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Minnesota Biodiesel Mandate Stands
Friday, September 30, 2016 2:48PM CDT


By Todd Neeley
DTN Staff Reporter

OMAHA (DTN) -- Minnesota's biodiesel mandate does not conflict with the federal Renewable Fuel Standard, a federal judge ruled Thursday in a lawsuit filed by petroleum interests and other groups.

A judge in the U.S. District Court for the District of Minnesota granted a plaintiff motion for summary judgement. The plaintiffs include the state of Minnesota, as well as intervenors on the state's behalf, including the National Biodiesel Board, Minnesota Soybean Growers Association, Minnesota Biodiesel Council and the Iowa Biodiesel Board.

The American Petroleum Institute, American Fuel and Petrochemical Manufacturers, Minnesota Automobile Dealers Association, Minnesota Trucking Association and Alliance of Automobile Manufacturers, filed a number of legal challenges to a Minnesota biodiesel mandate back in April 2015.

The plaintiffs argued the state mandate is in conflict with the RFS because the federal law prevents the U.S. Environmental Protection Agency from imposing per-gallon blending requirements, placing geographical limitations on blending biodiesel, and that the RFS does not impose any time constraints as to when biodiesel can be blended.

"The court, however, is not persuaded by any of AFPM's arguments and instead reaches a contrary conclusion," Chief Judge John R. Tunheim said in his ruling. "The Minnesota mandate does not conflict with the RFS, and the RFS therefore does not pre-empt the Minnesota mandate."

The National Biodiesel Board said in a statement Thursday the ruling was big for the industry

"This is a significant victory that maintains the pathway to clean energy, renewable fuel and green jobs in Minnesota and across the country," NBB said.

"The court's ruling affirms biodiesel's valuable role to help states move to renewable energy sources, promoting the rural economy and energy independence. We are pleased the district court agreed with our position that America's advanced biofuel is working both as a clear success story within the Renewable Fuel Standard and for states, which comes with it numerous benefits, including environmental."

The plaintiffs in the case have 30 days to appeal the court's ruling.

According to a Minnesota Department of Agriculture report to the state legislature this year, the mandate up to B10 has led to the expansion of biodiesel production capacity in the state to 63 million gallons.

The MDA said the state's production capacity can provide about 91% of the B10 need and about 55% of biodiesel needed to meet the B20 mandate.

In 2002, the Minnesota legislature passed a law requiring every gallon of diesel contain 2% biodiesel. Minnesota was the first state to pass a biodiesel blending law, and others have done so since.

In 2008, the state's legislature amended the Minnesota mandate to increase the required biodiesel blend from 2%, to 5%, to 10% and eventually to 20%. The B5 requirement took effect on May 1, 2009, and the statute set target dates of May 1, 2012, for the move to B10 and May 1, 2018, for the move to B20.

State law requires the transitions to B10 and B20 to be contingent on the state making a number of factual findings about whether the state is ready.

In November 2011, state officials notified the state legislature the transition to B10 would be delayed past the May 1, 2012.

In July 2013, however, state officials made the required factual findings and the B10 mandate took effect on July 1, 2014. The B20 mandate is on target to take effect May 1, 2018.

The plaintiffs filed suit on April 17, 2015, alleging the mandate conflicts with the RFS. The plaintiffs had sought a permanent injunction to prevent the state from enforcing the B10 requirement. In the challenge, they claimed the RFS preempts the mandate.

Also, the plaintiffs sought a permanent injunction to prevent the state from implementing the B20 mandate.

Earlier this week, New York City passed legislation to incrementally displace 20% of heating oil sold in the city with biodiesel.

The bill will increase the amount of biodiesel used in heating oil in the city from the current 2% level to 5% Oct. 1, 2017. The blend level increases to 10% in 2025, 15% in 2030 and 20% in 2034.

Todd Neeley can be reached at todd.neeley@dtn.com

Follow him on Twitter @toddneeleyDTN

(AG/CZ)


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