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Minnesota B10 lawsuit: Big Oil's new, old angle

A new lawsuit in an old Big Oil agenda seeks an end to Minnesota's B10 biodiesel mandate; the latest tactic in a long history of opposition to change and market share erosion
By Ron Kotrba | April 21, 2015

The state of Minnesota is being sued over its biodiesel mandate by a group of plaintiffs that includes Big Oil lobbyists the American Petroleum Institute and the American Fuel & Petrochemical Manufacturers, according to court documents obtained by Biodiesel Magazine.

Commissioners from the state’s pollution control agency, agriculture and commerce departments, along with the director of the commerce department’s weights and measures division, are named as defendants in a lawsuit filed April 17 by the Minnesota Trucking Association, the Minnesota Automobile Dealers Association, the Alliance of Automobile Manufacturers, API and AFPM.

The plaintiffs suggest the Minnesota biodiesel mandate violates various federal and state laws, including the federal Clean Air Act, the Energy Policy Act of 2005, the Energy Independence and Security Act of 2007, the U.S. Constitution, and the Minnesota Administrative Procedures Act.

API and AFPM—the muscle driving this lawsuit—claim that the state mandate is in opposition to the RFS, which API and AFPM clearly want repealed. “[The RFS] prohibits EPA from imposing any per-gallon biodiesel content requirements,” the lawsuit states. “The Minnesota mandate flies in the face of the federal program by removing the flexibility that federal law provides to obligated parties—dictating exactly where, when, and how much biodiesel must be blended.”

It appears that Big Oil is pulling out all stops in a shotgun approach to get its way, and talking out of both sides of its mouth while doing so. On the one hand, it has argued for years that RFS is policy that doesn’t work and needs to be repealed. And on the other hand, it says in the latest lawsuit summary that the RFS is “an efficient and effective market-based credit program” of which the Minnesota mandate compromises the integrity. 

Minnesota has had a mandate on the books for years now, beginning around a decade ago as B2. Under the argument that Minnesota’s biodiesel mandate “flies in the face of the federal program,” a 2 percent mandate would have violated the RFS and the CAA just as much a 10 percent mandate. Moreover, a number of states have low-level biodiesel percentage mandates on the books. It just so happens that 10 percent biodiesel eats into a much larger percentage of Big Oil’s petroleum market share than 2 percent.

And since EPA announced it is moving forward with finally proposing 2014 biodiesel volume requirements that reflect actual usage, which would represent a significant increase from its original proposal, it appears Big Oil is refocusing its sights on state mandates—not a new tactic, by any means.

Back in 2006, Charlie Drevna, then the executive vice president for the National Petroleum Refiners Association (now AFPM), asked EPA to “preempt” state mandates in implementing RFS. “Congress did not anticipate the proliferation of new state ethanol and biodiesel mandates when it passed the Energy Policy Act of 2005,” Drevna said. “Neither Congress nor the administration should take a pass on considering the potentially serious impacts of politically popular, but economically and environmentally questionable, state ethanol or biodiesel mandates.” Clearly this request wasn’t honored.

Also in 2006, API blamed state renewable fuel mandates for gasoline price volatility. 

I am not aware of any expressed provisions in RFS that disallow state biodiesel policies. It appears that the argument de jour by Big Oil is that state requirements are an implied interference with the ability to comply with the RFS—a repackaged attempt in a long list of lawsuits from API and NFPM to throw spaghetti at the wall to see if something sticks.

The plaintiffs’ case summary also says even if federal law didn’t preempt the mandate, requirements for notice and comment under the state’s procedures act were not complied with when Minnesota decided to move from 5 to 10 percent biodiesel during the warmer months, which was implemented last July.

The lawsuit also alleges that the mandate is injurious to consumers and businesses. This convoluted portion of the plaintiffs’ argument jumps from 5 percent limits on warranties for passenger vehicles, to interstate truckers refusing to fill up in Minnesota due to higher prices, to diesel fuel manufacturers in the state being financially harmed because biodiesel displaces petroleum diesel.

According to the Diesel Technology Forum, there are only about 100,000 diesel-powered pickup trucks and cars registered in Minnesota out of more than 3 million total. The vast majority of diesel consumed in the state is from the farming, freight (rail, trucking, marine), forestry, mining and construction industries—mostly heavy-duty applications. Nearly 80 percent of major OEMs producing diesel vehicles for the U.S. market now support B20 or higher biodiesel blends in at least some of their equipment, including nearly 90 percent of the medium- and heavy-duty truck OEMs, according to the National Biodiesel Board’s OEM Support Summary. Many light-duty diesel vehicles in the U.S. support up to 20 percent biodiesel use in their vehicles, including various diesel models by Audi and Volkswagen (in Illinois and Minnesota specifically), Chrysler, Ford, GM (including the Chevy Cruze), Isuzu and others.

The Minnesota Department of Agriculture had nothing to say on the lawsuit, other than that it doesn’t comment on pending litigation.

Tom Slunecka, the CEO of the Minnesota Soybean Growers Association, says, “The Minnesota Soybean Growers Association is proud of the implementation of B10 and how our state regulators have implemented this change. Not only do Minnesota soybean farmers produce the feedstock for biodiesel, more than 24,000 farmers use biodiesel in their farm operations and to haul the goods of Minnesota’s second largest industry.”

The lawsuit filed April 17 is just one more attempt at Big Oil fulfilling its agenda of eradicating renewable fuels, protecting its market share and profits, and resisting change.

“Change is often difficult,” Slunecka says, “but Minnesotans voted for change because Minnesotans wanted a cleaner, renewable fuel. Recognized by the EPA as an advanced biofuel for its ability to reduce greenhouse gases by more than 50 percent, biodiesel is a true renewable fuel alternative that promotes clean air. The current use of biodiesel blends in Minnesota is equal to removing 128,000 vehicles from the state’s roads, and biodiesel is an important driver of jobs in Minnesota. For these reasons, we stand by our state agencies’ implementation of B10.”