EPA Delays Decision on 2014 Renewable Fuel Standard to 2015

EPA Delays Decision on 2014 Renewable Fuel Standard to 2015

CRS Insights
EPA Delays Decision on 2014 Renewable Fuel Standard to 2015
Mark A. McMinimy, Analyst in Agricultural Policy (mmcminimy@crs.loc.gov, 7-2172)
December 1, 2014 (IN10189)
The Environmental Protection Agency (EPA) announced in November 2014 that it will delay issuing a
long-awaited final 2014 Renewable Fuel Standard (RFS) until 2015. The RFS sets the annual minimum
use requirements for biofuels in the nation's transportation fuel supply. EPA is required by statute to
announce the RFS for various categories of biofuels by November 30 of the preceding year, which for
2014 would have been November 30, 2013. The agency has missed such deadlines before, but not by
such a wide margin (Table 1). In announcing the delay, the agency cited "significant comment and
controversy" over its proposal for a reduction in biofuel use mandates for 2014.
At this date, EPA has also missed the November 30, 2014, deadline for issuing the 2015 RFS.
Congress established the RFS (RFS1) in the Energy Policy Act of 2005 (P.L. 109-58). Two years later, in
2007, Congress enacted the Energy Independence and Security Act of 2007 (P.L. 110-140), or RFS2,
greatly expanding and accelerating the use mandate for biofuels. RFS2 also created separate use
mandates for four categories of renewable fuel: total renewable fuels; advanced biofuels; biomass-
based diesel; and cellulosic biofuels.
As RFS administrator, the EPA calculates the total volume of renewable fuel that is to be used in a
year, expressed as a percentage of the expected total gasoline and diesel fuel use. It then calculates a
separate ratio (Renewable Volume Obligation, RVO) for each of the four individual categories of biofuel.
Obligated users of biofuels, consisting of gasoline and diesel fuel refiners, blenders, and importers,
must demonstrate that they have included in their total annual fuel sales a quantity of biofuels equal to
the RVO that EPA issues with the annual RFS rule (CRS Report R40155, Renewable Fuel Standard
(RFS): Overview and Issues). EPA has authority to waive the RFS requirements in whole or in part if it
determines there is inadequate domestic supply to meet the mandate, or if implementing it would
severely harm the economy or environment of a state, a region, or the nation. EPA also may waive, in
whole or in part, the specific sub-mandates for cellulosic biofuel and biomass-based diesel fuel. As
these sub-mandates are included in the totals for advanced biofuel and total renewable fuel, EPA may
choose to factor any reductions in these sub-mandates into the totals for advanced biofuels and total
renewable fuel (CRS Report RS22870, Waiver Authority Under the Renewable Fuel Standard (RFS)).
2014 Proposal Lowers RFS Volumes
On November 29, 2013, EPA published a proposed rule for the 2014 RFS that would have lowered the
total RFS to 15.21 billion gallons, well below the 18.15 billion gallons called for in the statute and also
below the 16.55 billion gallon blend mandate for 2013 (Table 1). EPA cited limits on the volume of
ethanol that can be consumed due to constraints on the supply of higher ethanol blends in gasoline,
and limits on the availability of advanced biofuels, as its rationale for reducing the total RFS for 2014
and, within it, the advanced biofuel category. Table 1 provides a partial picture of the RFS, and
compares statutory volumes with final blending requirements.
Table 1. Renewable Fuel Standard (RFS2) under EISA 2007
(in billions of gallons)

2012
2013
2014
2015

Statute
Final
Statute
Final
Statute
Proposed
Statute
Total
15.2
15.2
16.55
16.55
18.15
15.21
20.50

renewable
fuel
Cap on
13.2
13.2
13.8
13.8
14.4
13.0
15.0
corn-starch
ethanol
Total
2.0
2.0
2.75
2.75
3.75
2.2
5.50
advanced
biofuela
Cellulosic
0.5
0.0105b
1.0
0.0008
1.75
0.017
3.0
Biomass-
1.0
1.0
1.0
1.28
1.0
1.28
1.0
based
diesel
Date of Final November December November August November
To be
November
Rule
2011
2011
2012
2013c
2013
determined
2014
Source: EISA (P.L. 110-140), Section 202.
a. Includes cellulosic, biomass-based diesel and other "advanced" biofuels.
b. RFS Final Rule 2012, Federal Register, January 9, 2012. Subsequently vacated under
API v. EPA.
c. Cellulosic biofuel RVO revised via direct final rule on May 2, 2014.
Reactions among stakeholders and lawmakers to EPA's decision to delay the 2014 final rule covered a
broad range of opinion. The Renewable Fuels Association (RFA), representing the ethanol industry,
lamented the decision-making delay, but hailed what it interpreted as a decision to walk away from a
proposal that it viewed as being "wrong" on numerous counts. Press reports indicated that the RFA
expected EPA to set the RFS for 2014 at actual blend levels. The National Biodiesel Board asserted that
repeated delays are undermining the industry and urged EPA to issue a final rule quickly. The American
Fuel & Petrochemical Manufacturers issued a notice of intent to sue EPA for failure to issue the 2014
RFS, and asserted that the lengthy delay is one reason Congress needs to repeal or significantly reform
the program. The American Petroleum Institute said the delayed ruling demonstrates that the RFS has
become "unworkable" and "must be repealed."
Some Members of Congress criticized EPA's decision to delay the final rule, citing the uncertainty it
would perpetuate in the market, but opinions diverged over the decision's implications. Senator Debbie
Stabenow characterized the proposed rule as "deeply flawed," adding that the advanced biofuels
industry needed long-term certainty. Senator James Inhofe concluded that the RFS is "broken" and the
new Congress needs to address it. Representatives Fred Upton, Ed Whitfield, and John Shimkus
asserted that EPA cannot "ignore the law and the deadlines established by Congress," adding that the
decision highlights "significant challenges facing the RFS." Representative Colin Peterson stated the
volume cuts in the proposed rule were "unacceptable," while Representative Cheri Bustos expressed
hope that the delay would allow EPA to change course from its "devastating initial proposal."
Possible Issues for Congress
The decision to delay the final rule for the 2014 RFS into 2015 has provoked criticism from Members of
Congress who hold diverse viewpoints on the utility of the RFS, as well as from numerous industry
stakeholders with a direct interest in the administration of the program. Given that the EPA has missed
the November 30 deadline in recent years, and that the delays have grown longer, some in Congress
might want to review what costs this may impose on regulated parties and other biofuels stakeholders;
whether there are actions EPA might take to reduce delays in future years; and whether a legislative
response is needed to facilitate an efficient and timely process.