Evaluating EPA's arguments for RFS waiver authority
A previous post reviewed the leaked draft of EPA's proposed rule setting the Renewable Fuel Standard mandates for 2014 and concluded that EPA was making novel use of the authority provided by Congress. In November, EPA released the proposed regulation for public review and comment (the proposed rule can be found here). In the proposed rule, EPA proposes setting the RFS mandates lower than the statutory levels and makes an argument in support of its interpretation that the general waiver authority allows it to do so. This post evaluates EPA's argument in support of this use of the general waiver authority.
The process for the EPA proposal to become a final rule involves a 60-day public comment period that began when the rule was published on November 29, 2013. Comments must be received on or before January 28, 2014. Once the comment period closes, EPA has to review all public comments and respond to them in its final regulation. There is no set date for publication of the final rule and it depends on the number of public comments, how long it takes EPA to review them, as well as the time it takes to move the final regulation through the administrative process. Once the final rule is published in the Federal Register, it is effective and binding on the industry; should there be any legal challenges to the regulation, they would be expected shortly after the final rule is published.
The heart of the matter is whether the waiver authority Congress provided to the EPA allows it to waive the specific RFS requirements on the basis of the infrastructural challenges posed by the E10 blend wall. EPA's long argument, distilled to its essence, is that the statutory phrase "inadequate domestic supply" is ambiguous because Congress failed to specify what it meant by supply and therefore it is reasonable for EPA to include "factors beyond the capacity to produce" renewable fuels, such as the "ability to distribute, blend, dispense and consume those renewable fuels." Ambiguity is important to EPA because the Supreme Court has said that if a statute is ambiguous and the intent of Congress is not clear, a court must give deference to an agency's interpretation of the statute it is implementing. This is known in the legal world as "Chevron Deference" based on the 1984 case Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc. (a copy of the decision can be found here). EPA defines supply as an "amount of a resource or product that is available for use by the person or place at issue." For support, EPA refers to this definition in the online version of the Oxford Dictionaries: "a stock of a resource from which a person or place can be provided with the necessary amount of that resource."
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