Divided US Appeals Court Allows Biden-era Biofuel Rule to Stand

(Reuters) - A federal appeals court declined to throw out the U.S. Environmental Protection Agency's renewable fuel standards for 2023 to 2025 on Friday, even as it concluded regulators failed to adequately assess the potential effect the rule would have on climate change and endangered species.

A 2-1 panel of the U.S. Court of Appeals for the District of Columbia Circuit largely rejected challenges by environmental groups, refiners, and a renewable fuel producer to fuel volume requirements that the EPA set in 2023 for corn ethanol and other biofuels during former Democratic President Joe Biden's tenure.

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The requirements increased the amount of biofuels that oil refiners must blend into the nation's fuel mix and set finalized biofuel blending volumes at 20.94 billion gallons in 2023, 21.54 billion gallons in 2024 and 22.33 billion gallons in 2025.

The panel's majority found merit only in challenges filed by two environmental groups, including the Center for Biological Diversity. They argued the EPA failed to adequately explain why it relied on an outdated study when addressing greenhouse gas emissions associated with crop-based biofuels and contended the U.S. Fish and Wildlife Service did not adequately explain its conclusion that the rules would have no effect on endangered species.

The panel's majority agreed, finding that the EPA's analysis of the effects of the rule on climate change under the Clean Air Act was arbitrary and that the Fish and Wildlife Service failed to explain why it concluded there would be "no effect" on habitats if land is converted to grow corn and soybeans.

U.S. Circuit Judges Cornelia Pillard and Michelle Childs, both appointees of Democratic presidents, nonetheless declined to vacate the rule and instead sent it back to the EPA for further consideration, saying tossing it could be "highly disruptive."

Maggie Coulter, a lawyer at the Center for Biological Diversity, in a statement called the ruling a "big win," saying the agencies would now need to fully assess the renewable fuels program's harms to protected species and habitat.

The EPA did not respond to requests for comment.

U.S. Circuit Judge Gregory Katsas, who Republican President Donald Trump appointed in his first term, dissented and said he would have set the rule aside, saying "the requirements are more deeply flawed than my colleagues recognize." He said the EPA considered only how much renewable fuel the industry could produce, without considering the costs and benefits of possible alternatives.