Oil industry calls for swift release of final RFS rule

Source: Amanda Peterka, E&E reporter • Posted: Thursday, June 19, 2014

The American Petroleum Institute urged the Obama administration today to quickly complete the rule setting this year’s biofuel requirements.

U.S. EPA this month extended the compliance deadline for last year’s renewable fuel standard targets, raising the likelihood that a final rule initially slated for completion this month won’t be done until August or September.

“Right now, EPA should be proposing the 2015 requirements, but we’re still waiting for them to finalize the requirements for this year,” said Bob Greco, API director of downstream activities, in a conference call with reporters.

Under the renewable fuel standard, EPA is required to set targets for conventional renewable fuel and advanced biofuels each year.

For the first time, EPA has proposed lowering the requirements for renewable fuel based largely on the blend wall, the term for the limit to the amount of ethanol that can be used in today’s cars and fueling infrastructure. The agency’s proposal would compel refiners to blend 13.1 billion gallons of ethanol into gasoline this year, lower than actual production last year and the level laid out in statute.

The agency is already well beyond the statutory deadline of Nov. 30, 2013, to finalize the rule. The White House has not yet begun a review of the final rule.

When asked for specifics on how the delay is affecting refiners, Greco said that refiners will have “limited flexibility” to accommodate any changes that EPA proposes in the final rule.

API has previously signaled that it would file a lawsuit against EPA if the final rule is issued late, but Greco today said that no decisions have been made on potential legal action. He said it was inevitable, though, that someone would sue over the rule and “further the uncertainty.” Biofuel trade groups have also threatened litigation.

In a letter to EPA Administrator Gina McCarthy today, the oil industry trade group also said it was concerned that the agency is considering raising its targets for ethanol. According to a refining industry source, EPA is planning to raise the standard to as high as 13.6 billion gallons in its final rule.

API said that in recent meetings, administration officials have signaled that they view E85 as a way of adding more ethanol to the fuel mix. E85, a fuel consisting of up to 85 percent ethanol, is used in flex-fuel vehicles. The majority of gasoline in the market today contains 10 percent ethanol.

In the letter, API expressed doubt about the ability of E85 to help refiners get around the blend wall and repeated calls for the agency to set the overall renewable fuel requirements below the equivalent of 9.7 percent ethanol in the gasoline pool. Doing so would provide an “adequate buffer,” API said.

“We again urge EPA and the administration to avoid pushing the minimum biofuel requirements up to the maximum amount that could potentially be blended into transportation fuels,” API wrote. “This approach fails to provide necessary flexibility in the marketplace and threatens our economic security.”

Biofuels producers, who view the RFS as a key policy to reduce greenhouse gas emissions and a means of increasing the nation’s energy independence, have called on EPA to increase the targets for ethanol and advanced biofuels to their full statutory levels.