, we also must recognize real-world limitations to the future growth in the near future," she said. "These volumes actually represent more than gradual growth. They represent ambitious growth and are appropriate in light of Congress' intent."
The American Petroleum Institute stated the volume obligation cutbacks are evidence Congress needs to repeal or significantly alter the RFS, said President and CEO Jack Gerard.
"Some of [the EPA's] rosy assumptions raise questions of how much ethanol can ultimately be consumed," Gerard told the Des Moines Register. "We're at the point of the government trying to mandate a consumer choice that the consumer is rejecting."