The renewable fuels industry is welcoming a D.C. Circuit Court of Appeals decision upholding EPA’s renewable fuel volume obligations for 2020-2022, including a 250-million-gallon supplemental volume requirement for 2022 that the agency added to comply with a previous decision from the same court.
The court on Tuesday also upheld the method EPA used in its 2022 "set rule" to account for small refinery exemptions (SREs) in calculating the volume obligations under the Renewable Fuel Standard program. “EPA’s choice to account for them both retrospectively and prospectively is not arbitrary or capricious,” the court said. "The statute does not confine EPA to the refiner petitioners’ preferred method of accounting for small-refinery exemptions."
“The court’s decision … affirms EPA complied with the law and properly exercised its authority in setting these standards,” Renewable Fuels Association President and CEO Geoff Cooper said. “Taken together, today’s court opinion sets some important precedents and puts the RFS on solid footing for the future.”
Growth Energy CEO Emily Skor called the ruling “a win for renewable fuel producers and consumers.
"In addition to upholding blending obligations, it protects against SRE abuse by projecting future exemptions, properly allocating [renewable identification numbers], and bringing certainty to the marketplace," she said. "Thanks to the D.C. Circuit opinion, EPA can ensure the integrity of its annual RVOs and address shifts in market conditions and how refiners meet their blending obligations.”
The court said EPA had the statutory authority it needed to impose the supplemental requirement for 2022,. Citing a previous opinion, the court said, “EPA must ensure the applicable volumes are met, ‘regardless of EPA delay.’ … Therefore, EPA may increase later year volumes to make sure that volumes that should have been met in earlier years ‘are eventually sold or introduced into commerce.’”
Refiners, including Sinclair Wyoming Refining Co. and the American Fuel and Petrochemical Manufacturers, also had argued that EPA did not adequately consider the retroactivity of the 2022 applicable volumes, considering EPA set the volumes midway through the year.
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But the court said “EPA took sufficient care to minimize the hardship caused by its late issuance of the 2022 standards. EPA extended the compliance deadline, giving the obligated parties at least 11 months to comply with the renewable fuel requirements.”
The court also upheld EPA’s decision to cut cellulosic biofuel volume requirements from 2020-2022. In the first two years, it simply set the RVO at the volumes that had been achieved, but for 2022, it reduced the RVO from 16 billion gallons to 0.63 billion gallons.
The appeals court said that “under the discretionary prong of the cellulosic waiver provision [in the RFS], EPA had the option to reduce the advanced biofuel and total renewable fuel volumes by as much as the same amount as it had reduced the cellulosic biofuel volumes. It did so for the 2022 volumes, reducing the advanced biofuel and total renewable fuel volumes by the same 15.37 billion gallons as it had reduced the cellulosic biofuel volume.”
