Am. Fuel & Petrochemical Mfrs. v. Envtl. Prot. Agency

Decision Date06 September 2019
Docket NumberNo. 17-1258,C/w 18-1027, 18-1040, 18-1041,17-1258
Citation937 F.3d 559
Parties AMERICAN FUEL & PETROCHEMICAL MANUFACTURERS, Petitioner v. ENVIRONMENTAL PROTECTION AGENCY, Respondent Small Retailers Coalition, et al., Intervenors
CourtU.S. Court of Appeals — District of Columbia Circuit

Thomas A. Lorenzen, Washington, DC, and Samara L. Kline, Dallas, TX, argued the causes for Obligated Petitioners. Suzanne Murray argued the cause for petitioner-intervenor Small Retailers Coalition. With them on the briefs were Julie R. Domike, Michael J. Scanlon, Richard S. Moskowitz, Washington, DC, Robert J. Meyers, Elizabeth B. Dawson, Megan H. Berge, Lisa M. Jaeger, Brittany M. Pemberton, Washington, DC, and Clara Poffenberger. Evan A. Young, Austin, TX, entered an appearance.

Bryan M. Killian, Washington, DC, argued the cause for petitioner National Biodiesel Board. With him on the briefs was Douglas A. Hastings, Washington, DC.

Devorah Ancel argued the cause for Environmental Petitioners. With her on the briefs was Eric Huber.

Benjamin R. Carlisle, Attorney, and Michael R. Eitel, Senior Trial Attorney, U.S. Department of Justice, argued the causes for respondent. With them on the brief were Jeffrey H. Wood, Acting Assistant Attorney General, Jonathan D. Brightbill, Deputy Assistant Attorney General, and David P.W. Orlin, Attorney, U.S. Environmental Protection Agency.

Thomas Allen Lorenzen, Washington, DC, argued the cause for intervenors in support of respondent responding to National Biodiesel Board. With him on the brief were Robert A. Long Jr., Washington, DC, Kevin King, Stacy Linden, Richard S. Moskowitz, Washington, DC, Robert J. Meyers, and Elizabeth B. Dawson, Washington, DC. David Y. Chung and John P. Wagner entered appearances.

Seth P. Waxman, Washington, DC, David M. Lehn, Greenwich, CT, Saurabh Sanghvi, Claire H. Chung, Robert A. Long, Jr., Kevin King, Matthew W. Morrison, Bryan M. Stockton, Bryan M. Killian, and Douglas A. Hastings, Washington, DC, were on the brief for intervenors Growth Energy, et al. in support of respondent.

Matthew W. Morrison, Washington, DC, Bryan M. Stockman, Seth P. Waxman, Washington, DC, David M. Lehn, Greenwich, CT, Saurabh Sanghvi, Claire H. Chung, Bryan M. Killian, and Douglas A. Hastings, Washington, DC, were on the brief for intervenors Renewable Fuels Association, et al. in support of respondent.

Before: Henderson, Tatel, and Griffith, Circuit Judges.

Per Curiam:

The Clean Air Act’s Renewable Fuel Program mandates that certain amounts of renewable fuel must be introduced into the U.S. fuel supply each year. In late 2017, the EPA promulgated its final 2018 Rule, which, as in previous years, established overall targets for the fuel market and imposed individual compliance obligations on fuel refineries and importers. These consolidated cases concern various challenges to the 2018 Rule. Several petitioners maintain it is too strict, others allege it is too lax, and still others argue that the EPA failed to follow proper procedures in its promulgation. We conclude that all these challenges lack merit, except for one: that the EPA violated its obligations under the Endangered Species Act by failing to determine whether the 2018 Rule may affect endangered species or critical habitat. We therefore grant the petition for review filed by the Gulf Restoration Network and Sierra Club and remand the 2018 Rule without vacatur for the EPA to comply with the Endangered Species Act. We deny all other petitions for review.

I. Background
A. The Renewable Fuel Program

Enacted in 2005 and amended in 2007, the Renewable Fuel Program (the "Program" or "RFS Program"), alternatively called the Renewable Fuel Standard, was designed "[t]o move the United States toward greater energy independence and security" and "to increase the production of clean renewable fuels." Energy Independence and Security Act of 2007, Pub. L. No. 110-140, pmbl., 121 Stat. 1492, 1492; see also id. §§ 201–210 (amending the Program); Energy Policy Act of 2005, Pub. L. No. 109-58, § 1501, 119 Stat. 594, 1067–76 (enacting the Program). To accomplish these goals, the Program regulates suppliers through "applicable volume[s]"—mandatory and annually increasing quantities of renewable fuels that must be "introduced into commerce in the United States" each year—and tasks the EPA Administrator with "ensur[ing]" that those annual targets are met. 42 U.S.C. § 7545(o)(2)(A)(i). As we explained in Americans for Clean Energy v. EPA , "[b]y requiring upstream market participants ... to introduce increasing volumes of renewable fuel into the transportation fuel supply, Congress intended the Renewable Fuel Program to be a ‘market forcing policy’ that would create ‘demand pressure to increase consumption’ of renewable fuel." 864 F.3d 691, 705 (D.C. Cir. 2017) (first quoting Renewable Fuel Standard Program: Standards for 2014, 2015, and 2016 and Biomass-Based Diesel Volume for 2017, 80 Fed. Reg. 77,420, 77,423 (Dec. 14, 2015) ; then quoting Monroe Energy, LLC v. EPA , 750 F.3d 909, 917 (D.C. Cir. 2014) ).

The Program specifies annual fuel-volume requirements for four overlapping categories of fuel. The first and broadest category, "renewable fuel," includes any "fuel that is produced from renewable biomass and that is used to replace or reduce the quantity of fossil fuel present in" either "a transportation fuel," 42 U.S.C. § 7545(o)(1)(J), or "home heating oil or jet fuel," id. § 7545(o)(1)(A) ; see also Regulation of Fuels and Fuel Additives: Changes to Renewable Fuel Standard Program, 75 Fed. Reg. 14,670, 14,687 (Mar. 26, 2010) (including "home heating oil" and "jet fuel" within the definition of "renewable fuel"). Next are "advanced biofuel[s]," a subset of the renewable-fuel category defined as any "renewable fuel, other than ethanol derived from corn starch, that has lifecycle greenhouse gas emissions ... at least 50 percent less than" "the average lifecycle greenhouse gas emissions ... for gasoline or diesel" as of 2005. 42 U.S.C. § 7545(o)(1)(B)(i), (C). Lastly, of the fuels falling under the advanced-biofuel umbrella, the Program singles out two in particular: "cellulosic biofuel," a fuel derived from the fibrous parts of plants, see id. § 7545(o)(1)(E), and "biomass-based diesel," a renewable substitute for conventional diesel, see id. §§ 7545(o)(1)(D), 13220(f). Because the definitions of these four fuel categories are "nested," so, too, are their applicable volumes. Ams. for Clean Energy , 864 F.3d at 731. As depicted below, the Program will double- or even triple-count the more specialized fuels, such that one gallon of advanced biofuel simultaneously counts as one gallon of renewable fuel, and one gallon of either cellulosic biofuel or biomass-based diesel also counts as one gallon of both advanced biofuel and renewable fuel.

The Program lists calendar years and corresponding applicable volumes for each type of fuel. These tables run through 2022 for renewable fuel, advanced biofuel, and cellulosic biofuel; for 2018, the statute mandates applicable volumes of 26, 11, and 7 billion gallons, respectively. See 42 U.S.C. § 7545(o)(2)(B)(i)(I)(III). In contrast, the Program provides applicable volumes for biomass-based diesel through only 2012. See id. § 7545(o)(2)(B)(i)(IV). For all later years, the statute sets a floor of 1 billion gallons, see id. § 7545(o)(B)(i)(IV), (v), and directs the Administrator to establish, "no later than 14 months" before the relevant year, an applicable volume "based on a review of the implementation of the program during" previous years and "an analysis of" six other broad factors such as the fuel’s effect on "the environment," "energy security," and "cost to consumers," id. § 7545(o)(B)(ii).

Although the statutory tables initially appear to admit no exception, their applicable volumes in fact provide only starting points. Under certain circumstances, the Program grants the Administrator authority to exercise so-called waivers to reduce applicable volumes below statutory levels. Three waivers are relevant to this case.

The first waiver is mandatory. The Program requires that if in any year "the projected volume of cellulosic biofuel production is less than the minimum applicable volume" set by statute, then "the Administrator shall reduce the applicable volume of cellulosic biofuel ... to the projected volume available during that calendar year." Id. § 7545(o)(7)(D)(i). Put simply, regardless of the applicable volume Congress established in the Program, the EPA may require by regulation no more cellulosic biofuel than the market is projected to provide in any given year.

The second waiver flows from the first. For any year in which the EPA reduces the applicable volume of cellulosic biofuel based on a projected shortfall, "the Administrator may also reduce the applicable volume of renewable fuel and advanced biofuels ... by the same or a lesser volume." Id. Unlike its mandatory cousin, this "cellulosic waiver" is discretionary: if cellulosic biofuel is projected to underperform statutory levels, the Administrator may reduce renewable fuel and advanced biofuel volumes by the entire cellulosic deficit, by some percentage of the shortfall, or by nothing at all. See id. ; see also Regulation of Fuels and Fuel Additives: 2013 Renewable Fuel Standards, 78 Fed. Reg. 49,794, 49,810 (Aug. 15, 2013) (interpreting the cellulosic waiver provision "as authorizing [the] EPA to reduce both total renewable fuel and advanced biofuel, by the same amounts, if [the] EPA reduces the volume of cellulosic biofuel"). Because cellulosic biofuel is nested within advanced biofuel, if the Administrator exercises anything less than a full cellulosic waiver, other advanced biofuels will need to make up for the difference.

The last waiver, the so-called general waiver, is also discretionary. It permits the Administrator to "reduc[e] the national quantity of renewable fuel required" by the Program "based on a...

To continue reading

Request your trial

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT