January 12, 2022
Can we all just agree that New Year’s resolutions are really just well-intentioned suggestions rather than obligations? I could resolve to eat healthier and get more exercise, but carbohydrates and cheese make up about 75 percent of my being and my relationship with Netflix is well-established. EPA must have had a jump-start on its resolutions and finally resolved to release RVOs, among many other things. For this post, however, I am going to focus on the recent release of Renewable Volume Obligations (RVOs) for 2021 and 2022, and the revised 2020 final volumes.
Before I go any further, RVOs are sort of the thing that makes the Renewable Fuel Standard (RFS) world go ‘round. The federal government created the RFS with the intention of infusing renewable fuel into the transportation marketplace. RVOs stipulate how many gallons of fuel the federal government expects to be produced and blended to make transportation fuel. But wait, there’s more! Read Elementary Dear Watson: A Beginner’s Guide to the Renewable Fuel Standard written by yours truly. #selfpromotion. It’s short, I promise! It will give you a better background on the RFS, so you can understand the rest of this post. #pinkypromise.
As you may remember, EPA was a little behind. It was nearly 2022 and EPA had not yet released RVOs for 2021 and was a bit behind on releasing 2022 RVOs. However, EPA must have gotten a jump-start on their resolutions because within a month’s span of time, EPA released 5 proposals, perhaps the most significant being the RVOs for 2020, 2021, and 2022.
Wait, wait just one minute. Weren’t 2020 RVOs finalized in 2019? That must be a typo, or Kayley must be losing it. Ok, two things. Including 2020 RVOs is not the result of a typo…and I also might be losing it. As with many other things that happened as a result of COVID, fuel consumption was not at its highest. Remember that time the government said we had to quarantine which means no one was driving? Yeah, I try not to remember either. Rather than force obligated parties to satisfy an obligation that may have been directly affected by COVID and the lack of transportation, EPA is retroactively adjusting 2020 final RVOs to “volumes of [] fuels actually used in the U.S. in 2020[1].”
Can they do that? Uhhh…maybe. According to EPA, drastic times calls for drastic measures. Resetting final 2020 RVOs to reflect actual fuel use, makes up for the chaos that was 2020. EPA is claiming it has the ability to do this under EPA’s statutory reset authority[2]. However, I have a sneaky suspicion not everyone is going to agree with that. This is most probably a scenario where the courts are going to have to decide whether EPA’s reset authority can be applied in this way which means those types of questions will need more time to be answered.
Yeah, yeah, we get it. 2020’s resolution is to be the gift that keeps on giving and all that, but what about 2021 and 2022. Well, to put it bluntly, it could have been worse…but it also could have been better. For 2021, there are two main things to consider. One, 2021 was a recovery (or remix?) of 2020. Many areas still were not up to the robust use of fuel for transportation due to COVID. Additionally, 2021 proposed RVOs were released over a year late. EPA noted that requiring obligated parties to meet their obligation for year that has already passed might be difficult or, as they put it “the volumes…properly balance[] the statutory goal of increasing renewable fuel use with mitigating burdens on obligated parties[3].”
Are those things true? I don’t think they’re untrue. 2021 gave us, among the Delta and Omicron variant, more unpredictability and while transportation sectors increased, they certainly weren’t as robust as pre-COVID times. 2021 proposed RVOs should have been published around the end of June, beginning of July and finalized by November 30 of 2020. We all know that didn’t happen for many different reasons. Again, whether EPA was correct in their interpretation of statutory volumes and how they were set is probably going to end up being a question answered by the courts.
Ok, cool. So, 2020 final RVOs are being revised to account for COVID and 2021 proposed RVOs are being set to account for COVID and for the fact that they were released much later than EPA is statutorily required to do. This trend probably continued for 2022, correct? This is where a well-timed plot twist comes into play. There are a few things to note about 2022 RVOs.
EPA set 2022 RVOs at higher targets than 2021 and 2020. While an increase in volume is supposed to occur from year to year, this increase was relatively greater than in years past. EPA is trying to anticipate an increase in renewable fuel use, particularly in nonconventional ethanol, renewable diesel, and biogas[4]. In doing so, EPA set 2022 RVOs close to the target volumes listed in the Energy Independence and Security Act (EISA), even when EPA had the statutory reset authority to set lower volumes.
Does this mean that EPA is going to continue this trend of resetting volumes, but not too far from EISA? Until the 2023 set volumes are released, I don’t think anyone is willing to comment on that. It would be nice if EPA could resolve to more consistent, but admittedly, there are many factors outside their control…like a global pandemic for one…
Does the Clean Air Act require that EPA has to also propose the Bio-mass based diesel volume for 2023? If this were any other year, that’s how this would work. However, with the set of the RFS for 2023, there are some things that are just going to work differently than what RFS participants are used to seeing. EPA hasn’t yet released 2023 set volumes yet, so time will have to be the dictator of what to expect.
Will EPA at least resolve to be on-time going forward? I don’t know, but that’s one resolution that I would want to be more than a well-intentioned suggestion.
[1] Renewable Fuel Standard (RFS) Program: RFS Annual Rules, EPA-HQ-OAR-2021-0324; FRL-8521-02-OAR, pg. 28 (Dec. 7, 2021).
[2] Id. at 31.
[3] Id. at 32.
[4] Id. at 33.