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EPA Releases RFS Proposed Rule

Monday, July 10, 2017   (0 Comments)
Posted by: PMAA

On Wednesday afternoon, the EPA released a proposed rulemaking to implement the federal Renewable Fuel Standard (RFS). Congress adopted the RFS in 2005 and expanded it in 2007. The program requires oil companies to blend increasing volumes of renewable fuels with gasoline and diesel, culminating with 36 billion gallons in 2022. The EPA's proposed rule assigns 2018 renewable volume obligations (RVOs) for ethanol and cellulosic biofuel and biomass-biodiesel mandates for 2019. The proposed volumetric blending mandates call for:

  • Maintaining the current 15 billion gallon ethanol volumetric blending mandate for 2018. This mandate covers ethanol derived from corn and other renewable sources.
  • Reducing the current 311 million gallon cellulosic biofuel volumetric blending mandate to 238 million gallons for 2018. This mandate covers fuel considered the "next generation" ethanol.
  • Maintaining the current 2018 biomass-based diesel volumetric blending mandate of 2.1 billion gallons for 2019. This mandate covers biodiesel most often made from soybeans, vegetable fats and animal fats.

PMAA continues to oppose volumetric ethanol blending mandates for gasoline that would require the introduction of gasoline with a 15 percent ethanol content (E15) until all practical and legal compatibility issues with UST systems are settled. Most USTs in service nationwide are not compatible with gasoline blends exceeding 10 percent ethanol content (E10). Currently, it is illegal under EPA regulations and state fire laws to put E15 into existing UST systems designed for maximum E10 service. The cost to convert existing UST systems is beyond the reach of most petroleum marketers. PMAA believes the most effective way to solve the compatibility issue is to cap the maximum amount of ethanol blended into gasoline at 9.7 percent. The proposed 2018 blending mandate for ethanol requires a 10.3 percent blend. However, blenders have thus far been able to keep ethanol content below 10 percent through the purchase of RIN credits. The EPA also noted that the use of E0 in 2016 was higher than the EPA had assumed in setting the 2016 standards.

The proposed rule also seeks input on possible manipulation of the RINs market and ways to improve the program to ensure credit trading stability. The EPA stopped short of proposing any change that would move obligated party status from refiners to blenders. PMAA is currently neutral on the issue of moving the point of obligation under the RFS and is instead focused on pursuing an ethanol blend cap to hold content at 9.7 percent.

EPA also said that it was interested in stakeholder comments on biodiesel imports and noted the U.S. Commerce Department's antidumping and countervailing duty investigation aimed at biodiesel imports from Argentina and Indonesia. The investigation is in response to a complaint filed by the domestic biodiesel industry which argues that subsidized biodiesel from Argentina and Indonesia have forced U.S. producers out of their home market.

PMAA will submit written comments supporting volumetric requirements for biodiesel but call for the agency to use their general waiver authority to reduce the ethanol mandate to a level below E10. PMAA will continue to emphasize the dire economic and fuel supply consequences of moving beyond E10 blends without resolution of the UST compatibility issue.


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