February 24, 2014

After the EPA comments. What’s next?


blenderpump_3We are now in a holding pattern from the Environmental Protection Agency (EPA) to hear about next steps concerning their proposed ruling to cut-back on the Renewable Fuels Standard (RFS).

The corn-industry had big push last month to send comments and letters to the EPA. In remarks submitted to the EPA, supporters of the RFS have chided the agency’s decision to cut the blending requirements. They point to ethanol’s role in boosting the agricultural economy and promoting financial growth through the creation of jobs, tax revenue and other benefits. Many worry lowering the federal mandate could harm that growth.

“The bottom line is that this proposal would have a devastating ripple effect on investment in ethanol plants, their production and the jobs they support — as well as the surrounding communities,” Dave Glasnapp, an investor in an ethanol plant in Gowrie, Iowa, said in a comment to the EPA according to an interview on Brownfield.

Soliciting public comment on a government proposal is a normal step in the regulatory process. After the comment period closes, the EPA reads those remarks and considers whether to make changes to its proposal before issuing a final rule.

Overwhelming number of comments

rfs lettersThe large number and the tone of the comments on this proposal illustrate what’s at stake: billions of dollars and a clearer picture of the future of renewable fuels use in the United States. From Nebraska, over 6,000 total number of comments were submitted to the EPA. The over 212,000 number reflects actual comments submitted in both opposition and to keep the proposed ruling.  The bulk letters Nebraska Corn Board sent were counted as one until the EPA counts and reads each comment.

EPA is obligated to read each comment that was submitted before the comment period ended.  Comments received after the comment period will be noted but do not have to be read and taken into consideration of their final ruling. 

A change to the Renewable Fuel Standard would alter the blending requirements for renewable fuels including corn ethanol. In the past, the EPA largely followed the annual level requirements put in place by Congress, helping to drive new markets and spur demand for the renewable fuel. The proposed reduction — a move even some in the oil industry have called substantive — would shift the process to one that sets the requirements based on expected market demand.

So now that the comment period is closed, what’s next?

The EPA is on their own timeframe.  We are hoping they make a ruling by this summer on the 2014 requirements, and at the same time, release the 2015 requirements. 

The proposal by the EPA, which oversees the country’s Renewable Fuel Standard, would cut the fuel requirement in 2014 to 15.2 billion gallons of ethanol and other biofuels, 3 billion gallons less than Congress required in a 2007 law.

It would mark the first-ever drop in the Renewable Fuel Standard, which requires refiners to blend ever-increasing amounts of biofuels into the nation’s gasoline supply through 2022.

Next steps if their proposal is passed?

“That is a good question,” said Kim Clark, director of biofuels for the Nebraska Corn Board. “We, the corn-ethanol industry, are expecting the EPA to overturn their proposed numbers and not make any changes to the requirements.”

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