EPA Proposes Cellulosic Biofuel Increases Despite Court's Ruling

Agency's proposal unrealistic, AFPM says

WASHINGTON -- In a decision that some observers say questions the motivation of the Environmental Protection Agency (EPA), the U.S. Court of Appeals for the D.C. Circuit in late January vacated the agency's 2012 cellulosic biofuel mandate, concluding that its biased forecast was in "excess of the agency's statutory authority."

Despite that decision, the EPA on Jan. 31 proposed the 2013 percentage increases for four fuel categories that are part of the agency's Renewable Fuel Standard program (RFS2).

The proposed 2013 overall volumes and standards are biomass-based diesel (1.28 billion gallons, 1.12%); advanced biofuels (2.75 billion gallons, 1.6%), cellulosic biofuels (14 million gallons, 0.008%); total renewable fuels (16.55 billion gallons, 9.63%).

"We are disturbed that EPA is mandating 14 million gallons of cellulosic ethanol when zero gallons are available for compliance as of today," said American Fuel & Petrochemical Manufacturers (AFPM) president Charles T. Drevna. "In addition, we are surprised that EPA has not chosen to adequately consider [the] recent U.S. Court of Appeals for the District of Columbia's decision to vacate the agency's 2012 cellulosic biofuel mandate. EPA has been working on this rule for a very long time, so we are skeptical that the agency could re-evaluate the program in less than a week so that the proposed standards would comport with the court's decision."

Renewable Fuels Association (RFA) president and CEO Bob Dinneen said, "EPA again considered the best available information--including projections from the Energy Information Administration--to set the 2013 cellulosic biofuel requirement. The proposed standard in no way exaggerates the volumes that will be available in 2013 based on current information, and may ultimately prove to be conservative. ... We fully expect 2013 to be the breakthrough year for cellulosic ethanol."

Drevna said that the court's ruling "provides welcome relief and puts EPA on notice that it must act as a neutral arbiter rather than a promoter of cellulosic fuel. Instead of facing the reality of zero cellulosic biofuel production under the Renewable Fuels Standards, EPA wrongly relied upon an inflated production capacity predicted by cellulosic biofuel producers. This resulted in a cellulosic mandate that was impossible to meet and left refiners having to purchase waiver credits that act as a hidden tax on transportation fuels."

While the court acknowledged that the purpose of the RFS program was to "increase the production of clean renewable fuels," it rejected EPA's argument that an aggressive cellulosic mandate was needed to force new technology into the marketplace and held that "refiners are in no position to ensure or even contribute to growth in the cellulosic biofuel industry."

"In a win for consumers, the court rejected EPA's philosophy of 'Do a good job, cellulosic fuel producers. If you fail, we'll fine your customers'," said Drevna.

"Today's ruling is especially welcome in light of AFPM's pending petition for a waiver of the 2012 cellulosic mandate based on an inadequate domestic supply. AFPM will continue to challenge what we believe to be arbitrary decisions by EPA, and in fact, will move forward with litigation challenging the agency's denial of our 2011 cellulosic biofuels waiver request," he said.

AFPM is a trade association representing manufacturers of the entire U.S. supply of gasoline, diesel, jet fuel other fuels, home heating oil and petrochemicals.