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RFS2 Implementation Challenged by Oil Companies

Monday the American Petroleum Institute and the National Petrochemical & Refiners Association filed a lawsuit with the U.S. Court of Appeals for the District of Columbia challenging the Environmental Protection Agency's Renewable Fuels Standard 2 rule. The RFS2 rule was finalized and published in the Federal Register March 26.

National Biodiesel Board Vice President of Federal Affairs Manning Feraci issued a statement in response to the lawsuit, stating that Congress signaled its clear intent for a renewable component in U.S. diesel fuel.

"The final RFS2 rule issued by the Environmental Protection Agency seeks to ensure the volume requirements envisioned, and mandated each year, by Congress are implemented consistent with an energy policy that values the displacement of petroleum diesel fuel with low-carbon, renewable fuels such as biodiesel," Feraci said. "The NBB will take all appropriate steps going forward to ensure that Advanced Biofuels volume requirements for Biomass-based Diesel are met."

The groups are challenging the legality of EPA's actions because the agency made the rule effective on July 1, 2010, but combines the 2009 and 2010 biomass-based diesel volumes and makes the rule retroactive to January 1, 2010.

The organizations both state they don't question the role renewable fuels can play in the nation's transportation fuel mix. In fact, API's statement said the U.S oil and natural gas industry is the biggest consumer of ethanol and other biofuels. Almost 80% of all gasoline now produced in the United States contains ethanol. API said it supports a "realistic and workable RFS."

"While the U.S. oil and natural gas industry recognizes and appreciates the role of ethanol and other biofuels in the fuel marketplace, we are deeply concerned that the Environmental Protection Agency's final RFS2 rule could result in higher consumer costs. By setting retroactive requirements, refiners, and ultimately consumers, will be penalized for EPA's inability to get this rule out on time as directed by Congress," API said.

The Energy Independence and Security Act of 2007 required EPA to promulgate and finalize certain standards under the RFS2 program by specific dates in 2008 and 2009.  The agency, however, failed to meet those statutory deadlines. Instead, in its recently published RFS2 final rule, "EPA retroactively and unlawfully imposed RFS2 compliance burdens on obligated parties, many of whom are NPRA members," the organization noted.