Valero Goes After EPA on RFS

Source: By CSPNet • Posted: Thursday, February 18, 2016

WASHINGTON — Valero Energy Corp. is among parties that have filed lawsuits against the U.S. Environmental Protection Agency (EPA) to push the regulator to alter a U.S. policy designed to boost use of renewables in transportation fuels.

The country’s top refiner and No. 3 ethanol producer filed a challenge with the U.S. Court of Appeals in Washington to review the EPA’s latest Renewable Fuel Standard (RFS) plans for 2014-2016, said a Reuters report.

It also asked the court to reopen its standards from 2010 and 2007, Frank Maisano, a partner with Valero’s law firm, Bracewell LLP, told the news agency.

This is the latest push by refiners to move the responsibility of complying with the program further downstream, the report said.

Oil refiners are required to meet EPA targets for biofuel use. In November, the EPA set volumes for 2014-2016 below a 2007 plan laid out by Congress, disappointing both the oil and biofuel industries, said the report.

This was the first time EPA used a “general waiver authority” to lower the volumes, acknowledging a “blend wall” that oil companies say is the saturation point for use of ethanol in gasoline without a major overhaul at fuel pumps and in vehicles.

“If EPA is going to use an extraordinary action like a waiver, then at least EPA must remove any structural impediments that prevent penetration of renewable fuels,” Bracewell’s Richard Alonso told Reuters.

Moving obligations to marketing companies that own the fuel at the time of blending will help to boost biofuels because the groups required to comply will also have the capacity to blend, he said.

Also, the American Petroleum Institute (API) filed a lawsuit with the D.C. Circuit Court challenging EPA’s most recent RFS requirements.

The API is challenging the EPA’s failure to meet deadlines for the 2014 and 2017 biomass-based diesel standards and for mandating more cellulosic ethanol in 2016 than exists. The group has separately filed to intervene on behalf of EPA in another lawsuit brought forward by biofuel interests.

“We will continue to shine a light on this outdated and broken mandate and the need for positive change for the American consumer,” said Frank Macchiarola, API downstream group director. “EPA’s 2016 mandated ethanol volumes push more ethanol into our fuel supply than is safe for the vast majority of cars on the road. This action could harm consumers who could face higher fuel costs and damaged engines as a result.”

The Congressional Budget Office (CBO) found that consumers could see rising fuel prices if EPA attempts to force more than 10% ethanol into gasoline. API requested that EPA set the final ethanol mandate to no more than 9.7% of gasoline demand to help avoid the 10% ethanol blend wall while meeting strong consumer demand for ethanol-free gasoline.

Along with San Antonio-based Valero and Washington-based API, these companies and organizations are challenging the EPA on both sides of the issue:

  • Americans for Clean Energy. Americans for Clean Energy and six other biofuel and agriculture groups filed a lawsuit against the EPA, challenging the agency’s authority to set targets below a 2007 congressional plan. The other groups were American Coalition for Ethanol, Growth Energy, National Corn Growers Association, National Sorghum Producers, the Renewable Fuels Association and the Biotechnology Innovation Organization.
  • American Fuel & Petrochemical Manufacturers (AFPM). AFPM has sued EPA, saying the agency failed to provide obligated parties with the required lead time and used “flawed methodologies” to establish the requirements. AFPM has also filed separately to intervene on behalf of EPA in another lawsuit brought forward by biofuel interests.
  • Monroe Energy LLC. Delta Air Lines Inc.’s Monroe Energy LLC has sued EPA in a push to shift the requirements to comply with the RFS downstream, rather than on refiners like Monroe. Oil refiners and importers can meet EPA’s requirements by blending greater amounts of ethanol and biodiesel with gasoline and diesel. Merchant refiners that lack adequate blending capacity are forced to buy compliance credits.
  • National Farmers Union (NFU). The NFU said in a statement on Friday it has filed a legal challenge, asking a court to intervene and require EPA to use the biofuel requirements laid out in the 2007 plan by Congress. The group has joined other biofuel and agriculture interests that filed a similar lawsuit last month, challenging the agency’s ability to lower requirements.