Refiners Urge D.C. Circuit To Scrap EPA’s 2013 RFS

Source: Inside EPA • Posted: Sunday, March 2, 2014

Refiners are reiterating their call for the U.S. Court of Appeals for the District of Columbia Circuit to scrap EPA’s 2013 renewable fuel standard (RFS), saying the program’s fuel blending targets are based in part on flawed agency estimates on the use of renewable identification number (RIN) credits to comply with the standard.

The argument, outlined in recent briefs filed by opponents of the standard in Monroe Energy, LLC, et al., v. EPA, is the latest legal effort by refiners to undo the landmark renewable fuels program. Oil sector critics of the RFS say the agency exceeded its statutory authority and lacked adequate data for its decision to ramp up the RFS’ fuel production goals, and want the court to scrap the 2013 targets.

Refining companies Monroe Energy and the PBF Holding Company focus their separate Feb. 25 briefs on criticizing EPA’s calculation of surplus RINs available to comply with the RFS in 2013, saying it is erroneous and undermines the rule.

The American Petroleum Institute (API) and the American Fuel and Petrochemical Manufacturers (AFPM) argue in a separate Feb. 25 joint brief that the rule arbitrarily and capriciously used data provided by the Energy Information Administration (EIA) that was not used in the proposed rule to establish the final fuel blending requirements.

API and AFPM say EPA did this without allowing obligated parties the chance to comment on the data change. The groups also argue that the agency used the final rule to waive compliance for smaller refiners, arbitrarily adding a new compliance burden for other obligated parties.

In addition, the groups also ask the court to vacate the 2013 blending requirements for cellulosic biofuels because they say EPA overestimated production estimates in 2013 from one company that had not produced the fuels at the time the rule was made final last year.

The refiners’ briefs primarily raise concerns regarding the so-called “blend wall,” the limit on the amount of ethanol that can be blended safely into the fuel supply, and their inability to comply with the RFS due to higher RIN costs that have risen due to the blend wall.

Monroe and PBF argue that refiners with access to surplus RINs have taken those credits out of the RIN trading market in anticipation of even greater ethanol blending constraints in 2014 and future compliance years. This has shrunk the RIN pool even greater, making refiners like Monroe less able to purchase adequate credits to comply, they say.

Monroe and PBF do not possess adequate access to ethanol blending infrastructure, and therefore must buy RINs to fulfill a high percentage of their obligation under the program, raising the cost of compliance significantly, they say.

Although API in other proceedings argues similar concerns as PBF and Monroe about the blend wall and RIN prices, in the 2013 lawsuit API focuses more so on EPA’s alleged lack of transparency in devising the amounts of biofuels to be blended under the final rule, in particular its lack of authority in setting the cellulosic blending requirement at 6 million gallons — with no production evident at the time the rule was published.

Refiners have had success in past legal challenges to the RFS, with the D.C. Circuit issuing a ruling Jan. 25, 2013, that vacated the 2012 cellulosic standard, stating that EPA based the requirement on an aspirational goal rather than hard production figures from the Energy Information Administration (EIA).

Biofuels groups are defending EPA in the suit, rejecting the oil sector’s claims as erroneous because they are based on problems such as a blend wall that the groups do not believe exist.