Monroe Energy, LLC v. EPA

Respondent-intervenor National Biodiesel Board (NBB) filed a petition for rehearing of a portion of the D.C. Circuit’s decision. NBB sought reconsideration of the holding that Monroe Energy, LLC had Article III standing to challenge the RFS. NBB argued that Monroe Energy’s claimed energy was higher compliance costs resulting from third-party actions, and that Monroe Energy had produced no evidence that a decision in its favor would have redressed such an injury. NBB urged a rehearing to prevent the use of annual challenges to the RFS to raise questions about “fundamental precepts” of the program.

The D.C. Circuit upheld EPA’s <a href="http://www.gpo.gov/fdsys/pkg/FR-2013-08-15/pdf/2013-19557.pdf">rule</a> establishing the 2013 renewable fuel standards. In the final rule, which was issued months past the statutory deadline, EPA maintained the volumes for total renewable fuels and advanced biofuels established by the Energy Policy Act of 2005 as amended by the Energy Independence and Security Act of 2007. EPA reduced the statutory volume for cellulosic biofuel from 1.0 billion gallons to 6 million gallons. The D.C. Circuit rejected petitioner’s contentions that EPA had acted arbitrarily or unreasonably by not reducing the total renewable fuel quota despite having substantially reduced the volume for cellulosic biofuel and despite the constraints posed by the “E10 blendwall” created by the inability of U.S. vehicle engines to use gasoline consisting of more than 10% ethanol. The court also said that EPA’s failure to meet the statutory deadline for setting the RFS was not a basis for vacating the rule since obligated parties had been put on notice by the volumes set in the statute and EPA’s assertion in the proposed rule that it would not waive statutory volumes other than for cellulosic biofuel and because EPA had extended the compliance deadline by four months.

The court granted an unopposed motion by EPA to sever and hold in abeyance issues pertaining to the cellulosic biofuel standard, which EPA agreed to reconsider after learning that producers had lowered their production estimates. The D.C. Circuit established a new case (No. 14-1033) and required status reports on EPA’s reconsideration of the cellulosic biofuel standard every 60 days, starting on March 28. Oral argument on the challenge to other aspects of the 2013 renewable fuel standard was scheduled for April 7, 2014.

EPA filed a motion to sever and establish a new docket number for issues pertaining to the cellulosic biofuel standard. In the motion to sever, EPA reported that it had agreed to reconsider the 2013 cellulosic biofuel standard based on information received after the rule was finalized from a producer of cellulosic biofuel that it had reduced its 2013 production estimate. EPA indicated that to provide regulatory certainty to parties subject to the renewable fuels standard it would issue a new direct final rule concerning the cellulosic biofuel standard; to address concerns regarding the timing of the rulemaking process, EPA also proposed to make regular reports on its progress, starting on March 21, 2014.

The D.C. Circuit granted the motion by petitioner Monroe Energy, L.L.C. (Monroe) to expedite review.  Monroe had argued that expedited review was needed so that the court’s decision would be rendered well in advance of the June 30, 2014 deadline for submitting Renewable Identification Numbers to EPA.  Monroe noted that EPA had issued its final rule eight and a half months after the statutory deadline.  The briefing schedule set by the D.C. Circuit provides for the final set of briefs to be submitted by February 20, 2014 (Monroe had requested that briefing be completed in mid-December 2013).

Monroe Energy, LLC, the American Petroleum Institute, and American Fuel & Petrochemical Manufacturers filed petitions in the D.C. Circuit for review of EPA’s <a href="http://www.gpo.gov/fdsys/pkg/FR-2013-08-15/pdf/2013-19557.pdf">final rule</a> setting the 2013 renewable fuel standards. In the final rule, EPA concluded that available fuels would be available to meet the statutory volumes of 2.75 billion gallons for advanced biofuels and 16.55 billion gallons for total renewable fuels. EPA reduced the cellulosic biofuel volume for 2013 from the statutory volume of 1.0 billion gallons to 6 million gallons.