EPA Wants Steeper RFS Cut

Further Renewable Fuel Volume Reductions Sought

Todd Neeley
By  Todd Neeley , DTN Staff Reporter
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The U.S. Environmental Protection Agency has proposed further cuts to Renewable Fuel Standard volumes. (DTN file photo by Greg Horstmeier)

OMAHA (DTN) -- The U.S. Environmental Protection Agency wants to further reduce the renewable volume blend requirements for advanced biofuels, biomass-based diesel volumes for 2018 and 2019, and the total renewable fuel volumes in the Renewable Fuel Standard, the agency announced in a notice on Tuesday.

The proposed reductions are in addition to the agency's proposal to cut those volumes already. The deadline for the final RFS is Nov. 30. The latest change will be subject to an additional 15-day public comment period.

In the EPA notice for data availability, the agency is seeking comment on a proposal to reduce the 2018 advanced biofuel volume requirement from the proposed level of 4.24 billion gallons to 3.77 billion gallons and also to reduce the 2018 total renewable fuel volume requirement from the proposed level of 19.24 billion gallons to 18.77 billion gallons. The EPA said in the notice the new proposal is based on concerns about biofuel imports.

The announcement was met with shock and anger from renewable fuels groups and a United States senator. Biofuel and agriculture interest groups had already opposed the agency's proposed cuts to the RFS before this latest notice was released.

Sen. Charles Grassley, R-Iowa, said in a statement it appears President Donald Trump's administration is backing down from support for biofuels.

"It's outrageous that the EPA would change course and propose a reduction in renewable fuel volumes," Grassley said.

The senator added, "This seems like a bait-and-switch from the EPA's prior proposal and from assurances from the president himself and cabinet secretaries in my office prior to confirmation for their strong support of renewable fuels. Reducing volumes would undermine domestic renewable fuel production. That's contrary to the goal of America first, employing U.S. workers, and improving the U.S. economy.

"It's contrary to the goal of meeting the country's fuel needs, which is critical to economic growth. This all gives me a strong suspicion that big oil and refineries are prevailing, despite assurances to the contrary. I plan to press the administration to drop this terrible plan."

IMPORT CONCERNS

In the notice, the EPA expresses concern about the potential influence of biofuel imports into the United States. In particular, EPA raises concern about what could happen to the price of advanced biofuels due to pending trade actions against imports from Argentina and Indonesia on the overall price of advanced biofuels.

"Commenters raised concerns that along with affecting prices of renewable fuels in the U.S., imports may also have an impact on the energy independence and security status of the U.S.," the notice said.

The commenters EPA frequently refers to in the notice are the top lobby organizations for the petroleum industry -- the American Fuel and Petrochemical Manufacturers and the American Petroleum Institute. EPA cites comments about imports, prices and blend levels from AFPM and API no fewer than seven times in the notice.

Citing energy independence issues, EPA wants more comments on the role imports should play when EPA considers waiver authority and setting standards for blend volumes.

Further, EPA cited concerns about the high costs of advanced biofuels. EPA stated pending actions setting import duties on imported biodiesel from Argentina and Indonesia could hinder the supply of those advanced biofuel products. Thus, EPA states it is necessary to seek further comments on blend volume requirements for 2018 and 2019.

Doug Whitehead, chief operating officer of the National Biodiesel Board, said he was surprised by the EPA's latest action.

"EPA's proposal earlier this summer was inadequate, underestimating the power of domestic biodiesel production and ignoring the intent of the law," he said in a statement to DTN.

Whitehead added, "This request for comment is even more disappointing. NBB will be working with EPA to demonstrate the industry's proven success record, continued growth and impacts to American workers who were promised that this administration had their back."

Renewable Fuels Association President and CEO Bob Dinneen said in a statement that the EPA's action is confusing.

"There is no rationale for further lowering either the 2018 advanced biofuel volume requirement or the total renewable fuel volume," he said.

Dinneen added, "As we outlined in our recent public comments to EPA on the proposed 2018 RVO, we see no statutory basis whatsoever for attempting to limit biofuel imports through the use of a general waiver. It is also likely that using RFS waiver authorities in an attempt to limit exports would be perceived as a non-tariff trade barrier, which could run afoul of U.S. obligations under World Trade Organization rules."

Dinneen said the agency "appears to be adopting API's argument that 'domestic supply' somehow means 'domestic production,' when this is clearly not the case.

"The domestic supply of biofuels includes both imported and domestically produced biofuel volumes, just as USDA recognizes in its monthly supply-demand estimates that the total domestic supply of corn includes corn imports from other countries," he said.

"The RFA will formally submit comments for the record, but we don't see justification for any further reductions to the 2018 RVO proposal. Doing so would only harm U.S. consumers."

Todd Neeley can be reached at todd.neeley@dtn.com

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Todd Neeley