Biofuels Proposal Contradicts Congressional Intent

U.S. EPA’s biofuels proposal appears to give the agency authority Congress did not intend. The proposed rulemaking asserts the agency’s right to extend small refinery waivers without reallocating the congressionally mandated gallons. In this case that would be corn-based ethanol blended into the nation’s regular gasoline supply at the rate of no more than 15 billion gallons annually says agricultural economist Scott Irwin, “It seems like that could be challenged in court.”

It is easy to establish that this was the most important policy decision EPA had to make for this rulemaking thinks the University of Illinois professor, and it said “no way, no how are we going to listen to anybody”. He is unsure if the that decision can hold up in court.

EPA believes it has the right to grant small refinery waivers without reallocating the waived gallons. It has granted some 1.5 billion gallons worth of ethanol waivers. In this way, it is capable of creating rules that meet the legal requirement of the RFS, but then allow it not to be met via a loophole. Whether the loophole remains open is a political and legal question with big ramifications.

That is an interesting question says Irwin, “If the zero reallocation holds, then this will be a major defeat for the ag interest and (R) IA - Senator Charles Grassley. This is because we will have gone to a situation where the small refinery exemptions function effectively as a form of general waiver authority for the EPA to roll back the mandates.”

Clearly, Irwin goes on to say, Congress did not explicitly give that authority to the EPA. His view is that it will be challenged in court if necessary and thrown out.