EPA on Friday argued before the D.C. Circuit that its decision to make changes to the renewable fuel standards (RFS) program was based on the Clean Air Act and that it “reasonably set and fully explained the 2022 volume requirements for total renewable fuel and advanced biofuel” within the authority granted by the statute. Key points:
- Clean Air Act Authority: EPA contends it has the discretion to set annual standards for renewable fuel volume targets, which fuel refiners and importers must follow to reduce greenhouse gas emissions. They argue that they considered both the program’s implementation and statutory factors while making their decisions.
- Changes Made: EPA’s final rule, effective from Aug. 30, 2022, modified the 2021 and 2022 volume targets for different types of renewable fuels and established the 2022 volume target for biomass-based diesel. It also changed volume requirements for 2020, established annual percentage standards for obligated parties in 2020, 2021, and 2022.
- Refiners’ Objections: Refineries and biofuel groups argued EPA’s rule did not align with federal statute requirements. They claimed EPA increased renewable fuel requirements for 2022 to unreasonably high levels and disregarded statutory criteria.
- Small Refinery Exemptions: The dispute also involved hypothetical future small refinery exemptions, with refiners contending EPA wrongly reallocated them to nonexempt obligated parties.
- Cellulosic Biofuel Volume: The biofuel petitioners argued EPA set the required cellulosic biofuel volumes too low due to a misinterpretation of the cellulosic waiver provision, which is one of the types of renewable fuels regulated by EPA.
- Compliance with Standards: Obligated parties can meet fuel standards by retiring credits, known as renewable identification numbers (RINs), which they acquire through blending renewable fuels or purchasing them from third parties.
- Waivers for Cellulosic Biofuel: EPA can reduce or waive the required cellulosic volume if the projected volume of cellulosic biofuel production for a year is less than the statutory requirement. Biofuel groups claimed EPA failed to include carryover cellulosic RINs in its waiver decisions.
- RIN Lifespan: EPA disagreed with refiners’ suggestions that RINs from 2015 or 2016 could be used for compliance, stating that such an approach would be inconsistent with the statute’s provision that RINs have a 12-month lifespan.
- Supplemental Obligation: EPA imposed supplemental obligations in response to a 2017 court opinion, which raised questions about the fairness of subjecting obligated parties that were not in the market in 2016 to these obligations. EPA argued that it felt compelled to take action to address the court’s remand, and any approach it considered would have imposed some burden on obligated parties.
Bottom line: EPA defended its actions in modifying renewable fuel standards against claims from industry groups that the changes do not comply with federal law. The case involves complex legal interpretations and disagreements over the interpretation of the Clean Air Act and its requirements.
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