US biofuels group threatens to sue EPA over RFS delay

Clean Fuels Alliance America, one of the United States' largest biofuels industry trade groups, said it plans to sue the US Environmental Protection Agency if the agency does not significantly hasten its Renewable Fuel Standard timeline.

The group, which represents companies across the biofuel, renewable diesel and sustainable aviation fuel supply chains, sent a letter to EPA Administrator Michael Regan providing formal notice of its intent to sue to force the agency to issue its 2026 RFS volumes rule proposal by a statutory Oct. 31, 2024 deadline, 14 months before the start of the compliance year. In June, the White House Office of Management and Budget said EPA will propose its 2026 rule in March 2025 before finalizing it in December. That timeline would delay the proposal and final rule until well after the 2024 US election.

"There isn't any practical reason that would prevent the agency from meeting the legal deadline for the 2026 RFS rule," Clean Fuels Alliance America Vice President of Federal Affairs Kurt Kovarik said in a statement.

"Because this may become pending litigation, EPA has no further information to provide," an EPA spokesperson said in an email.

Lingering frustration

Delays of RFS rules have not been uncommon in its history. Since the RFS was enacted in 2007, the rules have been issued no more than two months late in just seven of 16 years, with several of those delays (and subsequent lawsuits) originating in the transition between presidential administrations.

In June 2023 the EPA finalized its regulations for the 2023-2025 compliance years all at once. Despite the longer lead time, industry groups were dismayed by the volumes themselves and forcefully pushed back on the administration's numbers.

"EPA's decision to lower its ambitions for conventional biofuels runs counter to the direction set by Congress and will needlessly slow progress toward this administration's climate goals," Emily Skor, CEO of ethanol group Growth Energy, said last year.

The final rule required refiners to blend 20.94 billion gallons of renewable fuel in 2023, up from the 20.63 billion gallons required under the 2022 renewable volume obligation (RVO). It boosted the total renewable fuel obligation to 21.54 billion gallons in 2024 and to 22.33 billion gallons in 2025. Industry officials, who decried those volumes as too low from the start, have continued to lobby EPA to revise those numbers through 2024 and 2025. In 2023, the US Energy Information Administration said the obligations were set "significantly lower than production trends."

On June 25, Clean Fuels Alliance America submitted a petition(opens in a new tab) asking the EPA to allow actual 2023 volumes of biomass-based diesel production -- which totaled 4.6 billion gallons, significantly higher than the EPA's 2.82 billion gallon volume -- to guide newly revised standards.

"As the agency set the RFS rule last year, Clean Fuels asked EPA to support achievable growth in biomass-based diesel of 500 million gallons a year. That request was very conservative, since the industry's achieved growth of 4.6 billion gallons is significantly higher," Kurt Kovarik, Vice President of Federal Affairs for Clean Fuels Alliance America, said in a statement. "We warned EPA that the 'no growth' rule they set would undercut investments, economic opportunities for our industry and environmental benefits. Unfortunately, we're seeing those consequences now."

In its notice of intent to sue over the 2026 deadline, Kovarik and the group remained focused on the previous year volumes.

"EPA's failure to timely issue the 2026 RFS volumes compounds another issue: EPA set the volumes for 2023 through 2025 too low," Kovarik wrote in the letter. "The result has been a crash in RIN prices, shuttered production facilities, and cancellations of planned facility expansions. While EPA can and should reconsider and revise its 2024 and 2025 volumes, it should at a minimum set a timely 2026 volume."

According to the EPA's own data(opens in a new tab), 9.96 billion net RINs were generated in the first five months of 2024, up 6.5% from the same time period in 2023. Platts on June 20 assessed D4 ethanol RINs for 2024 at 65 cents/RIN. Platts is part of S&P Global Commodity Insights.

Congress gets involved

In June, a group of 18 US Senators from both political parties sent their own letter to Regan urging him to hurry the 2026 RFS volumes rule. The letter also decried the agency's 2024 and 2025 volumes, saying that the current levels discouraged production and investment in the industry. Lower RIN prices are "sending a discouraging market signal to farmers, feedstock producers, biofuel producers, blenders and investors," the letter said.

US Senator Chuck Grassley, Republican-Iowa, argued that a plant in Iowa shut down as a direct result of the agency's actions.

"Iowa businesses are bearing the consequences of the Biden EPA's 2023 rule that set extraordinarily low RFS volumes," Grassley said in a statement. "To give you an example of the impacts, a plant in Ralston was forced to shut down as a result, which cost local jobs and hurt Iowa families. The EPA ought to embrace biofuels by correcting its past mistake and increasing 2026 levels in line with market data. Our producers are ready to supply communities with clean, bio-based fuels — if only the federal government would help facilitate their work rather than institute burdens."

In July, 37 members of the US House of Representatives led by Representatives Ashley Hinson, Republican, Iowa and Angie Craig, Democrat-Minnesota, joined the chorus, penning their own letter to Regan in support of a faster timeline.

"Producing advanced biofuels in the United States promotes economic opportunities for communities across the country and increases market access for our nation's farmers," the letter said.