The U.S. Court of Appeals for the 10th Circuit on Friday overturned waivers to three oil refineries that allowed them to opt out of the federal requirement to produce their share of biofuels.

“The EPA exceeded its statutory authority in granting those petitions,” Judge Mary Beck Briscoe wrote, adding that the agency “did abuse its discretion.”

The Energy Policy Act of 2005 directed the U.S. Environmental Protection Agency to steadily increase the amount of petroleum required to be mixed with renewable fuel, from four billion gallons in 2006 to 7.5 billion gallons in 2012.

At the time, President George W. Bush said that the legislation would “strengthen our economy, and it will improve our environment, and it’s going to make this country more secure.” Supporters in Congress pointed to the need to reduce greenhouse gas emissions and encourage greater reliance on American-made fuels, rather than depend on the unstable Middle East for oil.

In the law, small refineries – defined as those producing fewer than 75,000 barrels of oil per day – received an exemption from compliance that lasted until 2011. Requests for waivers needed to show “disproportionate economic hardship.”

However, beginning in 2016 the EPA began to escalate its exemptions, with a total of only eight denials in the past four years. That compares to 18 denials in the three years immediately prior. The agency exempted 17 billion gallons from blending in 2017, with the result that non-exempted refineries had to make up the balance.

In May 2019, 35 members of the U.S. House of Representatives sent a letter to the Trump Administration decrying the rate of waivers, calling it “a betrayal of our rural communities, detrimental to our energy security, and [threatening to] our entire agricultural sector.”

Four groups that advocate for biofuels or represent manufacturers filed suit against the EPA for its 2016 and 2017 waivers to refineries in Utah, Wyoming and Oklahoma. The plaintiffs, who said they only learned about the waivers in media reports, argued that they suffered harm because the EPA lifted restrictions on their competitors.

Writing for the three-judge panel, Briscoe said that any refinery that did not receive an exemption early on was not eligible for an extension of the waiver in 2016 or later.

“A small refinery in 2006 did not have a meaningful opportunity to consider in advance whether or how it could comply with renewable fuel obligations,” she wrote. “In contrast, a small refinery in 2016 or 2017 had many years to ponder operational issues and compliance costs, including whether it made sense to enter into or remain in the market in light of the statute’s challenging renewable fuels mandate.”

The court was also “satisfied that the EPA did not dispense with a comparative analysis” in determining whether the three refineries would suffer disproportionate economic hardship when the agency granted the waivers.

The case returns to the EPA for further action.