Long-awaited Biofuels RFS for 2014-2016, Biodiesel for 2017, Proposed by EPA

Proposed Renewable Fuels Standard (RFS) biofuel blending volumes for 2014, 2015 and 2016 - as well as the RFS for biodiesel - were announced Friday, May 29 by EPA, just ahead of the June 1 deadline set by a federal court.  Final RFS levels will be set by November 30, 2015, and once published in the Federal Register, the agency will take public comment through July 27, and hold a public hearing on June 25, in Kansas City, Kansas.  Details are available here: http://www.epa.gov/otaq/fuels/renewablefuels/regulations.htm. 

The volumes proposed are below the levels set by statute, but EPA says they'll increase renewable fuel use "above historical levels and provide for steady growth over time."  EPA said "real world" constraints have held biofuel production and use below aspirational levels set in law, and forced the agency to propose levels lower than those mandated by statute because of "slower-than-expected" growth in cellulosic biofuels development, lower than expected gasoline use and "constraints in supplying more ethanol to consumers."

As previously stated, EPA proposes to set the RFS for 2014 at fuel amounts actually used for transport, heating oil or jet fuel.  For 2015 and 2016, the agency says it's proposing "ambitious increases" in both advanced biofuel and total renewable fuel.

For corn ethanol, the proposed RFS for 2016 is 14 billion gallons, falling short of the 15 billion set in the RFS authorizing law.  With an RFS at 14 billion, the ethanol-gasoline ratio is 9.63%, just under the current legal 10% cap. This what the petroleum industry calls the "blend wall," that point at which it would have to blend above 10% to meet its RFS obligations based on consumer gas demand and overall fuel use. 

Here are the proposed volumes in billions of gallons unless otherwise noted:

The National Biodiesel Board (NBB) said it was pleased to see EPA contemplates "steady growth" in the biodiesel RFS and the current proposal is a dramatic improvement over the November, 2013, proposal.  However, it hoped for "more robust" RFS numbers.   The American Soybean Assn. (ASA), whose members refine biodiesel from soy oil and provide feedstocks to the industry, said, "The increases proposed by EPA will provide some benefit and certainty to the domestic biodiesel industry and to soybean growers who supply much of the feedstock.  However, the proposed volumes do not fully recognize or capitalize on the capacity and further growth potential of U.S. biodiesel."

Tom Buis, Growth Energy CEO said, "The initial read on EPA's proposal is they have simply acquiesced to the demands of Big Oil."

As for a potential legal challenge of EPA's failing to meet the statutory mandate set for the RFS, the National Corn Growers Association (NCGA) is "evaluating [its] legal options for defending the law."  It argues the proposal ignores Congresses intent.

"Once again, the EPA has chosen to ignore the law by cutting the corn ethanol obligation 3.75 billion gallons from 2014 to 2016," said NCGA President Chip Bowling. "This represents nearly a billion and a half bushels in lost corn demand. The only beneficiary of the EPA's decision is Big Oil, which has continuously sought to undermine the development of clean, renewable fuels."

House and Senate members voted to extend funding of federal highway programs for another two months as lawmakers struggle with how to fund long-term federal programs that pay for state efforts to repair highways, bridges and urban commuter systems. 

Current funding would have run out May 31, and the extension - authored by House Transportation & Infrastructure Committee Chair Bill Shuster (R, PA) and Ways & Means Committee Chair Paul Ryan (R, WI) - carries federal programs through July 31, and will keep federal dollars flowing during the peak construction period.  Shuster and Ryan wanted to extend the programs through the end of 2015, but couldn't muster support as the longer extension would require spending offsets.

Several House members - more than three dozen at last count - had planned to vote "no" on the extension and pledge to vote against anything other than a long-term reauthorization bill.  However, because another extension vote is expected at the end of July, the opponents decided to wait and continue gathering support for their effort. 

A federal appeals court last week refused to lift an injunction barring the Obama Administration from implementing the President's executive orders deferring deportation of nearly 4 million undocumented immigrants.

The government appealed a Texas district court judge's injunction that stopped implementation of executive orders that would have deferred the deportation of undocumented immigrants who are the parents of U.S. citizens and legal residents, and expand the 2012 program that defers deportation of illegal immigrants who were brought to the U.S. as children. 

The three-judge U.S. Court of Appeals for the 5th Circuit in New Orleans, ruling in a case brought by 26 states, voted in a 2-1 decision to keep the injunction in place.  The Department of Justice, clearly not pleased by the development, said it will not appeal the ruling of the U.S. Supreme Court, but will focus on winning its appeal on issues in the underlying states' suit against the government. Oral arguments in that separate appeal action are set for the week of July 6.   

"Today, two judges of the 5th Circuit chose to misinterpret the fact and the law in denying the government's request for a stay," the White House said in a statement.  "As the powerful dissent...recognizes, President Obama's immigration executive actions are fully consistent with the law." 

House Judiciary Committee Chair Bob Goodlatte (R, VA) supported the appeals court action, saying the verdict is "another victory for the Constitution and the American people."  

When EPA released its nearly 300-page final rule extending its Clean Water Act (CWA) authority to "waters of the U.S. (WOTUS)", it promised stakeholders would be pleased with changes made in the controversial rulemaking after review of more than 1 million public comments.  Instead of mollifying critics through promised changes and clarifications in the rule, the agency set off a fresh wave of protest and steeled resolve on Capitol Hill to kill the rule.

"The process by which this rule was established ignored (farmers and ranchers)," said House Agriculture Committee Chair Mike Conaway (R, TX), citing the House's recent approval of HR 1732 to require EPA to withdraw the rule and repropose it, but only after working with farmers, the states and local stakeholders. 

"Even input from the states was ignored, clearly displaying the arrogant, 'government-knows-best' attitude ever-present in this Administration.  Our requests were dismissed in favor of the expansion of federal authority (over waters) despite bipartisan opposition from Congress and the public." 

Said Sen. Pat Roberts (R, KS), chair of the Senate Agriculture Committee: "Today, the Obama Administration released the damaging 'waters of the U.S.' finalized rule - a regulation opposed by virtually every farm organization, commodity group and other business interests in rural America. The release of the nearly 300-page, finalized WOTUS rule raises more questions than it answers about the expansion of federal jurisdiction under EPA's CWA.  In March, the Committee...heard from farmers, ranchers and rural constituencies around the country.  The message was clear:  This is the wrong approach and the wrong rule for agriculture and rural America. "

Sen. John Hoeven (R, ND) took particular exception to the new inclusion of prairie potholes in the rule, shallow wetlands common in the upper Midwest.  He said the new rule "threatens these regions' agriculture, construction, energy and other industries with new permitting requirements and litigation." 

"I'm disappointed but not surprised EPA decided to move forward with a rule that would increase confusion and red tape," said House Agriculture Committee ranking member Rep. Collin Peterson (D, MN) in a statement.  "Farmers, ranchers, local communities and businesses all expressed concerns with the negative impacts of this rule. Despite that, EPA either wasn't willing to listen or simply just does not get it."  He pledged to work with both sides of the aisle to "ensure these arbitrary and subjective regulations never go into effect."

Most ag groups aren't happy with the new final rule, but said they'd study it before reacting.  However, Bob Stallman, president of the American Farm Bureau Federation (AFBF) which led coordinated agriculture opposition to the rulemaking, said that based on agency misstatements and its "aggressive advocacy campaign," "we find little comfort in the agency's assurances that our concerns have been addressed."  The American Soybean Assn. (ASA) said it's in a "trust-but-verify mode," saying it's reviewing the new rule to ensure it does not affect "everyday soybean farming operations."  The National Corn Growers Assn. (NCGA) took a similar position. 

With the House two weeks ago approving its version of legislation to force EPA to withdraw its "waters of the U.S. (WOTUS)" rulemaking, the Senate is moving quickly to approve its own version of legislation to stop EPA's extension of its regulatory authority under the Clean Water Act (CWA).

Senate Agriculture Committee Chair Pat Roberts (R, KS), didn't mince words.  "I am sorry to say, as expected, the rule is bad news for rural America," he said. "The Agriculture Committee, will lead the charge in pushing back against EPA's egregious federal overreach. That's why I helped introduce the Federal Water Quality Protection Act.  This requires EPA to go back to the drawing board and restart the rulemaking process to include stakeholders - especially agriculture.  The EPA's conduct during the rulemaking process confirms my belief that the Administration is not listening. This is a serious problem."

A strong Roberts' ally is chair of the Senate Environment & Public Works Committee Sen. Jim Inhofe (R, OK).  Inhofe said the new rule reflects that "EPA and the Army Corps of Engineers failed to keep their promises.  Instead of fixing the overreach of the proposed rule, remarkably, EPA has made it even broader.  The EPA has set themselves up to increase federal control over private lands, and I will not allow it."  

Inhofe said the Senate's Federal Water Quality Protection Act to block WOTUS - coauthored with Roberts and Sens. John Barrasso (R, WY), Joe Donnelly (D, IN) and Heidi Heitkamp (D, ND) - is now front and center on his agenda.    

Two weeks ago the Senate Environment & Public Works Committee held a subcommittee hearing that turned out to be less about the rule and more about EPA's "unprecedented grassroots lobbying campaign" in defense of the rulemaking.  

Roberts, in statements related to the Environment & Public Works review, alleged EPA crossed the line during the WOTUS rulemaking, and "manipulated and influenced" the public comments.  Referring to EPA Administrator Gina McCarthy's testimony in March that 87.1% of the more than 1 million public comments received supported the WOTUS rule, Roberts said, "Given what has come to light in recent days, I find the statement to be completely disingenuous and automatically discredits EPA's objectivity through every facet of the rulemaking.

"We now know that EPA stacked the deck against (farmers, ranchers and small communities). Rather than listening to public comments...it appears EPA has orchestrated a political grassroots lobbying campaign with environmental groups to manipulate the process and disregard legitimate concerns from rural America," Roberts said.  Inhofe said, "I have already asked the Government Accountability Office (GAO) to look into this matter."