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D.C. Circuit Vacates Greenhouse Gas Biogenic CO2 Deferral Rule

Posted Monday, July 22nd, 2013

On July 12, 2013, the United States Court of Appeals for the District of Columbia Circuit vacated the Environmental Protection Agency’s (EPA’s) 2011 biogenic deferral rule (Deferral Rule), which deferred regulation of biogenic carbon dioxide (CO2) emissions for three years.  Biogenic CO2 emissions result from the combustion or decomposition of biologically-based materials (e.g., landfill waste, manure, ethanol, all types of wood, etc.) rather than combustion of fossil fuels or minerals.

Citing scientific uncertainty over how to account for biogenic CO2 emissions, EPA proposed the Deferral Rule and pledged to study the science further during the three-year deferral period.  EPA justified the Deferral Rule under three administrative law doctrines: the de minimus doctrine, the one-step-at-a-time doctrine, and the administrative necessity doctrine.  Arguing that EPA’s invocation of these doctrines was arbitrary and capricious, the Center for Biological Diversity, along with several other environmental groups, challenged the final Deferral Rule.

In a 2-1 decision written by Circuit Judge Tatel, the Court held that the cited doctrines failed to justify the rule.  Turning first to the de minimus doctrine, which allows agencies to grant regulatory exemptions when the burdens of regulation yield a gain of trivial or no value, the Court determined that the doctrine was intended for establishing permanent regulatory exemptions—not temporary exemptions such as the Deferral Rule’s three-year exemption.  EPA ultimately conceded the issue.

Next, the Court turned to the one-step-at-a-time doctrine, which authorizes agencies to promulgate regulations in a piecemeal fashion.  Finding EPA’s invocation of the doctrine to be arbitrary and capricious, the Court reasoned that an agency invoking the doctrine must, at a minimum, articulate what it believes the statute requires and how it intends to achieve that goal.  While the Deferral Rule did explain the scientific uncertainty surrounding biogenic CO2, it failed to explain what the Clean Air Act requires in relation to the regulation of biogenic CO2 emissions.  As the Court put it, “the Deferral Rule is one step towards . . . what?  Without a clear answer to that question, EPA has no basis for invoking the one-step-at-a-time doctrine.”

Last, the Court discussed the administrative necessity doctrine.  This doctrine permits an agency to avoid implementing a statute by showing that attainment of the statutory objectives is impossible, though the agency may only adopt the narrowest feasible exemption.  EPA argued that requiring permits for biogenic CO2 sources would frustrate the goals of the greenhouse gas “Tailoring Rule”, emphasizing both that biogenic CO2 sources could have a negligible impact on the net carbon cycle and the extensive workload of processing permit applications.  In doing so, EPA rejected a proposed middle-ground option that would have required biogenic CO2 sources to obtain permits only if they failed to make any effort to take into account net carbon cycle impacts.  EPA rejected this approach because it might still result in regulation of sources with trivial or beneficial impacts on the net carbon cycle.  The Court found EPA’s rejection to be arbitrary and capricious.  However, reasoning that given EPA’s obligation to adopt the narrowest exemption possible, EPA should have explained why it rejected an option that would have reduced emissions from some sources the Deferral Rule exempts.

Concurring and dissenting opinions were also filed, respectively, by Circuit Judges Kavanaugh and Henderson.  A copy of the decision can be found here.

For additional information, contact Andrew Holway.

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