The American Petroleum Institute sued the EPA in the Washington, D.C., Circuit Court, saying standards for biofuel mixtures were "unattainable and absurd."
"The mandate is effectively an added tax on gasoline manufacturers that could ultimately burden consumers," Bob Greco, downstream director for API, said in a statement.
Passed under the George W. Bush administration, the fuel standard required the industry to use 6.6 million gallons of biofuels for 2012. Costs, logistics and diminished federal support dampened the requirement under the original measure, passed in 2007.
The U.S. Departments of Agriculture and Energy this week announced $41 million in investments would target 13 separate projects to improve biofuels production.
"If we want to develop affordable alternatives for oil and gasoline that will help reduce our dependence on foreign oil, we need investments like these projects to spur innovation in bioenergy," U.S. Agriculture Secretary Tom Vilsack said.