(via energynews.pro)
The Coalition for Renewable Natural Gas (RNG Coalition) has filed a lawsuit before the US Court of Appeals for the DC Circuit challenging the Environmental Protection Agency's (EPA) decision to reduce the 2025 cellulosic renewable volume obligation (RVO) under the Renewable Fuel Standard (RFS) Set 2 rule, published in March 2026. The broader US biogas sector is also being shaped by emerging agricultural biogas development projects across the country.
The EPA had initially set the 2025 cellulosic RVO at 1.38 billion renewable identification numbers (RINs) in mid-2023. The agency subsequently proposed reducing that volume to 1.19 billion RINs, before settling on a final figure of 1.21 billion RINs in the Set 2 rule. The net reduction from the original target amounts to 170 million RINs.
The RNG Coalition also has a separate legal challenge pending against an EPA rule from mid-2025 that reduced the 2024 cellulosic RVO from 1.09 billion RINs to 1.01 billion RINs. Both proceedings target successive downward revisions to the renewable volume obligations for cellulosic fuels.
The DC Circuit has consolidated the RNG Coalition's challenge with several other lawsuits seeking review of the Set 2 rule. These actions were brought by the AFPM (American Fuel & Petrochemical Manufacturers), the Center for Biological Diversity, the Sierra Club, Small Refineries of America, Biogas Works for America, and a number of refining companies. The consolidated litigation pits biomethane producers seeking higher volume mandates against refiners contesting other aspects of the regulation on a single docket.
To cushion the impact of the reduction on operators subject to compliance obligations, the EPA activated the cellulosic waiver credit (CWC) mechanism, setting the 2025 floor price at $1.91. At the time the rule was finalized in March, the D3 RIN — dedicated to cellulosic fuels — was trading at around $2.45, a significant spread over the D6 RIN (corn ethanol) at $0.70. The reduction in the 2025 mandate caps near-term demand for D3 RINs, according to available market analysis.
The Set 2 rule does project a meaningful increase in cellulosic obligations for 2026 (1.36 billion RINs) and 2027 (1.43 billion RINs). It also clarifies the Book and Claim mechanism: a RIN transfer bearing K-code 3 is now legally recognized as equivalent to the physical transfer of the corresponding volume of renewable natural gas through pipeline networks. The rule simultaneously removes eRINs — credits linked to the conversion of biogas into electricity for electric vehicles — from the RFS regulatory framework.
The RNG Coalition disputes the EPA's justification for reducing the 2025 mandate, which the agency attributes to a structural production shortfall estimated at 170 million gallon-RIN equivalents for the relevant compliance year. Biomethane producers argue that these retroactive downward revisions constitute regulatory overreach that could undermine investment in renewable natural gas infrastructure.
To hear about this and other stories impacting the world of Waste, Gas and Energy, check out the newest episode of Recyclist here: https://www.youtube.com/watch?v=STPLIhVkvsk
