Follow-up on API and EPA story – 9/26/2014

In the never ending RFS saga, the American Petroleum Institute (API) warned in a letter to EPA Administrator Gina McCarthy that the agency does not have the authority to raise the biomass-based diesel (biodiesel) target for 2014.

Citing Section 211(o)(2)(B)(ii) of the Clean Air Act sets a 1 billion gallon floor for biomass-based diesel after 2012 and requires EPA to provide a 14-month lead time when modifying the mandate. Considering the EPA is now almost two years past the statutory requirement for making changes to the biodiesel target, it would suggest that no changes to the 2014 mandate or for that matter the 2015 volume requirements can be made. In response, the EPA sent a statement to the ethanol and biodiesel news service OPIS, noting the agency “will review the concerns raised in the letter API sent to Administrator McCarthy and respond appropriately.”

It is unknown how this will be played out, but the potential ramifications could be significant. If no changes are made to the mandate, the bull story in soyoil again becomes dust in the wind and our new crop carryout estimate balloons back to 2+ billion pounds.  This latest wrinkle is another black mark against the EPA and it suggests that the API’s lawyers apparently have looked at the original 1109 page RFS document closer than the EPA.

 

Matthew Tegeler

 

 

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