US Court rules against EPA in Renewable Fuel Standard case

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A U.S Court of Appeals for the District of Columbia Circuit ruled that the Environmental Protection Agency (EPA) was wrong in its interpretation of “inadequate domestic supply” when decreasing required renewable fuel blending, the U.S. Court Friday.

The Court supported ACEI’s argument that EPA exceeded its authority in interpreting its general waiver authority.

In an arguments before the court in April, lawyers for renewable fuel groups – collectively referred to as Americans for Clean Energy (ACE) – disputed EPA’s interpretation of “inadequate domestic supply” in the governance of the Renewable Fuel Standard.

“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,” Judge Brett Kavanaugh wrote in the decision. However, he continued, “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.”

According to Agi-pulse, Under the law, the EPA is allowed to use waiver authority to set Renewable Volume Obligations (RVOs) at lesser volumes than what is called for in the statute. It did just that on Nov. 30, 2015, when the agency released RVOs for 2014, 2015, and 2016 in one swoop due to delays on previous years. Janet McCabe, then the acting assistant administrator for EPA’s Office of Air and Radiation, said the 2016 RVO – 18.11 billion total gallons of renewable fuel with 14.5 billion gallons potentially coming from corn ethanol –- represented “ambitious, achievable growth” for the program.

But renewable fuels groups disagreed. They wanted to see the statutory 15-billion-gallon availability for corn ethanol. EPA said that couldn’t happen because refiners and blenders lacked the necessary infrastructure to take that much product to market; ACE argued EPA wasn’t allowed to take that into consideration, saying refiners opposed to the program could turn it on its head by simply refusing to build out the necessary infrastructure.

In a sizable victory for the renewable fuels industry, the court ultimately agreed with ACE.

“Importantly, whether a thing is ‘available’ to someone has nothing to do with whether he or she decides to use it,” Kavanaugh stated in the decision. He further illustrating his point by noting “The fact that a person is on a diet does not mean that there is an inadequate supply of food in the refrigerator.

“So too here: Whether there is an adequate amount of renewable fuel available to allow refiners, blenders, and importers to meet the statutory volume requirements has little to do with how much renewable fuel that refiners, blenders, and importers – much less consumers at the pump – ultimately decide to use.”

A spokesperson for the EPA said the agency is “currently reviewing the decision.”

ACE is comprised of a number of groups – the Renewable Fuels Association, American Coalition for Ethanol, BIO, Growth Energy, the National Corn Growers Association and the National Sorghum Producers – some of which expressed their delight at Friday’s decision.

“BIO and its members are pleased that the Court agreed with us that EPA’s flawed methodology would have allowed the oil industry to control the volumes of renewable fuels offered to consumers, Biotechnology Innovation Organization President & CEO Jim Greenwood applauded the ruling in an official statement. BIO has consistently said that the RFS statute does not allow EPA to rely on demand-side factors under the oil industry’s control as a basis for setting annual volumes.

“We are equally pleased that EPA abandoned its legally flawed reliance on general waiver authority in subsequent rules. We will continue to work with the agency as it reconsiders the 2015 and 2016 RFS volumes. EPA can send a strong signal that it will support the biofuels industry and grow advanced and cellulosic biofuel production.

“BIO’s members rely on the RFS to open the U.S. transportation fuel market to new, cleaner technologies. Stability in this program enables our member companies to secure investment for the development and commercialization of new advanced biofuel technologies.”

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