Thursday, March 22, 2012

Refiners face EPA fines for failing to use product that doesn't exist

A lawsuit against the Environmental Protection Agency certainly isn't news. People and companies sue the agency regularly - primarily because they have invaded every aspect of our lives in the guise of 'protecting' us. But this latest lawsuit should be a no-brainer, even for liberal judges.

The Clean Air Act requires the EPA to determine the mandated volume of cellulosic biofuels each year at "the projected volume available." EPA's 2012 rule requires that refiners and importers of gasoline and diesel must use 8.65 million gallons of cellulosic biofuels.

The EPA's 2012 Renewable Fuel Standard (RFS) requires refiners to pay fees if they are unable to blend the mandated amount of cellulosic biofuels into their gasoline.

So far, this sounds pretty typical of the EPA.

But - and this is a HUGE 'but' - there is currently no commercial supply of cellulosic biofuels in the U.S., so it's impossible for refiners to meet this demand.

Of course, the EPA will probably say that at least this is less than the 250 million gallons that was required in 2007, though it is higher than than the 6.6 million gallons required in 2011.

But when the product doesn't exist, it doesn't make much difference how much is required - and it defies logic to raise a mandate for a product that isn't available.

The end result is that the companies cannot meet the mandate so they will pay fees - actually, a fine. And we all know that when companies have to pay 'fees' (actually TAXES) to the federal government, they'll just tack on that cost to the price we pay for the product. So you and I will end up paying the 'fee' at a time when gas prices are skyrocketing.

In 2011, the fine totaled about $6.8 million. The 2012 fines are expected to be higher. Perhaps the fine is the point. Perhaps the entire purpose is collect monies by mandating use of something that technology cannot provide.

Which is why the American Petroleum Institute has filed suit in Washington Circuit Court.

"EPA's standard is divorced from reality and forces refiners to purchase credits for cellulosic fuels that do not exist," said API Director of Downstream and Industry Operations Bob Greco. "EPA's unrealistic mandate is effectively a tax on manufacturers of gasoline that could ultimately burden consumers."

"Divorced from reality" is being kind. When it takes four years just to get 'permission' to challenge the EPA, you know you've got an agency that is out of control.

Surely any judge will see that it is wrong to penalize a company for failing to achieve the impossible.

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