Congressman Introduces Phantom Fuel Reform Act

Would eliminate EPA mandates for use of biofuels that do not yet exist

Published in CSP Daily News

Jeff Flake

WASHINGTON -- Representative Jeff Flake (R-Ariz.) has introduced the Phantom Fuel Reform Act (H.R. 6047) to reform an Environmental Protection Agency (EPA) regulation that he said adds millions of dollars each year to the cost of energy production.

Under current law and based on annual EPA estimates, U.S. 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, this still-infant industry produces no product, yet in 2012, the EPA is requiring 8.65 million gallons of cellulosic biofuel to be blended.

The EPA's solution to this problem is to force U.S. energy producers to buy paper credits for this "phantom fuel" directly from the EPA at a cost of millions. If U.S. energy producers do not buy these credits, they risk large fines from the EPA.

The Phantom Fuel Reform Act would simply require the EPA to rely on actual industry production rather than bureaucratic prediction when setting the annual cellulosic biofuel mandate.

"Even for the EPA, this is an outrageous regulation," said Flake. "The Phantom Fuel regulation has done nothing but net the federal government millions of dollars while needlessly driving up U.S. energy costs."

The American Petroleum Institute (API) welcomed the introduction of the Phantom Fuel Reform Act that would eliminate EPA mandates for the use of biofuels that do not yet exist.

"EPA's mandate is out of touch with reality and forces refiners to pay a penalty for not using imaginary biofuels," said API director of downstream and industry operations Bob Greco. "EPA's unrealistic mandate is effectively an added tax on making gasoline."

The Clean Air Act requires EPA to determine the mandated volume of cellulosic biofuels each year at "the projected volume available"; however, EPA continues to mandate the use of these fuels even though no company is able to produce them commercially, according to EPA's own records.

"The fact that EPA continues to mandate these biofuels that do not exist is regulatory absurdity and bad public policy," Greco said.