Most Groups Yet Unsure About Filing Lawsuits Over RFS

Source: By Michael Schneider, OPIS • Posted: Thursday, December 3, 2015

EPA’s release Monday of the agency’s long-awaited final volume requirements for 2014, 2015 and 2016 under the Renewable Fuel Standard (RFS) is expected to result in litigation, but many groups indicated today that it is still too early to say whether they will be filing lawsuits.

“I am not certain about too many things, but I am absolutely certain that this decision is going to be challenged,” Chet Thompson, president of the American Fuel & Petrochemical Manufacturers (AFPM), told OPIS. “I am 100% certain about that, and I am 100% certain that AFPM is going to be involved in some shape or form with the litigation.”

Thompson said his staff is “still cutting our way through” the decision and that “certainly no decisions have been made.”

“But we have serious concerns with certain aspects of the rule that could very easily lead us to conclude that the best remedy is to challenge the rule,” he added.

There are parts of the rule that AFPM supports and parts that it has significant concerns with, according to Thompson.

“So I can actually see us both defending EPA in part and challenging them in part,” he said.

Asked if he would like his chances in court, Thompson replied: “Certainly. We think it is clearly unlawful, for example, that EPA set biomass-based diesel volume requirements despite not giving us what the statute says: 14 months lead time. We think EPA has substantial legal vulnerability there.”

The Biotechnology Industry Organization (BIO) was one of the few groups that indicated that it would go forward with litigation.

“EPA violated the law,” said BIO spokesman Paul Winters. “The agency asserted a novel interpretation of the general waiver authority, one we believe is inconsistent with the legislative history and congressional intent.

“We feel we have to challenge that in court, since accepting it would create future uncertainty about how the program will work — and that uncertainty is going to undercut investment in advanced biofuel.”

Two groups ruled out litigation.

The Iowa Renewable Fuels Association (IRFA) said it “has no plans to file a suit itself.”

“If the industry decides to file suit in some manner (whether that be an organization or business), the IRFA board will discuss whether or not to support that effort,” said Communications Director T.J. Page, “but given the long-term ramifications of EPA’s waiver rationale, it is not surprising that the ethanol industry feels compelled to consider taking legal steps to defend the RFS law and congressional intent.”

The Advanced Biofuels Association (ABFA) also indicated that it has no plans for litigation.

“ABFA is not going to sue EPA over the rule,” said Michael McAdams, the group’s president, “as our members, which produce the next-generation biofuels, are in a totally different position and have nothing to gain.

“We anticipate potential litigation would come from the two incumbent industries, corn ethanol and oil,” he added.

Other groups were less definitive, however.

“We are pleased with the overall volumes and direction of the biodiesel program,” said Ben Evans, a spokesman for the National Biodiesel Board, “but this is obviously a lengthy and complex rule, and we are still reviewing the fine print, so it’s just too early for us to comment on legal ramifications or potential litigation.”

Michael C. Frohlich, director of communications for Growth Energy, said his group “is in the process of reviewing the rule in full and will discuss all options with our members and the Board of Directors on how to move forward.”

The American Coalition for Ethanol said it is “strongly committed to ensuring consumers have access to higher blends of ethanol, and we will explore all options at our disposal to achieve that goal with this administration and the next.”

The American Petroleum Institute simply said it is “weighing our options at this point.”

Tim Cheung, vice president and research analyst at ClearView Energy Partners, indicated that there may be plenty of lawsuits before the smoke clears.

“We expect obligated parties (mostly refiners) to challenge the final rule,” he said via email. “We think biofuel producers could also challenge the rule, arguing that EPA used invalid reasons to invoke the general waiver authority.”

As to who might have the best case, Cheung stated that “it’s hard to say this early on.”

“There are many issues that both sides of the debate could raise,” he added.

Cheung noted that parties have 60 days after a rule goes final (upon publication in the Federal Register) to file an appeal.

“Assuming publication sometime later this month,” he said, “the deadline would be sometime in February.”