RFS Litigation Update

The American Fuel & Petrochemical Manufacturers (AFPM) filed a lawsuit challenging Environmental Protection Agency’s (EPA) final Renewable Fuel Standard (RFS) rule establishing renewable volume obligations for 2014-2016 and biomass-based diesel obligations for 2017 alleging that the agency’s annual volume obligations are unlawfully high.

In addition, several entities are jockeying to intervene in a separate lawsuit filed by the ethanol industry challenging EPA’s RFS rule. That suit alleges that the agency's annual volume obligations are unlawfully low.  

The retail fuels community, by and large, thinks that the agency's final numbers are sound. 

AFPM's lawsuit alleges that EPA failed to provide obligated parties with requisite lead time and used flawed methodologies in establishing volume requirements.  

The other lawsuit, filed by Americans for Clean Energy, argues that EPA is not permitted to lower the statutory targets set by Congress under the present circumstances. Although EPA increased the amount of biofuels that must be blended with gasoline and diesel for 2016, it set the targets at lower volumes than Congress established by law in 2007. 

The American Petroleum Institute (API), AFPM, and Monroe Energy (a wholly owned subsidiary of Delta Airlines) are seeking to intervene in the lawsuit on EPA's behalf, defending the agency's authority to reduce the volume of renewable fuel that refiners are obligated to ensure are used in their transportation fuels.  At the same time, DuPont is seeking to intervene in opposition of EPA, arguing that the rule will have a negative impact on the nascent cellulosic renewable fuel industry. (DuPont recently opened what it says is the world's largest cellulosic biofuels refinery.)

Thus, AFPM currently finds itself enmeshed in two separate lawsuits related to the RFS: One defending the agency's authority to lower the annual volume obligations, the other alleging that the agency did not lower them enough.

When Congress enacted the RFS, it explicitly permitted EPA to lower the volume obligations in instances where there was an inadequate domestic supply of renewable fuel. EPA maintains that the "blend wall," represented by the various impediments affecting the market's ability to distribute, blend, dispense, and consume renewable fuels (including a lack of consumer demand and equipment compatibility issues), means that there is "inadequate supply" of renewable fuel justifying lowering the annual volume obligations. 

The lawsuit brought by the ethanol industry contends that EPA is misreading the waiver authority and that "inadequate domestic supply" exists only where instances where domestic production itself cannot supply enough renewable fuel.

NATSO supports EPA lowering the annual volume obligations, and urged the EPA to exercise that authority in its comments to EPA. Specifically, NATSO argued that in evaluating the "supply" of a product, such as renewable fuel, it is best to examine the product's ability to be used rather than ability to be produced. 

 

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David Fialkov

David Fialkov is the Vice President of Government Relations, as well as the Legislative and Regulatory Counsel, at NATSO. In this capacity, Mr. Fialkov direct's NATSO's legislative, regulatory, and legal strategy on a range of issues, including transportation, energy and fuels, labor, data security, and taxes. Mr. Fialkov also oversees NATSO's political engagement program, including individualized legal and political counsel to member companies. Prior to joining NATSO, Mr. Fialkov was the senior associate in the Government Affairs and Public Policy practice at the law firm of Steptoe and Johnson in Washington, D.C. At Steptoe, Mr. Fialkov advised clients on legislative, regulatory, and political issues, as well as legal concerns. His primary clients included trade associations representing the motor fuel wholesale and retail industries, including the National Association of Convenience Stores and the Society of Independent Gasoline Marketers of America. Mr. Fialkov's focus was not only on the motor fuels business, but also the litany of other issues that retailers confront, including labor matters, foodservice issues, healthcare and employment issues, tax matters and data security. Prior to joining Steptoe, Mr. Fialkov graduated with honors from George Washington University Law School. He received his B.S. Summa cum laude with highest honors from Clark University in Worcester, MA. He lives in Washington, D.C. with his wife Allison and daughter Lilah. More
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