Ethanol Blog: Federal Appeals Court Upholds EPA Action on 2020-2022 Renewable Fuel Standard Volumes

May 15, 2024

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by Todd Neeley (DTN Progressive Farmer) Renewable Fuel Standards set for 2020 to 2022 will stay in place after a federal appeals court on Tuesday denied review to a group of refining companies. Numerous lawsuits were filed against the U.S. Environmental Protection Agency, after it finalized RFS volumes for 2021 and 2022 by June 3, 2022. In addition, the EPA finalized a reset of already-finalized RFS volumes for 2020.

Once the volumes were finalized refining companies and biofuels interests filed lawsuits against the EPA on a number of fronts.

The cases were consolidated by the U.S. Court of Appeals for the District of Columbia Circuit. The court upheld EPA's action.

"Today, we resolve challenges to the standards for the years 2020, 2021 and 2022," the court said in its ruling.

"Once again, renewable fuel producers claim that EPA's standards are set too low, while petroleum refiners contend they are too high. We hold that EPA complied with the law and reasonably exercised its discretion in setting the renewable fuel requirements for the three years at issue. We therefore deny the petitions for review."

In a statement to DTN, the Renewable Fuels Association said it believes the court's decision puts the RFS on solid ground.

"Today's decision is a win for America's renewable fuel producers, farmers and consumers seeking lower-cost, lower-carbon fuels," RFA President and CEO Geoff Cooper said.

"The court's decision, which affirms EPA complied with the law and properly exercised its authority in setting these standards, will help set the tone for future RFS rulemakings and the long-term administration of the program. Specifically, we are pleased that the court confirmed EPA's approach to assessing certain statutory factors and considering the benefits of renewable fuels.

"Further, we are strongly encouraged by the court's confirmation of EPA's authority to account for potential small-refinery exemptions on a prospective basis when setting standards. Finally, we are pleased with the court's decision to uphold EPA's authority to impose a supplemental 250-million-gallon volume in 2022 to make up for the volume that EPA improperly waived in 2016. Taken together, today's court opinion sets some important precedents and puts the RFS on solid footing for the future."

A group of petroleum refining companies had alleged the EPA acted arbitrarily and capriciously in setting what they called an "unprecedently high 2022 standard."

In setting the 2022 volumes EPA used projections of how much biofuels volumes would likely be exempted from the RFS. The refiners contended that such a projection was illegal.

In the RFS 2020-2022 rule, the EPA attempted to project the volume of renewable fuel likely to be exempted through the small-refinery exemption process.

In addition, in that RFS proposal the EPA restored 250 million of 500 million gallons of biofuels found by a court to have been illegally waived from the RFS. READ MORE

Related articles

Court upholds EPA renewable fuel standard requirements: EPA acted within its authority in setting, mostly retroactively, the minimum biofuel volumes through the RFS, the court said. (E&E NewsPM)
In Precedent For Future Rulings, Split D.C. Circuit Backs 2020-2022 RFS (Inside EPA)
Court Rejects Oil Industry Challenge to RFS (Energy.AgWired.com)
EPA 2020-22 renewable fuel standards upheld by D.C. Circuit (Bloomberg)
RFA Welcomes Court Decision Upholding 2020-2022 Renewable Fuel Standards (Renewable Fuels Association)
D.C. Appeals Court Upholds 2020-2022 RVO Rule (Growth Energy)
Renewable fuels industry cheers D.C. Circuit opinion upholding 2020-2022 volume obligations (Agri-Pulse)
Appeals court upholds 2022 supplemental ethanol mandate (Successful Farming)
Engine Technology Forum calls on the EPA to revise its renewable fuel standards (American Journal of Transportation)
Engine Technology Forum Calls on the EPA to Revise its Renewable Fuel Standards: More Low Carbon Fuels are Critical to Reducing Greenhouse Gas Emissions (Engine Technology Forum)
Court Ruling Sets Important Precedents For Future Of RFS (Renewable Fuels Association/Ethanol Producer Magazine)
Engine Technology Forum Calls for Revised Renewable Fuel Standards (Heavy Duty Trucking)

Excerpt from E&E NewsPM: Tuesday's opinion by Judge Cornelia Pillard, an Obama appointee, denied requests by the petroleum refiners and the American Petroleum Institute, as well as cellulosic biofuel producers, to revisit the regulations EPA set in July 2022.

In essence, the court agreed with EPA's position that it acted properly in setting the volumes based in part on a waiver of cellulosic biofuel volume mandates in the RFS, which is standard practice because the industry hasn't been able to produce levels envisioned in the mid-2000s law. READ MORE

Excerpt from Inside EPA: A divided panel of the U.S. Court of Appeals for the District of Columbia Circuit has upheld EPA’s biofuel blending volumes for 2020 through 2022, backing the agency’s discretion to set the volumes that were the last issued under statutory targets, but also setting a precedent for the current RFS on how officials handle statutory factors, particularly costs. In a May 14 ruling in Sinclair Wyoming Refining, et al., v EPA , Chief Judge Sri Srinivasan and Judge Nina Pillard... READ MORE

Excerpt from Growth Energy: With these regulations, EPA can ensure that RFS blending obligations are met and RFS gallons are properly accounted for. Furthermore, the court upheld EPA’s issuance of an additional 250 million RIN supplemental RVO in response to the court’s 2017 ruling in Americans for Clean Energy v. EPA. In celebrating the ruling by the D.C. Appeals Court, Growth Energy CEO Emily Skor issued the following statement:

“This ruling is 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 RIN obligations, and bringing certainty to the marketplace. 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. Put simply, this ruling will allow the RFS to operate the way Congress intended and give the nation’s biofuel producers what they need to continue doing what they do best—lower emissions while saving consumers money. Looking ahead, RVOs should reflect the continued innovation and growth of the renewable fuels industry. READ MORE

Excerpt from Successful Farming: The EPA acted reasonably and within the law when it added a 250-million-gallon ethanol mandate to the Renewable Fuel Standard for 2022, said U.S. appellate judges in a 2-1 ruling on Tuesday. The supplement was intended by the EPA to make up for its mistake in lowering the 2016 RFS by too much.

“EPA has the authority to impose a supplemental 2022 volume to make up for volume that should have been satisfied in 2016,” said the U.S. Court of Appeals for the D.C. Circuit in an opinion written by Judge Cornelia Pillard and joined by Chief Judge Sri Srinivasan. Judge Gregory Katsas dissented in that part of the ruling, which covered a variety of challenges to the RFS for 2020, 2021, and 2022.

The petroleum industry challenged the 250 million-gallon supplement, saying the RFS law did not contain a “true-up mechanism on the back end if things don’t go as planned” and failed to look for better ways to resolve the issue.

The Renewable Fuels Association said the ruling “puts the RFS on solid footing for the future” by affirming the EPA’s realm of authority in renewable fuels. The case before the circuit court touched on advanced biofuels and how to account for small-refinery exemptions while setting the RFS as well as the challenge to the 250 million-gallon supplement.

In 2017, the circuit court said the EPA erred in reducing the 2016 RFS by 500 million gallons. The biofuel industry repeatedly said the agency was taking too long to correct the mistake. In 2022, the EPA said it would issue supplemental standards of 250 million gallons each for 2022 and 2023. Only the 2022 supplement was at issue in the case.

The court decision is available here. READ MORE

Excerpt from American Journal of Transportation: The Engine Technology Forum issued the following statement from Executive Director Allen Schaeffer about the U.S. Environmental Protection Agency’s renewable fuel volume determinations, known as the Set Rule:

“American employees are losing jobs in the biofuel industry because the EPA’s renewable fuels policy isn’t supporting growth. Last summer’s announcement of disappointing future volumes for biomass-based diesel in the Renewable Fuel Standard were well-below expectations and production levels. As I said at the time, the volume set is out of touch with current conditions.

“The fallout from this policy is now becoming clearer. Fuel producers have closed down production lines causing the elimination of jobs, impacting hard-working throughout the country.

“In a May 24, 2024 letter to EPA Administrator Michael Regan, the Forum renewed its appeal from June 2023 and those recent calls by feedstock providers and advanced biofuel producers, to propose and finalize robust, growth-oriented 2026 Renewable Fuel Standard volumes by November. The need is great, not only because of the negative economic impact but also because of the environmental one, too.

“In addition, the Forum has launched a national education campaign to raise awareness about the importance of growth-oriented renewable fuel volumes.

“The use of those fuels immediately reduces greenhouse gas emissions, and every diesel engine, vehicle, and machine can use them. Every day that goes by when consumers and fleets aren’t given the choice to use those low-carbon fuels in their vehicles because of lack of supply is a missed opportunity, stalling progress on meeting climate goals.” READ MORE