Update: AFPM Files Motion Against Ethanol Industry Lawsuit

Source: By Rachel Gantz and Molly White, OPIS • Posted: Monday, January 18, 2016

American Fuel & Petrochemical Manufacturers (AFPM) late Wednesday said it would intervene in opposition to a lawsuit that biofuel groups brought against the EPA challenging the agency’s authority to reduce renewable volume obligations in the Renewable Fuel Standard (RFS2).

“AFPM filed a motion to intervene to support EPA’s interpretation and use of its legal waiver authority to reduce the mandated amounts of renewable fuels to be blended into the nation’s fuel supply,” AFPM President Chet Thompson said in a statement. “EPA’s decision to lower volume requirements was the only justifiable option given market realities and the failure to do so would have been arbitrary and capricious.”

As OPIS reported on Friday, seven biofuel and clean energy groups filed the first of what are likely to be several lawsuits against EPA’s final 2014-2016
RFS2 program in the U.S. Court of Appeals for the District of Columbia. The rule, issued on Nov. 30, raised some of the biofuel targets above what had previously been proposed, but not near their statutory requirements

The biofuel groups’ grievances focus on EPA’s interpretation of its “inadequate domestic supply” waiver authority, including consideration of fueling infrastructure and other constraints, as a way to reduce RFS targets below the statutory requirement in the agency’s final rule.

“By focusing on fuel distribution capacity and demand rather than supply, and by failing to consider surplus RINs [Renewable Identification Numbers] from prior years, the agency erroneously concluded that there was an inadequate supply of renewable fuel to justify a waiver of the levels established by Congress,” the petitioners said in the statement.

According to Thompson though, “[t]his lawsuit is another effort by the ethanol industry to force increased amounts of ethanol produced by the petitioners’
members on consumers through an unpopular government mandate, and ignores not only the E10 blend wall but also strong consumer rejection of higher-ethanol fuels.”

In AFPM’s 23-page motion to intervene on behalf of EPA, it explained how it and the American Petroleum (API) “supported some aspects of EPA’s proposal. In particular, they commented that EPA reached the correct conclusion concerning the effect of the E10 blendwall, namely that it represents a binding constraint on the ability to use ethanol in gasoline. To address the blendwall, AFPM and API recommended that EPA utilize its general waiver authority based on inadequate domestic supply, although AFPM and API argued that EPA should additionally base its general waiver on severe economic harm.”

It should be noted that API has not filed a motion to intervene. “Nothing to announce at this time,” API spokesman Carlton Carroll told OPIS this morning.

“AFPM has a significant, direct interest in this litigation to protect its members’ operations,” the group wrote in its motion. “AFPM members are directly regulated as obligated parties under the RFS Rule, and thus, they have …
prudential standing to intervene in this litigation. AFPM’s interests in this case are not adequately represented by the existing parties and may be harmed by a favorable ruling for petitioners. The court should grant AFPM’s motion for leave to intervene as a respondent in this case because AFPM meets the standard for intervention in petition-for-review proceedings in this court,” it added.

According to AFPM General Counsel Richard Moskowitz, the appeals court has not set a briefing schedule, since the deadline to file a lawsuit in the overall RFS case is not until Feb. 12. “In that regard, we are still discussing aspects of the final rule with our members and will make a decision on whether to file our own petition for review soon,” he said.