March 9, 2022
How do you give a millennial incurable writer’s block? Tell them they’re on a deadline. EPA can relate to millennial angst where deadlines are concerned. Growth Energy recently reached a settlement with EPA requiring that EPA finalize the Renewable Volume Obligations (RVOs) for 2021 and 2022 by June 3.
Growth Energy’s settlement terms (the “Settlement”) require EPA to sign the final rule for the 2021 and 2022 RVOs by June 3. Just a quick legalese sidebar, when a civil suit is filed and the parties reach an agreement prior to a final adjudication (the jury giving a verdict or dollar amount), the resulting settlement must be entered into the court record in order for the rules of procedure to be properly met. The document that is filed with the court is called the consent decree and it generally gives the terms the parties agreed to within the final settlement. At this point, the consent decree is proposed pending court approval, which can’t be given until the close of EPA’s comment period. EPA is currently taking comments on the proposed consent decree for 30 days after the date of publication in the federal register…which is coming up…
Why is this significant? If Growth Energy and other companies like them continually sue EPA, isn’t this just another civil lawsuit? If the subject matter of the suit was not so germane to the Renewable Fuel Standard (RFS), I would have to agree. However, RVOs drive the RFS forward, setting the tone for the coming year and for the participants within the RFS. Given the fact that EPA has taken entirely too long to set these proposed RVOs, this Settlement is a mechanism of keeping EPA “honest.” For example, EPA’s consistent and repeated disregard for statutory deadlines to set RVOs is infamous. Without some sort of accountability, EPA has little incentive to return finalize RVOs in a timely manner. This Settlement puts EPA on a deadline. #triggeredmillennialanxiety.
In addition to keeping EPA accountable, it also gives participants of the RFS some assurances. For example, as of this moment, obligated parties are in the position of guessing which RVO EPA decides to finalize. Keep in mind, EPA proposed two different sets of RVOs for the 2021 and 2022 compliance years. This means, at this point, obligated parties are in a bit of a holding pattern until EPA finalizes RVOs. While I am not an obligated party sympathizer (nor demonizer), attempting to plan for two different RVOs is not easy. Combine the two different 2021 and 2022 RVOs with the fact that EPA is re-doing finalized 2020 RVOs and obligated parties are caught in a guessing game of how much capital they may need to retain in order to be in compliance.
Moreover, this Settlement isn’t just to the benefit of the obligated parties. These terms give producers and blenders of renewable fuel some assurances that their gallons and, more to the point, the resulting separated RINs, will be needed within the RFS marketplace as well as a timeline for that demand. EPA’s stalling in setting RVOs hasn’t been easy for these parties either. RVOs give the entities like producers and blenders a snapshot of what’s to come. By requiring EPA to set finalized RVOs, whatever those look like, producers and blenders of renewable fuel begin to get an idea of what the needs of obligated parties may be, and can plan accordingly.
Is everyone at EPA breathing into a paper bag at this point? No, mostly because EPA is not staffed only by millennials. But also because the hard part has already been done. EPA’s gathering of information to set proposed RVOs is a process that requires data gathered from three different government agencies as well as careful consideration of compliance with the Clean Air Act. While EPA has not been consistently timely with RVOs, it’s not like it didn’t have a reason. Between those requirements and a global pandemic, EPA has had their hands full. While this doesn’t excuse lack of compliance with statutory deadlines, it most certainly makes their noncompliance understandable.
Will EPA be able to meet the June 3 deadline? Well, EPA Administrator Regan isn’t a millennial, so I think there’s a pretty good chance of that happening. But I might send some care packages…just in case…