EPA authority to reduce the RFS
A recent farmdoc daily post exploring options for the Renewable Fuel Standard (RFS) raised a question about the Environmental Protection Agency's (EPA) authority to reduce the RFS requirements below what Congress mandated. Recently, an EPA draft of a proposed rule for the 2014 calendar year fuel supply was leaked and seems very likely to put that issue to the test. It is important to keep in mind, however, that the leaked document is the summary of a draft of EPA's proposal - it is not the final proposal nor is it the final rule. This post examines EPA's authority to reduce the RFS statutory mandates.
Congress updated the RFS in 2007 establishing yearly requirements for blending renewable fuels into the domestic fuel supply that increase each year up to 36 billion gallons in 2022. For 2014, the mandate is for 18.15 billion gallons of renewable fuel. Renewable fuel is defined as all fuels produced from renewable biomass, and advanced biofuel is a subset of renewable fuel. Cellulosic biofuel and biomass-based diesel are subsets of advanced biofuel. Within the annual renewable fuel requirements are increasing annual sub-requirements for cellulosic and advanced biofuel, and for biomass-based diesel. Conventional corn-based ethanol makes up the difference between the advanced biofuel requirement and the overall renewable fuel requirement. For 2014, the statutory mandate for corn ethanol equals 14.4 billion gallons.
The statute provides EPA with the authority to waive a requirement for an individual calendar year by "reducing the national quantity of renewable fuel required." The RFS is housed in the Clean Air Act (42 U.S.C. 7545(o) and is available here; the waiver authority is in paragraph (7). Waiver may be granted because a State or a person subject to the requirements requests it. The EPA Administrator may also take the initiative and reduce the RFS requirements. To grant a waiver and reduce the requirement, EPA must determine either that implementing the requirements would "severely harm the economy or environment" or that there is "an inadequate domestic supply." EPA is to consult with the Secretaries of Agriculture and Energy on the decision, which presumably would take place before a rule is available for public review and comment under standard rulemaking procedures.
In addition to an EPA decision to reduce the RFS under waiver authority, Congress explicitly required EPA to reduce the applicable volume of cellulosic biofuel in any year that EPA determines the projected volume will be less than the volume required. If EPA reduces the cellulosic biofuel requirement, the Administrator may - but is not required to - reduce the required amount of overall renewable fuel and advanced biofuel but only by an amount that is the same or less than the cellulosic reduction.
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