EPA blindsides biodiesel industry with 'outrageous' proposed cuts

By Ron Kotrba | September 26, 2017

The U.S. EPA issued a Notice of Data Availability Sept. 26, to provide public notice and an opportunity to comment on potential reductions in biomass-based diesel and overall advanced biofuel categories in the Renewable Fuel Standard.

The agency’s NODA issuance is highly unusual, as its proposal for 2018 conventional, cellulosic and advanced biofuel volumes, along with 2019 biomass-based diesel volumes, was issued this summer, after which the comment period closed Aug. 31. Now EPA is seeking comment on new approaches to reduce biomass-based diesel and advanced biofuel volumes from its already anemic proposal, which had originally sought to stall biomass-based diesel volumes in 2019 at 2.1 billion gallons—the same volume previously set by the Obama administration for the 2018 compliance year—and to reduce advanced biofuel volumes for 2018 to 4.24 billion ethanol-equivalent gallons, down from 4.28 billion gallons this year.

“EPA’s proposal earlier this summer was inadequate, underestimating the power of domestic biodiesel production and ignoring the intent of the law,” said Doug Whitehead, chief operating officer of the National Biodiesel Board. “This request for comment is even more disappointing.”

Adding to the unusual nature of the NODA is that the agency is seeking comment on potentially reducing the 2018 biomass-based diesel category, which was finalized by the previous administration in 2016. EPA suggests the possibility of lowering the already-established 2018 biomass-based diesel volume of 2.1 billion gallons by up to 315 million gallons through use of the biomass-based diesel and other waiver authorities.

“It was a shocker, but not totally unexpected,” said Juan Sacoto, senior vice president for Agribusiness Consulting, an Informa company. “It is unprecedented for sure.”

EPA makes repeated mention of the expired biodiesel tax credit and preliminary duty determinations by the U.S. Department of Commerce on Argentine and Indonesian biodiesel as impetuses to potentially decrease the biomass-based diesel and overall advanced biofuel categories in RFS.

“I gave a speech about biodiesel a month and a half ago, and essentially I said this can easily happen,” Sacoto told Biodiesel Magazine. “If imports come to zero, then it becomes very hard—in the short term—to meet the previous mandate.”

Sacoto said the biodiesel industry must go back to the drawing board and provide detailed documentation to EPA demonstrating domestic productive capacity exists to make up for the shortfall in imports and, perhaps even more importantly, from where the feedstock will come, and what impacts this would have on commodity and RIN markets.

“This is doable,” said Sacoto, who added that the cuts, if finalized, would be a short-term setback.

“Our expectation in July was the tariffs would be delayed until November,” he said. “By coming this early, in August, there is not much adjustment time. Maybe EPA is acting too quickly. Maybe the agency would rather err on the side of caution.” 

In the NODA, EPA repeatedly cites comments from oil lobby groups AFPM and API, legitimizing postulations that the Trump administration and an EPA led by Scott Pruitt back the oil industry in its quest to dismantle the RFS, despite campaign promises to uphold and defend the standard.

“This all gives me a strong suspicion that Big Oil and refineries are prevailing, despite assurances to the contrary,” said U.S. Sen. Chuck Grassley, R-Iowa, in a press statement. “This seems like a bait-and-switch from the EPA’s prior proposal and from assurances from the president himself and cabinet secretaries in my office prior to confirmation for their strong support of renewable fuels.”

“When you look at how Trump campaigned,” Whitehead told Biodiesel Magazine, “and how the administration’s cabinet nominees testified in their confirmation hearings, our industry had a sense of optimism—we are adding hard-to-find jobs in rural America. Taken on face value, we were very optimistic. But in this hard political culture, we have to turn up the volume so we are heard. I remain optimistic that the promises made in the past by this administration will be kept, and they can understand and value what we do for America.”

The NODA gives much weight to oil industry comments while discounting submitted comments and historical evidence that the U.S. biodiesel industry has outperformed every RFS increase to date, creates American manufacturing jobs, provides increased energy security and independence, adds much-needed value to rural economies, and is beneficial to the environment.

“What’s most frustrating is it appears EPA has not bothered to look at the facts we’ve put forth to them in our comments—facts that support higher volumes in RFS,” Donnell Rehagen, CEO of the NBB, told Biodiesel Magazine. “It appears they have not considered all the comments and are instead worried about conjecture—the expired tax credit, imports. It’s very disappointing to me since we’ve answered these questions positively. This is not the first year the biodiesel industry has been without the tax credit, or the first year there’s been uncertainty in the biodiesel industry.”

Grassley called the NODA proposal outrageous and said it would undermine domestic renewable fuel production. “That’s contrary to the goal of America first, employing U.S. workers, and improving the U.S. economy,” he said. “It’s contrary to the goal of meeting the country’s fuel needs, which is critical to economic growth. I plan to press the administration to drop this terrible plan.”

Whitehead said, “NBB will be working with EPA to demonstrate the industry’s proven success record, continued growth and impacts to American workers who were promised that this administration had their back.”

The comment period will be open for only 15 days once the NODA is published in the federal register. Click here to view the NODA. 

 

 
 
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