The final 2019 Renewable Fuel Standard volumes are out, and one thing has become abundantly clear -- EPA either doesn't believe it has the authority to reallocate biofuels gallons lost to small refinery waivers, or it is reviewing the program internally and will announce changes at a later time.
Though RFS volumes were raised in all categories minus the corn-ethanol number, we know the waived gallons were not reallocated by looking at the percentage of renewable fuel mandated in the fuel supply next year.
EPA raised the total percentage from 10.67% to 10.97%. Had the agency decided to reallocate gallons to other obligated parties, it would have increased the percentage by substantially more. The agency raised the percentage from its June proposal by just .09%. By EPA's own estimates, 2.25 billion gallons of biofuels were not blended in 2016 and 2017, because of waivers.
Following the release of the final volumes, Sen. Charles Grassley, R-Iowa, said he believes EPA Acting Administrator Andrew Wheeler is examining how the agency grants waivers.
"After a meeting with Acting Administrator Wheeler yesterday, I'm optimistic about the potential for a revisiting of this practice," Grassley said in a statement.
"It would be long overdue and show that the Trump administration and Acting Administrator Wheeler care about righting the ship at EPA after the prior administrator's mismanagement and poor leadership. The handling of these applications is ripe for review. There's no good reason oil companies making billions of dollars in profits should be exempted from following the law as passed and intended by Congress."
Most recently it was reported Chevron received such a waiver, although the company reported net profits of $9.2 billion last year.
"The biofuels blending levels for 2019 are good news for farmers, biofuels producers and all Americans," Grassley said. "The increased levels are an encouraging development after a year of underwhelming and often disappointing news from EPA. These levels are a promise made by EPA in line with congressional intent and the spirit of the Renewable Fuel Standard law. The true test of this promise is with the implementation of the program and how many gallons of biofuels are actually blended."
Grassley pointed to the higher final volumes for biodiesel and cellulosic ethanol, as "very promising and will help significantly...That's a significant bright spot in the agricultural economy and for farmers who haven't had a whole lot of good news the past few years."
The National Biodiesel Board, however, was unimpressed by the final volume of 2.1 billion gallons for biodiesel in 2019, in light of losing some 300 million gallons of demand from waivers.
"EPA recognizes that the biodiesel and renewable diesel industry is producing fuel well above the annual volumes," NBB Chief Executive Officer Donnell Rehagen said in a statement. "The industry regularly fills 90% of the annual advanced biofuel requirement. Nevertheless, the agency continues to use its maximum waiver authority to set advanced biofuel requirements below attainable levels."
In the final rule, EPA indicates it has not received small refinery waiver requests for 2019. So the agency estimates zero gallons of fuel will be exempted in its RVO formula.
The NBB said in a news release the EPA has "estimated zero gallons every year since 2015."
Following the RVO release, the American Petroleum Institute said in a news release the latest volumes increase shows the RFS is "broken."
API Vice President of Downstream and Industry Operations Frank Macchiarola said the ethanol volumes increase should "concern" consumers.
"Implementing this broken program year after year simply doesn't make sense," he said. "We need a comprehensive legislative solution that sunsets the RFS."
Monte Shaw, executive director of the Iowa Renewable Fuels Association, said in a statement that he believes the EPA had the authority to reallocate lost biofuels gallons.
"We are left hoping that Acting Administrator Andrew Wheeler will take a more judicious approach to exemptions," he said. "If not, President Trump's pledge to protect the RFS and American farmers will be hollowed out from inside his own administration."
Todd Neeley can be reached at email@example.com
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