Petroleum Interests Sue EPA on E15 Rule

Renewable Fuels Association Set to Intervene in E15 Rule Lawsuit

Todd Neeley
By  Todd Neeley , DTN Staff Reporter
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A petroleum interest group on Monday filed a petition for review with a U.S. court of appeals, challenging the final E15 rule. (DTN file photo)

OMAHA (DTN) -- The American Fuels and Petrochemical Association has filed a legal challenge against the new E15 rule finalized on May 31, filing a petition for review with the U.S. Court of Appeals for the District of Columbia Circuit on Monday.

In the weeks leading up to the final rule that allows year-round E15 sales across the country, petroleum interests indicated they would file a legal challenge.

In a news release on Monday, the Renewable Fuels Association said it will file a motion to intervene in the case on the EPA's behalf.

"It was entirely predictable that Big Oil would challenge President (Donald) Trump's effort to provide increased competition, consumer choice at the pump, and lower gasoline prices for a higher-octane fuel," RFA President and CEO Geoff Cooper said in a statement.

"But EPA's legal analysis is sound and is overwhelmingly supported by the public record and a plain reading of the statute. President Trump was correct in calling the regulatory barrier to E15 'unnecessary' and 'ridiculous,' and we greatly appreciate his effort to empower consumers and the American farmer. AFPM's desperate effort to have the court overturn President Trump's E15 rule will fail and reflects a callous desire to protect market share at the expense of rural America. The RFA stands with President Trump and consumers across the country who deserve a price break at the pump."

The court action comes one day ahead of the president's scheduled visit to tout the new rule, at Southwest Iowa Renewable Energy's ethanol plant just south of Council Bluffs, Iowa.

Chet Thompson, president and chief executive officer of the American Fuel and Petrochemical Manufacturers, said in a statement to DTN his group expects to win in court.

"We fully expect the court's ruling to align with what the EPA and Congress have each previously concluded: the plain language of the Clean Air Act does not authorize an RVP waiver expansion beyond E10," he said. "Nothing has changed -– a waiver for E15 is unlawful, plain and simple."

Thompson said the E15 rule does nothing to address what his group believes are problems with the Renewable Fuel Standard.

"An E15 waiver is in no way a fix for the shortcomings of the RFS, which has for years plagued markets with volatility," he said. "Following his visit to Iowa, we invite the president to listen to refinery employees and constituents in Pennsylvania, Ohio and elsewhere to fully understand the economic harm the RFS is causing and the overwhelming need for its reform."

The rule lifts the restriction placed on year-round sales of E15 through the summer months in some regions of the country. Those restrictions have been in place from June 1 to Sept. 15.

The final rule grants a waiver of the 1-pound Reid vapor pressure restriction on E15.

While the E15 announcement was welcome news to ethanol producers and farmers, concern continues to linger about the long-term viability of the Renewable Fuel Standard if EPA continues to grant 30 to 40 small-refinery waivers on an annual basis. There are just 48 refineries in the country categorized as small.

So far, the agency has granted waivers in the past few years totaling more than 2.61 billion ethanol equivalent gallons. There is concern the waivers are cutting ethanol demand.

News reports in recent years show refineries that produce 75,000 or fewer barrels per day that received waivers are owned by some of the largest, most profitable oil companies in the world.

In the proposed rule, the EPA explored the possibility of five different reforms to the Renewable Identification Numbers, or RIN, market in response to concerns about potential market manipulation.

Obligated parties to the RFS, including refiners and others, are allowed to buy RINs or blend biofuels to comply with the law.

EPA will require obligated parties to the Renewable Fuel Standard to publicly disclose when their separated D6 (corn ethanol) RIN holdings exceed certain thresholds. In addition, EPA is setting reporting and record-keeping requirements to help the agency enhance its market monitoring capabilities.

Eliminated from the proposed rule are reforms related to RIN retirement compliance, who can purchase RINs and limits on how long non-obligated parties can hold D6 RINs.

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Todd Neeley