WASHINGTON, July 3, 2012 -An Arizona congressman is attempting to do legislatively what the oil industry is attempting in federal court – modify the federal Renewable Fuel Standard to lower cellulosic biofuel requirements.

Rep. Jeff Flake, a Republican, introduced late last week a measure that would require the EPA to rely on actual industry production rather than levels mandated by the 2007 Energy Independence and Security Act (EISA) when setting volumetric requirements for cellulosic ethanol. The Phantom Fuel Reform Act (H.R. 6047), Flake said in a statement, would “reform an outrageous [EPA] regulation that adds millions of dollars each year to the cost of energy production.

Under current law and based on annual EPA estimates, United States refiners are required to blend millions of gallons of cellulosic biofuel into the U.S. fuel supply, even if no cellulosic biofuel is produced.

Currently, the still infant industry has yet to produce any substantial product. However, EPA is requiring 8.65 million gallons of cellulosic biofuel to be blended.

The American Petroleum Institute (API), the oil industry’s chief trade organization; the American Fuel & Petrochemical Manufacturers (AFPM), the nation’s principal refiners group; and the Western States Petroleum Association filed federal lawsuits challenging EPA’s implementation of the EISA requirement that the agency set the “projected volume” of cellulosic ethanol available. In lieu of the product, refiners and oil companies can purchase credits.

AFPM and Western States filed suit last month after EPA denied their request for a waiver of the 2011 cellulosic biofuel requirement of 6.8 million gallons under the EISA-established RFA. API filed suit last month seeking to negate the agency’s imposition of an 8.65 million gallon RFS requirement this year.

The API’s Bob Greco, director of industry operations, said the Flake bill was necessary. "The fact that EPA continues to mandate these biofuels that do not exist is regulatory absurdity and bad public policy," he said in a statement.

EPA officials, who say they have lowered cellulosic volume requirements originally set by EISA for 2011 and 2012, say the RFS requirements are necessary to enable the development of the cellulosic biofuel market. Biofuel industry leaders are also insistent in their call for EPA to maintain the volumetric requirements.

“The purpose of Congressman Flake’s legislation is to pander to oil companies who are desperate to repeal the RFS because several cellulosic biofuel projects are scheduled to break ground or begin production within the next 18 months,” said Brian Jennings, executive vice president of the American Coalition for Ethanol. “In re-legislating the RFS, what Congressman Flake and big oil keep getting backwards is that it is supposed to be a forward-looking policy, not one which reflects actual production, after the gallons have been made.”

Brent Erickson, executive vice president of the industrial and environmental section at the Biotechnology Industry Association, said “lobbyists representing the oil refining industry . . . are now trying to change the RFS regulations to prevent new cellulosic biofuel biorefineries from being built and other advanced biofuels from reaching the market. These interests know full well that the biorefineries under construction and opening around them are not phantoms, but real-life competitors.”



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