Oil groups challenge retroactive RFS2 in court

By Holly Jessen | April 15, 2010
Two associations representing the petroleum industry filed petitions for review with the U.S. Court of Appeals for the District of Columbia on March 29. The National Petrochemical & Refiners Association and American Petroleum Institute are challenging the U.S. EPA's Renewable Fuel Standard 2 final rule. "The petition NPRA filed today does not challenge the overall RFS2 program and does not call into question the important role renewable fuels play in our nation's transportation fuel mix," said Charles T. Drevna, NPRA president. "Rather, our concern is with the unreasonable retroactive application of certain provisions of the rule and fundamental fairness in the implementation of policy.

Likewise, API said it supports a "realistic and workable" renewable fuel standard. "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," the organization said. "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."

Both groups also said the EPA missed important Congressional deadlines. According to NPRA, the EPA was required by the Energy Independence and Security Act of 2007 to finalize certain RFS2 standards in 2008 and 2009 and failed to do so. Instead, the organization said, the EPA is "retroactively and unlawfully" imposing RFS2 compliance on obligated parties.

API used similar language in its press release. "We believe this rule unlawful and unfair, and we filed a petition for review in the U.S. Court of Appeals for the District of Columbia to challenge the legality of EPA's actions. EPA made the rule effective on July 1, while setting unreasonable mandates on refiners that reach back to 2009 for bio-based diesel and to January 1 for the other advanced biofuels."

These lawsuits are only two of several lawsuits filed recently against EPA. In February, Texas, Alabama and Virginia were the first to challenge the EPA on its endangerment finding on greenhouse gas (GHG) emissions. At the end of March, 16 states and 21 industry groups had filed petitions to join that legal battle. Nebraska, Florida, Hawaii, Indiana, Kentucky, Louisiana, Mississippi, North Dakota, Oklahoma, South Carolina, South Dakota and Utah filed a joint petition and Alaska and Michigan filed individual claims. Alaska Attorney General Dan Sullivan said the state wasn't challenging the climate change science. Instead, Alaska signed the petition to challenge what the EPA considers as its authority under the Clean Air Act. Alaska has been challenging the EPA's authority to regulate GHGs since 2003, he said.

Only 15 states have not joined the lawsuit by filing petitions. However, with a coalition of 16 state and local associations, plus five national industry associations, filing a joint petition, Nevada, Missouri and Montana are the only states not somehow involved in the lawsuit against the EPA. The additional petitions will be reviewed and consolidated before the appeals court considers the case. The EPA has continued to assert its right to regulate emissions under the Clean Air Act and many believe the lawsuits will be thrown out. The agency won't regulate emissions from stationary sources such as those used in the ethanol industry until 2011 but, at the end of March, was expected to issue its final tailpipe rule and the final decision on GHG emission regulations soon after.

In support of the EPA, the environmental protection departments in Minnesota and Pennsylvania have filed a joint petition, which joined similar ones filed earlier this year by Arizona, California, Connecticut, Delaware, Iowa, Illinois, Maine, Maryland, Massachusetts, New Hampshire, New Mexico, New York, Oregon, Rhode Island, Vermont and Washington.

Lawmakers in both the House of Representatives and the Senate have also joined the fight. Resolutions to repeal the EPA's endangerment finding were introduced by Sen. Lisa Murkowski, R-Alaska, in the Senate in January and Reps. Ike Skelton, D-Mo.; Collin Peterson, D-Minn.; and Jo Ann Emerson, R-Mo., followed suit with a similar disapproval resolution at the end of February. The EPA is using the Clean Air Act to regulate GHGs without seeking approval from Congress, Peterson said. "Energy issues should be addressed by elected officials, not the EPA. We need to stop the EPA in its tracks on this and prevent them from simply imposing these over-reaching regulations on all of us," he said. According to Skelton, the joint resolution would not stop Congress from working on energy legislation. "I do hope it will set aside cap and trade in favor of a more scaled back bipartisan bill," he continued. "My resolution does, however, keep EPA from threatening Congress with its own GHG policy as we write legislation."