EPA NOT TO BLAME FOR RFS PITFALLS: A CALL TO CONGRESS TO RESTRUCTURE THE RFS PROGRAM

Note Written By: Garlan Joseph VanHook

Congress created the Renewable Fuel Standard (“RFS”) in 2005 and greatly enhanced the legislation in 2007. The RFS mandated minimum volumes of renewable fuel that must be blended into the volume of gasoline produced in the United States during the year. The Environmental Protection Agency (“EPA”) was given authority to enforce the RFS and adjust the requirements as necessary.

First, this note introduces and expands on the issues facing the current RFS and concludes that Congress should repeal the original RFS and establish a new RFS. The standard should be a demand-based market percentage, set at a level below the blend wall percentage, which will eliminate the need for physical volume blending gallons to be calculated by the EPA each year. The volume-based percentage would provide absolute certainty to the fuel producers and would avoid the issue of breaching the blend wall completely, so long as the volume level is set at or below the limitation. Determining ethanol-blending volumes for fuel producers should not be decided by Congress or the EPA to estimate years in advance when the demand is uncertain. If the market cannot absorb a product, the government should not require it. Government mandates taking the fuel market out of equilibrium can have disastrous economic effects. This note then concludes that if Congress desires to increase ethanol blending volume requirements for fuel producers, they should first focus on passing legislation to create greater demand for ethanol fuels and improve the national infrastructure for ethanol fuels.

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