By Representative Sensenbrenner
February 24, 2013
What has been termed the Environmental Protection Agency’s “Phantom Fuel Requirement” is an aptly named rule that epitomizes the mind-set of an agency that has put itself above the law. Hiding behind complexity and its self-assigned moral authority, EPA increasingly subjugates the views of the public, Congress and the courts to its own policy determinations.
In 2005 and 2007, Congress twice amended the Clean Air Act to establish a renewable fuel standard. Under the RFS, Congress required that our fuel supply contain increasing amounts of renewable fuels.
The Phantom Fuel Requirement relates specifically to a mandate within the RFS to use cellulosic biofuels. Under the mandate, refiners, blenders and importers must purchase the prescribed amount of cellulosic biofuels or pay a fine.
The RFS established ambitious goals for cellulosic biofuels but charged EPA with reducing the requirement if production was in fact lower than the mandate.
The intent was for EPA to reduce the required level of cellulosic biofuels to the amount that was actually likely to be produced. Congress wanted to avoid penalizing refiners for failing to buy fuel that did not exist.
The RFS greatly overestimated the industry’s ability to produce cellulosic biofuels. As a result, EPA has had to reduce the required level every year since the mandate took effect.
In 2010, the first year of the mandate, EPA projected that 5 million gallons of cellulosic biofuels would be available. In fact, there were none. In 2011, EPA increased the mandate to 6.5 million gallons. Again, the actual amount available was zero. Undeterred, in 2012, EPA increased the required amount to 8.5 million gallons. The actual available amount was 25,000 gallons.
Since it is impossible to comply with the mandate to use this phantom fuel, EPA is effectively taxing the industry. This tax is passed to consumers in the form of higher gas prices.
EPA’s overestimates are part of an intentional strategy. On July 19, 2012, I wrote to EPA and argued that the agency had “usurped Congress’ policymaking authority in order to satisfy its own goals.” In its response, EPA wrote, “the standard that we set helps drive the production of volumes that will be made available.”
The statement is a concession that EPA was setting volumes above required levels in order to drive more production. Whether you agree with EPA’s goal or not, this position is at odds with the express mandate of Congress.
In the same response, EPA wrote, “Congress did not specify what degree of certainty should be reflected in the projections.” This latter response is reminiscent of a petulant child who, asked to clean his room, responds, “You didn’t say when I had to do it.”
On Jan. 25, 2013, the D.C. Circuit Court of Appeals agreed that EPA had overreached. The court held that the cellulosic biofuels legislation calls for “a prediction of what will actually happen.” The court further chastised the agency: “The EPA points to no instance in which the term ‘projected’ is used to allow the projector to let its aspiration for a self-fulfilling prophecy divert it from a neutral methodology.”
EPA, however, appears to have no more regard for the courts than it does for Congress. The agency responded to the court’s concerns by nearly doubling its 2013 mandate from 8.5 million gallons to 14 million gallons. EPA outright snubbed the court for its clear rebuke. Paying lip service to the ruling, the agency’s regulatory announcement stated the amount was “a reasonable representation of expected production.” One wonders: What “degree of certainty” does the agency have?
From all the data currently available, the 2012 requirement will again wildly overestimate the available amount of cellulosic biofuel. Taxpayers will very likely pay for EPA’s agenda twice: at gas pumps in the form of higher prices and in tax dollars when EPA is again sued for abuse of discretion.
It is past time for Congress to recognize the RFS as a failed experiment. Until it does so, I have introduced legislation that would link the mandated amount of fuel to the actual level of production the previous year. Allowing EPA to exercise its own discretion has also unfortunately proven a failed approach.
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