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DAVID KRUSE

By Staff | Feb 14, 2014

The Renewable Fuels Standard was signed into law by Pres. George Bush in 2007 to mandate that a progressively larger amount of biofuels be incorporated into the motor fuel supply reaching 36 billion gallons of differing types of biofuel – corn ethanol, cellulosic ethanol, biodiesel and advanced biofuels by 2022.

The objectives of the RFS were reduced oil imports as a component of U.S. energy independence, fuel diversity, domestic economic growth, reduced carbon emissions and cost savings for consumers.

The RFS has delivered all of that and more.

Corn-based ethanol was scheduled in the law to reach its 15 billion gallon maximum mandate level of usage by 2015 and the development of cellulosic ethanol production was planned to be the primary fuel component of the expanding RFS, exceeding the corn-based ethanol production mandate reaching a total 36 billion gallons of all types of biofuel by 2022.

The RFS is a direct challenge to oil industry fossil fuel petroleum-based gasoline market dominance and the petroleum industry has orchestrated a full out judicial, legislative and public relations campaign to stop the RFS.

While the law remains in force as written, the Obama administration has ordered the Environmental Protection Agency to circumvent rather than implement the future volumetric targets set by the law.

The EPA has accepted the Big Oil argument that a mythical E-10 blend wall exists. The RFS doesn’t accommodate any blend wall; in fact, one of its primary purposes was to secure a market for 36 billion gallons of biofuel which meant breaking through any commercial blend wall created by Big Oil.

Congress did not write an E-10 RFS. If they had intended to limit biofuel production to 10 percent of the motor fuel supply Congress would have written the law to specifically reflect that.

They did not write the RFS to read, “36 billion gallons of biofuel or E-10, whichever is reached first.” The only provision in the RFS that allows EPA action reducing the volumetric biofuel totals was in the condition that a shortage of feedstock existed to make the production of the ethanol scheduled.

A system of reneable identification numbers available for purchase by blenders was also incorporated into the law as a relief value if stress developed from the mandate to use physical biofuel.

USDA advised the EPA that there was enough corn available for the RFS when the carryover stocks were 800 million bushel.

With a burdensome 1.6 billion bushel projected corn carryover this year, the waiver provision in the law allowing EPA to reduce the scheduled production of biofuel does not even remotely appear relevant.

Industry sources working with EPA say it did not independently make the decision to reduce the RFS. The decision was reportedly made within the White House coming from the Council of Economic Advisors telling the EPA to make a political alteration to the RFS.

They reportedly advised the EPA that there would be “no harm-no foul” in keeping the volumetric targets set low. That shows how out of touch with reality the President’s economic advisers are.

They are foul and they do harm.

The EPA’s action to reduce instead of expand the biofuel content of the nation’s motor fuel supply will have a profound negative impact primarily on the development of the cellulosic ethanol industry and biodiesel industries.

The EPA’s authority to turn the RFS around from incentive to disincentive to use biofuel is nowhere to be found in the legislation.

That is not me saying that, but Iowa Attorney General Tom Miller has reviewed the law and concluded, as have others, that the EPA does not have the authority to reduce the intended ethanol and biodiesel volumetric totals as proposed.

Miller said the EPA calls the statute dealing with “adequate supply” ambiguous, but he says that it is only as ambiguous as the EPA wants to make it.

There will certainly be a legal challenge of EPA authority to make the RFS revision should they follow through with the political decision to throw biofuel under the bus as a growing component of the nation’s motor fuel supply.

The President lied about having an “all of the above energy policy” as his administration cuts the biofuel industry out of the future mix.

Now we know what the President meant when he vowed to expand his executive authority in the State of the Union Message.

His administration’s reversal of the RFS is in direct conflict with the intent of the law as written by Congress.

In other words, if Congress enacts a law that he doesn’t like he will use executive power to do whatever he wants.

The EPA’s reversal of the RFS is an exercise of Presidential overreach that exceeds his constitutional authority.

Some are surprised that Obama would add that to his legacy.

David Kruse is president of CommStock Investments Inc., author and producer of The CommStock Report, an ag commentary and market analysis available daily by radio and by subscription on DTN/FarmDayta and the Internet.

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