Americans for Clean Energy v. Environmental Protection Agency
864 F.3d 691
| D.C. Cir. | 2017Background
- The Clean Air Act’s Renewable Fuel Program (RFP) requires EPA to set annual volume requirements for categories of renewable fuels and to translate those into percentage standards for obligated parties (refiners and importers).
- EPA issued a 2015 Final Rule setting volumes/standards for 2014–2016 (and biomass-based diesel for 2017); EPA (i) reduced cellulosic volumes to match its projections, (ii) used the cellulosic waiver to lower advanced and total renewable volumes, and (iii) further reduced total renewable volumes by invoking the general waiver for “inadequate domestic supply.”
- EPA interpreted “inadequate domestic supply” to permit consideration of downstream distribution and consumer demand constraints (and not just supply-side constraints applicable to refiners/blenders/importers).
- Petitioners (including Americans for Clean Energy and National Biodiesel Board) challenged the Final Rule on multiple grounds: some argued EPA set volumes too low (challenging the inadequate-supply waiver interpretation and other reductions); obligated-party petitioners argued some volumes were too high and EPA wrongly left the point of obligation unchanged.
- The D.C. Circuit upheld most aspects of EPA’s rulemaking (including cellulosic projections, late issuance mitigation, and EPA’s refusal to treat carryover RINs as part of annual supply), but vacated EPA’s use of the inadequate-domestic-supply waiver to reduce the 2016 total renewable fuel requirement insofar as EPA considered demand-side factors and downstream supply to consumers.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Scope of “inadequate domestic supply” waiver: may EPA consider downstream distribution and consumer demand when reducing statutory volumes? | Americans for Clean Energy: waiver is limited to supply available to refiners, blenders, and importers (supply-side factors); EPA may not consider consumer-side demand or retail distribution constraints. | EPA: “supply” ambiguous; may include availability to ultimate consumers and permit consideration of demand-side constraints to avoid impractical statutory targets. | Court: Vacated EPA’s reductions under this waiver for 2016. “Inadequate domestic supply” refers to supply available to refiners/blenders/importers; EPA may consider only supply-side factors, not consumer demand/distribution constraints. |
| Must EPA treat carryover RINs as part of the year’s "supply" when assessing inadequate domestic supply? | Americans for Clean Energy: carryover RINs should count as supply, reducing need for waivers. | EPA: statute does not require carryover RINs be included; excluding them preserves a carryover bank and compliance flexibility. | Court: Agreed with EPA. EPA permissibly excluded carryover RINs from the definition of annual “supply.” |
| Authority to promulgate late standards (2014–2015 volumes and biomass-based diesel 2014–2017) and mitigation of retroactivity | Petitioners: EPA wrongly relied on tardiness to lower 2014–2015 volumes; late biomass-based diesel standards unlawful or unreasonably applied. | EPA: Court precedents permit late issuance if EPA reasonably mitigates retroactive burdens; EPA set 2014–2015 volumes using actual supplied volumes and extended compliance relief; prior notice and mitigation suffice for biomass-based diesel. | Court: EPA had authority to issue late standards and acted reasonably in mitigating burdens (setting 2014–2015 based on actual volumes; delayed biomass-based diesel standards were lawful and reasonably implemented). |
| Adequacy of EPA’s 2016 cellulosic (liquid + biogas) projections and use of cellulosic waiver to reduce advanced/total volumes | Obligated Party Petitioners / National Biodiesel Board: projections arbitrary, failing the “neutral aim at accuracy” and inadequately explained; cellulosic-waiver reductions unlawful if they second-guess supply. | EPA: adopted reasoned methodology (plant-by-plant ranges, percentile selection, EIA consideration, separate treatment for biogas), consistent with precedent allowing broad cellulosic-waiver discretion. | Court: EPA’s projection methodology and choice were reasonable and adequately explained; Monroe Energy permits EPA broad discretion under the cellulosic waiver (including consideration of demand-side factors for that waiver). |
Key Cases Cited
- Chevron U.S.A. Inc. v. Natural Resources Defense Council, 467 U.S. 837 (agency deference framework)
- Motor Vehicle Mfrs. Ass'n v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29 (arbitrary and capricious review standards)
- National Petrochemical & Refiners Ass'n v. EPA, 630 F.3d 145 (D.C. Cir.) (EPA may issue late RFS standards if it reasonably mitigates retroactive burdens)
- Monroe Energy, LLC v. EPA, 750 F.3d 909 (D.C. Cir.) (cellulosic-waiver grants EPA broad discretion; EPA may consider consumability constraints when using cellulosic waiver)
- American Petroleum Institute v. EPA, 706 F.3d 474 (D.C. Cir.) (EPA must aim neutrally at accuracy in cellulosic projections)
- Heckler v. Chaney, 470 U.S. 821 (agency action/inaction deference)