Oil industry takes EPA to court over Renewable Fuels Standard

March 30, 2010

The oil industry filed lawsuits against the US Environment Protection Agency yesterday, objecting to retroactive biofuel supply obligations imposed through the Renewable Fuel Standard.

The National Petrochemical & Refiners Association and the American Petroleum Institute filed claims with the US Court of Appeals for the District of Columbia yesterday, saying the EPA’s final arrangements for the second stage of the Standard were “unlawful and unfair”.

The EPA published the final version of the Standard last week, setting out requirements for fuel suppliers to supply more and more renewable biofuels with their fuel each year.

the fact that EPA failed to meet its statutory obligations under current energy law does not give the Agency license to impose retroactively additional compliance burdens on obligated parties.” - NPRA President Charles T. Drevna

But the oil industry organizations said the EPA had failed to keep to the deadlines set by the Energy Independence and Security Act of 2007 to finalize portions of the Renewable Fuels Standard by certain dates in 2008 and 2009.

They said it was unfair for the EPA to miss its deadlines and then impose retroactive burdens on fuel suppliers.

The NPRA and the API stressed that their lawsuits were not opposed to the Standard itself or the use of renewable biofuels.

The challenges were against the Agency’s decision to combine the biofuel supply requirements of 2009 and 2010 and apply them retroactively back to January 1, 2010.

Issuing a statement after filing the lawsuit, the Institute said it was “deeply concerned” by the rule, warning that it would mean higher gas prices for consumers.

The Institute said consumers would be paying more because of the EPA’s “inability to get this rule out on time as directed by Congress”. The Agency missed Congress’ deadline to finalize the Standard by a year and a half, the Institute said.

“Unlawful and unfair”

The statement from the Institute said: “We believe this rule unlawful and unfair, and we filed a petition for review in the U.S. Court of Appeals for the District of Columbia to challenge the legality of EPA’s actions. EPA made the rule effective on July 1, 2010 while setting unreasonable mandates on refiners that reach back to 2009 for bio-based diesel and to January 1 for the other advanced biofuels.”

NPRA President Charles T Drevna said: “Simply put, the fact that EPA failed to meet its statutory obligations under current energy law does not give the Agency license to impose retroactively additional compliance burdens on obligated parties.

“At the least, such action calls into serious question the fundamental fairness of EPA’s RFS2 rulemaking process.”

The U.S. oil and natural gas industry is the biggest consumer of ethanol and other biofuels, thanks to their obligations to supply biofuel under the Renewable Fuel Standard. Almost 80 percent of all gasoline now produced in the United States contains ethanol, the API said, adding that it “supports a realistic and workable RFS”.

Mr Drevna said: “The petition NPRA filed today does not challenge the overall RFS2 program and does not call into question the important role renewable fuels play in our nation’s transportation fuel mix.

“Rather, our concern is with the unreasonable retroactive application of certain provisions of the rule and fundamental fairness in the implementation of policy,” Mr Drevna explained.