RFS Legal Challenge Launched

Biofuels, Ag Groups Join Forces in Seeking Review of RFS Volume Requirements

Todd Neeley
By  Todd Neeley , DTN Staff Reporter
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In November 2015, EPA announced a three-year Renewable Fuels Standard program through 2016 that includes biofuel volumes below those set in the original 2007 law. (Logo courtesy of EPA)

OMAHA (DTN) -- In what could be the first of many legal challenges to the latest Renewable Fuel Standard volume requirements, ethanol and agriculture industry groups on Friday petitioned a federal appeals court to hear a challenge to the RFS finalized by EPA in November 2015.

The petition was filed by Americans for Clean Energy, American Coalition for Ethanol, Biotechnology Innovation Organization, Growth Energy, National Corn Growers Association, National Sorghum Producers and the Renewable Fuels Association in the U.S. Circuit Court of Appeals for the D.C. Circuit.

A preliminary listing of "issues to be raised" in the court of appeals "will be filed at a later date," according to a news release from Americans for Clean Energy.

"Among other things, the petitioners intend to demonstrate that EPA's interpretation of its general waiver authority under the Renewable Fuel Standard statute was contrary to the statute," the release said about the upcoming complaint to be filed.

"By focusing on fuel distribution capacity and demand rather than supply, and by failing to consider surplus RINs (renewable identification numbers) from prior years, the agency erroneously concluded that there was an inadequate supply of renewable fuel to justify a waiver of the levels established by Congress."

Americans for Clean Energy said the petitioners also plan to point out other "fundamental flaws and inconsistencies in the government's rule."

Among the issues the ethanol industry and other groups raised in the months leading up to the final RFS volumes was EPA's use of waiver authority based on biofuels volumes and infrastructure available.

The plaintiffs in such an appeal are not required to file a formal complaint to challenge an agency's rulemaking. The petition for review filed last week plays the role of initiating the action that a complaint would in a typical lawsuit.

"We will provide more detail regarding the basis of our claims in a statement of issues that will be filed in the next few weeks," said Michael Frohlich, communications director for Growth Energy.

The American Fuel and Petrochemical Manufacturers said in a statement the group stands behind EPA's authority to alter RFS volumes in the way the agency did.

Overall, the final RFS volumes represented a cut of more than 2 billion gallons of renewable fuels from the 2007 statute itself.

AFPM President Chet Thompson said in a news release that EPA properly used its waiver authority in lowering RFS volumes.

"AFPM fully supports EPA's decision to use its waiver authority to adjust the RFS volume mandates to reflect the E10 blend wall, vehicle and engine warranty restrictions, and overwhelming consumer rejection of higher-ethanol fuels," he said.

"We are confident that the D.C. Circuit will uphold EPA's legal authority to do so. It is long overdue for Congress to repeal this broken program and for the biofuels industry to stand or fall on its own, without government subsidies. But, in the meantime, it is clear that EPA has the authority to adjust unrealistic mandates to account for market realities. This lawsuit is yet another attempt by the ethanol industry to use government mandates to force higher percentage ethanol blends upon consumers."

EPA announced a three-year program for 2014, 2015 and 2016 that includes biofuel volumes below those set in the original 2007 law. The agency also announced biomass-based diesel volumes through 2017. The overall RFS cuts came about as a result of overall decreased demand for gasoline, reflected in about a 20% reduction in overall biofuels volumes in the RFS.

EPA used a waiver rule to change the blend volumes required by petroleum marketers. Biofuel volumes are set in the final rule at 16.28 billion gallons for 2014, 16.93 billion gallons for 2015, and 18.11 billion gallons for 2016.

EPA's earlier proposed numbers called for renewable blend volumes of 15.93 billion gallons in 2014, 16.3 billion gallons in 2015, and 17.4 billion gallons in 2016.

Under the original 2007 law, overall biofuel blending volumes would have been 18.15 billion gallons in 2014, 20.5 billion gallons in 2015 and 22.25 billion gallons in 2016.

The new rule lowers blend volumes from the law by 1.87 billion gallons for 2014, 3.57 billion gallons for 2015 and 4.14 billion gallons.

Corn-based ethanol will see its volumes set below the statutory 15 billion gallons for 2014 and 2015, at 13.57 billion and 13.93 billion gallons, respectively. The blend level is set at 14.27 billion gallons in 2016, although industry groups say producers are poised to produce at least 15 billion gallons.

EPA set cellulosic volumes at 33 million gallons for 2014, 123 million gallons for 2015, and 230 million gallons in 2016.

Todd Neeley can be reached at todd.neeley@dtn.com

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(AG/CZ)

Todd Neeley