D.C. Circuit Backs EPA on Challenges to Renewable Fuel Standard

Court backs EPA’s refusal to shift biofuel obligations and reallocate volumes.

September 06, 2019

WASHINGTON, D.C.—Last week, the District of Columbia Court of Appeals rejected several challenges to the Environmental Protection Agency’s (EPA) implementation of the Renewable Fuel Standard (RFS).  In the opinion released last week in the Alon Refining v. Environmental Protection Agency (EPA) case, it incorporated multiple challenges to EPA’s past decisions on the Renewable Fuel Standard (RFS) point of obligation and renewable fuel volumes (RVOs). Both the oil and gas industry and biofuels groups had urged the court to review several EPA decisions relating to the RFS program.

In particular, the D.C. Circuit denied petitions to shift the point of obligation to comply under the RFS from refiners and importers to fuel blenders. In addition, it rejected claims that EPA had arbitrarily set the 2017 renewable volumes too high and rejected a separate claim that EPA set the 2018 volumes for biomass-based diesel too low.

NACS, along with NATSO and SIGMA, filed an amicus brief supporting EPA and opposing the point of obligation challenges. The amicus brief explained how the price of RINs is already baked into the price of fuel. Thus, the point of obligation does not create a “loss” for refiners or a “windfall” for others in the supply chain. In the court’s opinion, they concurred and stated, “the problem with this argument, however, is that EPA reasonably explained why, in its view, there is no misalignment in the RFS program. According to EPA, refiners ‘recover the cost of the RINs they purchase’ by passing that cost along in the form of ‘higher prices for the petroleum based fuels they produce.’ EPA Denial at 25, Alon J.A. 79. It grounded that conclusion in studies and data in the record.”

To see more of the D.C. Circuit Court opinion, click here.

In separate and unrelated news, EPA’s public comment period for its draft proposed renewable volume obligations under the RFS closed last week. NACS, along with SIGMA, submitted comments as part of the annual process to set biofuel volumes. In their comments, NACS and SIGMA supported EPA taking into account market realities to ensure that renewable volume obligations not exceed the volume of renewable fuel that the market can absorb, so that hitting the blend wall can be avoided.  They also urged EPA to improve its small refiner exemption process by making the decision process more open and transparent by providing the criteria used in making a decision on an application and releasing the decision to all parties at the same time so that all stakeholders have the same information at the same time.

To see the comments, click here.