WASHINGTON A federal appeals court on Tuesday rejected a challenge from U.S. oil companies and refiners against the Environmental Protection Agency for retroactively imposing ethanol blending levels and volume requirements for gasoline sales.
Federal law requires the EPA to set by November 30 each year the amount of ethanol that must make up U.S. gasoline sales for the following year. For 2010, biofuels have to account for 8.25 percent of gasoline sales.
The oil industry sued because the EPA did not finalize the ethanol renewable fuel standard for 2010 until March 26 of this year, almost four months past the deadline set by Congress.
The oil industry said it was not trying to challenge the important role biofuels play in the U.S. fuel supply, but was questioning the fairness of EPA rulemaking.
"This retroactive regulation by a federal agency establishes a deeply troubling and potentially far-reaching precedent," said Charles Drevna, president of the National Petroleum Refiners Association,
"We're disappointed that the court did not overturn what is clearly a flawed and misguided approach toward implementation of the federal renewable fuels standard," he added.
The American Petroleum Institute said it was worried the case set a dangerous precedent by allowing retroactive requirements.
"EPA failed to meet its statutory deadlines," API senior policy advisor Patrick Kelly said.
U.S. biofuels use is supposed to increase annually, rising from nearly 13 billion gallons this year to 36 billion gallons in 2022.
In its 40-page ruling, the court said oil companies and refiners had plenty of time to meet the EPA's renewable fuel standard and the ethanol law had no provision requiring the EPA to create a "proportionally reduced obligation" for using biofuels.
Growth Energy, a coalition of ethanol producers, welcomed the court's decision. "This is an important legal development that upholds a critical pillar of a national energy policy that is intended to wean the United States off of foreign sources of fossil fuels," Growth Energy CEO Tom Buis said.
Ethanol and other biofuels stretch available gasoline supplies, making the U.S. less dependent on petroleum imports.
(Editing by Dale Hudson)