After much anticipation, on Friday, May 29, 2015, EPA finally released a multi-year renewable fuels standard (RFS) for 2014-2016. The volumes and percentages of renewable fuel that EPA proposed to comprise the transportation fuel pool for 2014-2016 are as follows:
Click here to view table.
Each year, by November 30, EPA is obligated to set the annual renewable volume obligation (RVO) for the upcoming year. Since the RFS program began in 2006, EPA has met this statutory deadline twice. Because EPA has been falling further and further behind in meeting this statutory deadline, the American Petroleum Institute (API) and American Fuel & Petrochemical Manufacturers (AF&PM) filed a lawsuit against EPA in March 2015 regarding the agency’s failure to meet the November 30 deadline for both 2014 and 2015. Pursuant to the terms of a settlement agreement with these two trade associations, EPA agreed to issue a multi-year proposed rule by no later than June 1, 2015 and to finalize a multi-year RVO for 2014 and 2015 by November 30, 2015.
Although not required under the agreement, in order to try to stay on track with the statutory schedule in the future, EPA’s recent proposal also included the proposed RVO for 2016 and the biomass-based diesel volume for 2017 (1.90 billion gallons).
The volumes EPA proposed for 2014-2016 are lower than those Congress set in the Clean Air Act. EPA has proposed exercising its waiver authority and setting volumes below the statutory levels based on (1) the ethanol blendwall which limits the amount of ethanol that can be blended into the nation’s transportation fuel given compatibility concerns with vehicles, machines, and infrastructure, and (2) industry’s ability to provide sufficient volumes of qualifying renewable fuel.
Given that the 2014 compliance year is over, EPA has proposed standards for 2014 that reflected “actual” renewable fuel use. For 2015 and 2016, EPA has proposed values that called for “ambitious increases in both advanced biofuel and total renewable fuel in comparison to 2014 levels” in an attempt to stimulate “significant growth in renewable fuel production. . . .”
While the D.C. Circuit has previously upheld EPA’s authority to issue a multi-year volume requirement after the November 30 deadline (NPRA v. EPA, 630 F.3d 145 (D.C. Cir. 2010), the court has not always been so lenient with EPA. In fact, the court vacated EPA’s cellulosic biofuel standard where the agency adopted a strategy intended to “‘promot[e] growth’ in the cellulosic biofuel industry.” API v. EPA, 706 F.3d 474 (D.C. Cir. 2013). Because “such a purpose has no basis in the relevant text of the Act,” the court directed EPA to adopt a “neutral methodology” that does not pose “a greater risk of overshooting than undershooting” renewable fuel production volumes. Commenters on the proposed 2014-2016 rule will likely keep this precedent top-of-mind.
Comments on the proposed standards may be submitted through July 27, 2015. EPA claims that it is “committed to returning [its] standard-setting process to the statutory schedule” to provide industry more certainty going forward. To fulfill this commitment, EPA plans to issue a final rule setting these standards by November 30, 2015.