Circuit Court Rejects Challenges to EPA’s Renewable Fuel Standards

September 03, 2019

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by Tim Ryan (Court House News) The D.C. Circuit on Friday upheld the Environmental Protection Agency’s renewable fuel standards in the face of challenges from energy companies, biofuel producers and industry groups.

Under longstanding EPA policy, the burden of introducing more renewable fuel into the U.S. market falls on fuel refiners and importers, not on the companies that blend the renewables with fossil fuels.

The EPA reaffirmed that policy in 2010 and again in 2017. Refineries and related trade associations, led by Alon Refining Krotz Springs, brought a suit in 2016 challenging the agency’s decision not to revise this policy.

In 2015, the EPA lowered the renewable fuel requirements for 2014, 2015 and 2016, after finding a lack of domestic supply. The agency again issued new standards for biofuels in 2017, dropping nearly 5 billion gallons from the required amount of renewable fuel. The agency separately increased the requirements for biomass diesel slightly.

Those changes drew legal challenges from a group of refineries, including Coffeyville Resources Refining & Marketing, which argued the EPA used flawed methodology and set the biofuel standards too high. The National Biodiesel Board similarly challenged the new rules, but said the EPA set the requirements for biomass diesel too low.

In a 70-page unsigned opinion released Friday, the D.C. Circuit beat back all of the challenges to the agency’s renewable fuel standards decisions.

Starting with the EPA’s policy that puts the obligation to meet the fuel requirements on refiners and importers, the three-judge panel found the agency based its decision on studies and other evidence that suggests the burden does not financially hurt the refiners.

The panel also did not fault the agency for declining to reconsider its stance when petitioned to do so, finding the EPA has already grappled with the issue in the past.

As for the fuel requirements themselves, the court similarly found the EPA acted within its authority when setting the standards in 2017. The court said Coffeyville’s arguments were similar to those rejected in an earlier case and found the agency properly took into account input from the Energy Information Administration on the availability of biofuel.

The court rejected the National Biodiesel Board’s challenge, saying its arguments came down to “a policy disagreement.”

“A mere disagreement with the particular calibration of a line drawn in the exercise of an agency’s reasonable judgment is no basis to invalidate a rule,” the opinion states. READ MORE

EPA Beats Industry Challenges to Renewable Fuel Obligations (1) (Bloomberg)

Biodiesel Industry Hits Keep Coming (Energy.AgWired.com; includes AUDIO)

Court Sends '18 RFS Volumes Back to EPA: Appeals Court Sides With Environmentalists on Legal Claims Over RFS Volumes (DTN Progressive Farmer)

US court declines to review EPA’s refusal to account for small refinery exemptions (Biofuels International)

NBB Frustrated by Court Ruling on Small Refinery Exemptions (National Biodiesel Board)

EPA RFS FACES COURT SETBACK AS FUELS FIGHT DRAGS ON (Washington Examiner)

COURT: EPA MUST CONSIDER ENVIRONMENTAL IMPACT WHEN SETTING ETHANOL MANDATE (Successful Farming)

Excerpt from DTN Progressive Farmer: ... The court agreed with environmental groups that the EPA did not conduct the proper Endangered Species Act consultation in setting the volumes.

In its opinion, the U.S. Court of Appeals for the District of Columbia Circuit remanded the 2018 rule back to the EPA.

...

The court sided with the Gulf Restoration Network and the Sierra Club in their claims the EPA didn't follow proper procedure in determining the 2018 rule's effects on endangered species and critical habitat.

...

"We conclude that all these challenges lack merit, except for one: that the EPA violated its obligations under the Endangered Species Act by failing to determine whether the 2018 rule may affect endangered species or critical habitat," the court said.

The court pointed to an EPA report from 2018 that concluded the RFS annual standards likely cause the conversion of uncultivated land into agricultural land for growing crops.

"Since the program was enacted, acreage planted with corn and soybeans has increased, and the evidence suggests that some of this increase 'is a consequence of increased biofuel-production mandates,'" the court said.

"In the same vein, a declaration by Dr. Tyler Lark, an associate researcher at the University of Wisconsin-Madison's Center for Sustainability and the Global Environment, explains that many studies have found that the RFS program has heightened demand for ethanol, thus increasing the production of corn, soybeans, and similar crops and incentivizing the conversion of uncultivated land to agricultural land for growing these crops," the court said.

Kurt Kovarik, NBB vice president of federal affairs, said in a statement the court's decision was "frustrating."

"EPA requested comment on its practice of ignoring retroactive small-refinery exemptions but did not give notice of its intent to unleash a flood of the exemptions," he said. "The court, however, faults industry for not commenting specifically on that. EPA's flood of retroactive small-refinery exemptions are causing severe economic harm to biodiesel and renewable diesel producers, forcing some to close their doors and lay off workers. It's disappointing that the court did not take this opportunity to address that harm."

Geoff Cooper, president and CEO of the Renewable Fuels Association said he believes the agency will conduct the necessary ESA review.

"We also disagree with the court's decision to remand the 2018 rule back to EPA to make additional findings to satisfy the agency's consultation requirements under the Endangered Species Act," he said. "We believe EPA met those obligations in the 2018 rulemaking process. In any case, a science-based analysis by EPA will determine that the RFS and biofuels pose no threat to endangered species and reconfirm that biofuels like ethanol offer superior environmental benefits."

As part of their petition, the environmental groups presented specific examples of how critical habitats and endangered species may be harmed by the RFS.

"As to causation, the EPA's alleged failure to comply with its ESA obligations is plainly connected to the setting of standards in the 2018 rule, and those standards might have come out differently if the EPA had complied," the court said in its opinion.

"Also, there is a 'substantial probability' that the EPA's ultimate decision adversely affected local conditions in Kansas, the Gulf, and the Mississippi River Basin, harming cranes and sturgeon. This establishes causation."

The court said the environmental petitioners were not required to show the specific 2018 volumes caused injury.

"They must show only a 'substantial probability' of injury," the court said. "The EPA's triennial report and the Lark declaration provide evidence of just that. The EPA concluded that it is impossible to know whether the 2018 rule will affect listed species or critical habitat. That is not the same as determining that the 2018 rule 'will not' affect them." READ MORE