The ethanol industry joined with clean fuel advocates Friday in suing the Environmental Protection Agency over its renewable fuel mandate that it argues is biased toward the oil industry.
The lawsuit was filed in the D.C. Circuit Court of Appeals, adding to the list of high-level cases opposing the Obama administration's more contentious environmental regulations.
The lawsuit comes just weeks before the Iowa caucuses in the 2016 presidential race, where ethanol is a top concern.
The issue is EPA's interpretation of its waiver authority under the Renewable Fuel Standard program, or RFS. The RFS requires refiners to blend an increasing amount of biofuels in the nation's gasoline and diesel supplies through 2022. The waiver authority that Congress gave the EPA enables it to waive the mandated volumes under certain circumstances.
"Among other things, the petitioners intend to demonstrate that EPA's interpretation of its general waiver authority under the Renewable Fuel Standard statute was contrary to the statute," the groups said in a fact sheet.
The ethanol industry has warned the EPA in the past that it cannot waive the amount of biofuel required based on what it calls "demand" factors, such as the lack of infrastructure to handle higher volumes of the fuels. The law says the requirements can only be waived given "supply" problems such as production shortfalls.
The EPA said it used the waiver Eauthority based on concerns that the fuel system cannot accommodate higher volumes of ethanol, which is an argument used by the oil industry referred to as the "blend wall." Refiners argue that being forced to blend higher amounts of ethanol in the fuel supply places millions of vehicle engines at risk, making them liable for the damages.
The American Fuel and Petrochemical Manufacturers, representing oil refiners, criticized the lawsuit and supports EPA's decision to use its waiver authority in enacting the 2014, 2015 and 2016 RFS annual requirements. The agency had delayed the requirements for years due in part to the blend wall scenario. It issued the retroactive requirements last year.
"AFPM fully supports EPA's decision to use its waiver authority to adjust the RFS volume mandates to reflect the ... blend wall, vehicle and engine warranty restrictions, and overwhelming consumer rejection of higher-ethanol fuels," said Chet Thompson, the group's president.
"It is long overdue for Congress to repeal this broken program and for the biofuels industry to stand or fall on its own, without government subsidies," he said. "But in the meantime, it is clear that EPA has the authority to adjust unrealistic mandates to account for market realities."
The biofuel groups said they "look forward to presenting their arguments to the court of appeals to provide clarity and certainty to market participants concerning the requirements of the statute."
The groups in the lawsuit include Americans for Clean Energy, American Coalition for Ethanol, Biotechnology Innovation Organization, Growth Energy, National Corn Growers Association, National Sorghum Producers and the Renewable Fuels Association.