Senators Jeff Flake (R-AZ), David Vitter (R-LA), and Mike Crapo (R-ID) introduced this week the Phantom Fuel Reform Act, S.251, which will reform an Environmental Protection Agency (EPA) regulation that 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.  Only 1,024 gallons of product that could have been used to meet the cellulosic biofuel mandate were produced in 2012.  Yet, in 2013, EPA is requiring 14 million gallons of cellulosic biofuel to be blended, which is almost double the 8.65 million gallons initially required in 2012.  The EPA solution to the problem of a lack of product is to force U.S. energy producers to buy paper credits for the “phantom fuel” directly from EPA at a cost of millions.  If U.S. producers do not buy these credits, they risk large fines from EPA.

In January, the DC Circuit Court recognized the absurdity of the EPA cellulosic biofuel mandate as part of the RFS by vacating it, explaining that the cellulosic production estimate was not based in reality and was, therefore, at odds with congressional intent.  Building on what the DC Circuit Court has already acknowledged, the Phantom Fuel Reform Act would simply require EPA to rely on actual industry production rather than bureaucratic prediction when setting the annual cellulosic biofuel mandate.

A companion bill, H.R. 550, was introduced Thursday in the House by Representatives Gregg Harper (R-MS) and Jim Matheson  (D-UT).