A federal court on Friday rejected an Environmental Protection Agency (EPA) decision to waive certain ethanol blending requirements that regulators said were appropriate due to the state of fuel markets.
The Court of Appeals for the District of Columbia ruled that the EPA erred in 2015 when it waived certain biofuel blending requirements set in the Renewable Fuel Standard (RFS) law seven years prior.
The EPA decision in 2015 required oil refiners blend 18.11 billion gallons of biofuels into their gasoline and diesel supply the following year. That level was below the goal set by Congress, but the EPA said it was waiving the requirement because demand pressures were limiting the ability to increase renewable fuel levels as quickly as the law required.
But the court ruled Friday that the EPA wasn’t allowed to make that determination.
“We hold that the ‘inadequate domestic supply’ provision authorizes EPA to consider supply-side factors affecting the volume of renewable fuel that is available to refiners, blenders, and importers to meet the statutory volume requirements,” the court ruled.
“It does not allow EPA to consider the volume of renewable fuel that is available to ultimate consumers or the demand-side constraints that affect the consumption of renewable fuel by consumers.”
The EPA said it’s still reviewing the decision, but ethanol groups said the ruling was a victory. Biofuel producers have long pushed the EPA to set higher blending requirements, something opposed by oil producers and refiners.
“We are still reviewing the decision, but the fact the court has affirmed our position that EPA abused its general waiver authority by including factors such as demand and infrastructure in a waiver intended to be based solely on available supply is a great victory for consumers and the RFS program,” Renewable Fuels Association President Bob Dinneen said in a statement.
The American Petroleum Institute, an industry group leading the charge against the RFS, said the waiver process was “necessary to protect consumers from an outdated mandate” and said the decision means Congress needs to “revisit and significantly reform the broken RFS program.”
“The outdated goals of the ethanol mandate have led to implementation challenges for EPA and the refining industry,” API Downstream Group Director Frank Macchiarola said in a statement.
The EPA in July proposed requiring refiners use 19.24 billion gallons of renewable fuels in 2018, about 25 percent lower than the target in the RFS law.
—Updated at 1:00 p.m.