WASHINGTON – On Friday, the U.S. Court of Appeals for the District of Columbia rejected the Environmental Protection Agency’s (EPA) decision to reduce 2016 renewable fuel blending requirements—known as Renewable Volume Obligations (RVOs)—set under the Renewable Fuel Standard (RFS) program. The judges said that the agency misinterpreted its waiver authority.

EPA had reduced the 2016 RVOs from congressionally-mandated numbers after arguing that there was an “inadequate domestic supply” of certain biofuels. EPA had interpreted domestic supply to mean the amount of fuel actually available to consumers in the marketplace, as opposed to the amount of biofuel available to be blended into the nation’s fuel supply.

The court’s opinion, written by Judge Brett Kavanaugh, stated that “whether consumers have an adequate supply of renewable fuel to fill their cars is not relevant to whether refiners, blenders and importers have an adequate supply of renewable fuel to meet the statutory volume requirements.” Further, Judge Kavanaugh wrote that while EPA has the authority to consider supply-side factors in determining inadequate domestic supply, it is not allowed 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 is being called a victory by biofuels producers, who have argued that RVOs have been set too low. However, certain oil industry stakeholders don’t view the opinion favorable, as they have argued that the lowered RVOs are still too high. The agency has said that it is still reviewing the decision.

The court’s ruling has created substantial uncertainty regarding the potential consequences for markets affected by the decision. Stay tuned to NACS Daily for additional information as it arises.