A long battle over the use of ethanol in gasoline will climax Feb. 16 with oral arguments in a Washington, D.C., federal appeals court.
The court has been asked to decide whether the Environmental Protection Agency can require refiners, as part of the reformulated gasoline (RFG) program, to use renewable fuels for 15% of the oxygenates in RFG this year and 30% next year.
The three justices are not likely to issue their opinion until several months after oral arguments.
Petroleum industry groups are optimistic of victory. They say the fact that the appeals court stayed the EPA rule indicates that the court is favorably disposed to industry's arguments.
Lawyers say if the oil industry loses, the court likely will give the industry some lead time before allowing the rule to take effect or continue the stay if the case is appealed to the Supreme Court.
The American Petroleum Institute, National Petroleum Refiners Association, American Methanol Institute, and Oxygenated Fuels Association filed the suit against EPA.
Intervening on behalf of EPA were the Renewable Fuels Association and Corn Refiners Association. Filing briefs in support of EPA were the Governors' Ethanol Coalition, American Farm Bureau Federation, National Corn Growers Association, American Coalition for Ethanol, and Citizen Action.
OIL INDUSTRY'S COMPLAINT
API and NPRA argue that the ethanol mandate imposes costly burdens on refiners and consumers, will increase total energy consumption, and provide no environmental benefits (OGJ, July 18, 1994, p. 29).
Later, the U.S. Senate narrowly rejected an amendment that would have voided the EPA rule (OGJ, Aug. 15,1994, p. 38).
EPA at first proposed a 30% mandate but last February opted for a 2 year phase-in starting at 15%. When it issued the ethanol mandate (OGJ, Dec. 27,1993, p. 27), EPA dropped a Bush administration proposal that ethanol be given a I psi waiver from gasoline volatility limits (OGJ, Oct. 12,1992, p. 36).
In their legal brief, API and NPRA said, "The ethanol rule clearly violates the statutory requirements that RFG rules achieve the 1 greatest reduction in emissions' in volatile organic compounds (VOCs) and air toxics-and independently, that RFG rules be oxygenate neutral."
They said EPA admitted, in documents concerning the Bush administration rule, that it lacks the legal authority to order the use of a particular oxygenate for RFG and has admitted the rule will not improve air quality.
API and NPRA said, "EPA's ethanol rule unnecessarily and unduly interferes with California's more stringent RFG regulatory program, exacerbating compliance and undercutting air quality benefits."
The Methanol Institute claims the ethanol rule violates Section 211(k) of the Clean Air Act, which "requires EPA to establish an RFG program that will offer the greatest reduction achievable of emissions of VOCs and toxic air pollutants.
"By EPA's own admission, the rulemaking is designed for other purposes-the promotion of renewable oxygenates, energy efficiency, and the reduction of greenhouse gases. It will cause RFG to have greater toxic emissions and will make it more difficult to reach the minimum statutory goal of reducing toxic emissions by at least 15%."
EPA RESPONDS
EPA argued the Clean Air Act gives it "considerable discretion to evaluate and weigh the significance of the environmental impacts and the effects on the nation's energy requirements in establishing the RFG program and to fashion appropriate regulations."
In a reply brief, API and NPRA noted, "EPA makes no claim that the act gives it explicit authority to adopt the ethanol mandate."
Oil industry groups said use of RFG alone will satisfy the law's requirements to reduce VOCs and air toxic emissions and has freed EPA "to use its ethanol rule to pursue exclusively nonair quality objectives such as reducing fossil fuel usage and greenhouse gas emissions and to secure an expanded market for ethanol in the oxygenate marketplace."
The Governors Ethanol Coalition, which represents 19 states, said that without the ethanol mandate, 'It is clear that MTBE, a derivative of oil, will become the oxygenate fuel of choice and may in fact be the only oxygenate available in the future.
"An RFG program that does not accommodate ethanol's place in the oxygenate market through some means is likely to result in economic consequences to ethanol producers, distributors, and corn farmers."
EPA and its supporters argued the case is similar to a landmark 1984 case, Chevron USA vs. the Natural Resources Defense Council, in which the courts held that Congress may leave explicit or implicit decisions to regulatory agencies.
API and NPRA replied the Chevron case calls for a two step process: if the statute is ambiguous, the agency can make the requisite decisions. API and NPRA argue the law is clear in this case, and EPA does not have the prerogative to require ethanol use in RFG.
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