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Increasing biomass based diesel fuel standard

Hydrocarbon Engineering,

Below are extracts and highlights from a letter written by Bob Greco, American Petroleum Institute Downstream Group Director to Gina McCarthy, the Environmental Protection Agency Administrator. In this letter, Greco discusses the position the EPA hold to increase biodiesel mandates.

The letter

‘It has come to our attention that the US EPA is considering an increase to the biomass based diesel standard for the 2014 compliance year. The API reminds the EPA that it: a) lacks the authority to increase the biomass based diesel standard in 2014 and (b) is legally required to follow the express language of the Clean Air Act when setting the final standards for 2014.

‘Section 211 (o)(2)(B)(ii) of the Clean Air Act sets a one billion gallon floor for biomass based diesel after 2012 and requires EPA to establish the subsequent annual volume requirements based on an analysis of six statutory criteria…Because the volumes for biomass based diesel are not specified in the statute and an evaluative process is required, section 211 (o)(2)(B)(ii) expressly compels EPA to provide a 14 month lead time when modifying the mandate. Specifically, this provision requires the EPA Administrator to ‘promulgate rules establishing the applicable volumes under this clause no later than 14 months before the first year for which such applicable volume will apply.’

‘Therefore, pursuant to the Clean Air Act’s unambiguous language, EPA was required to have finalised any increase to the 2014 biomass based diesel mandate by October 31, 2012. Because this deadline has passed by almost two years and the required six factor analysis was not undertaken in the proposed 2014 RFS, the Clean Air Act prohibits EPA from increasing the biomass based diesel requirements from the 2013 biomass based diesel standard of 1.28 billion gallons. In other words, any higher applicable volume for biomass based diesel for 2014 would be a clear violation of EPA’s statutory authority. Unfortunately, political gamesmanship has further delayed the 2014 requirements, and as a result EPA’s authority to increase the 2016 biomass based diesel standard is soon to pass. It is irrelevant if more than 1.28 billion gallons of biomass based diesel has been produced this year because the RFS imposes obligations on individual companies, not the industry as a whole, and changes to individual company obligations clearly harms these obligated parties.

‘Congress establishes statutory deadlines for a reason, they provide certainty to the regulated industries. Here, Congress recognised the fundamental difference in setting the biomass based diesel standard and the other biofuel standards by providing the 14 month lead time to give obligated parties sufficient notice to make the necessary operational, logistical, and investment decisions to meet any increase in the biomass based diesel standard. A court will likely find any increase in the biomass based diesel standard to be both statutorily barred and a breach of good government, especially when EPA itself admitted that it lacked the legal authority to increase the mandate by clearly acknowledging in the 2014 RFS proposal that ‘the statute requires that we finalise these biomass based diesel volume requirements no later than 14 months before the first year for which that volume requirement will apply.’

Edited from letter by Claira Lloyd

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