Group Projects and Accountability: Growth Energy Reaches Settlement with EPA For 2023 Set Deadline

August 10, 2022

Group projects are the worst…or maybe that’s just my sentiments? Oh, come on, we both know you read the words “group project” and groaned! After its recent lawsuit and subsequent settlement with Growth Energy, I think EPA may know exactly how I (we) feel.

Recently, Growth Energy and EPA reached a settlement that requires EPA to publish proposed target volumes for the 2023 Set by November 16, 2022, and have to be finalized no later than June 14, 2023. While the court is expected to approve the terms of the settlement, a consent decree has not yet been issued by the court.

Wait, what is the 2023 Set? When the Renewable Fuel Standard (RFS) was promulgated, Congress set RVOS for every year until the year 2022. By November 1, 2021, EPA, in conjunction with the Department of Energy (DOE) and the Department of Agriculture (USDA), was supposed to have promulgated new volumes for 2023 and beyond. #groupwork. As indicated by the presence of a settlement agreement, this did not happen. This was largely because unprecedented times kept EPA from begin able to accurately set RVOs for 2021 and 2022, let alone dictate the future of the RFS. By filing a lawsuit (and reaching a settlement) Growth Energy was ensuring that EPA would be held accountable to a deadline, even if it wasn’t the one originally set by statute.

Alright, that makes sense, there’s been a bit going on and EPA is on the clock to get the volumes for the 2023 Set published. So, what all goes into setting these volumes? The Clean Air Act requires EPA to perform certain sets of analysis by looking at a set of 6 different factors. These factors include[1]:

  • the impact of the production and use of renewable fuels on the environment, including on air quality, climate change, conversion of wetlands, ecosystems, wildlife habitat, water quality, and water supply;
  • the impact of renewable fuels on the energy security of the United States;
  • the expected annual rate of future commercial production of renewable fuels, including advanced biofuels in each category (cellulosic biofuel and biomass-based diesel);
  • the impact of renewable fuels on the infrastructure of the United States, including deliverability of materials, goods, and products other than renewable fuel, and the sufficiency of infrastructure to deliver and use renewable fuel;
  • the impact of the use of renewable fuels on the cost to consumers of transportation fuel and on the cost to transport goods; and
  • the impact of the use of renewable fuels on other factors, including job creation, the price and supply of agricultural commodities, rural economic development, and food prices.

Essentially, when taken in sum, EPA has to evaluate how the RFS has impacted the environment, the economy, and the energy security of the United States. I know that looks like a lot, but EPA is not doing this alone. Remember this is a “teamwork makes the dream work” situation. EPA has to include USDA and DOE as “partners” in the analysis. Think of this like a group project…except everyone actually does their work.

It also worth mentioning that the settlement between Growth Energy and EPA has to be approved by the D.C. Circuit court. While there is a near 100 percent chance that the court will issue a consent decree (court ratifies the settlement between the two parties and closes the case) with the terms contained in this article, the court also has the right to deny or change the terms of the settlement.

What does this settlement do for the industry? For starters, beyond 2022, the Clean Air Act doesn’t specify how EPA should be handling RVOs other than that it needs to set them. Without RVOs (which, in part, drive the industry), RFS participants don’t have a good handle on future planning. This includes everything from how many gallons of ethanol, biodiesel, etc. will be needed to meet RVO requirements to whether a small refiner is going to apply for an exemption. In general, the renewable fuel industry needs to know what direction the RFS is heading so that it can plan accordingly.

Ok, so to recap, Growth Energy sued EPA to force EPA to do something it is already required to do by statute, there are a lot of factors involved, and it’s going to take some time for EPA to publish the new RVOs for 2023 and beyond, but we should expect to see the new volumes by November? Exactly. Nailed it.

Will EPA be able to meet the November 14 deadline? I think so.

[1] 42 U.S.C. § 7545(o)(2)(B)(ii) (1977).