| WASHINGTON, April 7
WASHINGTON, April 7 Federal judges on Monday
pressed the Obama administration to explain delays that have
plagued its implementation of the U.S. biofuel mandate, as the
government attempted to fend off an oil industry challenge to
renewable fuel use targets.
In a case before the U.S. Court of Appeals for Washington
D.C., the American Petroleum Institute and the American Fuel and
Petrochemical Manufacturers argued the 2013 biofuel use targets
should be thrown out because the administration acted
"arbitrarily and capriciously" when it issued the targets nearly
nine months after its legislative deadline.
The Environmental Protection Agency, which administers the
biofuel mandate, "exacerbated the negative effects of its
tardiness" by basing the targets on a new estimate of total
transportation use that increased compliance burdens for
refiners, the industry groups said.
Judge Thomas Griffith called EPA's delays "egregious."
"At some point, don't these deadlines mean something?" Judge
Griffith asked at the hearing.
The ruling on the 2013 targets could have broad implications
for the biofuel mandate going forward. The EPA's final 2014
quotas are due out in June, about seven months behind schedule.
The Renewable Fuel Standard requires increasing amounts of
biofuels to be blended into U.S. gasoline and diesel supplies
each year through 2022 and was designed at a time fuel demand
was also expected to rise.
Instead, gas and diesel demand has been limited by rising
fuel economy and slow economic growth.
An attorney for EPA defended the delays, saying the agency
had to weigh how to handle the looming "blend wall," the point
when the law would require more ethanol to be blended into
gasoline supplies than the 10 percent level that dominates U.S.
fueling infrastructure, such as equipment at gas stations.
Refiners need to accumulate ethanol credits, or Renewable
Identification Numbers (RINs), to prove they have blended their
share of renewable fuels into gasoline and diesel. If they do
not blend, they need to buy a RIN for each gallon of ethanol.
RIN prices spiked last year in anticipation of the country's
collision with the blend wall, dramatically raising compliance
costs for some refiners and cementing oil industry opposition to
Despite the concerns raised about the EPA missing statutory
deadlines, the judges also challenged the industry groups to
prove that the agency's use of updated transportation data in
the final rule issued in August caused them harm.
"Isn't it always better to have accurate information?" Judge
Cornelia Pillard asked.
Another party arguing against EPA's 2013 targets was Delta
Air Lines' subsidiary Monroe Energy, which operates the
Trainer refinery complex in Pennsylvania.
Monroe said EPA failed to fully consider the amount of
ethanol credits that companies might need to carry over for use
in 2014 when setting the 2013 targets.
The company said compliance with the mandate imposed
"devastating" costs, possibly of $100 million for Monroe, and it
was not sure whether it would be able to meet the targets by the
June 30 deadline.
Judge Pillard said some of Monroe's concerns seemed more
aimed at the market for ethanol credits, than with EPA's actual
Biofuel groups intervening in the case said there are more
than enough ethanol credits to adhere to the EPA's quotas and
the oil industry has plenty of options to meet the program's
It is unclear when the court will rule on the case.
(Reporting by Ayesha Rascoe, editing by Ros Krasny and Cynthia