American Fuel & Petrochemical v. EPA

United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued February 20, 2019 Decided September 6, 2019
No. 17-1258
AMERICAN FUEL & PETROCHEMICAL MANUFACTURERS,
PETITIONER
v.
ENVIRONMENTAL PROTECTION AGENCY,
RESPONDENT
SMALL RETAILERS COALITION, ET AL.,
INTERVENORS
Consolidated with 18-1027, 18-1040, 18-1041
On Petitions for Review of an Action of the
United States Environmental Protection Agency
Thomas A. Lorenzen and Samara L. Kline 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, Robert J. Meyers, Elizabeth B. Dawson,
Megan H. Berge, Lisa M. Jaeger, Brittany M. Pemberton, and
Clara Poffenberger. Evan A. Young entered an appearance.
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Bryan M. Killian argued the cause for petitioner National
Biodiesel Board. With him on the briefs was Douglas A.
Hastings.
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 argued the cause for intervenors
in support of respondent responding to National Biodiesel
Board. With him on the brief were Robert A. Long Jr., Kevin
King, Stacy Linden, Richard S. Moskowitz, Robert J. Meyers,
and Elizabeth B. Dawson. David Y. Chung and John P. Wagner
entered appearances.
Seth P. Waxman, David M. Lehn, Saurabh Sanghvi, Claire
H. Chung, Robert A. Long, Jr., Kevin King, Matthew W.
Morrison, Bryan M. Stockton, Bryan M. Killian, and Douglas
A. Hastings were on the brief for intervenors Growth Energy,
et al. in support of respondent.
Matthew W. Morrison, Bryan M. Stockman, Seth P.
Waxman, David M. Lehn, Saurabh Sanghvi, Claire H. Chung,
Bryan M. Killian, and Douglas A. Hastings were on the brief
for intervenors Renewable Fuels Association, et al. in support
of respondent.
Before: HENDERSON, TATEL, and GRIFFITH, Circuit
Judges.
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Opinion for the Court filed PER CURIAM.
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
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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
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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
6
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
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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 determination” that any of three circumstances
exist: first, “that implementation of the requirement would
severely harm the economy . . . of a State, a region, or the
United States,” 42 U.S.C. § 7545(o)(7)(A)(i); second, “that
implementation of the requirement would severely harm
the . . . environment of a State, a region, or the United States,”
id.; or third, “that there is an inadequate domestic supply,” id.
§ 7545(o)(7)(A)(ii). The Administrator may exercise the
general waiver in response to a petition by a state or regulated
party or “on his own motion.” Id. § 7545(o)(7)(A).
After exercising any waivers and finalizing an applicable
volume for each type of fuel, the EPA must by November 30
of each year calculate and promulgate “renewable fuel
obligation[s] that” will “ensure[] that the [Program’s]
requirements . . . are met” in the upcoming year. Id.
§ 7545(o)(3)(B)(i). In broad strokes, this task requires the EPA
to identify the entities responsible for collectively achieving
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applicable volumes, quantify each entity’s individual
obligation, and ensure those entities’ successful compliance.
To begin with, there is the threshold question of who,
exactly, must satisfy renewable fuel obligations—that is, who
are the “obligated parties”? Although the statute states that
“[t]he renewable fuel obligation determined for a calendar
year . . . shall . . . be applicable to refineries, blenders, and
importers, as appropriate,” id. § 7545(o)(3)(B)(ii)(I), the EPA
has since the Program’s inception declined to include
blenders—defined as “part[ies] that simply blend[] renewable
fuel into gasoline or diesel fuel,” 40 C.F.R. § 80.1406(a)(1)—
within the definition of “obligated party,” see Regulation of
Fuels and Fuel Additives: Renewable Fuel Standard Program,
72 Fed. Reg. 23,900, 23,924 (May 1, 2007) (designating
obligated parties); Regulation of Fuels and Fuel Additives:
Changes to Renewable Fuel Standard Program, 75 Fed. Reg. at
14,721–22 (same). Instead, the EPA defines an obligated party
as “any refiner that produces gasoline or diesel fuel within the
48 contiguous states or Hawaii, or any importer that imports
gasoline or diesel fuel into the 48 contiguous states or Hawaii
during a compliance period.” 40 C.F.R. § 80.1406(a)(1). The
Program does, however, permit “small refiner[ies]” to receive
exemptions from renewable fuel obligations if they
demonstrate that compliance would inflict “disproportionate
economic hardship.” 42 U.S.C. § 7545(o)(9)(B).
Next, each year the EPA must transform its aggregate,
fuel-sector-wide applicable volumes into individual
compliance obligations that sum to the requisite whole. To do
this, the Program instructs the EPA to translate the applicable
volumes into “percentage[s] of transportation fuel sold or
introduced into commerce in the United States.” Id.
§ 7545(o)(3)(B)(ii)(II). By dividing the applicable volumes for
each fuel type by an estimate of the total gasoline and diesel
9
volume that will be used in the coming year (subject to some
adjustments), the EPA generates “percentage standards” which
then “inform each obligated party of how much renewable fuel
it must introduce into U.S. commerce based on the volumes of
fossil-based gasoline or diesel it imports or produces.” Ams. for
Clean Energy, 864 F.3d at 699; see also 40 C.F.R. § 80.1405(c)
(setting out the percentage-standard formula). In other words,
the EPA estimates what percentage of the overall fuel supply
each renewable-fuel type should constitute and then requires
each obligated party to replicate those percentages on an
individual basis.
Although the nuances of the percentage standard are
mostly beyond the scope of this case, one feature requires
mention. When calculating percentage standards for any given
year, the EPA accounts for any small refineries that have
received exemptions by requiring non-exempt obligated parties
to produce proportionally more. See Regulation of Fuels and
Fuel Additives: 2011 Renewable Fuel Standards, 75 Fed. Reg.
76,790, 76,805 (Dec. 9, 2010) (explaining that small-refinery
exemptions “result in a proportionally higher percentage
standard for remaining obligated parties”). The problem is that
while the EPA must promulgate annual percentage standards
by November 30 each year, refineries may petition for an
exemption “at any time,” 42 U.S.C. § 7545(o)(9)(B)(i), and the
EPA has no mechanism to adjust renewable fuel obligations to
account for exemptions granted after each year’s percentage
standards are finalized. As a result, because the EPA cannot
ensure that non-exempt obligated parties compensate for the
renewable-fuel shortfall created by belated exemptions, those
gallons of renewable fuel simply go unproduced.
Finally, after the obligated parties have been identified and
their percentage standards have been set, there remains the
matter of compliance. The Program does not require each
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obligated party to produce precisely the right mix of fuel itself.
See id. § 7545(o)(5) (directing the EPA to establish a “[c]redit
program”). Instead, for every gallon of renewable fuel entering
the U.S. market, producers and importers may generate a set of
“Renewable Identification Numbers” (RINs). See 40 C.F.R.
§§ 80.1426, 80.1429(b) (describing how RINs are “generated”
and then “separated” from their fuel); Ams. for Clean Energy,
864 F.3d at 699 (same). Each year, obligated parties must
generate or purchase enough RINs to meet their renewable fuel
obligations, which the obligated parties then satisfy by
“retir[ing]” RINs at an annual compliance demonstration. 40
C.F.R. § 80.1427. To prevent fuel that ultimately leaves the
U.S. market from satisfying obligated parties’ renewable fuel
obligations, the EPA also requires exporters to retire any RINs
(or an equivalent number of RINs) that were generated by
exported fuel. See 40 C.F.R. § 80.1430 (listing requirements
for renewable-fuel exporters). An obligated party lacking
enough RINs may, under certain circumstances, carry forward
a deficit, while an obligated party possessing excess RINs may
save those RINs for the following year. See 42 U.S.C.
§ 7545(o)(5)(B), (D) (addressing the transfer of RINs and the
ability to carry forward a RIN deficit); 40 C.F.R. § 80.1427(b)
(addressing “[d]eficit carryovers”); id. § 80.1428(c)
(addressing “RIN expiration”).
B. The 2018 Rule
To fulfill its annual rulemaking obligation under 42 U.S.C.
section 7545(o)(3)(B)(i), the EPA proposed a rule in July 2017
to set renewable fuel applicable volumes and percentage
standards for 2018 and a biomass-based diesel applicable
volume for 2019. Renewable Fuel Standard Program:
Standards for 2018 and Biomass-Based Diesel Volume for
2019 (“Proposed Rule”), 82 Fed. Reg. 34,206 (proposed
July 21, 2017). The Proposed Rule explained that “[r]eal-world
challenges, such as the slower-than-expected development of
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the cellulosic biofuel industry, . . . have made the volume
targets established by Congress for 2018 beyond reach for all
fuel categories other than [biomass-based diesel].” Id. at
34,207. The EPA thus proposed reducing the cellulosic biofuel
applicable volume to match the projected volume of cellulosic
biofuel available in 2018 and exercising its discretionary
cellulosic waiver authority to reduce the applicable volumes for
advanced biofuel and total renewable fuel a corresponding
amount. Id. at 34,208–10. It determined that the market for
biomass-based diesel, however, outproduced the minimum
requirements of the Program and therefore proposed
maintaining for 2019 its applicable volume for biomass-based
diesel set for 2018. Id. at 34,210–11.
The Proposed Rule further solicited comment on three
other issues. First, although the EPA initially concluded that it
should not exercise its general waiver authority to reduce
applicable volumes further, it solicited comment on whether it
should exercise that authority due to either severe economic
harm or inadequate domestic supply. Id. at 34,213. Second, it
solicited comment on how it should account for small refinery
exemptions when translating the 2018 applicable volumes into
percentage standards. Id. at 34,241–42. And third, it solicited
comment on the current RIN trading market. Id. at 34,211. It
clarified, however, that it was “not soliciting comment on any
aspect of the current RFS regulatory program other than those
specifically related to RIN trading . . . and the proposed annual
standards for 2018 and biomass-based diesel applicable
volume for 2019.” Id.
During the comment period, the EPA published
supplemental information regarding its proposal and requested
further comment on aspects of the Proposed Rule. See
Renewable Fuel Standard Program: Standards for 2018 and
Biomass-Based Diesel Volume for 2019; Availability of
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Supplemental Information and Request for Further Comment
(“Supplemental Information”), 82 Fed. Reg. 46,174 (Oct. 4,
2017). In particular, in response to this court’s intervening
decision in Americans for Clean Energy, 864 F.3d 691, the
EPA solicited comment on the meaning of the phrases
“inadequate domestic supply” and “severe economic harm” in
the general waiver provision, 42 U.S.C. section 7545(o)(7)(A).
See Supplemental Information, 82 Fed. Reg. at 46,177–79.
Over 235,000 comments later, the EPA promulgated its
final 2018 Rule in December 2017. See Renewable Fuel
Standard Program: Standards for 2018 and Biomass-Based
Diesel Volume for 2019 (“2018 Rule”), 82 Fed. Reg. 58,486,
58,487 (Dec. 12, 2017). The 2018 Rule tracked the Proposed
Rule with only slight modifications. The EPA reduced the
applicable volume for cellulosic biofuel to match the agency’s
updated projection of the amount of cellulosic biofuel that
would be produced in 2018. Id. at 58,487. It also exercised its
full cellulosic waiver authority to reduce the applicable
volumes for advanced biofuel and renewable fuel by an equal
amount. Id. And as anticipated in the Proposed Rule, the EPA
declined to exercise its general waiver authority to reduce
applicable volumes further due to inadequate domestic supply
or severe economic harm. Id. The EPA adopted the following
final applicable volumes and percentage standards:
2018 RULE: APPLICABLE VOLUMES & PERCENTAGE
STANDARDS
Applicable Volume Percentage
(billions of gallons) Standard
Cellulosic Biofuel 00.288 00.159%
Biomass-Based Diesel 02.1 (2019) 01.74%
Advanced Biofuel 04.29 02.37%
Total Renewable Fuel 19.29 10.67%
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Id. at 58,487, 58,491. The EPA further explained that it
calculated the percentage standards without prospectively
adjusting for potential small refinery exemptions and that it did
not intend to adjust retroactively the fuel percentage standards
to account for exemptions it subsequently granted. Id. at
58,523. The EPA also declined to address as “beyond the scope
of this rulemaking” comments asking it to reconsider its RIN
policy for renewable fuel exports and its definition of obligated
parties. Assessment and Standards Div., Office of Transp. and
Air Quality, EPA, EPA-420-R-17-007, Renewable Fuel
Standard Program – Standards for 2018 and Biomass-Based
Diesel Volume for 2019: Response to Comments 223
(December 2017) (“Response to Comments”), Joint Appendix
(J.A.) 1446.
C. Procedural History
After the EPA promulgated its final rule, four groups of
interested parties petitioned for review in this court. American
Fuel & Petrochemical Manufacturers, a national trade
association of U.S. refineries and petrochemical
manufacturers, and Valero Energy Corporation, a Texas-based
energy company that refines transportation fuels, produces
biofuels, and sells them in the United States (together, the
“Obligated Parties”), both filed petitions for review
challenging the 2018 Rule as setting applicable volumes and
percentage standards too high. On the other hand, the National
Biodiesel Board, a biodiesel industry trade association,
petitioned for review of the 2018 Rule on the ground that the
Rule set applicable volumes and percentage standards too low.
Independently, the Sierra Club and Gulf Restoration Network,
two nonprofit environmental groups (together, the
“Environmental Petitioners”), filed a joint petition for review
of the 2018 Rule, claiming that the EPA violated the
Endangered Species Act, 16 U.S.C. §§ 1531–1544, by failing
to consult with the U.S. Fish and Wildlife Service and the
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National Marine Fisheries Service regarding whether the 2018
Rule would adversely affect threatened or endangered species.
Several other parties intervened, including the Small Retailers
Coalition, a national trade association of small gasoline and
diesel retailers, which intervened on behalf of the Obligated
Parties and now argues that the EPA violated the Regulatory
Flexibility Act, 5 U.S.C. §§ 601–612, by failing to assess the
2018 Rule’s potential effects on small fuel retailers.
While the petitions before us were pending, another panel
of this court resolved several petitions challenging the EPA’s
final rule setting applicable volumes and percentage standards
for 2017 and the applicable volume for biomass-based diesel
for 2018. See Alon Ref. Krotz Springs, Inc. v. EPA, No. 16-
1052, slip op. at 6–7 (D.C. Cir. Aug. 30, 2019) (deciding
related case Coffeyville Res. Ref. & Mktg., LLC v. EPA, No. 17-
1044 (D.C. Cir. filed Feb. 9, 2017)).
II. Jurisdiction and Standards of Review
We have jurisdiction of a timely petition for review of the
EPA’s regulations implementing the Program. 42 U.S.C.
§ 7607(b)(1). We may reverse the EPA’s actions under the
Program if we find them to be “arbitrary, capricious, [or] an
abuse of discretion.” Id. § 7607(d)(9)(A). We will sustain the
EPA’s actions, however, so long as the agency “consider[ed]
all of the relevant factors and demonstrate[d] a reasonable
connection between the facts on the record and the resulting
policy choice.” Sierra Club v. Costle, 657 F.2d 298, 323 (D.C.
Cir. 1981). In conducting our review, we “give an ‘extreme
degree of deference’ to the EPA’s evaluation of ‘scientific data
within its technical expertise,’ especially where, as here, we
review the ‘EPA’s administration of the complicated
provisions of the Clean Air Act.’” Miss. Comm’n on Envtl.
Quality v. EPA, 790 F.3d 138, 150 (D.C. Cir. 2015) (per
curiam) (citation omitted) (first and second quoting City of
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Waukesha v. EPA, 320 F.3d 228, 247 (D.C. Cir. 2003) (per
curiam); then quoting Catawba Cty. v. EPA, 571 F.3d 20, 41
(D.C. Cir. 2009) (per curiam)).
We also may reverse an EPA action under the Program if
we determine that it is “otherwise not in accordance with law”
or “in excess of statutory jurisdiction, authority, or limitations,
or short of statutory right.” 42 U.S.C. § 7607(d)(9)(A), (C). The
court reviews the EPA’s interpretation of the Clean Air Act
under the familiar two-step framework formulated in Chevron,
U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467
U.S. 837 (1984). Under Chevron, the court defers to the EPA’s
interpretation if the statutory text is ambiguous and the EPA’s
interpretation is reasonable. See id. at 842–45.
We proceed to apply these standards of review to each of
the claims raised in these consolidated cases. In Part III we
address arguments regarding the 2018 Rule’s applicable
volumes, including claims that the EPA erred both in
exercising its full cellulosic waiver authority and in declining
to exercise its general waiver authority. Next, in Part IV we
discuss challenges to the ways in which the EPA translates
applicable volumes into compliance obligations, specifically
its treatment of RINs generated by renewable fuel exports, its
definition of “obligated parties,” and its method for accounting
for small refinery exemptions when calculating percentage
standards. In Part V we deal with the claim that the EPA
violated the Regulatory Flexibility Act in promulgating the
2018 Rule. And finally, in Part VI we consider whether the
EPA violated the Endangered Species Act by failing to engage
in interagency consultation before issuing the 2018 Rule.
III. Applicable Volumes
We begin with the 2018 Rule’s applicable volumes. To
arrive at those requirements, the EPA proceeded through a
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series of interlocking steps. It began by projecting 288 million
gallons of cellulosic biofuel production in 2018—6.71 billion
gallons short of the Program’s 7-billion-gallon statutory
target—and exercised its mandatory waiver accordingly. See
2018 Rule, 82 Fed. Reg. at 58,492, 58,495–504. Next, after
estimating “reasonably attainable” volumes of other advanced
biofuels and considering “the costs and benefits associated
with” achieving those volumes, the EPA decided to exercise its
full cellulosic waiver authority to reduce advanced biofuel and
renewable fuel applicable volumes to 4.29 and 19.29 billion
gallons, respectively. Id. at 58,513. And finally, the EPA
considered but rejected using its general waiver authority,
concluding that neither “severe economic harm” nor
“inadequate domestic supply” warranted further reductions in
applicable volumes. Id. at 58,516–18.
Petitioners find fault in each of these steps. First, the
Obligated Parties argue that the EPA miscalculated its
projection of cellulosic biofuel production. Second, the
National Biodiesel Board contends that the EPA impermissibly
considered financial costs when deciding to set applicable
volumes of advanced biofuels below reasonably attainable
levels. And third, the Obligated Parties argue that, for various
reasons, the EPA unreasonably interpreted and refused to
exercise its general waiver authority. None of these challenges
has merit.
A. Liquid Cellulosic Biofuel Projection
In the 2018 Rule, the EPA projected that 288 million
gallons of cellulosic biofuel would be produced in 2018: the
sum of 274 million gallons of liquefied and compressed natural
gas and 14 million additional gallons of liquid cellulosic
biofuel. See 2018 Rule, 82 Fed. Reg. at 58,503 tbl.III.D.3-1.
Only this latter liquid estimate is at issue in this case.
17
To arrive at its liquid cellulosic projection, the EPA
“use[d] the same general approach as . . . in previous years.”
Id. at 58,498. It began by sorting potential producers according
to whether they had previously “achieved consistent
commercial scale production” of liquid cellulosic biofuel. Id.
Then it defined two ranges “of likely production volumes for
2018,” one “for each group of companies.” Id. It set the low
end of each range at last year’s “actual RIN generation” (for
consistent producers) or zero (for new producers) and
estimated the high end of each range (for both groups) by
considering “a variety of factors,” including each facility’s
“expected start-up date,” “ramp-up period,” and “capacity.” Id.
at 58,499. And finally, the EPA selected what it calls a
“percentile value”—in simplified terms, a number somewhere
between the endpoints of each range—to extract “from the
established range[s] a single projected production volume for
each group of companies.” Id. at 58,498–99. The lower the
percentile value, the lower the resulting projection.
The Obligated Parties complain that by relying on this
percentile method, which has produced overestimations in the
past, the 2018 Rule “failed to correct chronic errors” in the
EPA’s liquid cellulosic biofuel projections. Obligated Parties
Br. 41. But the record reveals just the opposite. Recognizing
that its “estimates for liquid cellulosic biofuel exceeded actual
production of liquid cellulosic biofuel” in previous years, the
EPA adjusted its percentile values downward in the 2018 Rule
to “the percentile values that would have resulted in accurate
production projections” in 2016 and 2017. 2018 Rule, 82 Fed.
Reg. at 58,499–500. The result was the 10th percentile for new
producers and the 12th percentile for consistent producers,
down from the 25th and 50th percentiles, respectively, that the
EPA had used in 2016 and 2017. See id. at 58,500–01. The
2018 Rule, then, hardly presents “a situation in which [the]
EPA has arbitrarily refused to reconsider a projection
18
methodology that has proven unsuccessful in the past.” Ams.
for Clean Energy, 864 F.3d at 728.
Given that the Obligated Parties offer no other grounds to
doubt the EPA’s liquid cellulosic biofuel projection
methodology, we conclude that the EPA’s estimate, as
required, “took a ‘neutral aim at accuracy’ and was otherwise
reasonable and reasonably explained.” Id. at 729 (quoting Am.
Petroleum Inst. v. EPA, 706 F.3d 474, 476 (D.C. Cir. 2013)).
B. Cellulosic Waiver
Having projected that only 288 million gallons of
cellulosic biofuel would be produced in 2018, the EPA did as
the Program requires and “reduce[d] the applicable volume of
cellulosic biofuel” from 7 billion gallons “to [that] projected
volume.” 42 U.S.C. § 7545(o)(7)(D)(i); see also 2018 Rule, 82
Fed. Reg. at 58,492 (explaining that the EPA was “setting the
cellulosic biofuel volume requirement at a level lower than the
statutory applicable volume”). The EPA then confronted the
question of whether to exercise its discretionary cellulosic
waiver. Put another way, given the absence of 6.71 billion
gallons of cellulosic biofuel that Congress had predicted would
help satisfy the Program’s overall 11-billion-gallon advanced
biofuel requirement, the EPA needed to decide whether to
“reduce the applicable volume” of the latter fuel type “by the
same or a lesser volume” as it had reduced the former. 42
U.S.C. § 7545(o)(7)(D)(i). The EPA analyzed this question in
two stages.
It began by considering what volumes of advanced
biofuels would be “reasonably attainable in 2018,” excluding
volumes whose attainment would result in the “diversion of
advanced feedstocks from other uses or diversion of advanced
biofuels from foreign sources.” 2018 Rule, 82 Fed. Reg. at
58,505. Based on an extensive analysis of various advanced
19
biofuels (primarily imported sugarcane ethanol and advanced
biodiesel and renewable diesel), the EPA projected that in
addition to 288 million gallons of cellulosic biofuel, about 4.11
billion gallons of non-cellulosic advanced biofuels were
reasonably attainable. See id. at 58,513. Although less than the
statute’s 11-billion-gallon target, the EPA’s combined
4.4-billion projection, in a sense, exceeded statutory
expectations: while the Program implicitly requires 4 billion
gallons of non-cellulosic advanced biofuel (11 billion minus
7 billion), the EPA estimated that up to 4.11 billion gallons
could, in fact, be made available (110 million gallons above the
4-billion-gallon floor).
Next, the EPA had to decide whether to require those 110
million gallons of non-cellulosic advanced biofuels “to
partially backfill for”—i.e., compensate for—“missing
cellulosic volumes.” Id. at 58,505. Acknowledging that it had
mandated such backfilling in previous years, the EPA
nonetheless explained that, “as a result of a stronger policy
focus on the economic impacts of the RFS program,” it had
adopted in the 2018 Rule a “new approach to balancing
relevant considerations” that “plac[ed] a greater emphasis on
cost considerations.” Id. at 58,504, 58,513. The EPA
“present[ed] illustrative cost projections for . . . the two
advanced biofuels . . . most likely to provide the marginal
increase in volumes,” “sugarcane ethanol and soybean
biodiesel,” and estimated per-gallon marginal cost increases
ranging from $0.61 to $1.56 for the former (compared to
gasoline) and $0.95 to $1.30 for the latter (compared to diesel).
Id. at 58,513. “In light of these comparative costs,” the EPA
concluded, “it is reasonable to forgo the marginal benefit that
might be achieved by establishing the advanced biofuel
standard to require an additional 110 million gallons.” Id. In
the end, then, the EPA decided to exercise its full cellulosic
waiver authority to reduce the advanced biofuel applicable
20
volume—and, by extension, the renewable fuel applicable
volume—by 6.71 billion gallons. See id. (explaining that the
EPA interprets “the cellulosic waiver provision . . . to provide
equal reductions in advanced biofuel and total renewable
fuel”).
The National Biodiesel Board argues that by taking cost
considerations into account, the EPA erred in exercising its full
cellulosic waiver. We disagree.
The Board first argues that the EPA “waive[d] the
advanced-biofuel volume solely to save obligated parties
money,” NBB Br. 23, and that in so doing, the 2018 Rule
“strayed too far” from the Program’s “market forcing” purpose,
id. at 21 (quoting Ams. for Clean Energy, 864 F.3d at 710).
Neither proposition is correct. To begin with, the EPA hardly
“[s]et[] the advanced-biofuel volume based entirely on costs.”
Id. To the contrary, in calculating the reasonably attainable
volume of advanced biofuels, the EPA analyzed many factors,
all of which justified a 6.6-billion-gallon reduction—and only
then did it rely on cost considerations to support an additional
110-million-gallon decrease. And the EPA’s decision to
consider costs fell well within its discretion. As this court
observed in Americans for Clean Energy, because “the text of
the cellulosic waiver provision does not direct [the] EPA to
‘consider particular factors,’” the “EPA enjoys broad
discretion” “to consider ‘a range of factors’ in determining
whether to exercise its cellulosic waiver authority.” 864 F.3d
at 734 (quoting Monroe Energy, 750 F.3d at 915–16). The
Board offers no persuasive reason to conclude that those
factors must exclude costs.
The Board next contends that the EPA failed to justify its
decision to abandon its former practice of requiring non-
cellulosic advanced biofuels to backfill for cellulosic deficits
21
up to reasonably attainable levels. Under normal
circumstances, the 2018 Rule’s explanation would have been
perfectly sufficient: the EPA both “display[ed] awareness that
it [was] changing position” and offered “good reasons for the
new policy.” FCC v. Fox Television Stations, Inc., 556 U.S.
502, 515 (2009). The Board, however, argues that this is not
the typical case. Because the EPA’s prior practice of requiring
all reasonably attainable levels to be produced “engendered
serious reliance interests,” says the Board, the 2018 Rule was
required to “provide ‘a more detailed justification’” than usual.
NBB Br. 24 (quoting Fox Television Stations, 556 U.S. at
515)). According to the Board, the EPA failed to satisfy this
heightened requirement.
Again, we disagree. First, it is far from obvious that
renewable fuel producers possess the sort of reliance interests
that merit special consideration. Neither the statute nor the EPA
ever suggested that the Program’s statutory applicable volumes
would be enforced without modification. To the contrary, as
the EPA argues, annual volumes are “always dependent on a
variety of considerations,” including the “EPA’s projection of
the volume of cellulosic biofuel,” its “calculation of reasonably
attainable volumes,” and its decision regarding whether to
“exercise[] its other waiver authorities.” EPA Br. 28. And
second, even where “serious reliance interests” do exist, what
is required is not better reasons but rather more tailored
reasons. “[I]t is not that further justification is demanded by the
mere fact of policy change; but that a reasoned explanation is
needed for disregarding facts and circumstances that underlay
or were engendered by the prior policy.” Fox Television
Stations, 556 U.S. at 515–16. The EPA did just that in its 2018
Rule, which explains that the EPA declined to require
backfilling because, in its view, any “marginal benefit”
generated by the additional 110 million gallons of advanced
biofuel would be outweighed by their steep substitution costs.
22
2018 Rule, 82 Fed. Reg. at 58,513. No further explanation was
required.
Finally, the Board suggests that the non-delegation
doctrine prohibits any interpretation of the EPA’s cellulosic
waiver authority broad enough to permit the EPA to consider
costs. This argument we easily reject. To satisfy the
constitutional requirement that “[a]ll legislative Powers . . .
shall be vested in . . . Congress,” U.S. Const. art. I, § 1, all that
is required “when Congress confers decisionmaking authority
upon agencies” is that it “lay down by legislative act an
intelligible principle to which the person or body authorized to
[act] is directed to conform,” Whitman v. Am. Trucking Ass’ns,
531 U.S. 457, 472 (2001) (alteration in original) (quoting J.W.
Hampton, Jr., & Co. v. United States, 276 U.S. 394, 409
(1928)). “Or in a related formulation, the Court has stated that
a delegation is permissible if Congress has made clear to the
delegee ‘the general policy’ he must pursue and the
‘boundaries of [his] authority.’” Gundy v. United States, 139 S.
Ct. 2116, 2129 (2019) (alteration in original) (quoting Am.
Power & Light Co. v. SEC, 329 U.S. 90, 105 (1946)). Congress
provided more than enough direction in the Program’s
cellulosic waiver provision, which constrains both when and to
what extent the EPA may reduce statutory applicable volumes:
only after projecting a cellulosic biofuel deficit and only by an
amount less than or equal to that projected shortfall. See 42
U.S.C. § 7545(o)(7)(D)(i) (stating that “[f]or any calendar year
in which the Administrator makes . . . a reduction” in the
applicable volume for cellulosic biofuel based on a projected
shortfall, “the Administrator may also reduce the applicable
volume of renewable fuel and advanced biofuels requirement
established under paragraph (2)(B) by the same or a lesser
volume”).
23
C. General Waiver
After reducing applicable volumes of cellulosic biofuel,
advanced biofuel, and renewable fuel by the amount of the
cellulosic shortfall, the EPA then considered whether “severe[]
harm [to] the economy or environment” or “an inadequate
domestic supply” existed such that further reductions were
justified. 42 U.S.C. § 7545(o)(7)(A). Answering those
inquiries in the negative, the EPA declined to exercise its
general waiver. The Obligated Parties now raise various
challenges to that decision, and we consider each in turn.
1. Sequencing the Cellulosic and General Waivers
Before addressing the particulars of the EPA’s general
waiver determination, the Obligated Parties make an
antecedent argument: that the EPA began its analysis at the
wrong baseline. They ground their contention in the Program’s
general waiver provision, which states that the EPA “may
waive the requirements of paragraph (2)”—that is, the statutory
applicable volumes—“by reducing the national quantity of
renewable fuel required under paragraph (2).” 42 U.S.C.
§ 7545(o)(7)(A). According to the Obligated Parties, this
language requires the “EPA to consider whether domestic
supply would be inadequate to meet statutorily-specified
volumes . . . and whether meeting those volume requirements
would trigger severe economic harm.” Obligated Parties Br.
22. In other words, the Obligated Parties argue that instead of
considering whether to “further reduc[e]” applicable volumes
after exercising its cellulosic waiver, 2018 Rule, 82 Fed. Reg.
at 58,516, the EPA should have conducted its general waiver
analysis as if the cellulosic waiver had never happened.
The Obligated Parties ask too much. As an initial matter,
the statute is at least ambiguous when it comes to sequencing
the cellulosic and general waivers. Both provisions grant the
24
EPA authority to “waive” or “reduce” the applicable volumes
established by “paragraph (2),” but neither provision indicates
what the EPA should do if, as here, it has already decided to
reduce those volumes. 42 U.S.C. § 7545(o)(7)(A) (the EPA
may use the general waiver to “waive the requirements of
paragraph (2) . . . by reducing the national quantity of
renewable fuel required under paragraph (2)”); id.
§ 7545(o)(7)(D) (the EPA may use the cellulosic waiver to
“reduce the applicable volume of renewable fuel and advanced
biofuels requirement established under paragraph (2)(B)”).
Consequently, because “Congress has not directly
addressed the precise question at issue,” we need determine
only “whether the agency’s answer is based on a permissible
construction of the statute.” Chevron, 467 U.S. at 843. And
indeed it is. Not only is it reasonable to interpret one waiver
authority as reducing paragraph (2)’s volumes for purposes of
the other waiver authority, but, as the EPA points out, “[t]here
is no logical reason why [the agency] should base its waiver
decision” on hypothetical volumes “that will not actually be
implemented . . . because they have been reduced.” EPA Br.
37. We have no basis, therefore, for overriding the EPA’s
reasonable interpretation of the Program’s text with a
requirement—cumbersome at best and absurd at worst—that
the EPA conduct counterfactual analyses of scenarios it has
already rejected.
2. Severe Economic Harm
We turn, then, to the EPA’s examination of whether the
2018 Rule’s applicable volumes as reduced by the cellulosic
waiver “would severely harm the economy . . . of a State, a
region, or the United States.” 42 U.S.C. § 7545(o)(7)(A)(i).
The EPA concluded no, and the Obligated Parties now raise
two objections: one interpretive, the other analytical.
25
The Obligated Parties first take issue with the EPA’s
interpretation of the requisite causal link between applicable
volumes, on the one hand, and severe harm to the economy, on
the other. The EPA interprets the general waiver provision “as
requiring a demonstration that implementation of the RFS
Program itself would cause severe economic harm (as opposed
to allowing a waiver if severe economic harm were
demonstrated for any reason, or if the RFS merely contributed
to severe harm).” Memorandum from David Korotney, Office
of Transp. and Air Quality, EPA, to Docket EPA-HQ-OAR-
2017-0091, Assessment of Waivers for Severe Economic Harm
or BBD Prices for 2018, at 15 (Nov. 30, 2017) (“Assessment
of Waivers”), J.A. 1051. The Obligated Parties argue that by
“requir[ing] proof that a single market factor—RFS volume
requirements—is the sole cause of the harm,” the EPA has
ensured that its test will almost never be met. Obligated Parties
Br. 25.
The EPA has set a high bar, to be sure, but we disagree
with the Obligated Parties’ assertion that the bar is so high as
to be unreasonable. At bottom, this dispute comes down to an
interpretation of the phrase “would severely harm the
economy.” 42 U.S.C. § 7545(o)(7)(A)(i). The degree of
causation required by that text is an open question, and
although “agencies must operate within the bounds of
reasonable interpretation” of even ambiguous statutory
phrases, Util. Air Regulatory Grp. v. EPA, 573 U.S. 302, 321
(2014) (internal quotation marks omitted), courts, by the same
token, “may not substitute [their] own construction of a
statutory provision for a reasonable interpretation made by the
administrator of an agency,” Chevron, 467 U.S. at 844. The
EPA argues that in the Program, Congress intentionally “set a
high threshold” for an economic-harm determination by
“requiring . . . direct causation and a high degree of
confidence.” EPA Br. 41. And indeed, this court has previously
26
observed that “Congress intended the . . . Program to be . . .
market forcing.” Ams. for Clean Energy, 864 F.3d at 705
(internal quotation marks omitted). Accordingly, we cannot
now fault the EPA for declining to reduce applicable volumes
below statutory levels absent some clearly and causally
demonstrable harm. That EPA’s interpretation is stringent
hardly makes it unreasonable.
As to the Obligated Parties’ analytical objection, they
question whether the EPA provided adequate reasons for its
determination that “further reductions” of applicable volumes
“on the basis of severe economic harm” were not “warranted.”
2018 Rule, 82 Fed. Reg. at 58,518. To reach this conclusion,
the EPA first acknowledged various comments regarding the
2018 Rule’s financial “impacts on specific companies” but
explained that “statements generally claiming financial
difficulties, potential for closure, and the high cost of RIN
purchases alone” failed to support a determination “that severe
economic harm to a State, a region, or the United States [was]
occurring.” Assessment of Waivers 5, J.A. 1041. Then,
observing “that the 2018 volumes generated through the
maximum reduction permitted under the cellulosic waiver
authority are nearly the same as the volume requirements for
2017,” the EPA explained that it would, in effect, use 2017 as
a test case by considering both “[w]hether severe economic
harm ha[d] occurred . . . in 2017, and . . . whether the economic
conditions in 2018 might be expected to be substantially
different than those in 2017.” 2018 Rule, 82 Fed. Reg. at
58,518. Based on its assessment of “market overcompliance,
retail fuel prices, fuel supply, crop prices, and refinery
closures” in recent years along with “crop-based feedstock
futures prices” and “projected gasoline demand” for 2018, the
EPA concluded that the 2017 requirements had not “caus[ed]
severe economic harm to a State, a region, or the United States”
and that “market conditions in 2018” were unlikely “to cause
27
compliance with the applicable standards to have a higher
potential for severe economic harm than in 2017.” Assessment
of Waivers 14–15, J.A. 1050–51.
With this analysis, the EPA sufficiently “examine[d] the
relevant data and articulate[d] a satisfactory explanation for its
action.” Motor Vehicle Mfrs. Ass’n v. State Farm Mut. Auto.
Ins. Co., 463 U.S. 29, 43 (1983). Although the EPA declined
to conduct a state-by-state or region-by-region analysis, “an
agency need not—indeed cannot—base its every action upon
empirical data; depending upon the nature of the problem, an
agency may be ‘entitled to conduct . . . a general analysis based
on informed conjecture.’” Chamber of Commerce v. SEC, 412
F.3d 133, 142 (D.C. Cir. 2005) (alteration in original) (quoting
Melcher v. FCC, 134 F.3d 1143, 1158 (D.C. Cir. 1998)). Here,
based on “the limited time available” to conduct its analysis,
“the lack of clear evidence of severe economic harm provided
in comments,” and its ability to “grant waivers . . . during the
compliance year should sufficient evidence become available,”
the EPA reasonably elected to begin with “a high-level
investigation of a number of broad economic indicators” to see
if they “provide[d] evidence of possible severe economic harm
that would justify further EPA investigation.” Assessment of
Waivers 7, J.A. 1043. The EPA then reasonably concluded that
they did not. See id.
The Obligated Parties nonetheless argue that the EPA
erred by “ignor[ing] actual data regarding state and regional
economic jeopardy.” Obligated Parties Br. 29 (emphasis
omitted). For this claim, they cite two facts: first, that “the
largest refiner on the East Coast” declared bankruptcy after the
2018 Rule went into effect, portending, in the Obligated
Parties’ view, additional “refinery shutdowns,” Obligated
Parties Reply Br. 12, 15; and second, that RIN costs are
28
“escalating” and, in the Obligated Parties’ estimation, not
easily passed on to consumers, Obligated Parties Br. 29.
But the EPA did, in fact, address this purported evidence
of economic harm. As to threatened refinery closures, the EPA
noted that the commenting refineries lacked “any concrete
evidence that their financial difficulties are caused primarily or
even significantly by the RFS program.” Assessment of
Waivers 5, J.A. 1041. And as to compliance costs, the EPA
explained that the refineries had failed to show “why they
cannot recoup the cost of RINs through higher prices of their
products.” 2018 Rule, 82 Fed. Reg. at 58,517. Although the
Obligated Parties may disagree with the EPA’s analysis, they
have fallen far short of showing that the EPA either “entirely
failed to consider an important aspect of the problem” or
“offered an explanation for its decision that runs counter to the
evidence before the agency, or is so implausible that it could
not be ascribed to a difference in view or the product of agency
expertise.” Motor Vehicle Mfrs. Ass’n, 463 U.S. at 43. Mindful
that we may not “substitute [our] judgment for that of the
agency,” id., we conclude that the EPA did not act arbitrarily
and capriciously in declining to exercise the economic-harm
prong of its general waiver authority.
3. Inadequate Domestic Supply
The Obligated Parties also take issue with the EPA’s
failure to exercise the general waiver “based on a
determination . . . that there is an inadequate domestic supply.”
42 U.S.C. § 7545(o)(7)(A)(ii). The dispute turns on the
meaning of the phrase “domestic supply”: the Obligated Parties
argue that it includes only fuel produced domestically, while
the EPA, at least until the 2018 Rule, had interpreted the term
to include any fuel available domestically, including imports.
See Supplemental Information, 82 Fed. Reg. at 46,177 (noting
that the EPA had previously considered “biofuel imports as
29
part of the domestic supply”). But recently the EPA’s
enthusiasm for its imports-inclusive interpretation has turned
tepid. In its October 2017 Supplemental Information, the EPA
sought comments on whether to adopt a production-only
interpretation under which the agency would continue to
“consider the availability of imports . . . in determining
whether to exercise its discretion to use the waiver authority,”
but only after “ma[king] the threshold finding that there was an
inadequate domestic supply” of fuel produced in the United
States and, even then, only “as one factor among others.” Id. at
46,178.
After dipping its toe into the water, however, the EPA
waded no further. Instead, the final 2018 Rule analyzed each
category of fuel under both a production-only and an imports-
inclusive interpretation of “domestic supply.” Concluding that
“a waiver is not warranted” “[u]nder either approach,” the EPA
adopted neither definition—in effect, deciding not to decide.
2018 Rule, 82 Fed. Reg. at 58,516. Its analysis proceeded as
follows.
The EPA began by discussing the supply of “non-
advanced” renewable fuel—primarily corn ethanol—that could
fill the 15-billion-gallon gap between the Program’s
requirement of 11 billion gallons of advanced biofuel (4.29
after the cellulosic waiver) and 26 billion gallons of total
renewable fuel (19.29 after the cellulosic waiver). 2018 Rule,
82 Fed. Reg. at 58,516–17. Explaining that “the total domestic
production capacity of corn ethanol in the [United States] is
about 16 billion gallons” and that “total production . . . in 2016
exceeded 15 billion gallons,” the EPA concluded the market
could supply sufficient “conventional renewable fuel” with or
without imports. Id. at 58,517.
30
Turning next to cellulosic biofuel, the EPA explained that
286 million gallons of its 288-million-gallon projection was
“expected to come from domestic sources” and that pre-2018
“carryover cellulosic biofuel RINs” were available to facilitate
“additional compliance flexibility.” Id. “Given the importance
that Congress placed on the growth of cellulosic biofuel
volumes” and the 2018 Rule’s “projection that compliance with
a 288 million gallon requirement is feasible,” the EPA decided
it “would not exercise its discretion to lower the 288 million
gallon projected cellulosic biofuel volume by 2 million gallons
even if [it] were to interpret the term ‘domestic supply’ to
exclude imported volumes.” Id.
That left only non-cellulosic advanced biofuel. Having
already determined that 4.11 billion gallons (4.4 billion minus
288 million) was “reasonably attainable,” the EPA dismissed
any concern that there would be an “inadequate domestic
supply” of advanced biofuel under an imports-inclusive
interpretation. See id. at 58,516. But, as the EPA
acknowledged, a production-only interpretation presented a
closer question. The EPA observed that “a significant portion
of the advanced biofuel available in previous years has been
from imported biofuels,” and it noted comments “suggest[ing]
that, without imported volumes, the domestic industry could
not ramp up production quickly enough to compensate for the
exclusion of imports from our analysis.” Id. at 58,517. The
2018 Rule, however, also highlighted comments to the
contrary. “Some commenters pointed to total domestic
production capacity and feedstock availability,” the EPA
explained, “to argue that domestic producers are capable of
compensating for volumes that would not be provided through
imports.” Id. Faced with this “uncertainty,” the EPA concluded
that based on “the distinct possibility that the domestic industry
could compensate for exclusion of imports” and “the
availability of imported volumes and carryover RINs,” it
31
“would not choose to exercise its authority to grant a waiver on
the basis of inadequate domestic supply for 2018 even if it
interpreted the term ‘domestic supply’ to exclude imports.” Id.
This belt-and-suspenders approach, though perhaps not
maximally efficient, relieved the EPA of any obligation to
choose conclusively one interpretation of “domestic supply”
over the other. To be sure, “an agency rule would be arbitrary
and capricious if the agency . . . entirely failed to consider an
important aspect of the problem.” Motor Vehicle Mfrs. Ass’n,
463 U.S. at 43. But by explaining that it would decline to
exercise its general waiver under either a production-only or
imports-inclusive interpretation, the EPA made that choice
itself unimportant. And because the EPA sufficiently
“acknowledge[d] factual uncertainties and identif[ied] the
considerations it found persuasive” with respect to each of its
alternative analyses, we find no fault in the substance of the
2018 Rule’s “predictive judgments” about the adequacy of
domestic supply. Rural Cellular Ass’n v. FCC, 588 F.3d 1095,
1105 (D.C. Cir. 2009).
Nor are we persuaded by the Obligated Parties’ contention
that the imports-inclusive option would have “impermissibly
twisted the [Program’s] statutory language.” Obligated Parties
Br. 32. Implied by the Obligated Parties’ interpretive argument
is a bold assertion: that the EPA could have acted arbitrarily
and capriciously by merely contemplating, without adopting,
an erroneous interpretation of the statutory text. But even
assuming that premise, we conclude that the EPA permissibly
considered what would have been a reasonable interpretation
of an ambiguous statutory phrase. Indeed, this court has
previously offered “import capacity” as an example of the sorts
of “supply-side factors” that the “‘inadequate domestic supply’
provision authorizes [the] EPA to consider” when “examining
whether the supply of renewable fuel is adequate.” Ams. for
32
Clean Energy, 864 F.3d at 710. We can hardly blame the EPA
for permitting itself to consider whether this court spoke
accurately. See Supplemental Notice, at 46,178 & n.19
(explaining the EPA’s view that “the court’s statements,” while
“dicta,” “may indicate the scope of permissible, but not
required, interpretations”).
In conclusion, even though the EPA declined to interpret
“inadequate domestic supply,” its refusal to exercise the
domestic-supply prong of its general waiver authority was
nonetheless “the product of reasoned decisionmaking.” Motor
Vehicle Mfrs. Ass’n, 463 U.S. at 52. We reject the Obligated
Parties’ contrary arguments.
4. Ethanol Projection
Before moving away from the EPA’s general waiver
analysis, we must address one final point: the Obligated
Parties’ argument that the EPA failed to produce a well-
reasoned estimate of attainable ethanol production, thus
making “its final volume determinations . . . arbitrary and
capricious.” Obligated Parties Br. 41; see also Oral Arg. Tr. 8–
9 (conceding that any errors in the EPA’s ethanol projection
could affect only the general waiver, as the EPA exercised in
full its cellulosic waiver).
The Obligated Parties misapprehend the EPA’s ultimate
task. The Program imposes no free-floating obligation on the
EPA to estimate “the reasonably attainable supply of ethanol.”
Obligated Parties Br. 37. Nor does it permit, much less require,
the EPA to craft applicable volumes of any fuel from scratch.
Instead, the statute establishes applicable volumes—in 2018,
26 billion gallons of renewable fuel, no more than 15 gallons
of it “non-advanced,” see 42 U.S.C. § 7545(o)(2)(B)(i)—and
permits the EPA to “waive [those] requirements” only if the
Administrator determines that the statutory mandates “would
33
severely harm the economy or environment” or “that there is
an inadequate domestic supply,” id. § 7545(o)(7)(A). As we
have explained before, “[n]othing in the text of . . . the
[Program] plainly requires [the] EPA to support its decision”
against exercising the general waiver “with specific numerical
projections.” Am. Petroleum Inst., 706 F.3d at 481. “Certainly
[the] EPA must provide a reasoned explanation for its actions,
but rationality does not always imply a high degree of
quantitative specificity.” Id.
The 2018 Rule’s explanation is more than satisfactory.
Citing the Renewable Fuels Association’s “2017 Ethanol
Industry Outlook,” the EPA explained that the U.S. market had
the capacity to produce “about 16 billion gallons” of corn
ethanol and had in fact produced some 15.25 billion gallons in
2016. 2018 Rule, 82 Fed. Reg. at 58,517 & n.135. The EPA
further supplied a lengthy memorandum analyzing “various
conditions and constraints in the marketplace . . . for the two
most prominent biofuels, ethanol and biodiesel.”
Memorandum from David Korotney, Office of Transp. and Air
Quality, EPA, to Docket EPA-HQ-OAR-2017-0091, Market
Impacts of Biofuels 1 (Nov. 27, 2017), J.A. 1180. “[B]ased
both on levels achieved in the past and” predictions regarding
“how the market might respond to the applicable standards,”
the EPA offered “a range of possible outcomes with varying
levels of [ethanol blends], imported sugarcane ethanol,
advanced biodiesel and renewable diesel, and conventional
biodiesel and renewable diesel,” all of which would satisfy the
(post-cellulosic waiver) “total renewable fuel and advanced
biofuel volume requirements of 19.29 and 4.29 billion gallons,
respectively.” Id. at 11, J.A. 1190. This analysis provided more
than enough support for the EPA’s determination that neither
inadequate supply nor economic harm warranted use of the
general waiver.
34
Dall. 2019 Biomass-Based Diesel Applicable Volume
In addition to establishing renewable fuel obligations for
cellulosic biofuel, advanced biofuel, and renewable fuel for
calendar year 2018, the 2018 Rule also finalized the biomass-
based diesel applicable volume for 2019—a year for which the
Program lists no statutory applicable volume. See 2018 Rule,
82 Fed. Reg. at 58,518–22. Following the same “approach [it
used] in setting the final [biomass-based diesel] volume
requirement for 2018,” the EPA decided to maintain the
biomass-based diesel requirement at 2.1 billion gallons, the
same as in 2018. Id. at 58,522. Central to the EPA’s analysis
was its assessment that because “RIN generation data has
consistently demonstrated that the advanced biofuel volume
requirement . . . [is] capable of incentivizing the supply of
[biomass-based diesel] above and beyond the [biomass-based
diesel] volume requirement,” “the 2019 advanced volume
requirement”—not the biomass-based diesel requirement—
would drive “the level of [biomass-based diesel] production
and imports that occur in 2019.” Id. at 58,521–22. In other
words, the EPA determined that while its biomass-based diesel
requirement might set a floor on production, it would hardly
impose a ceiling. The EPA therefore concluded that a
2.1-billion-gallon requirement would “strike[] the appropriate
balance between” “maintaining support for the [biomass-based
diesel] industry” and “providing a market environment where
the development of other advanced biofuels is incentivized.”
Id.
The National Biodiesel Board argues that by considering
“the future, then-not-set 2019 advanced-biofuel volume,” the
EPA impermissibly “bas[ed] the 2019 [biomass-based diesel]
volume on a factor” absent from the statute’s enumerated list.
NBB Br. 28; see also 42 U.S.C. § 7545(o)(2)(B)(ii), (v)
(requiring that applicable volumes should be established
“based on a review of the implementation of the program
35
during” previous years and on “an analysis of” six other
factors). We need not, however, linger long on this argument,
as it has been resolved by this court’s decision in Alon Refining.
See slip op. at 65. Therefore, we deny the Board’s petition.
IV. Other Facets of the Program
The Obligated Parties and the National Biodiesel Board
also challenge three of the EPA’s regulations implementing the
Program. The Obligated Parties contend that the EPA, as part
of the 2018 rulemaking process, should have reconsidered both
its RIN policy for renewable fuel exports and its definition of
“obligated party.” The National Biodiesel Board, in turn,
argues that the EPA should have accounted for retroactively
granted small refinery exemptions in calculating percentage
standards. As explained below, the Obligated Parties’
challenges are untimely and the National Biodiesel Board’s
challenge was not preserved.
A. The EPA’s RIN Policy for Renewable Fuel Exports
Under the EPA’s current regulations, obligated parties
cannot use RINs generated from renewable fuel that is later
exported from the United States to satisfy their renewable fuel
obligations under the Program. See 40 C.F.R. § 80.1430.
Instead, exporters must use those RINs to offset their own
Exporter Renewable Volume Obligation. Id. During the 2018
rulemaking process, several parties submitted comments
asking the EPA to remove the Exporter Renewable Volume
Obligation. Rather than address the substance of these
comments, the EPA stated: “These comments are all beyond
the scope of this rulemaking as EPA did not propose any
changes to the overall structure of the RFS program or
otherwise seek comment on these issues.” Response to
Comments 223, J.A. 1446. The Obligated Parties now argue
that the EPA acted arbitrarily and capriciously in refusing to
36
engage with comments regarding renewable fuel exports for
two reasons: first, because those comments were within the
scope of the EPA’s Proposed Rule and Supplemental
Information and second, because the EPA’s obligation to make
a reasoned decision required it to reevaluate its RIN policy for
renewable fuel exports as part of the 2018 rulemaking.
The EPA correctly dismissed comments regarding its RIN
policy for renewable fuel exports as outside the scope of the
2018 Rule. In the Proposed Rule, the EPA delineated those
issues for which it was—and was not—soliciting comment:
“EPA is not soliciting comment on any aspect of the current
RFS regulatory program other than those specifically related to
RIN trading . . . and the proposed annual standards for 2018
and biomass-based diesel applicable volume for 2019.”
Proposed Rule, 82 Fed. Reg. at 34,211. The Obligated Parties
do not dispute that the EPA’s RIN policy for renewable fuel
exports falls outside these enumerated subjects for comment.
Instead, the Obligated Parties point to five other statements in
the Proposed Rule and Supplemental Information that they
argue brought the EPA’s RIN policy for renewable fuel exports
within the scope of the rulemaking: (1) the EPA’s
acknowledgment that “[r]eal-world challenges” have rendered
unattainable congressional goals for the production of most
categories of renewable fuel, id. at 34,207; (2) the EPA’s
observation that the variable volume of annual renewable fuel
imports and exports “affect[s] the price of renewable fuel,”
Supplemental Information, 82 Fed. Reg. at 46,176; (3) the
EPA’s concern that increasing reliance on renewable fuel
imports may jeopardize energy independence and security,
Proposed Rule, 82 Fed. Reg. at 34,212; (4) the EPA’s
affirmance of the importance of maintaining the liquidity of the
RIN market by maintaining an “adequate RIN bank,” id. at
34,213; and (5) the EPA’s requests for comments “on all
aspects of this proposal” and “any aspect of this rulemaking,”
37
id. at 34,242. It is not clear that these statements, on their face,
open the EPA’s RIN policy for renewable fuel exports for
comment. Whatever the potential meaning of these statements
in isolation, the Proposed Rule’s express limitation of the
subjects on which the EPA was soliciting comment
unambiguously communicates its decision not to solicit
comment on its RIN policy for renewable fuel exports.
Accordingly, we find no error in the EPA’s treatment of
comments requesting that it reconsider its RIN policy for
renewable fuel exports as outside the scope of the 2018
rulemaking.
Because comments regarding the EPA’s RIN policy for
exported renewable fuel were outside the scope of the 2018
rulemaking, we lack jurisdiction to consider the Obligated
Parties’ instant challenge to the policy. Generally, “[a] petition
for review of action of [the EPA] in promulgating . . . any
control or prohibition under [the Program] . . . shall be filed
within sixty days from the date notice of such promulgation,
approval, or action appears in the Federal Register.” 42 U.S.C.
§ 7607(b)(1). Section 7607(b)(1)’s sixty-day filing deadline is
jurisdictional. See Sierra Club v. EPA, 895 F.3d 1, 16 (D.C.
Cir. 2018). Here, the EPA promulgated its current version of
its regulation governing renewable fuel exports in 2014. See
RFS Renewable Identification Number (RIN) Quality
Assurance Program, 79 Fed. Reg. 42,078, 42,115 (July 18,
2014). The Obligated Parties filed their first petition in this case
more than three years later—well outside the statutory sixty-
day filing period. Although a party may file an otherwise
untimely petition challenging a regulation if the promulgating
agency subsequently expressly or constructively “reopens” the
issue, Nat. Res. Def. Council v. EPA, 571 F.3d 1245, 1265
(D.C. Cir. 2009) (per curiam), our conclusion that comments
regarding the EPA’s RIN policy for renewable fuel exports
were outside the scope of the 2018 rulemaking forecloses the
38
claim that the EPA reopened the issue. We therefore lack
jurisdiction to consider the Obligated Parties’ challenge to the
EPA’s current rule preventing refineries and importers of
renewable fuel from using RINs from renewable fuel later
exported to discharge their renewable fuel obligations.
In an apparent attempt avoid the sixty-day filing period,
the Obligated Parties argue that the EPA acted arbitrarily and
capriciously by failing even to reconsider its RIN policy for
renewable fuel exports. According to the Obligated Parties,
altering that policy is a significant alternative that the EPA
should have considered when settling on the 2018 Rule’s
applicable volumes and percentage standards. Although an
agency must consider comments “relevant to the agency’s
decision and which, if adopted, would require a change in an
agency’s proposed rule,” it “does not have to ‘make progress
on every front before it can make progress on any front.’” Nat’l
Mining Ass’n v. MSHA, 116 F.3d 520, 549 (D.C. Cir. 1997)
(per curiam) (first quoting Home Box Office, Inc. v. FCC, 567
F.2d 9, 35 n.58 (D.C. Cir. 1977) (per curiam); then quoting
Pers. Watercraft Indus. Ass’n v. Dep’t of Commerce, 48 F.3d
540, 544 (D.C. Cir. 1995)). Here, the Obligated Parties have
not explained how a change in the EPA’s RIN policy for
renewable fuel exports would have required the agency also to
change its proposed applicable volumes and percentage
standards. Therefore, the EPA could, without acting arbitrarily
and capriciously, take the discrete action of establishing annual
applicable volumes and percentage standards under the
Program while declining to reconsider its RIN policy for
renewable fuel exports.
B. The EPA’s Definition of “Obligated Party”
The Clean Air Act gives the EPA some leeway in
determining which parties in the transportation fuel industry
must comply with the Program’s percentage standards. The Act
39
provides that renewable fuel obligations “shall . . . be
applicable to refineries, blenders, and importers, as
appropriate.” 42 U.S.C. § 7545(o)(3)(B)(ii)(I) (emphasis
added). Exercising its discretion under the statute, the EPA has
long declined to obligate blenders. See 40 C.F.R.
§ 80.1406(a)(1). Refineries and importers have repeatedly
objected to the EPA’s decision not to require blenders to help
shoulder the Program’s regulatory burden, including in
comments to the 2018 Rule. The EPA, however, dismissed
those comments as outside the scope of the rulemaking.
There is no doubt that the EPA is correct that comments
regarding the agency’s “obligated party” definition fell outside
the scope of the 2018 rulemaking. In the Proposed Rule, the
EPA expressly declared that it was not reopening the issue:
“EPA is not re-opening for public comment in this rulemaking
the current definition of ‘obligated party.’” Proposed Rule, 82
Fed. Reg. at 34,211. Because the EPA did not reopen the issue,
the Obligated Parties’ challenge to the EPA’s rule is untimely
by over seven years, see Regulation of Fuels and Fuel
Additives: Modifications to Renewable Fuel Standard
Program, 75 Fed. Reg. 26,026, 26,037 (May 10, 2010), and we
therefore lack jurisdiction to review the limited reach of the
EPA’s regulations obligating only refineries and importers of
transportation fuel, see Sierra Club, 895 F.3d at 16.
The Obligated Parties, however, again attempt to side-step
the sixty-day filing requirement by arguing that the EPA acted
contrary to the Clean Air Act as well as arbitrarily and
capriciously by declining to reconsider its definition of
“obligated party” in promulgating the annual applicable
volumes and percentage standards in the 2018 Rule. We need
not consider this argument because this court’s recent decision
in Alon Refining resolves the issue. See slip op. at 53.
40
C. The EPA’s Method of Accounting for Small Refinery
Exemptions
After establishing the applicable volumes for a particular
year, the EPA translates those volumes into percentage
standards by dividing the applicable renewable fuel volumes
by the total volume of transportation fuel expected to be sold
in the United States in that year. See 42 U.S.C.
§ 7545(o)(3)(B)(ii)(II); 40 C.F.R. § 80.1405(c). Thus, if every
obligated party incorporates the required percentage of
renewable fuel into the gasoline and diesel it sells, the
transportation fuel industry as a whole will achieve the
established applicable volumes. As noted above, however, the
Program requires the EPA to exempt from compliance small
refineries experiencing disproportionate economic hardship in
complying with their renewable fuel obligations. 42 U.S.C.
§ 7545(o)(9). By permitting some obligated parties to
incorporate less renewable fuel into the gasoline and diesel
they sell, small refinery exemptions can impede attainment of
overall applicable volumes. To avoid such a shortfall, the EPA
raises the percentage standard for non-exempt parties in a given
year by subtracting from its calculations the transportation fuel
contributions of small refineries that were granted exemptions
before the EPA established the percentage standard for that
year. See 40 C.F.R. § 80.1405(c).
This solution, however, is only partial: the EPA does not
currently account for small refinery exemptions granted after it
promulgates percentage standards for that year—so-called
retroactive exemptions. To address any deficiency in its current
approach, the EPA solicited comment on how it should account
for small refinery exemptions in its calculation of the 2018
percentage standards. Proposed Rule, 82 Fed. Reg. at 34,241–
42. The EPA ultimately maintained its previous policy of
adjusting fuel percentages for exemptions granted before the
percentage standards are promulgated but not for exemptions
41
granted after. 2018 Rule, 82 Fed. Reg. at 58,523.
The National Biodiesel Board challenges the EPA’s
decision to retain its policy of disregarding retroactive small
refinery exemptions as failing to “ensure[]” that obligated
parties’ renewable fuel contributions achieve total applicable
volumes pursuant to 42 U.S.C. section 7545(o)(3)(B)(i). The
Board argues that the EPA should have adopted a policy
whereby it (1) adjusts the final percentage standards ex ante to
account “for small-refinery exemptions [the EPA] is
reasonably likely to grant after promulgating the standards”
and (2) corrects any deficiencies resulting from exemptions
actually granted ex post by “increasing later years’ standards.”
NBB Br. 18.
The Board, however, did not make its current challenge
during the 2018 rulemaking. Under the Clean Air Act, “[o]nly
an objection to a rule or procedure which was raised with
reasonable specificity during the period for public comment . . .
may be raised during judicial review.” 42 U.S.C.
§ 7607(d)(7)(B). “The court enforces this provision ‘strictly’ to
ensure that [the] EPA has an opportunity to respond to every
challenge” and so that “the court enjoys the benefit of the
agency’s expertise and possibly avoids addressing some of the
challenges unnecessarily.” Motor & Equip. Mfrs. Ass’n v.
Nichols, 142 F.3d 449, 462 (D.C. Cir. 1998) (citation omitted)
(quoting Nat. Res. Def. Council v. Thomas, 805 F.2d 410, 427
(D.C. Cir. 1986)). “[A]lthough we allow commenters ‘some
leeway in developing their argument before this court,’ the
comment must have provided ‘adequate notification of the
general substance of the complaint.’” Nat. Res. Def. Council,
571 F.3d at 1259 (quoting S. Coast Air Quality Mgmt. Dist. v.
EPA, 472 F.3d 882, 891 (D.C. Cir. 2006)).
The Board identifies two sets of comments it claims
42
preserved its current challenge, but both failed to give
“adequate notification of the general substance” of the Board’s
current proposal. Id. In one set of comments, the American
Petroleum Institute suggested that the EPA cease granting
retroactive exemptions altogether. In a similar vein, the other
set of comments by BP Products of North America asked the
EPA to cease granting retroactive exemptions or, in the
alternative, to adjust applicable volumes after the standards are
promulgated to account for any retroactive exemptions. The
Board’s offered solutions are significantly different from these
proposals—the Board does not ask the EPA to cease granting
retroactive exemptions or to adjust the applicable volumes for
the same year in which the retroactive exemptions are later
granted. Rather, the Board suggests that the EPA should
project the number of retroactive exemptions it expects to grant
when calculating percentage standards or should adjust the
following year’s applicable volumes to account for any
shortfall resulting from the grant of retroactive exemptions.
The comments submitted to the EPA therefore did not raise the
Board’s current proposals with “reasonable specificity,” 42
U.S.C. § 7607(d)(7)(B), leaving the EPA no opportunity to
respond to the Board’s challenge and burdening this court with
potentially unnecessary challenges, see Motor & Equip. Mfrs.
Ass’n, 142 F.3d at 462.
At oral argument, the Board acknowledged that neither of
its proposals “specifically was in front of the Agency” but
claimed that they are merely “alternative proposals” and that
the Board “d[oes] not have a specific proposal” that the EPA
must adopt. Oral Arg. Tr. 64, 66. Instead, the Board argued that
“the Court should tell EPA that its duty to ensure requires it to
do something, and then send [the 2018 Rule] back to the
Agency for the Agency to decide what that something is.” Oral
Arg. Tr. 65–66. Regardless whether we can vacate the 2018
Rule due to the EPA’s failure to do an unspecified
43
“something,” the Board did not make this argument in its briefs
and has therefore forfeited the issue. See Elec. Privacy Info.
Ctr. v. Presidential Advisory Comm’n on Election Integrity,
878 F.3d 371, 379 n.6 (D.C. Cir. 2017).
As a fallback, the Board argues that the EPA’s policy
regarding small refinery exemptions is a “vital assumption”
underlying the 2018 Rule and therefore no comment was
necessary to preserve its current challenge. Under the “key
assumption” doctrine, an agency has the “‘duty to examine key
assumptions as part of its affirmative burden of promulgating
and explaining a non-arbitrary, non-capricious rule’ and
therefore . . . ‘must justify that assumption even if no one
objects to it during the comment period.’” Okla. Dep’t of Envtl.
Quality v. EPA, 740 F.3d 185, 192 (D.C. Cir. 2014) (alteration
in original) (quoting Appalachian Power Co. v. EPA, 135 F.3d
791, 818 (D.C. Cir. 1998) (per curiam)). But the key
assumption doctrine applies to aspects of a rule that are
foundational to its existence, such as assumptions regarding the
agency’s statutory authority, see Nat. Res. Def. Council v. EPA,
755 F.3d 1010, 1023 (D.C. Cir. 2014) (“[T]hat EPA had
statutory authority . . . to exempt some hazardous-waste-
derived fuels from regulation was a ‘key assumption’
underlying EPA’s exercise of its discretion . . . .” (internal
quotation mark omitted)), or those pertaining to the agency’s
analytical methodology, see Small Refiner Lead Phase-Down
Task Force v. EPA, 705 F.2d 506, 535 (D.C. Cir. 1983)
(“[A]ggregate analysis is a vital assumption underlying the
[EPA’s] model. Thus, EPA must justify that assumption even
if no one objects to it during the comment period . . . .”). How
the EPA accounts for exemptions granted to a subset of a subset
of a subset of obligated parties (small fuel refineries
experiencing disproportionate economic hardship) is hardly an
assumption undergirding the entire 2018 Rule. In any event, the
EPA examined its policy regarding retroactive exemptions,
44
solicited comment on the issue, and reasonably rejected the
proposals it received. See Proposed Rule, 82 Fed. Reg. at
34,241–42; 2018 Rule, 82 Fed. Reg. at 58,523. Thus, to the
extent the EPA’s method of accounting for retroactive
exemptions in its percentage standard calculations is a “key
assumption,” the EPA has carried its “affirmative burden . . .
[to] justify that assumption.” Okla. Dep’t of Envtl. Quality, 740
F.3d at 192 (quoting Appalachian Power Co., 135 F.3d at 818).
V. Regulatory Flexibility Act
The Regulatory Flexibility Act requires an agency to
perform a regulatory flexibility analysis when conducting a
rulemaking. 5 U.S.C. §§ 603(a), 604(a). As part of that
analysis, the agency must assess any potential effects its
proposed rule may have on small entities and must consider
alternatives that would “minimize any significant economic
impact” on small entities to which the rule will apply. Id.
§ 603(b)(3), (c); accord id. § 604(a)(4), (6). Intervenor Small
Retailers Coalition argues that the court should vacate the 2018
Rule because the EPA failed to perform a regulatory flexibility
analysis assessing the potential impact of the 2018 Rule on
small fuel retailers. Although the Regulatory Flexibility Act
argument was articulated in a joint brief filed by the Obligated
Parties and the Coalition, the parties agree that only the
Coalition raises the argument.
We decline to exercise our discretion to hear this argument
brought only by an intervenor and not by any of the petitioners.
By failing to file a timely petition for review, the Coalition
forfeited any guarantee to judicial review of its claim. See E.
Ky. Power Coop., Inc. v. FERC, 489 F.3d 1299, 1305 (D.C.
Cir. 2007). Generally, “[i]ntervenors may only argue issues
that have been raised by the principal parties.” Nat’l Ass’n of
Regulatory Util. Comm’rs v. ICC, 41 F.3d 721, 729 (D.C. Cir.
1994). “[O]nly in ‘extraordinary cases’ will we depart from our
45
general rule.” Id. at 730 (quoting Lamprecht v. FCC, 958 F.2d
382, 389 (D.C. Cir. 1992)). For example, we will consider an
intervenor-only argument that raises “‘an essential’ predicate”
to the issues raised by the petitioners—that is, if the argument
has been “fully litigated in the agency proceedings and [is]
potentially determinative of the outcome of judicial review.”
Synovus Fin. Corp. v. Bd. of Governors, 952 F.2d 426, 433–34
(D.C. Cir. 1991). But we are reticent to consider an intervenor-
only argument if the intervenor “had every incentive to petition
for review of the administrative decision and its failure to do
so was without excuse.” Id. at 434.
The Coalition’s challenge does not constitute an
extraordinary case. Instead of demonstrating that its argument
presents an “essential predicate” to the issues the petitioners
raise or is otherwise of unusual importance, the Coalition
emphasizes (1) that the EPA did not object to its motion to
intervene, (2) that the Regulatory Flexibility Act argument
raises a pure question of law, and (3) that the Coalition has a
history of challenging the EPA’s definition of obligated parties.
The Coalition points to no case, and we are aware of none, in
which we have relied on similar facts to justify considering an
intervenor-only argument.
On the other hand, we believe this case is indistinguishable
from Time Warner Entertainment Co. v. FCC, 56 F.3d 151(D.C. Cir. 1995). In Time Warner, we declined to consider an
argument under the Regulatory Flexibility Act made only by
the intervenor, the Small Cable Business Association. Id. at
202–03. In doing so, we observed that the Association had
“participated in the agency proceedings and had the
opportunity to file an independent petition for review of the
Commission’s alleged rejection of the Association’s . . .
[Regulatory Flexibility Act] claim[].” Id. at 202. Just so here.
The Coalition submitted comments on the Proposed Rule
46
asking the EPA to conduct a regulatory flexibility analysis, and
the EPA’s alleged failure to conduct the requested analysis
gave the Coalition every incentive to file its own petition for
review of the final 2018 Rule. The Coalition has offered no
excuse for its failure to do so. We therefore decline to exercise
our discretion to consider the Coalition’s arguments under the
Regulatory Flexibility Act.
VI. Endangered Species Act
Finally, the Environmental Petitioners argue that the EPA
failed to comply with its obligations under the Endangered
Species Act (ESA), 16 U.S.C. §§ 1531–1544. The ESA
requires agencies to determine whether certain proposed
actions may affect endangered and threatened species, known
as “listed species,” and their critical habitat. Generally, unless
an agency determines that an action will not affect these species
and habitat, the agency must consult with the U.S. Fish and
Wildlife Service and the National Marine Fisheries Service (the
“Services”). The Environmental Petitioners contend that the
EPA disregarded these obligations by failing to determine
whether the 2018 Rule may affect listed species and critical
habitat. This challenge clears several threshold hurdles: we
have jurisdiction, the Environmental Petitioners have standing,
and the Environmental Petitioners preserved their challenge.
On the merits, we agree with the Environmental Petitioners that
the EPA did not comply with the ESA.
A. Jurisdiction
We have jurisdiction over challenges to “final action[s]”
taken by the EPA under the Clean Air Act. 42 U.S.C.
§ 7607(b)(1); see supra Part II. The term “final action” in the
Clean Air Act is synonymous with “final agency action” in the
Administrative Procedure Act. See Indep. Equip. Dealers
Ass’n v. EPA, 372 F.3d 420, 428 (D.C. Cir. 2004). This means
47
that the Clean Air Act empowers us to hear challenges to
“discrete agency actions,” but we may not consider more
sweeping “programmatic” attacks. See Norton v. S. Utah
Wilderness All., 542 U.S. 55, 62–65 (2004); Lujan v. Nat’l
Wildlife Fed’n, 497 U.S. 871, 891 (1990). The EPA argues that
the Environmental Petitioners’ claim is outside our jurisdiction
because it is a broad attack seeking “wholesale improvement
of” the RFS Program. EPA Br. 85 (quoting Lujan, 497 U.S. at
891).
We do not understand the claim so broadly. Although the
Environmental Petitioners criticize the RFS Program and
complain that the EPA has never consulted on the Program
during the past decade, their actual challenge is to the 2018
Rule. According to their petition, they “seek review” of “the
EPA’s failure to comply with the requirements” of the ESA “in
promulgating the Final Rule,” and they charge the EPA “in this
instance” with failing to consult with the Services “to ensure
that the Final Rule” would not harm listed species. Envtl. Pet’rs
Pet. ¶ 2, No. 18-1040 (D.C. Cir. Feb. 9, 2018). Because the
promulgation of the 2018 Rule is a discrete agency action, this
challenge is squarely within our jurisdiction under the Clean
Air Act.
B. Standing
The EPA also argues that we may not consider the
challenge because the Environmental Petitioners lack standing.
“The Constitution limits our ‘judicial Power’ to ‘Cases’ and
‘Controversies,’ and there is no justiciable case or controversy
unless the plaintiff has standing.” West v. Lynch, 845 F.3d
1228, 1230 (D.C. Cir. 2017) (quoting U.S. Const. art. III, § 2).
An association like each of the Environmental Petitioners has
standing “only if (1) at least one of its members would have
standing to sue in his own right; (2) the interest it seeks to
protect is germane to its purpose; and (3) neither the claim
48
asserted nor the relief requested requires the member to
participate in the lawsuit.” Ctr. for Biological Diversity v. EPA,
861 F.3d 174, 182 (D.C. Cir. 2017) (quoting Am. Trucking
Ass’ns v. Fed. Motor Carrier Safety Admin., 724 F.3d 243, 247
(D.C. Cir. 2013)).
The parties do not dispute that one of the Environmental
Petitioners—the Sierra Club—satisfies the latter two elements
of associational standing. Nor could they. As an organization
dedicated to protecting and enjoying the environment,
Addendum to Envtl. Pet’rs Br. (“Add.”) 275, 289, the Sierra
Club “has an obvious interest in challenging the EPA’s failure
to engage in consultation,” a process that ensures that agency
action “does not go forward without full consideration of its
effects on listed species,” Ctr. for Biological Diversity, 861
F.3d at 182 (internal quotation marks omitted). Also, the claim
asserted (that the EPA violated its obligations under the ESA)
and the relief requested (an order requiring the EPA to comply
with its obligations) do not require any member of the Sierra
Club to participate in this suit. See id.
The only disputed element of associational standing is the
first: whether at least one of the Sierra Club’s members would
have standing to sue in his or her own right. Generally, a
plaintiff must meet three requirements to have standing. The
plaintiff must have suffered (1) a concrete and particularized
injury that (2) was caused by the challenged conduct and (3) is
likely to be redressed by a favorable judicial decision. See
Hollingsworth v. Perry, 570 U.S. 693, 704 (2013) (citing
Lujan v. Defs. of Wildlife, 504 U.S. 555, 560–61 (1992)); Ctr.
for Biological Diversity, 861 F.3d at 181–82.
This case involves a twist on the usual standing inquiry
because the claim—that the EPA failed to meet its obligations
under the ESA—describes an “archetypal procedural injury.”
49
Ctr. for Biological Diversity, 861 F.3d at 182 (quoting
WildEarth Guardians v. Jewell, 738 F.3d 298, 305 (D.C. Cir.
2013)). In cases involving a procedural injury, our “primary
focus” is “whether a plaintiff who has suffered personal and
particularized injury has sued a defendant who has caused that
injury,” and our analyses of the injury and of causation tend to
involve similar concepts. Fla. Audubon Soc’y v. Bentsen, 94
F.3d 658, 664 (D.C. Cir. 1996) (en banc) (citing Lujan, 504
U.S. at 572 n.7); see Ctr. for Biological Diversity, 861 F.3d at
182–83. As to injury, the Sierra Club must show that the failure
to comply with the ESA “affects its members’ concrete . . .
interests,” Ctr. for Biological Diversity, 861 F.3d at 183; in
other words, that the failure “demonstrably increased some
specific risk of environmental harm[s]” that “imperil” the
members’ “particularized interests” in a species or habitat with
which the members share a “geographic nexus,” Fla. Audubon
Soc’y, 94 F.3d at 666–68; see Ctr. for Biological Diversity, 861
F.3d at 183–84. As to causation, the Sierra Club must show two
links: “one connecting the omitted procedural step to some
substantive government decision that may have been wrongly
decided because of the lack of that procedural requirement”
and “one connecting that substantive decision to the plaintiff’s
particularized injury.” Ctr. for Biological Diversity, 861 F.3d
at 184 (alterations and internal quotation marks omitted). The
Sierra Club need not show that harm to a member “has in fact
resulted from the EPA’s procedural failures,” but the Club must
“demonstrate that there is a ‘substantial probability’ that local
conditions will be adversely affected” by the final decision
infected with procedural failures and “thus harm a [Club]
member.” Id. (quoting Am. Petroleum Inst. v. EPA, 216 F.3d
50, 63 (D.C. Cir. 2000) (per curiam)).
The Sierra Club has established injury and causation
through at least two of its members, C. Elaine Giessel and
William Fontenot. We begin by describing their interests, then
50
we explain how the 2018 Rule affects those interests.
Giessel has aesthetic and recreational interests in
observing the whooping crane. Watching birds, including
whooping cranes, is one of her family’s favorite activities. Add.
286. For many years, she has supported the conservation of
critical habitat for the whooping crane. In 1997, she helped
create an organization that supports a Texas wildlife refuge;
she now visits the refuge annually to see the whooping cranes.
Id. at 283–84. She also belongs to an organization that supports
the Quivira National Wildlife Reserve in Kansas, and several
times per year she visits that refuge and another in Kansas, the
Cheyenne Bottoms State Waterfowl Management Area. She
intends to continue visiting these areas “for the foreseeable
future,” and her “enjoyment would be greatly diminished by
the loss of the Whooping cranes.” Id. at 285. These interests
are “undeniably . . . cognizable interest[s] for purpose of
standing.” Ctr. for Biological Diversity, 861 F.3d at 183
(quoting Lujan, 504 U.S. at 562–63).
Fontenot has similarly cognizable educational and
conservation interests in observing and studying the sturgeon
that live in the Gulf of Mexico and the Mississippi River Basin.
He has visited their habitat in the Gulf and intends to do so
again in the future. Add. 298. As the Conservation Chairman
for a Sierra Club Chapter, he has “been active in efforts to
protect the Gulf Sturgeon and its habitat,” including
commenting on the 2011 draft plan for the Bogue Chitto
Refuge at the mouth of the Mississippi River. Id. at 299. He has
studied sturgeon, such as those in the Pearl River in the
Mississippi River Basin, and he wishes to continue studying
the species because it helps him understand, protect, and
educate others about the Gulf and the Mississippi River. Id. at
296–99.
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The interests of Giessel and Fontenot are harmed by the
EPA’s alleged failure to comply with its ESA obligations in
promulgating the 2018 Rule. The EPA’s own 2018 Triennial
Report concluded that the Program’s annual standards likely
cause the conversion of uncultivated land into agricultural land
for growing crops that can be used to make biofuels. Since the
Program was enacted, acreage planted with corn and soybeans
has increased, and the evidence suggests that some of this
increase “is a consequence of increased biofuel production
mandates.” Id. at 123–25. In the same vein, a declaration by Dr.
Tyler Lark, an associate researcher at the University of
Wisconsin-Madison’s Center for Sustainability and the Global
Environment, explains that many studies have found that the
RFS Program has heightened demand for ethanol, thus
increasing the production of corn, soybeans, and similar crops
and incentivizing the conversion of uncultivated land to
agricultural land for growing these crops. See id. at 3–7 (Lark
Decl. ¶¶ 4–8). Land conversion is particularly marked in areas
surrounding ethanol refineries. See id. at 7–8 (Lark Decl. ¶¶ 9–
10).
According to the EPA’s Triennial Report and Dr. Lark,
this increase in crop production and land conversion harms the
habitats of numerous animals and fish, see id. at 212–20; id. at
9–18 (Lark Decl. ¶¶ 12–23), including—critically—the
particular habitats of the whooping cranes and Gulf sturgeon in
which Giessel and Fontenot have interests. Dr. Lark explains
that the Program’s annual standards may negatively affect the
whooping crane “through the loss and fragmentation of
habitat.” Id. at 13 (Lark Decl. ¶ 17). Most relevant to Giessel,
“[t]here is substantial conversion of land to biofuel feedstock
crops near the species’ designated critical habitat in Kansas.”
Id. In support, Dr. Lark cites a map showing that potential land
conversion occurred from 2008 to 2016 near and within the
very areas that Giessel visits to observe whooping cranes: the
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Quivira National Wildlife Reserve and Cheyenne Bottoms
State Waterfowl Management Area. Id. The Triennial Report
echoes this refrain, stating that the whooping crane’s critical
habitat in Kansas is “at risk of impairment” due to recent land
conversion, crop production, and ethanol refinery locations. Id.
at 64.
Gulf sturgeon are also at risk. The increase in crop
production and land conversion caused by the Program’s
annual standards “negatively impact[s] water quality.” Id. at
125–26. In particular, the standards contribute to oxygen
deficiencies (known as hypoxia) in the northern Gulf of
Mexico. Id. Indeed, “[t]he link between the Renewable Fuel
Standard, increased cropping intensification, and hypoxia in
the Gulf of Mexico” is “well established.” Id. at 20 (Lark Decl.
¶ 27) (citing studies). This may harm sturgeon, which are
“vulnerable” to hypoxia and have migration and feeding ranges
and critical habitat in the Gulf and at the mouth of the
Mississippi River. Id. at 21 (Lark Decl. ¶¶ 28–29); accord. id.
at 65; see also Endangered and Threatened Wildlife and Plants;
Designation of Critical Habitat for the Gulf Sturgeon, 68 Fed.
Reg. 13,370, 13,390, 13,408 (Mar. 19, 2003) (defining the Gulf
sturgeon’s critical habitat to include the Pearl River and the
Bogue Chitto River in the Mississippi River Basin). These are
precisely the waterways where Fontenot observes and studies
sturgeon. See Add. 296–99.
In these ways, the 2018 Rule created a demonstratable risk
to the particularized interests of two Sierra Club members in
the whooping crane in Kansas and the sturgeon in the Gulf and
the Mississippi River Basin. That risk is an injury to those
members. We reached the same conclusion in Center for
Biological Diversity v. EPA, 861 F.3d 174 (D.C. Cir. 2017).
There, an environmental association likewise charged the EPA
with failing to meet its ESA obligations before approving a
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pesticide that was toxic to insects. Id. at 180. We held that two
members of the association suffered cognizable injuries
because the EPA’s alleged failure created a “demonstrable
risk” to (1) a beetle that one member sought to observe in a
particular habitat several times a year, and (2) a butterfly that
lived in a county frequently visited by another member, who
intended to return to the county “to look for” the butterfly. Id.
at 183–84. Here, the 2018 Rule poses a similar risk to species
that share a “geographical nexus” with the Sierra Club
members. Id. (quoting Fla. Audubon Soc’y, 94 F.3d at 667).
The members have suffered cognizable injuries.
As to causation, the EPA’s alleged failure to comply with
its ESA obligations is plainly connected to the setting of
standards in the 2018 Rule, and those standards might have
come out differently if the EPA had complied. See id. at 184.
Also, there is a “substantial probability” that the EPA’s
ultimate decision adversely affected local conditions in Kansas,
the Gulf, and the Mississippi River Basin, harming cranes and
sturgeon to the detriment of Giessel and Fontenot. Id. (internal
quotation marks omitted). This establishes causation. Again,
Center for Biological Diversity is instructive. In that case, we
held that causation existed due to the substantial probability
that approving the pesticide threatened the members’ interests,
particularly given the pesticide’s toxicity to insects and the
“geographical overlap” between the beetle habitat and the areas
of likely pesticide use. Id. at 184–85. The EPA action here
similarly affects the local conditions that matter to Giessel and
Fontenot. The Sierra Club has established that at least one of
its members has suffered an injury caused by the EPA.
The EPA dismisses all this as “generalized concerns with
RFS statutory provisions and past RFS action,” which “do not
provide ‘evidence’ that the 2018 Rule causes the same alleged
injuries.” EPA Br. 91. We disagree. The EPA’s argument relies
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on the wrong standard. The Environmental Petitioners need not
show that the 2018 Rule “in fact” causes the same injuries; they
must show only a “substantial probability” of injury. Ctr. for
Biological Diversity, 861 F.3d at 183–84 (internal quotation
marks omitted). The EPA’s Triennial Report and the Lark
declaration provide evidence of just that. They describe the
effects of the annual standards promulgated over the past
decade, and the 2018 Rule is simply the next iteration of those
standards. Thus, the report and declaration certainly serve as
evidence of the likely effects of the 2018 Rule.
The EPA also argues that this case is more like Florida
Audubon Society than Center for Biological Diversity. Not so.
In Florida Audubon Society, an environmental association
challenged a new federal tax credit that allegedly harmed
wildlife habitats by incentivizing ethanol production. 94 F.3d
at 662. We held that no member had standing because there
was only a “general risk” of harm throughout the United States,
without a “geographic nexus” connecting a member to areas
harmed by the tax credit. Id. at 667–68. Also, the chain of
causation showing that the tax credit would harm habitats was
too “protracted” and “speculative,” for the chain depended on
“predictive assumptions” about uncertain incentives and
“presume[d] certain ‘independent action[s] of some third
party.’” Id. at 670 (quoting Simon v. Eastern Ky. Welfare
Rights Org., 426 U.S. 26, 42 (1976)). By contrast, here the
members of the Sierra Club share a geographic nexus with
areas likely affected by the 2018 Rule, and the chain of
causation does not depend on predictive assumptions about a
novel agency action. We have a decade’s worth of information,
including the EPA’s own Triennial Report, on the effects of the
Program’s annual standards. And unlike in Florida Audubon
Society, those standards do not simply establish uncertain tax
incentives that might lead third parties to take actions that harm
habitats, but rather directly regulate biofuel producers who are
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“before this court.” Id. at 670. It requires “no great speculative
leap” to conclude that the EPA caused an injury to the members
of the Sierra Club. Ctr. for Biological Diversity, 861 F.3d at
183 n.7.
This injury is also redressable. In this context, the
requirement of redressability is “relaxed.” Id. at 185 (quoting
WildEarth Guardians, 738 F.3d at 306). The Sierra Club need
not show that the EPA “would alter” the 2018 Rule if ordered
to comply with its ESA obligations, but rather that “the EPA
could reach a different conclusion.” Id. (quoting Nat’l Parks
Conservation Ass’n v. Manson, 414 F.3d 1, 5 (D.C. Cir. 2005)).
The Sierra Club has made this showing. There “remains at least
the possibility” that the EPA could set different standards by,
for example, invoking the general waiver for severe
environmental harm. Id.; see 42 U.S.C. § 7545(o)(7)(A)(i).
Having established that at least one of its members would
have standing to sue, the Sierra Club has associational
standing. We do not address whether the other Environmental
Petitioner, the Gulf Restoration Network, has standing. When
multiple associations bring suit, only one must have standing.
See Ctr. for Biological Diversity, 861 F.3d at 182.
C. Preservation
The EPA next argues that we may not consider the
Environmental Petitioners’ challenge because it was not
preserved. As we explained in Part IV.C, the Clean Air Act
directs that “[o]nly an objection to a rule . . . raised with
reasonable specificity during the period for public comment . . .
may be raised during judicial review.” 42 U.S.C.
§ 7607(d)(7)(B). An objection is reasonably specific if it
provides “adequate notification of the general substance of the
complaint.” Nat. Res. Def. Council, 571 F.3d at 1259 (quoting
S. Coast Air Quality Mgmt. Dist., 472 F.3d at 891).
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The Environmental Petitioners preserved their claim in a
letter sent to the EPA on July 14, 2017. At that time, the
upcoming fuel standards were those that were to be
promulgated in the 2018 Rule. The letter criticizes the Program
generally, but it also objects that the EPA did not consult on
the Program’s annual standards. The letter states on its first
page that the EPA has violated the ESA “[b]y failing to initiate
and complete consultation with the [Services] in . . . setting
annual volumetric standards for renewable fuels” and in
“failing to exercise[] its waiver authority.” J.A. 1450. The letter
elaborates that the “annual standards” have harmed various
species, and in setting the standards, the EPA “ha[s] not
complied” with its obligations under the ESA. J.A. 1458–69.
The letter specifically identifies these annual standards through
2017.
The EPA argues that the letter is not sufficiently specific
because it does not refer to the forthcoming 2018 standards or
urge the EPA to consult on the 2018 Rule in particular. Given
these omissions, we too might doubt that the letter preserved
an objection to the 2018 Rule were it not for some additional
facts: the EPA placed the letter in the administrative record for
the 2018 Rule, and the letter appears on the EPA’s rulemaking
docket as a comment on the 2018 Rule. See EPA Docket, EPA-
HQ-OAR-2017-0091-5030, J.A. 1450; Oral Arg. Tr. 106. In
our view, these facts lend substantial support to the argument
that the letter can be reasonably read to target the 2018 Rule
and provided “adequate notification of the general substance”
of the challenge. Nat. Res. Def. Council, 571 F.3d at 1259
(quoting S. Coast Air Quality Mgmt. Dist., 472 F.3d at 891).
After all, the EPA’s own actions reflect as much.
We note that the letter is dated July 14, 2017, making it
possible that the EPA received the letter before and not “during
the period for public comment” that opened on July 21. 42
57
U.S.C. § 7607(d)(7)(B) (emphasis added); see Proposed Rule,
82 Fed. Reg. at 34,206. But the EPA does not make that
argument. See EPA Br. 86 (arguing that the letter was
insufficiently specific, not that it was submitted outside the
comment period); cf. id. at 86–87 & n.39 (arguing that other
documents failed to preserve the challenge because they were
submitted after the comment period). Perhaps the EPA does not
urge this point because the letter was sent before the comment
period but received during the period, which its placement on
the rulemaking docket for the 2018 Rule suggests. In any event,
we need not resolve this issue. Section 7607(d)(7)(B) does not
impose jurisdictional requirements, so we are not obligated to
address issues that go undisputed by the parties. See EPA v.
EME Homer City Generation, LP, 572 U.S. 489, 511–12
(2014); CTS Corp. v. EPA, 759 F.3d 52, 60 n.2 (D.C. Cir.
2014). On this record and the arguments before us, we hold that
the Environmental Petitioners preserved their ESA claim.
D. Merits
Because this claim survives the EPA’s threshold
objections, we turn to its merits. The Environmental Petitioners
argue that the EPA did not comply with its obligations under
the ESA in promulgating the 2018 Rule. The ESA requires
each federal agency to “insure that any action authorized,
funded, or carried out by such agency . . . is not likely to
jeopardize the continued existence of any [listed] species or
result in the destruction or adverse modification” of designated
critical habitat by adhering to the consultation process. 16
U.S.C. § 1536(a)(2); see Ctr. for Biological Diversity, 861 F.3d
at 177–78; see also 50 C.F.R. § 402.02 (defining “listed
species” as those “determined to be endangered or threatened”
under 5 U.S.C. § 1533). As the first step in this process, the
agency must make an “effects determination,” i.e., the agency
must assess whether a proposed action “may affect” listed
species or critical habitat. 50 C.F.R. § 402.14(a). If so, the
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agency must engage in formal consultation with the Services.
Id. But if the agency makes a “no effect” determination by
finding that its proposed action “will not affect any listed
species or critical habitat,” then “it is not required to consult”
with the Services. Ctr. for Biological Diversity v. U.S. Dep’t of
Interior, 563 F.3d 466, 475 (D.C. Cir. 2009) (emphasis added);
see also 50 C.F.R. §§ 402.13(a), 402.14(b) (the consultation
process terminates and no further action is necessary if the
agency determines, with the written concurrence of the relevant
Service, that the action “is not likely to adversely affect” any
listed species or critical habitat).
The EPA claims that it was not obligated to make an
effects determination or consult with the Services on the 2018
Rule because the Clean Air Act required the agency to establish
certain fuel volumes, which eliminated any discretion it might
otherwise have had to act differently based on information
gathered through consulting with the Services. It is true that the
EPA’s duty to consult with the Services “covers only
discretionary agency actions and does not attach to actions . . .
that an agency is required by statute to undertake.” Nat’l Ass’n
of Home Builders v. Defs. of Wildlife, 551 U.S. 644, 669
(2007). But the EPA’s argument fails because the agency had
discretion to reduce fuel volumes in at least two ways. First, the
EPA could have invoked its authority to issue a general waiver
allowing it to reduce statutory volumes that “would severely
harm the . . . environment of a State, a region, or the United
States.” 42 U.S.C. § 7545(o)(7)(A)(i). Second, the EPA
retained discretion to establish volumes for biomass-based
diesel. When setting such volumes, the EPA must consider six
factors, one of which allows the EPA to modify volumes based
on environmental considerations, such as concerns about
wetland conversion, wildlife habitat, and water quality. See id.
§ 7545(o)(2)(B)(ii)(I).
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The EPA next argues that it made a “no effect”
determination, thus eliminating any obligation to consult with
the Services. According to the EPA, it “expressly determined
that its actions do not affect” listed species, EPA Br. 99, by
stating in response to comments that “any harm to threatened
or endangered species or their critical habitat that may be
associated with crop cultivation in 2018 could not be attributed
with reasonable certainty to EPA’s action” in promulgating the
2018 Rule, id. (quoting J.A. 1249); see also J.A. 1253 (EPA
similarly stating that “whatever impacts or threats to listed and
endangered species or their critical habitats that may be caused
by corn or soy cultivation in 2018 cannot with reasonable
certainty be attributed to” the 2018 Rule).
These statements are not a “no effect” determination. The
inability to “attribute[]” environmental harms “with reasonable
certainty” to the 2018 Rule, EPA Br. 99 (quoting J.A. 1249), is
not the same as a finding that the 2018 Rule “will not affect”
or “is not likely to adversely affect” listed species or critical
habitat. Moreover, the EPA made this purported “no effect”
determination in response to comments urging the EPA to
reduce volumes through a finding of “severe environmental
harm” under 42 U.S.C. § 7545(o)(7)(A)(i). See J.A. 1248–49.
Concluding that the 2018 Rule may not cause harms that meet
that high threshold does not necessarily mean the 2018 Rule
will have no effect on listed species or critical habitat. Finally,
the EPA’s brief omits an important part of the purported “no
effect” determination, which reads: “[W]e believe that even
with additional research and analysis, . . . any harm to
threatened or endangered species or their critical habitat that
may be associated with crop cultivation in 2018 could not be
attributed with reasonable certainty to EPA’s action . . . .” J.A.
1249 (emphasis added). In other words, the EPA concluded
that it is impossible to know whether the 2018 Rule will affect
listed species or critical habitat. That is not the same as
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determining that the 2018 Rule “will not” affect them.
By failing to make an effects determination, the EPA did
not comply with its obligations under the ESA. See 16 U.S.C.
§ 1536(a)(2); 50 C.F.R. §§ 402.13(a), 402.14(a). We therefore
grant the Environmental Petitioners’ petition for review and
remand the 2018 Rule to the EPA to make an appropriate
effects determination. See Ctr. for Biological Diversity, 861
F.3d at 188–89; Am. Bird Conservancy, Inc. v. FCC, 516 F.3d
1027, 1034–35 (D.C. Cir. 2008).
The Environmental Petitioners ask us to go a step further
and make the effects determination ourselves. In their view, the
evidence conclusively establishes that the 2018 Rule “may
affect” listed species or critical habitat. Envtl. Pet’rs Br. 28–29.
This would trigger formal consultation, 50 C.F.R. § 402.14(a),
and so the Environmental Petitioners ask us to order the EPA
to consult with the Services, Envtl. Pet’rs Br. 30. On this
record, we decline to make this effects determination on the
EPA’s behalf, preferring instead to allow the EPA to develop
the record and decide the issue in the first instance on remand.
See Ctr. for Biological Diversity, 861 F.3d at 189 n.13.
Finally, the Environmental Petitioners do not ask us to
vacate the 2018 Rule. Envtl. Pet’rs Br. 31 (seeking remand
“without vacatur”). Accordingly, and consistent with our
practice in similar cases, our remand is without vacatur. See,
e.g., Ctr. for Biological Diversity, 861 F.3d at 188–89; North
Carolina v. EPA, 550 F.3d 1176, 1178 (D.C. Cir. 2008) (per
curiam).
VII. Conclusion
For the foregoing reasons, we deny the petitions for review
filed by American Fuel & Petrochemical Manufacturers,
Valero Energy Corporation, and the National Biodiesel Board.
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We grant the Environmental Petitioners’ petition for review
and remand the 2018 Rule without vacatur for further
proceedings consistent with this opinion.
So ordered.