Court Ruling Sets Important Precedents for Future of RFS
Geoff Cooper
June 4, 2024
BY Geoff Cooper
For more than 18 years, the Renewable Fuel Standard has faced unrelenting legal assaults from oil refiners, poultry producers, grocery manufacturers, environmental extremists and others who oppose the expanded use of low-carbon renewable liquid fuels. Since Day One, RFA has vigorously protected the RFS from these attacks; and overall, the program has faithfully withstood the steady barrage of courtroom sieges and emerged with flying colors.
In May, yet another high-stakes legal challenge to the RFS was rebuffed, establishing some important precedents and putting the program on solid footing for the future. A decision from the D.C. Circuit Court upheld EPA’s RFS volumes for 2020-2022 (known widely as the “reset rule”) and rejected the oil refining industry’s challenges to the rule. The Court found that EPA exercised its discretion appropriately in setting RFS standards for those years, including a supplemental volume requirement to comply with a separate D.C. Circuit Court decision from 2016.
The American Fuel & Petroleum Manufacturers and individual refiners had sued EPA over the 2020-2022 standards, arguing that 1) the volumes were set too high, 2) EPA lacked the authority to prospectively reallocate projected small refinery exemptions (SREs), and 3) EPA should not have restored the 500-million-gallon remanded volume that was illegally waived from the 2016 RFS volumes. RFA intervened in this litigation on EPA’s behalf, arguing that the Agency validly exercised its authority in each instance.
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Ultimately, the court agreed with us and found in our favor on all the issues raised, denying the refiners’ request to vacate the 2020-2022 standards.
Notably, this decision will have ramifications beyond the 2020-2022 volumes. It sets three important precedents that help solidify the RFS program’s foundation for the future.
First, the court afforded EPA substantial discretion to set volumes, as long as the agency could show it properly considered certain statutory factors specified by Congress in 2007. Since these are the same factors that EPA considered in the newer “set rule” for 2023-2025 volumes, this is extremely precedential and has favorable implications for litigation already underway on the “set rule” volumes.
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Second, the court found EPA acted appropriately in projecting volumes affected by expected small refinery exemptions and creating a mechanism to reallocate exempted volumes. Although EPA’s recent approach to SREs has been to deny petitions because there is no showing of “disproportionate economic harm”—thus, zero exemptions have been projected—this decision affirms that EPA can indeed reallocate expected exempted volumes if its approach to adjudicating SRE petitions changes in the future.
Finally, the court confirmed that EPA acted within its statutory authority by restoring the 500 million gallons of illegally waived volume from 2016, per the same court’s earlier ruling in litigation brought against the agency by RFA and others eight years ago. This affirms that EPA has the authority to restore past volumes that are determined to be illegally lowered or waived.
Overall, this is a very positive result for the ethanol industry that could have important positive implications for administration of the RFS moving forward. Also, it proves once again why we must continue to protect and defend the program from the onslaught of baseless legal attacks.
Author: Geoff Cooper
President and CEO
Renewable Fuels Association
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