EPA files court brief defending 2013 renewable fuel target

Source: Amanda Peterka, E&E reporter • Posted: Thursday, February 6, 2014

U.S. EPA is defending its 2013 biofuel mandate in the face of a court challenge brought by a small refinery and oil industry trade groups.

In a 113-page brief filed late yesterday in the U.S. Court of Appeals for the District of Columbia, EPA says it reasonably exercised its authority in increasing the renewable fuel volume targets.

“The agency thoroughly explained its reasoning and carefully addressed all of the issues raised in public comments, ultimately concluding that obligated parties can and should comply with the standards,” EPA said.

Finalized last August, the rule requires refiners to blend 16.55 billion ethanol-equivalent gallons of renewable fuel in 2013. Of that total, 13.8 billion gallons is to be conventional ethanol and 2.75 billion gallons advanced biofuel not made from corn starch.

The amounts are consistent with provisions in the 2007 Energy Independence and Security Act, which created the most recent renewable fuel standard, but EPA chose to lower its cellulosic biofuel target, a subset of advanced biofuels.

Monroe Energy LLC, a refinery subsidiary of Delta Air Lines Inc., argues that it would spend “tens of millions of dollars” acquiring credits to show compliance with the renewable fuel standard because it does not blend its own ethanol into gasoline.

The refinery called EPA’s mandate “absurd” because it requires the nation to breach the “blend wall,” or to blend more ethanol than the market can handle. Monroe said refiners would hoard credits to comply with the standard, limiting the refinery’s ability to meet its obligations.

Monroe also argued the standard should be shelved since EPA released the proposed rule more than eight months late.

The American Petroleum Institute and American Fuel & Petrochemical Manufacturers also sued EPA over the 2013 renewable fuel standard. The court combined the challenges into a single case.

In its brief, EPA argues that neither Monroe nor any oil industry representatives raised hoarding concerns during the public comment period for the rule. Under the Clean Air Act, only objections raised during the rulemaking period may be brought up in a federal district court challenge.

EPA says it considered the blend wall, as well as appropriate market data, in setting the 2013 requirement. It determined that the wall was not a barrier to compliance last year.

The ability of refiners to comply with 2013 targets “was not in doubt,” EPA says.

Even though it missed the statutory deadline to set the requirements, EPA also dismisses industry concerns about the tardiness of the rule. The agency argued that it extended the compliance deadline to June 2014 and that courts have previously upheld rules that have been promulgated after statutory deadlines.

EPA also asks that the court stay further litigation over its 2013 cellulosic biofuel standard. The agency announced last month it would internally reconsider the target based on updated information from KiOR Inc., a cellulosic biofuel producer.

The biofuel industry will be picking apart the briefs for clues as to whether the agency will modify proposed targets for 2014. This year, EPA has proposed to roll back the levels for both conventional ethanol and advanced biofuels for the first time because of the blend wall (Greenwire, Nov. 18, 2013).

The agency closed its comment period on the 2014 rule last week. Biofuels industry critics have hinted at lawsuits should the agency keep the targets as proposed (Greenwire, Jan. 28).

“I think they’re going to have to figure out themselves how they rationalize these two approaches because they’re very different,” said Bob Dinneen, president and CEO of the Renewable Fuels Association.

According to ClearView Energy Partners LLC, though, EPA’s response in the 2013 lawsuit “has not given us any new information” on whether the agency will choose to raise its 2014 volumes based on the availability of carryover renewable identification numbers.

The court has not announced a date for oral arguments in the trial. Biofuel intervenors are expected to file a brief defending EPA’s decision.