Center for Biological Diversity v. EPA

The D.C. Circuit Court of Appeals found that EPA’s analysis of the climate change effects of its 2023 rule setting Renewable Fuel Standards (RFS) Program standards for 2023, 2024, and 2025 was arbitrary and capricious. The court said EPA failed to adequately explain why it relied on “an admittedly outdated study” from 2010 for its assessment of the greenhouse gas (GHG) emissions associated with crop-based biofuels instead of using newer data that estimated higher emissions for corn-based ethanol. The court said the “substantial, unexplained discrepancy” in the high-end emissions estimates from the 2010 study and in the newer data was “particularly problematic” because corn-based ethanol “is by volume the largest category of renewable fuel produced in the United States” and “drives the largest aggregate portion of GHG emissions attributable to renewable fuels.” The court said that if EPA improperly relied on the lower emissions estimate, it would lack support for its conclusion that corn-based ethanol provides some GHG reduction compared to gasoline, and its determinations of renewable fuel volumes could have been skewed. The D.C. Circuit also found that the U.S. Fish and Wildlife Service (FWS) did not adequately explain its conclusion that the standards would have “no effect” on endangered species or their critical habitat. The court rejected two other critiques of EPA’s climate change analysis: (1) its decision not to use a “model comparison exercise” to evaluate climate effects and (2) its decision not to include the “carbon opportunity cost” of renewable fuel production in its climate change analysis. The court found that EPA’s decision not to use the carbon opportunity cost analysis for which environmental groups advocated was “reasonable and reasonably explained” because that analysis relied on a “flawed assumption” that if land were not used to grow renewable fuel feedstocks it would lie fallow and regenerate native vegetation. The court’s majority also rejected the environmental groups’ contention that EPA’s weighing of statutory factors was arbitrary and capricious because it gave “short shrift” to harms to the environment, environmental justice, and communities. The court also rejected all arguments made by petroleum product refiners, a renewable fuel producer, and a trade association representing certain biodiesel stakeholders. The court concluded that remand without vacatur was the appropriate remedy because EPA and FWS might be able to adequately justify their conclusions regarding climate change and effects on endangered species and critical habitats on remand. A dissenting judge disagreed with the majority’s conclusion that EPA “adequately accounted” for relevant costs and benefits and would have set aside the standards because “EPA has shown no significant possibility that it will be able to rehabilitate the requirements on remand.”