The EPA’s nonexistent-product mandate

Font Size:

First, President Obama decided that the government can punish consumers if they don’t buy a particular product (e.g., health insurance). Now, his administration has decided that the government can punish consumers if they don’t buy a product that can’t be purchased because it doesn’t exist.

At one time such a notion would have been laughed off as preposterous. It would have been considered unfair (before the president made himself the ultimate authority on what’s fair and what isn’t). But that’s what the Environmental Protection Agency (EPA) has been doing.

The product that the EPA wants purchased is cellulosic biofuel, which, if it could be purchased, would be mixed with gasoline and diesel fuel. Cellulosic biofuel is made from inedible parts of plants, yard waste, and cellulose-rich crops, such as switchgrass, grown specifically to produce the biofuel.

Since 2010, the EPA has been requiring refiners and importers of transportation fuel to purchase millions of gallons of cellulosic biofuel (5 million gallons in 2010, 6.6 million in 2011, and 8.65 million in 2012). Problem is, not a single gallon has been available for purchase.

That little obstacle hasn’t deterred the EPA from collecting approximately $25 million from sales of waiver credits that refiners and importers have had to purchase to avoid paying a penalty of up to $37,500 per day for not buying a fuel that doesn’t exist.

On March 9 of last year, the American Petroleum Institute went to court to challenge the EPA’s 2012 renewable fuel standards.

The EPA defended its projection of how much cellulosic biofuel would be produced during 2012 as “realistic” — given its objective to promote the growth of the cellulosic biofuel industry. But the Court of Appeals for the District of Columbia refused to let the EPA redefine the term “projected” as allowing the projector’s “aspirations for a self-fulfilling prophecy divert it from a neutral methodology.”

The Court of Appeals acknowledged that it has approved past governmental efforts to force technology but noted that the EPA was applying pressure on consumers “in no position to ensure, or even contribute to, growth in the cellulosic biofuel industry,” since producers don’t have the “requisite expertise, plant, capital and ultimate opportunity for profit” from sales of cellulosic biofuel. As the court wrote, the EPA’s message to the producers of cellulosic biofuel has been, “‘Do a good job, cellulosic fuel producers. If you fail, we’ll fine your customers.’”

You might think, who cares? It’s affecting only businesses (and particularly evil ones at that). But motorists are reimbursing refiners by paying higher fuel prices at the pump.

And who’s to say that the government will stop with refiners and importers of transportation fuel? Why not require motorists to purchase motor vehicles using hydrogen for fuel? Fine each of the 200,000,000 U.S. motorists $1,000 each year they’re not driving a vehicle propelled by hydrogen, and the government will collect more than $200 billion annually. Increase the fine to $10,000, and the government will collect more than $2 trillion annually. Just think how many ribbon-cutting ceremonies for future Solyndras can be purchased with that amount of money.

On January 25, the Court of Appeals unanimously ruled that the EPA exceeded its statutory authority. Has that deterred the EPA? No. Since then the EPA has doubled down (almost literally). Its 2013 renewable fuel standards require refiners and importers to purchase 14 million gallons of cellulosic biofuel (up from 8.65 million for 2012). Never let it be said that the Obama administration lets reality trump wishful thinking when setting policy.

Update: On February 28, Climatewire reported that the EPA is waiving its 2012 cellulosic fuel mandate.

David Gibberman, a lawyer, writes about legal and financial matters for professionals, college students, and the general public.