Political Football Season Returns with RFS

By Donnell Rehagen, CEO, National Biodiesel Board

Special to The Digest

If you’re craving the excitement of live sports played by highly paid professionals, perhaps you’ll want to watch the back and forth in Washington’s annual Renewable Fuel Standard game. On the other hand, if you’re looking for something where the rules are clearer and the timing more predictable, then perhaps you’ll tune in to cricket matches instead.

Once again, the Environmental Protection Agency has turned the RFS into a political football. In June, the agency disclosed it is considering 52 newly filed small refinery exemptions petitions, covering compliance years from 2018 all the way back to 2011. This month, refiners upped the number to 58 petitions, one for every year between 2011 and 2016. These come on top of the flood of 85 exemptions EPA granted from 2016 to 2018 – which destroyed demand for more than 500 million gallons of biodiesel – and the 27 pending for 2019. The “gap” exemptions, as they’re called, could destroy demand for another 300 million gallons of biodiesel or more.

EPA should have immediately thrown a flag on these petitions. They disregard the January decision by the U.S. Court of Appeals for the 10^th Circuit, which said EPA abused its authority by giving the trophies to every player whether they were merited or not. Several of the “new” petitions directly defy the language of the court’s order, with refiners asking for replays on petitions DOE previously rejected. Despite the court’s ruling, EPA Administrator Andrew Wheeler handed the petitions off to the Department of Energy for another scoring attempt.

Perhaps Administrator Wheeler and the refiners are hoping that a slo-mo review will overturn the court ruling? They are missing the court’s central point. Congress designed the RFS to force the market to use more low-carbon fuels like biodiesel and renewable diesel. EPA does not have authority to move the goal line by granting exemptions and waivers at any time to anyone who asks. The agency cannot sideline the biofuel industry and allow only oil refiners on the field.

Rejecting these petitions should have been an easy play call for Administrator Wheeler. The 10^th Circuit did not change the rule book; it in fact clearly and carefully illustrated that its decision was consistent with all prior court rulings on the RFS. Nevertheless, Wheeler is now delaying the game.

Sharing the industry’s frustration, Sen. Joni Ernst (R-IA) announced that until Administrator Wheeler made clear how he would handle the new exemption requests, she would not support the nomination of Doug Benevento to be Deputy EPA Administrator. Benevento actually acknowledged to Ernst, during his confirmation hearing, that the 10^th Circuit Court decision is binding on future small refinery exemption decisions. Presumably, Administrator Wheeler could have moved the ball forward with a signal that he agrees.

After the play was dead and Benevento’s nomination vote was called off, Sen. Ted Cruz (R-TX) vowed to block it unless EPA could pull out a win-win deal for small refineries. It is unclear what option EPA could call for small refineries, but biofuel producers, farmers and rural communities know by now it would mean another lose-lose-lose for them. Administrator Wheeler is now apparently unable to break the huddle; news reports indicate EPA is indefinitely delaying this year’s RFS rule.

We can only hope this isn’t a replay of EPA’s rulemaking delays from 2013 to 2015.  Biodiesel producers and farmers would be harmed by the added uncertainty. Biomass-based diesel volumes are set more than a year in advance to provide our industry the appropriate signals for investment and growth. The mid-year proposal also provides transparency for refiners – including small refineries – to plan their compliance strategies. In multiple appearances before Congress, Administrator Wheeler has cheered his record of issuing annual rules on time.

EPA can’t run out the clock now. The agency should issue the annual rule as soon as possible. The rule should repair the damage from EPA’s abuse of small refinery exemptions and restore the market growth for biodiesel and renewable diesel that Congress intended.