The Environmental Protection Agency (EPA) has settled an oil industry lawsuit and agreed to set the ethanol blending mandates for this year and last year by Nov. 30.
The 2014 mandate under the Renewable Fuel Standard will be two years late and this year’s will be one year late. But with an end to the delays finally in sight, the settlement ends a dispute that angered both the oil industry and ethanol producers.
"Our goal is to provide the market with the certainty it needs to continue to grow renewable fuel volumes," Christopher Grundler, director of the EPA's office of transportation and air quality, told reporters Friday.
The settlement does not require the agency to set the volumes at any particular level. The agreement is still subject to a 30-day public comment period and approval by a federal court.
Friday’s announcement ends lawsuits filed by the American Petroleum Institute (API) and American Fuel and Petrochemical Manufacturers (AFPM) over the EPA’s delays, which they said force refiners to guess how much ethanol to blend into their products before the agency decides a retroactive mandate.
The Renewable Fuel Standard requires that fuel refiners mix a certain volume of ethanol into gasoline and biodiesel into diesel each year.
The EPA is legally obligated to set those volume mandates by Nov. 30 each year for the following year.
The agency proposed in 2013 to reduce the ethanol mandate for the first time, to 15.21 billion gallons, while keeping the biodiesel mandate the same as the previous year. After multiple delays, EPA officials said most recently that they would make final the 2014 mandate by the end of spring.
The EPA said it will set next year’s mandate during this year, as it is required to do under the law.
The oil industry groups welcomed the settlement, but said they would rather see the EPA comply with the law. They said they still hope Congress either repeals or significantly reforms it to reduce the amount of ethanol that must be used.
Industry groups complain that the mandate increases their costs significantly, which are passed onto consumers through gasoline and diesel prices.
Ethanol producers and other proponents of the mandate say that it reduces the oil industry’s monopoly on fuels and helps the environment.
“It’s unfortunate that we will, under this agreement, have a 2014 rule that comes out by Nov. 30, which will be two years late, and a 2015 rule that comes out, also Nov. 30, which will be one year late," said Rich Moskowitz, general counsel at the AFPM. “That is not the solution we’re looking for.”
Brendan Williams, the refinery group’s executive vice president, said the lawsuit exposed major flaws in the Renewable Fuel Standard.
“This is just another glaring example of the need for Congress to step in and either repeal or significantly reform what is a broken program,” he said. “Today’s announcement, as well as what we see them propose at these deadlines are just going to continue to be stark reminders that will continue to bolster momentum for a legislative change.”
“We hope this agreement helps get the RFS back on track, but the only long-term solution is for Congress to repeal the program and let consumers, not the federal government, choose the best fuel to put in their vehicles,” added Stacy Linden, general counsel for API, in a statement.
“Failure to repeal the unworkable law could put millions of motorists at risk of higher fuel costs, damaged engines, and costly repairs,” she said.
The ethanol industry was also happy to see the settlement and called it a "good start."
"No one has benefited from the delays in setting annual renewable volume obligations," said Bob Dinneen, president of the Renewable Fuels Association.
"While we are sympathetic to the difficulty EPA faces in promulgating annual targets, the statute is clear about the volumes required and the agency simply has to do a better job moving forward."
This story was updated at 1:47 p.m.