Court Rules Against EPA Interpretation Used to Temper 2014-2016 RFS Levels

EPA's stance that they reduced Renewable Fuel Standard (RFS) mandated volumes under the program in a rule promulgated in 2015 on 2014-2016 biofuel requirements (and 2017 biodiesel) due to insufficient demand being the same as insufficient supply was rejected by the U.S. Court of Appeals for the DC Circuit.Americans for Clean Energy and aligned petitioners claimed EPA erred in how it interpreted "inadequate domestic supply" waiver provisions in the RFS statute, according to the Court. "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 said. "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."Based on that view, the Court said they granted Americans for Clean Energy petition and "vacate EPA’s decision to reduce the total renewable fuel volume requirements for 2016 through use of its 'inadequate domestic supply' waiver authority, and remand the rule to EPA for further consideration in light of our decision."The Court also said they reject "EPA’s attempt to bootstrap the definition of 'renewable fuel' into a boundless general waiver authority." While EPA contended the phrase in the statute referring to renewable fuel that "is used" does "not mean that biofuel transforms into renewable fuel only when it is actually pumped into gas tanks." The Court pointed to the following argued by Americans for Clean Energy contention that "term ‘used’ merely defines the qualifying uses to which the biofuel may be put."However, the Court rejected other petitioners arguments as the court said EPA does not have to address which companies bear the obligation for complying with the program in annual rules and it upheld EPA's separate waiver to reduce cellulosic requirements. Plus, the court said EPA does not need to consider the amount of leftover renewable identification numbers (RINs) from prior years when it sets future volumes. Further, the court also determined EPA has the right to set biofuel requirements even if they miss the statutory deadline to do so.