API, AFPM sue EPA over RFS delays

On March 18, the American Fuel & Petrochemical Manufacturers and American Petroleum Institute filed a new lawsuit in the U.S. District Court of the District of Columbia against the U.S. EPA regarding delays in finalizing 2014 and 2015 renewable fuel obligations under the renewable fuel standard (RFS).

In the complaint, AFPM and API said the EPA is continuing its multi-year trend of “disregarding statutory deadlines.” Those deadlines require the agency to promulgate final RFS obligations for a particular year by Nov. 30 of the preceding year. For example, under statutory deadlines, 2014 RFS obligations should have been finalized by Nov. 30, 2013.

“Timely promulgation of the 2014 and 2015 applicable volumes of renewable fuel and percentage standards by November 30 of the prior year allows obligated parties to calculate their RVOs based on how much gasoline and diesel they will produce or import into the United States in the coming year,” said the API and AFPM in the compliant. “Parties are then able to adjust their production or importation and, by extension, the amount of their annual RFS obligation. Since 2014 is now over, however, obligated parties are unable to change their production or importation of gasoline and diesel for 2014 and therefore have been denied the ability to control the extent of their RFS obligations. Given the Agency’s delay in proposing the 2015 RFS regulations, obligated parties will likely be similarly constrained with respect to controlling the extent of their RFS obligations in 2015.”

The court filing goes on to noted that refineries can produce a range of products and choose their production mix, in part, by analyzing the costs and profitability of refining one product over another. “EPA’s failure to promulgate annual RFS regulations curtails this market response and the ability of refineries to plan their production of various products. EPA’s ongoing failure to promulgate the 2014 and 2015 annual regulations prevents Plaintiffs’ members from knowing how many RINs will be required to meet their 2014 and 2015 RFS compliance obligations,” continued the groups in the complaint.

The compliant also addresses a waiver petition API and AFPM submitted to the EPA in August 2013 requesting a partial waiver of the 2014 RFS volumes, alleging the EPA did not take sufficient action on the petition.

Within the filing, the API and AFPM ask the court to order the EPA to promulgate 2014 and 2015 RFS regulations promptly pursuant to a deadline set by the court.

The EPA has already announced its intentions to complete 2014, 2015 and 2016 RFS standards this year. In December, Janet McCabe, acting assistant administrator for EPA’s Office of Air and Radiation, testified at a hearing held by the House Committee on Oversight and Government Reform Subcommittee on Energy Policy, HealthCare and Entitlement. “The EPA recognizes that the delay in issuing the 2014 standards has exacerbated uncertainty in the market for both renewable fuel producers and obligated parties. We will also take action on the 2015 and 2016 RFS standards next year so that we get back on a more predictable, timely schedule for issuing such rules. Issuing rules every year has proven to be a  significant implementation challenge, particularly in the last several years as cellulosic biofuels have continued to face challenges in scaling up to commercial production and the fuel pool has become saturated with E10, raising concerns about the E10 blendwall. Resolving the fundamental issues that we are facing as part of the 2014 standards rulemaking should go a long way to enabling EPA to complete annual rulemakings on time,” she said in testimony offered at that hearing.

While the EPA’s Regulatory Development and Retrospective Review Tracker currently offers no timeline for the finalizing the 2014 RFS rule, which was first proposed in November 2013, it does indicate the EPA currently expects to publish a notice of proposed rulemaking in the Federal Register for the 2015 RFS in May.