U.S. EPA sends 2014 biofuel targets to White House for review

WASHINGTON Fri Aug 22, 2014 12:15pm EDT

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WASHINGTON (Reuters) - The U.S. Environmental Protection Agency on Friday sent its final targets for 2014 biofuel use to the White House as the long-delayed rule enters its last round of review before public release.

The Obama administration will now face a last-ditch round of lobbying from biofuel producers seeking changes to the rule and opponents of the renewable fuels mandate who hope regulators will stand firm on proposed cuts to the targets.

It is unclear how long the rule will remain at the White House's Office of Management and Budget. Such reviews can drag on for months, but OMB can move more quickly at times. Last year, the agency took just over 30 days to send the final targets back to EPA.

"We would not be surprised if OMB were to replicate last year’s rapid turnaround," ClearView Energy Partners said in a research note.

EPA angered biofuel producers in November when it issued a draft 2014 rule slashing federal requirements for use of ethanol and biodiesel in U.S. fuel supplies. The biofuel producers warned that unless EPA reversed course, investment in their industry would dry up.

Biofuel industry sources expect the targets will be higher in the final rule, but likely still far less than Congress intended when it formulated the Renewable Fuel Standard in 2007. [ID:nL1N0O82JJ]

With the rule nearly nine months behind schedule, biodiesel producers have struggled with low fuel prices and market uncertainty.

"We can begin to reverse that damage with a meaningful increase in the biodiesel volume that is finalized as quickly as possible," said Anne Steckel, of the National Biodiesel Board.

Citing concerns that U.S. energy markets could not absorb the levels of biofuels called for by the law, the EPA lowered the 18.15 billion gallons (68.7 billion liters) of biofuels mandated for use in 2014 to 15.21 billion gallons.

The agency said on Friday that it remains committed to biofuels and said its goal is to put the renewable fuel program "on a path that supports continued growth."

The proposed cuts to the program were a win for the oil industry, which has long sought to repeal the federal biofuel mandate. They argue the law requiring increasing amounts of biofuels to be blended into gasoline and diesel each year places a crippling financial burden on refiners.

Compliance costs for the program rose dramatically last year on concerns the nation would hit the so-called blend wall, the point when the law would require ethanol to be blended into gasoline at levels higher than the 10 percent mix that dominates U.S. gas stations.

The American Petroleum Institute urged the administration to finalize the 2014 rule as quickly as possible, warning that delays could "harm consumers" and make it "harder to produce the fuels Americans need."

(Reporting by Ayesha Rascoe; Editing by Ros Krasny, Lisa Von Ahn and Leslie Adler)

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