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Court Issues Mixed Decision on Cellulosic Biofuel Standards

Court rejects American Petroleum complaints; vacates 2012 cellulosic biofuel standard

Published on: Jan 29, 2013

The D.C. Circuit court Friday issued a mixed decision vacating the 2012 cellulosic biofuel standard and affirming the 2012 advanced biofuel standard.

Organizations representing biofuel producers--who had intervened in the litigation to defend the rulemaking--noted that although the court vacated the cellulosic standard, it also rejected the American Petroleum Institute's argument that EPA was required to follow the US Energy Information Administration's projections in setting its own.

Similarly, the court rejected API's argument that EPA was not entitled to consider information from cellulosic biofuel producers in setting its projection, finding that cellulosic producers were an "almost inevitable source of information" for EPA.  According to the biofuel organizations, these were important decisions that give EPA flexibility in setting cellulosic biofuel volumes in the future.

Court rejects American Petroleum complaints; vacates 2012 cellulosic biofuel standard
Court rejects American Petroleum complaints; vacates 2012 cellulosic biofuel standard

The court vacated the cellulosic biofuel standard because it believed that EPA had impermissibly set the volume with the objective of promoting growth in the industry, rather than simply making an accurate prediction. 

Growth Energy, and other biofuels groups, disagree with the court's characterization of what EPA did, and said that EPA did not determine a reasonably achievable volume and then inflate it, rather it set the volume based on the best information available to it at the time.

Regardless, under the D.C. Circuit's decision, EPA is free to reinstate the volumes that it had established, as long as the information available at the time would support the agency's conclusion that those volumes were reasonably achievable.  The court's decision does not now require, or permit, EPA to set volumes based on hindsight.

American Fuel & Petrochemical Manufacturers President Charles T. Drevna said the court's decision puts EPA on notice that it must act as a neutral arbiter, not a promoter of cellulosic fuel.

"Instead of facing the reality of zero cellulosic biofuel production under the Renewable Fuels Standard, EPA wrongly relied upon an inflated production capacity predicted by cellulosic biofuel producers. This resulted in a cellulosic mandate that was impossible to meet and left refiners having to purchase waiver credits that act as a hidden tax on transportation fuels," Drevna said.

The D.C. Circuit also affirmed the EPA's decision not to reduce the advanced biofuel volume, rejecting API's arguments that EPA must be support its decision not to reduce the applicable volume of advanced biofuels with specific numerical projections.

In a joint statement, biofuels organizations said although they disagree with the court's decision vacating the 2012 cellulosic volumes, the decision "once again rejects broad-brushed attempts to effectively roll back the federal Renewable Fuel Standard."

The National Biodiesel Board boiled the case down to an ongoing complaint against the RFS.

"This is just the latest in a series of cases in which the oil industry has tried unsuccessfully to re-litigate the standards for renewable fuels, and it is yet another victory for our nation's shift toward cleaner, more diverse energy supplies," said Anne Steckel, vice president of federal affairs for the National Biodiesel Board. "The fact is that the RFS is a very effective program for improving U.S. energy security, creating jobs and reducing greenhouse gas emissions."

The intervenor biofuel organizations are reviewing the court's decision and assessing next steps in the matter.