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U.S. court says regulator incorrectly set renewable fuel standard

NEW YORK, July 28 (Reuters) - A U.S. court on Friday said the U.S. Environmental Protection Agency erred when setting standards for how much renewable fuel must be included in fuel sold in the United States and ordered the agency to try again, according to a court filing.

The EPA had sought to lower the amount of biofuels that needed to be mixed into U.S. fuel. But the U.S. Appeals Court, District of Columbia Circuit said the agency had incorrectly interpreted a provision in the 2005 Energy Policy Act on which the agency relied to justify reducing the levels.

Rather than considering how much biofuel supply was available to refiners and importers, the EPA considered how much demand consumers expressed for renewable fuels. That consideration was not allowed under the law, according to the appeals court ruling.

"We are currently reviewing the decision," said an EPA spokesman.

A group of biofuels advocates challenged the EPA's latest renewable fuel standards after they were released in 2016.

"The fact the court has affirmed our position that EPA abused its general waiver authority by including factors such as demand and infrastructure in a waiver intended to be based solely on available supply is a great victory for consumers and the RFS program," said Bob Dinneen, president of the Renewable Fuels Association. (Reporting by Emily Flitter; Editing by James Dalgleish)