Oil and gas lobby sues EPA over biofuel mandate

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Michael Bastasch Contributor
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Nearly two weeks after the Environmental Protection Agency rejected waivers for state governors seeking relief from the agency’s biofuel-blending mandates, the oil and gas industry’s main lobbying group has sued the agency over its “unworkable” and “overzealous” biodiesel mandate.

“EPA’s overzealous 2013 biodiesel mandate is unworkable, could raise the costs of making diesel fuel, and should be reduced,” Bob Greco, downstream director at the American Petroleum Institute, told reporters.

The American Petroleum Institute filed the lawsuit against the EPA with the U.S. Court of Appeals for D.C. late on Monday over the agency’s decision to mandate that 1.28 billion gallons of biodiesel be used in 2013 — a 28 percent increase from last year’s requirement.

“In its final rule, EPA admitted the costs of increasing the biodiesel volume requirement for 2013 outweighed the benefits by as much as $425 million,” Greco said.

Greco stressed that the group’s members supported renewable fuels, but he said that the EPA’s Renewable Fuel Standard should be repealed because it’s unworkable, despite repeated efforts to improve the program.

“The program has many flaws,” Greco said. “For example, EPA has required refiners to purchase credits for failing to blend cellulosic ethanol in motor fuel, even though no one makes and sells that special variety of ethanol.”

The industry is also close to hitting what is called the “blend wall” as soon as next year, meaning that the amount of ethanol the mandate requires to be blended in fuels will exceed the ability vehicles to safely use those blends.

The group also expressed concerns over fraudulent biofuel credits plaguing the trading system of which the federal government has identified 140 million believed to be generated by three biodiesel companies.

However, the EPA ordered refiners who bought the fraudulent credits to pay fines and purchase new, legitimate credits.

“The fraudulent RIN problem is having — and will continue to have — significant impacts on the biodiesel marketplace that make it more difficult for companies to comply with EPA’s mandate,” Greco said.

The API lawsuit marks the latest effort to curb what critics believe to be onerous biofuel mandates.

Nearly two weeks ago, the EPA rejected requests from the governors of seven states to waive the renewable fuel mandate, arguing that no evidence of severe “economic harm” was found and no waiver could be granted.

In an August letter to the EPA, Arkansas Democrat Gov. Mike Beebe said that ethanol production was taking a “terrible toll” on animal agriculture in Arkansas and would force consumers to pay more for food.

“The Obama EPA shows little concern for the hardships being faced by American consumers, and the denial of the governors’ request signals four more years of regulatory burdens, bureaucratic indifference, and politicized rule-making from this administration,” said Thomas Pyle, president of the American Energy Alliance. “As long as government mandates trump the free market, Americans will continue to suffer.”

In September, House Republicans railed against the EPA for the agency’s approval of the sale of gasoline containing 15 volume percent ethanol and mandating that consumers to buy at least four gallons of gas when purchasing from stations with hoses containing 10 percent and 15 percent ethanol-blended fuel.

“The EPA has no business telling Americans how much fuel they must purchase,” the letter from Republican Reps. Jim Sensenbrenner of Wisconsin and Chip Cravaack of Minnesota.

“The other critical reality is that the RFS program was enacted at a time when our nation’s energy landscape was far different,” Greco said. “With the current boom in domestic oil and natural gas development, we are steadily reducing our foreign energy dependence, well beyond what the RFS program has achieved.”

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