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EPA Bracing for RFS Lawsuit

DANIEL LOOKER 08/05/2014 @ 5:09pm Business Editor

An official with the Environmental Protection Agency told members of the American Coalition for Ethanol Tuesday that EPA is still working on the final 2014 blending levels that will be mandated under the Renewable Fuel Standard.

"We're working as hard as we can to get it out the door as soon as possible," said Paul Machiele, center director for fuel programs in the assessment and standards division of the agency.

EPA's proposed rule released last November drew strong opposition from biofuels groups because it rolls back the effective mandate for corn ethanol from 13.8 billion gallons in 2013 to 13 billion gallons for this year, justifying the decision in part because the oil industry claims the infrastructure isn't in place to sell more than roughly 10% ethanol that is currently blended into gasoline, a marketing barrier known as the blend wall.

The EPA is far behind schedule to release the final rule for 2014 blending and just last week it extended requirements for the 2013 RFS a third time this year -- a sign that the agency is struggling to finish the regulation.

The agency is still responding to some 300,000 comments that it got on the rule last winter, Machiele said at the ACE annual meeting that's being held in Minneapolis, Minnesota this week. And it has to submit the rule to the White House Office of Management and Budget for review and for review by other federal agencies, a process he said could take 30 to 90 days.

The standard for 2015, "is something we normally would have proposed by now," he said. But the ability to do that will depend on how much time the staff has to prepare for lawsuits over the 2014 rule, "which we have been told we will receive by several stakeholders."

EPA has already been challenged in court several times by the oil industry and others over the RFS. Depending on how the final rule looks, it could also face a challenge from the biofuels industry, Brian Jennings, executive vice president of ACE told Agriculture.com later in an interview.

Jonathan Lehman, an attorney for ACE who was former South Dakota Senator Tom Daschle's counsel when the RFS was written, told an EPA hearing last December that Congress rejected an amendment that would have allowed the oil industry to use lack of infrastructure as an excuse to not sell a fuel it doesn't like.

Jennings said Tuesday that even if the EPA's final 2014 rule raises the amount of ethanol that can be blended under the RFS, if the EPA continues to use the blend wall to justify its decisions, "it's very likely that renewable fuel advocates from all over will be forced to sue."

ACE, which represents mainly farmer-owned ethanol plants in the Midwest, isn't anxious to file suit. Jennings told Agriculture.com that his board recently discussed how litigation might affect ethanol blending, and it's an unanswered question. While he is frustrated by the delays in the 2014 RFS blending rules, "it's much more important that they (EPA) get this done right," he said.

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