## Facts

- Congress created the Renewable Fuel Program (RFP) under the Clean Air Act to require increasing annual volumes of renewable fuel, implemented through percentage standards applicable to “obligated parties” (generally refiners and importers).
- EPA issued a final rule setting volume requirements for 2014–2016 (and biomass-based diesel for 2017), including reductions from statutory targets through waiver authorities.
- EPA reduced statutory cellulosic biofuel volumes based on projected production and used the cellulosic waiver to reduce related advanced and total renewable fuel volumes.
- EPA further reduced the 2016 total renewable fuel requirement under the general waiver for “inadequate domestic supply,” reasoning that “supply” could include downstream distribution limitations and consumer ability or willingness to use renewable fuel.
- Renewable fuel groups petitioned for review, arguing EPA’s demand- and distribution-based interpretation unlawfully weakened the RFP’s market-forcing design; obligated parties raised additional challenges, including the “point of obligation” for compliance.

## Issues

1. Whether EPA may interpret “inadequate domestic supply” to include demand-side constraints and downstream distribution limits, rather than focusing on the supply available to obligated parties.
2. Whether EPA was required to treat carryover RINs (banked compliance credits) as part of “supply” when applying the “inadequate domestic supply” waiver.
3. Whether EPA’s remaining volume-setting decisions and waiver uses (including cellulosic projections and related reductions) were lawful.
4. Whether EPA unlawfully refused to change the RFP “point of obligation” from refiners/importers to downstream entities.

## Decision

- The court granted the renewable-fuel petitions in part and denied the remainder of the consolidated petitions.
- The court held EPA’s interpretation of “inadequate domestic supply” was unlawful to the extent it relied on demand-side considerations and downstream retail/distribution constraints.
- The court vacated EPA’s 2016 total renewable fuel volume requirement insofar as the reduction rested on that interpretation and remanded to EPA for further proceedings.
- The court upheld EPA’s decisions on carryover RINs, cellulosic projections and related waivers, the late issuance/retroactive features of the standards, and EPA’s refusal to change the point of obligation.

## Legal Principles

- “Inadequate domestic supply” in the RFP general waiver is limited to supply-side constraints relating to renewable fuel available to obligated parties, not consumer demand or downstream infrastructure limits.
- An agency may not use a statutory waiver to convert a congressionally market-forcing mandate into a regime capped by existing demand conditions.
- EPA has discretion not to treat carryover RINs as part of annual renewable fuel “supply” for purposes of applying the “inadequate domestic supply” waiver.
- EPA may maintain the existing point of obligation where it reasonably explains its choice within the statute’s structure and administrative record.

## Conclusion

The D.C. Circuit largely sustained EPA’s renewable fuel standards but required EPA to redo the 2016 total renewable fuel determination because “inadequate domestic supply” cannot be based on consumer demand or downstream distribution constraints, only on supply available to compliance entities.


Americans for Clean Energy v. EPA, 864 F.3d 691 (D.C. Cir. 2017)