	Background and Recent History

The Energy Policy Act of 2005 (EPAct, P.L. 109-58 ) established a renewable fuel standard (RFS), requiring the use of biofuels (such as ethanol) in the nation's fuel supply. The Energy Independence and Security Act of 2007 (EISA, P.L. Under the provisions of EPAct and EISA, the administrator of the Environmental Protection Agency (EPA) has the authority to waive the RFS requirements in whole or in part, in response to a petition by a state or a fuel provider, or on her own motion. In August 2008, EPA denied the waiver request because the agency found that the effects of the RFS on food, feed, and fuel prices was minimal, and thus the economic effects of the RFS "could not be categorized as severe." However, EPA denied these petitions for similar reasons as in 2008. The vast majority of the RFS is met using ethanol blended into gasoline at the 10% level (E10). However, there is a limit to the amount of ethanol that can be blended into gasoline at this level, and other options for supplying ethanol (e.g., higher-level ethanol blends such as E15 and E85) are currently constrained because of infrastructure and other impediments. In prior years this had not been a problem because the volume of biofuels needed to meet the RFS mandate was below the maximum amount of ethanol that could be supplied as E10; but stakeholders were especially concerned about the possibility of facing this "blend wall" in either 2013 or 2014. In November 2013 EPA proposed using its general authority to lower the RFS mandates in cases of "inadequate supply." Within the overall RFS there are sub-mandates for the use of cellulosic biofuels, biomass-based diesel fuels, and other advanced biofuels. However, questions have been raised over whether there is enough feedstock supply and production capacity to meet some of these carveouts, especially the cellulosic biofuel carveout. In January 2013, the U.S. Court of Appeals for the D.C. Circuit vacated the 2012 cellulosic mandate and remanded the rule back to EPA. Current RFS Requirements

The RFS requires the use of 16.55 billion gallons of renewable fuel in transportation fuels in 2013—corn ethanol is limited to 13.8 billion gallons of the 2013 mandate. Waiver Provisions

As amended by EISA, Section 211(o)(7) of the Clean Air Act gives the EPA administrator the authority to waive, in whole or in part, the total volume of renewable fuel mandated by the RFS if, in her determination, there is inadequate domestic supply to meet the mandate, or if "implementation of the requirement would severely harm the economy or environment of a State, a region, or the United States." Proposed Waiver of 2014 Standards

In November 2013, EPA, under its own authority, proposed lowering the 2014 overall RFS mandate from 18.15 billion gallons to 15.21 billion gallons, and the advanced biofuel mandate from 3.75 billion gallons to 2.20 billion gallons. EPA has proposed using its general authority to lower the RFS mandates in cases of "inadequate supply." In this case, they interpreted "inadequate supply" to include an inability to deliver the necessary biofuels to consumers, even if there is sufficient production of said biofuels. Gasoline and diesel fuel suppliers and other stakeholders have generally been supportive of EPA's proposal, while many biofuel producers believe that EPA is overstepping its authority. Ultimately, for 2010 thorough 2013, EPA found that there was insufficient production capacity to meet the scheduled levels of cellulosic biofuel, a situation likely to be continued in 2014.
Transportation fuels are required by federal law to contain a minimum amount of renewable fuel each year. The renewable fuel standard (RFS), established by the Energy Policy Act of 2005 (EPAct, P.L. 109-58) and amended by the Energy Independence and Security Act of 2007 (EISA, P.L. 110-140), required that a total of 16.55 billion gallons of renewable fuels be used to offset gasoline and diesel fuel in 2013. Under EISA, the scheduled mandates grow each year (to 36 billion gallons in 2022). However, the ability of fuel suppliers to meet the growing RFS mandates has been questioned. For 2014, instead of a total of 18.15 billion gallons scheduled in EISA, the Environmental Protection Agency (EPA) has proposed using waiver authority within the statute to lower the mandate to 15.21 billion gallons. Within the overall RFS there are sub-mandates (or "carveouts") for advanced and cellulosic biofuels. EPA has proposed lowering these as well.
Most of the overall RFS mandate (84% for 2013) is currently met using corn-based ethanol. The vast majority of the ethanol supplied to meet the RFS is blended into gasoline at the 10% level (E10). However, there is a limit to the amount of ethanol that can be blended into gasoline at this level, and other options for supplying ethanol (e.g., higher-level ethanol blends such as E15 and E85) are currently constrained because of infrastructure and other impediments. In prior years this had not been a problem because the volume of biofuels needed to meet the RFS mandate was below the maximum amount of ethanol that could be supplied as E10; but stakeholders were especially concerned about the possibility of facing the "blend wall" in either 2013 or 2014.
The Environmental Protection Agency (EPA) has the authority to waive the RFS requirements, in whole or in part, if certain conditions outlined in the law are present. Under EISA the overall RFS is scheduled to grow to 18.15 billion gallons in 2014. In November 2013 EPA proposed using its general authority to lower the RFS mandates in cases of "inadequate supply." In this case, they interpreted "inadequate supply" to include an inability to deliver the necessary biofuels to consumers, even if there is sufficient production of said biofuels. Gasoline and diesel fuel suppliers and other stakeholders have generally been supportive of EPA's proposal, while biofuel producers and corn growers believe that EPA is overstepping its authority.
Questions have also been raised over whether the overall mandate diverts enough corn supply from food/feed production to dramatically raise prices in those markets, and whether there is enough feedstock supply and production capacity to meet the carveouts for fuels other than corn ethanol. In 2008 the governor of Texas requested a waiver of the RFS because of high grain prices, although that waiver request was denied because EPA determined that the RFS requirements alone did not "severely harm the economy of a State, a region, or the United States," a standard required by the statute. A similar waiver petition was filed by the governors of several states in August 2012. That petition was denied for similar reasons.
In February 2010, as part of a final rulemaking implementing the RFS as expanded by EISA, EPA waived most of the 2010 cellulosic biofuel carveout—as they have in each subsequent year. In cases where EPA projects inadequate production of cellulosic biofuels to meet the schedule in EISA, the agency must lower the mandate to the projected level, although EPA's process for doing so has been controversial, and the agency's 2012 cellulosic mandate was remanded by the U.S. Court of Appeals for the D.C. Circuit. EPA ultimately revised the 2012 standard to zero.
This report discusses the process and criteria for EPA to waive various portions of the RFS.