By RYAN TRACY
WASHINGTON -- A federal appeals court Friday granted the oil
industry a partial victory in a lawsuit challenging the US
renewable-fuel mandate, throwing out part of an Environmental Protection Agency rule
that would have fined refiners for not buying advanced forms of
motor fuel even though the fuel wasn't available on the
The decision means the EPA will
have to be more cautious in setting future requirements for
buying advanced renewable fuels, including a mandate for this
year that is still pending.
In previous years, developers of advanced fuels have relied on
the EPA's mandate to show investors there will be a market for
The unanimous ruling from the US Court of Appeals for the
District of Columbia Circuit said the EPA overstepped its
authority when it set optimistic targets for the amount of
advanced renewable fuel the US would produce in 2012.
Under a 2007 law designed to boost the US alternative-fuel
industry, the EPA sets requirements each year for buying
renewable fuel, which can be made from corn and soybeans as
well as other materials.
For 2012, the agency estimated six companies would produce
about 8.65 million gallons of advanced "cellulosic" fuel made
from inedible parts of plants, such as corn stalks and wood
chips. It required US refiners, fuel importers, and blenders to
purchase that amount of cellulosic fuel in 2012, or pay a
But the agency's projections turned out to be too
high -- about 20,000 gallons were produced in the US last year,
according to EPA data. As a result, the oil industry said it
was facing more than $8 million in fines.
In June, the American Petroleum Institute, an oil-industry
trade group, filed a lawsuit saying the EPA was
"systematically" overestimating the amount of advanced fuel
that would be produced, citing 2010 and 2011 projections that also turned out to
The court agreed Friday in an opinion authored by Judge
Stephen F. Williams, who wrote the law doesn't allow the EPA
"to let its aspirations for a self-fulfilling prophecy divert
it from a neutral methodology."
The court vacated the 2012 requirement for fuel made from
inedible parts of plants, and said the agency should make
future decisions consistent with Friday's ruling.
Stephen Brown, vice president of federal government affairs
for the refiner and fuel marketer Tesoro, said the decision
meant EPA's annual renewable-fuel targets "need to have a basis
in reality and cannot be founded on a desired political
agenda." He said it showed Congress needed to step in and make
changes to the renewable fuels policy.
Renewable-fuel backers disagreed with the court's decision
to throw out part of the 2012 rule, but also claimed a partial
victory because the court left the rest of the rule intact.
"Today's decision once again rejects broad-brushed attempts
to effectively roll back the federal Renewable Fuel Standard,"
said a statement from a coalition of renewable fuel trade
Dow Jones Newswires