EPA Ordered to Rethink Prospective Biofuel Rule

(CN) - The D.C. Circuit on Friday struck down future rules for blending cellulosic biofuels since supplies are not available to meet forward-looking requirements.

Adopted under the renewable fuel standard, or RFS, program, the rule requires refiners to blend 36 billion gallons of biofuel into traditional transportation fuel by 2022. In meeting that goal, the Environmental Protection Agency wanted refiners to blend 10.45 million ethanol equivalent gallons in 2012, but the industry was unable to produce more than 22,000 gallons.

American Petroleum Institute brought the challenge as part of its aggressive public relations campaign to have Congress repeal the Environmental Protection Agency rule while the courts weigh its legal claims.

A 2012 volume standard for advanced biofuels also drew concern from the lobbying group, but those claims failed to sway the three-judge appellate panel.

The ruling concedes that Congress directed the EPA to "make predictions about a promising technology," and that the program intends to promote and spur the growth of that technology.

"We are not convinced that Congress meant for EPA to let that intent color its work as a predictor, to let the wish be father to the thought," Senior Judge Stephen Williams wrote for the court.

"We agree with API that because EPA's methodology for making cellulosic biofuel projection did not take neutral aim at accuracy, it was an unreasonable exercise of agency discretion," he added.

The API had argued that the rules forced refiners to buy credits for gallons of cellulosic biofuel that do not - and may never exist - to meet the EPA target. It said the agency should base its future requirements on a more realistic assessment of current production levels.

Williams and his colleagues agreed that the EPA's 2012 projection of cellulosic biofuel production was "in excess of the agency's statutory authority."

"We accordingly vacate that respect of the 2012 RFS rule and remand for further proceedings consistent with this opinion," the 14-page ruling states.

In tossing the lobbyist's other objection, the court said the EPA properly allowed the importation into the United States of other advanced biofuels to meet it projections.

"In the 2012 RFS rule, EPA concluded that other sources of advanced biofuels, in particular imported sugarcane ethanol and biomass-based diesel, could make up for the 490 million gallon shortfall in cellulosic biofuel it had projected for 2012," Williams wrote. "The agency accordingly declined to reduce the applicable volume of advanced biofuels," Williams wrote. "However, did not specify precisely how much sugarcane ethanol or biomass-based diesel it thought would be available, nor did it indicate in what combination these two sources would amount to 490 million gallons.

"API asserts that this failure to provide numerical projections 'reveals the arbitrary nature' of EPA's findings and 'violates the agency's duty to provide a reasoned explanation for its decisions,'" he added. "We find these arguments unpersuasive."

API applauded the decision, which it said "put a stop to EPA's pattern of setting impossible mandates for a biofuel that does not even exist."

"This absurd mandate acts as a stealth tax on gasoline with no environmental benefit that could have ultimately burdened consumers," API Group Downstream Director Bob Greco said in a statement.

Several organizations that had intervened in the litigation echoed those remarks.

"Although we disagree with the court's decision vacating the 2012 cellulosic volumes, today's decision once again rejects broad-brushed attempts to effectively roll back the federal renewable fuel standard," according to a statement from Growth Energy, the Renewable Fuels Association, the Advanced Biofuels Association, the Advanced Ethanol Council, the American Coalition for Ethanol, and the Biotechnology Industry Organization.

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