Guest Post by Dave Juday*
Yesterday the Energy Policy, Health Care and Entitlements subcommittee of the House Oversight Committee held a hearing on the EPA’s implementation of the Renewable Fuel Standard (RFS) volumes for 2014. The RFS is a schedule, which prescribes the volume of biofuels – corn ethanol, biodiesel, and so-called advanced biofuels, like cellulosic ethanol – that must be blended into the nation’s fuel supply each year. The RFS was established by the Energy Policy Act of 2005, and greatly expanded by the Energy Independence and Security Act (EISA) of 2007. EPA’s track record is abysmal, hence the hearing.
According to the statute, EPA’s confirmation of biofuels volumes is to be announced by November 30 of the preceding year – i.e. after the corn harvest and before the compliance year – in order to give some clarity to both the food and fuel markets. Now in December, more than a year late, EPA has still not set the volumes for 2014. And, according to Acting Assistant Administrator, Janet McCabe, probably won’t be until sometime 2015.
McCabe told lawmakers that “issuing rules every year has proven to be a significant implementation challenge.” That’s an understatement. Consider the agency’s record.
Each year since 2009, EPA has missed its deadline. In the 60 months since November 30, 2009 – the last time the deadline was met – EPA has been tardy in announcing the final volumes by a cumulative total of 27 months, so far. By next year, the EPA will likely be 40 months late – or more – in meeting its annual deadline. That means that for 72 months since 2009 when fuel blenders and refiners were to be in compliance they did not know the actual compliance target for more than half that time. As the Government Accountability Office has reported, these late rulings “contribute to industry uncertainty, which can increase costs because industry cannot plan and budget effectively.” Indeed, when the new 114th Congress convenes in January, RFS reform should be a pressing issue.
* Dave Juday is the principal of The Juday Group a commodity market and policy analytical firm in Washington, D.C.
ML Comment: Juday’s commentary buttresses a conclusion recently posted on this blog. EPA’s missed deadlines reveal the most damning unintended consequence of all. Congress’s attempt to centrally plan a market over 15 years has ushered in an era of regulatory uncertainty and market unpredictability. As the gap between statutory targets and market conditions grows, EPA increasingly has to improvize. Each year’s targets are decided — or delayed — by unaccountable bureaucrats in a pressure cooker of interest group lobbying and electoral calculation.