The rule requires refiners to blend 36 billion gallons of biofuel into traditional transportation fuel by 2022. Of that total, 21 billion gallons must come from cellulosic and “advanced” biofuels, which are made from non-edible feedstock.

But the court said EPA acted in “excess of the agency’s statutory authority” in projecting refiners could blend 10.45 million gallons of cellulosic biofuel in 2012, as only 22,000 gallons were produced.

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In its lawsuit against the EPA, the American Petroleum Institute (API) argued refiners were forced to buy credits to fill the gap in the agency’s projections and actual production levels.

The court sided with API on that point, giving the oil-and-gas lobby its first victory in its full-court press to repeal the biofuel mandate.

API is pushing Congress to tear down the rule and is fighting the rule through the courts. It also has a lawsuit on file challenging EPA’s projections for 2011.

“We are glad the court has put a stop to EPA’s pattern of setting impossible mandates for a biofuel that does not even exist. This absurd mandate acts as a stealth tax on gasoline with no environmental benefit that could have ultimately burdened consumers,” API Group Downstream Director Bob Greco said in a Friday statement.