Senate Panel Examines RFS

The Senate Environment and Public Works Committee last week heard testimony discussing the current state of the Environmental Protection Agency's (EPA's) Renewable Fuel Standard (RFS) program. At the hearing, critics of the RFS argued that the assumptions upon which the program is based -- i.e., continuously increasing motor fuel demand -- are no longer valid and that the RFS should therefore be repealed or substantially revised. RFS supporters testified that the program is needed to increase the amount of renewable fuels in the United States, and said EPA was wrong to lower the statutory volume obligations for the 2016 compliance period.
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  • 2016-02-29
 

The Senate Environment and Public Works Committee on Feb. 24 heard testimony discussing the current state of the Environmental Protection Agency's (EPA's) Renewable Fuel Standard (RFS) program.  At the hearing, critics of the RFS argued that the assumptions upon which the program is based -- continuously increasing motor fuel demand -- are no longer valid and that the RFS should therefore be repealed or substantially revised.  RFS supporters testified that the program is needed to increase the amount of renewable fuels in the United States, and said EPA was wrong to lower the statutory volume obligations for the 2016 compliance period.Janet McCabe, EPA's acting assistant administrator for the Office of Air and Radiation, said that EPA is balancing two dynamics as it implements the RFS: Congress's clear intent to increase renewable fuels over time to combat climate change and enhance America's energy security; and acknowledging economic and market realities such as the ethanol "blend wall" and lower-than-expected gasoline demand. It is EOA's job to ensure that annual volume requirements are ambitious "but not impossible to achieve," McCable said. 

Committee Chairman James Inhoffe (R-Okla.) said the constant delays, litigation, and biodiesel fraud within the program necessitates that Congress decide whether the program should continue once the statutory volume targets end in 2022. After that date, the program will continue but EPA will have discretion over annual volume targets. McCabe did not comment on how EPA would implement the program at that point. She did say, however, that EPA is on track to release 2017 volumes on time. 
 
Ron Minsk, former staff members of the White House's National Economic Council, echoed calls from the refining community in urging the Senate panel to move the point of obligation under the RFS from importers and refiners to blenders.  
 
NATSO has serious concerns with this concept, and submitted a statement with other retail groups in opposition to making blenders obligated parties. Under current rules, refiners and importers of motor fuel are obligated parties under the RFS. Moving the point of obligation downstream to blenders would discourage blending and lower biofuel consumption in the United States, contravening the RFS's purpose.  Additionally, fuel blenders and marketers do not control the fuel products that they would be required to blend with renewable fuel.  These legal and practical considerations are why EPA has rightly classified refiners and importers as obligated parties under the RFS, NATSO has argued. 

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