OREANDA-NEWS. April 25, 2017. Federal judges reviewing the US Environmental Protection Agency's (EPA) decision to reduce biofuel mandates that applied from 2014-16 today questioned if the agency went too far trying to ease compliance burdens.

The three-judge panel on the DC Circuit Court of Appeals was sympathetic to the difficulty EPA faces carrying out the Renewable Fuel Standard, which sets biofuel blending requirements that increase from 18.15bn USG in 2014 to 22.25bn USG by 2016. But they were skeptical that the agency had authority to reduce those requirements by more than 9bn USG over three years.

EPA's attorney Samara Spence said "real-world market complexities" have limited the growth of biofuels, such as the limited availability of gasoline blends that contain more than 10pc ethanol. Setting higher blending requirements would have meant fuels "sitting in warehouses," she said, and not achieving statutory goals to reduce use of fossil fuels and cut greenhouse gas emissions.

Judge Brett Kavanaugh said the biofuel blending requirements that the US Congress prescribed in the law were "perhaps impossible" and could lead to "crazy" outcomes. But he questioned if it was EPA's place to modify the requirements, since lawmakers were trying to force the market to consume more biofuels.

"I don't see the statute as giving grand authority to EPA," Kavanaugh said. "If this thing is so screwed up, Congress can fix it."

The existing statute allows EPA to reduce biofuel blending if there is an "inadequate domestic supply." EPA has used this authority to reduce past blending requirements when it found there was too little biofuel. But for the first time, the 2014-16 standards reduced the targets after finding there was an inadequate supply of gasoline and other transportation fuels into which the biofuels could be blended.

Judge Patricia Millett, along with Kavanaugh, appeared skeptical there was enough ambiguity in the statute to support EPA's interpretation that inadequate supply might not just refer to biofuels but also to the base transportation fuels. Federal courts usually give deference to agency interpretations of ambiguous laws if they are reasonable.

"I have a lot of problems understanding how a glut turned into inadequate supply," Millet said.

Biofuels producers have challenged EPA's decision to reduce the blending requirements and say it undercuts the objectives of the law. Seth Waxman, an attorney for the biofuels producer group Americans for Clean Energy, said it would be "incoherent" to allow EPA to reduce the biofuels growth that the Congress had hoped to artificially create when it passed the law, even if there could be short-term consequences.