US petroleum lawsuit faces uphill battle against renewable fuels

19 April 2010 16:30  [Source: ICIS news]

Petroleum files lawsuitHOUSTON (ICIS news)--The petroleum industry will face an uphill battle with the lawsuits it filed against the US Environmental Protection Agency’s (EPA) renewable fuel mandate, legal experts familiar with the case said on Monday.

The American Petroleum Institute (API) filed suit in March against the EPA’s renewable fuel requirements for 2010, with the National Petrochemical & Refiners Association (NPRA) joining soon after. The move threatened to delay blending requirements and to add more woes to a burgeoning US biofuels industry experiencing bankruptcies and layoffs amid lacklustre demand.

But the petroleum industry’s main complaint - that the EPA missed by more than a year its target date for rolling out its mandate, and that therefore its requirement that petroleum companies account for not only 2010 biofuels blending targets but also those for 2009 - is unlikely to succeed in court, legal scholars said. 

“The jurisprudence regarding retroactive effect makes a challenge difficult unless the retroactive impact is severe, which isn’t the case here in my opinion,” said Victor Flatt, professor of environmental law at the University of Houston.

“The industry was certainly aware of what the EPA was going to do from its draft rulemaking,” Flatt added.

To the petroleum industry’s chagrin, the EPA is charging them with blending 2009’s mandated 11bn gal of renewable fuels this year in addition to 2010’s mandate of 13bn gal.

Congress passed the biofuels blending mandate in late 2007 as part of the Energy Independence and Security Act (EISA).

Lawmakers charged the EPA with implementing the mandate. But the agency, working to define which types of biofuels would be allowed to satisfy the mandate, only officially ratified the rule in January 2010. The regulations are scheduled to take effect 1 July.

But it was not as if the mandated levels should have caught the industry by surprise, said James Coan, research associate for the Energy Forum at Rice University in Houston.

Despite the EPA’s delay in officially releasing the rule, blenders should have known how much biofuels they would need to blend, he said.

“Congress mandated with EISA how much fuel would be needed each year. It just seems the EPA was rubberstamping what was already there,” Coan said.

The EPA declined to discuss the lawsuits.

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