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RFA: EPA Moving in Right Direction on RFS, But Must Reconsider Retroactive Cut to 2020 RVO

January 4, 2022



In a virtual hearing on the U.S. Environmental Protection Agency’s proposed renewable volume obligations for 2020 through 2022, Renewable Fuels Association President and CEO Geoff Cooper noted that EPA’s proposal marks “an important and long-awaited step toward restoring order, integrity and stability to the Renewable Fuel Standard program.” However, Cooper noted in his testimony, there is plenty of room to improve the proposal before it is finalized.


“RFA supports the proposed volumes for 2022 for all categories of renewable fuel, and we specifically commend EPA for proposing to set the implied requirement for conventional renewable fuels at the statutory level of 15 billion gallons,” Cooper said. “We also support EPA’s proposal to account for projected exempt volumes from small refineries when setting RVO percentages. And, RFA agrees with EPA that, ‘in the interest of transparency,’ the Agency should release basic information about entities seeking exemptions from RFS compliance.” Cooper also voiced RFA’s strong support for EPA’s related proposal to deny 65 pending small refinery exemption petitions.


Unfortunately, however, EPA’s proposed RVO for 2021 misses the mark and the proposed retroactive revision of the 2020 RVO would set a “dangerous precedent,” Cooper said.


“As for the 2021 RVO and the proposed revision to the 2020 RVO, we have serious concerns about EPA’s questionable use of its ‘reset’ authority,” Cooper said. “While we understand EPA has a statutory obligation to consider resetting future RFS volumes when certain thresholds are met, it does not appear that Congress intended for EPA to use its reset authority for the purpose of retroactively addressing unforeseen market anomalies like COVID or weather-related disasters.”


Even if EPA's use of its reset authority to lower 2020 and 2021 volumes was justified, the agency grossly underestimated actual conventional ethanol consumption in 2021, Cooper said. The Energy Information Administration’s latest data suggest 13.73 billion gallons of conventional ethanol were consumed domestically in 2021, more than 400 million gallons higher than assumed by EPA.


When it comes to the impact of COVID on 2020 RFS compliance, the RVO already includes a self-correcting mechanism that caused actual renewable fuel volume requirements to adjust lower with reduced gasoline and diesel consumption. In addition, EPA has long been on the record opposing retroactive reductions in volumes. EPA has repeatedly stated that “Congress…did not provide a means for correcting the percentage standards after November to ensure that the applicable volumes of renewable fuel are exactly met in a given compliance year.” The agency has also previously taken the position that “…periodically and retroactively altering the standards would…inappropriately render the standards a moving target.”


Also testifying at today’s hearing are RFA Board Secretary Rick Schwarck of Absolute Energy and board members Jeff Oestmann of Granite Falls Energy, David Sovereign of Golden Grain Energy and Derek Peine of Western Plan Energy, as well as Lindsay Fitzgerald of member company Gevo.