Appeals Court Hands Major Victory to Alternative Fuels Industry

WASHINGTON, D.C. — The ethanol industry received a major victory on July 28 when a federal appeals court ruled that the Environmental Protection Agency (EPA), under the Obama administration, fundamentally misinterpreted its authority under the national renewable fuel mandate by reducing the amount of ethanol allowed to be blended in the nation's fuel supply.

The decision handed down by the Washington, D.C. Circuit Court of Appeals marks a significant victory for the ethanol and alternative fuel industry, which argued that the EPA erred in its interpretation of its own authority to waive biofuel requirements. The industry also argued that this misuse of authority played into arguments made by refiners and other members of the oil industry. The EPA must correct the action, according to the ruling, reported the Washington Examiner. 

The court only ruled on the issue of the EPA's use of its waiver authority. It dismissed other arguments from both sides.

"We reject all of those challenges, except for one: We agree with Americans for Clean Energy and its aligned petitioners ... that EPA erred in how it interpreted the 'inadequate domestic supply' waiver provision," the court wrote in the decision.

"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. 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 decision read.

That means that the EPA can't waive the renewable fuel requirements because there are not enough biofuel refueling stations or pumps at gasoline stations, for example. It can waive the annual blending requirements for ethanol and other biofuels only because of lack of supply, the news outlet reported.

"We therefore grant Americans for Clean Energy's petition for review of the 2015 Final Rule, 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 concluded.

The EPA must now redo the 2016 annual Renewable Fuel Standard requirements that were already implemented, although it is not clear what this will mean for the biofuel and oil industry, according to the report.

The Renewable Fuels Association stated that it was pleased that the court affirmed its position on the EPA's waiver authority.

"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," said Bob Dinneen, president and CEO of the organization.

Growth Energy, which jointly filed a petition in January 2016, alongside multiple other industry organizations, to hear a challenge to the EPA's Renewable Fuel Standards for 2014, 2015, and 2016, also applauded the decision.

"We're very pleased with the court's ruling, which restores Congressional intent and will ensure that renewable fuels continue to play a growing and important role in America's fuel mix," Growth Energy CEO Emily Skor said. "This is a major win for consumers, who save money when American biofuels can compete at the pump with foreign oil. Every year, American biofuels get more affordable and more sustainable. Ethanol slashes greenhouse gas emissions by 43 percent, and biofuel production supports hundreds of thousands of jobs across the U.S. We appreciate the court recognizing the value of the RFS, and we look forward to working with the EPA to make sure that America's biofuel targets reflect the goals set down in law."