US refiner Valero joins lawsuits against EPA over biofuels blending plan

By Chris Prentice

NEW YORK, Feb 12 (Reuters) - Valero Energy filed lawsuits against the US Environmental Protection Agency on Friday to push the regulator to alter a US policy designed to boost use of renewables in transportation fuels.

The country's top refiner and No. 3 ethanol producer filed a challenge with the US Court of Appeals in Washington to review the EPA's latest Renewable Fuel Standard plans for 2014-2016. It separately asked the court to reopen its standards from 2010 and 2007, according to court documents dated Feb. 12.

This is the latest push by refiners to move the responsibility of complying with the program further downstream. Oil refiners are required to meet EPA targets for biofuel use. Those without adequate capacity to blend ethanol with gasoline have to buy compliance credits in a thinly traded market.

Each year, the EPA is required to set targets for biofuel use. In November, it set volumes for 2014-2016 below a 2007 plan laid out by Congress, disappointing both the oil and biofuel industries.

This was the first time EPA used a "general waiver authority" to lower the volumes, acknowledging a so-called blend wall that oil companies say is the saturation point for use of ethanol in gasoline without a major overhaul at fuel pumps and in vehicles.

That milestone made the time ripe to revisit what Valero sees as a major logistics issue with the program, said Bracewell's Richard Alonso, counsel to the company.

"If EPA is going to use an extraordinary action like a waiver, then at least EPA must remove any structural impediments that prevent penetration of renewable fuels," Alonso said.

Moving obligations to marketing companies that own the fuel at the time of blending will help to boost biofuels because the groups required to comply will also have the capacity to blend, he said.

Delta Air Lines' Monroe Energy, a merchant refinery without blending ability, filed its own lawsuit requesting a similar change late last month.

The Renewable Fuel Standard (RFS) program has been a battleground between Big Oil and Big Corn since it was introduced more than a decade ago. Criticism from environmentalists, oil groups and others has increased in that time.

Valero had also filed a petition with the EPA directly to consider the change.