RFS2 Scores a Victory

Court upholds EPA’s renewable fuel requirements
By Erin Voegele | January 12, 2011

Just days after the tax credit was reinstated, the U.S. biodiesel industry received more good news. The U.S. District Appeals Court for the District of Columbia issued a unanimous decision on Dec. 21 to deny a petition that was filed by the National Petrochemical Refiners Association and the American Petroleum Institute in March on the U.S. EPA’s combined RFS2 volume requirements for 2009 and 2010.

In the petition, NPRA and API claimed that the EPA’s issuance of retroactive volume requirements under the final RFS2 rule would unfairly penalize both refiners and consumers. While neither organization challenged the RFS2 program as a whole, the petition argued that EPA’s inability to issue volume requirements in the timetable required by Congress resulted in unfairness regarding implementation of the policy.

More specifically, the petition alleged that the EPA’s RFS2 rulemaking for 2009 and 2010 volume requirements was in violation of the statutory requirements of the program, which require volume mandates for each year to be issued by Nov. 30 of the previous year. The petition also claimed that the retroactive nature of the 2009 volume requirements was impermissible, and that the rulemaking violated statutory lead time and compliance provisions.

“This is a disappointing decision,” says API senior policy advisor Patrick Kelly. “Setting requirements to blend certain biofuels for the previous year is a legally questionable retroactive action.” While Kelly notes that his organization supports a realistic and workable RFS2 program, the court’s decision may set a troublesome precedent for the program. “This decision significantly complicates compliance and may set a dangerous precedent allowing retroactive requirements for past compliance periods.”

The NPRA has also expressed disappointment in the court’s ruling. “The retroactive regulation by a federal agency establishes a deeply troubling and potentially far-reaching precedent,” says NRPA President Charles Drevna. “We’re disappointed that the court did not overturn what is clearly a flawed and misguided approach toward implementation of the federal renewable fuel standard. Regardless of the court’s ruling, however, NPRA and its members remain committed to working towards the overall implementation of the RFS program.”

While API and NPRA are clearly disappointed in the court’s decision, the biodiesel industry has enthusiastically embraced the ruling. “This [decision] wholly validates the U.S. biodiesel industry’s legal position and sends a clear, unambiguous signal to the marketplace that the common-sense goals established in the RFS2 program will be met,” says Manning Feraci, the National Biodiesel Board’s vice president of federal affairs. “This lawsuit was the final piece of uncertainty creating market disruption for the biodiesel industry,” adds Gary Haer, Renewable Energy Group Inc.’s vice president of sales and marketing, and new NBB chair. “Today’s decision is an important sign that our nation is moving full-steam ahead to meet our energy independence and greenhouse gas emissions reductions goals.”

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