Coalition for Renewable Natural Gas v. EPA

108 F.4th 846
CourtCourt of Appeals for the D.C. Circuit
DecidedJuly 19, 2024
Docket23-1248
StatusPublished

This text of 108 F.4th 846 (Coalition for Renewable Natural Gas v. EPA) is published on Counsel Stack Legal Research, covering Court of Appeals for the D.C. Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Coalition for Renewable Natural Gas v. EPA, 108 F.4th 846 (D.C. Cir. 2024).

Opinion

United States Court of Appeals FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued April 25, 2024 Decided July 19, 2024

No. 23-1248

COALITION FOR RENEWABLE NATURAL GAS, PETITIONER

v.

ENVIRONMENTAL PROTECTION AGENCY, RESPONDENT

AMERICAN FUEL & PETROCHEMICAL MANUFACTURERS, ET AL., INTERVENORS

On Petition for Review of a Final Action of the Environmental Protection Agency

Jonathan Y. Ellis argued the cause for petitioner. With him on the briefs was Sandra P. Franco.

Kimere J. Kimball and Alexander M. Purpuro, Attorneys, U.S. Department of Justice, argued the causes for respondent. With them on the brief were Todd Kim, Assistant Attorney General, and Lucas May, Attorney, U.S. Environmental Protection Agency. Joseph W. Crusham and John H. Martin, Attorneys, U.S. Department of Justice, entered appearances. 2 Before: HENDERSON, MILLETT, and GARCIA, Circuit Judges.

Opinion for the Court filed by Circuit Judge MILLETT.

MILLETT, Circuit Judge: To ensure that America’s transportation-fuel mix contains the statutorily required amounts of renewable fuel, EPA updated how it accounts for biogas-derived renewable fuel. Because its prior system was vulnerable to fraud and error, EPA implemented a more structured process that allocated reporting burdens among different fuel groups. An industry group petitioned this court to overturn EPA’s changes. Because EPA’s modifications are reasonable and supported by substantial evidence, we deny the petition for review.

I

A

Under the Clean Air Act’s Renewable Fuel Program, EPA “shall promulgate regulations to ensure that * * * transportation fuel sold or introduced into commerce in the United States * * * contains at least the applicable volume of renewable fuel[.]” 42 U.S.C. § 7545(o)(2)(A)(i). Renewable fuel is produced from specific organic matter, known as qualifying “renewable biomass[,]” and is “used to replace or reduce the quantity of fossil fuel present in a transportation fuel.” Id. § 7545(o)(1)(J). “[R]enewable biomass,” in turn, is any matter that falls into one of seven specified categories such as “[a]nimal waste and material and animal byproducts[,]” [a]lgae[,]” and certain “[p]lanted trees and tree residue[.]” Id. § 7545(o)(1)(I). As such, “renewable fuel” encompasses a swath of products that include particular ethanols, biodiesels, 3 and compressed or liquified natural gases. 40 C.F.R. § 80.1426, Table 1.

Congress charged EPA with calculating annually the “applicable volume of renewable fuel” to be used in the Nation’s transportation fuel. 42 U.S.C. § 7545(o)(2)(A)(i); id. § 7545(o)(2), (3). It also directed EPA to place “renewable fuel obligation[s]” on “refineries, blenders, and importers, as appropriate” to ensure those entities bring enough renewable fuel into the United States marketplace. Id. § 7545(o)(3)(B)(ii)(I); American Fuel & Petrochemical Manufacturers v. EPA, 937 F.3d 559, 570–571 (D.C. Cir. 2019) (per curiam).

Those covered parties demonstrate compliance with renewable fuel obligations through the EPA’s credit-trading program. See 42 U.S.C. § 7545(o)(5); American Fuel, 937 F.3d at 571–572. That program’s lifeblood is a credit called a “RIN.” Wynnewood Ref. Co., LLC v. EPA, 77 F.4th 767, 774 (D.C. Cir. 2023). Parties generate RINs by producing or importing renewable fuel. See American Fuel, 937 F.3d at 571–572; 40 C.F.R. § 80.1426. RINs attach to the renewable fuel and can later be separated from the fuel—that is, they become an asset in the hands of their owner that can either be credited toward the owner’s own renewable-fuel obligations or traded to other companies in need of renewable-fuel credits. See 40 C.F.R. §§ 80.1426, 80.1427, 80.1428, 80.1429; 42 U.S.C. § 7545(o)(5)(B); Sinclair Wyo. Ref. Co. LLC v. EPA, 101 F.4th 871, 879 (D.C. Cir. 2024).

This case involves biogas. Biogas comes from decomposing organic matter like sewage, food and crop waste, or manure. It can be used to produce transportation fuel once it has been collected, treated, and then liquified or compressed. When the decomposing organic matter that created the biogas 4 is a qualifying renewable biomass, EPA considers the biogas- derived transportation fuel to be renewable fuel. See 40 C.F.R. §§ 80.125(b)(3), 80.1426(a)(1)(ii).

Biogas is commonly converted into renewable fuel through a multi-step commercial distribution system. First, the biogas is extracted from its source waste at places like landfills or livestock operations. Second, the extracted biogas is treated to remove impurities and to increase its methane content. This treatment process transforms the biogas into renewable natural gas which is then injected into a commercial pipeline. Third, downstream parties extract the renewable natural gas and convert it to renewable fuel by liquifying or compressing it so that it can be used as transportation fuel.

Renewable natural gas producers generate RINs when the renewable natural gas is injected into the pipeline. See 40 C.F.R. § 80.125(b)(1). Those RINs can be separated (i.e., turned into an asset distinct from the fuel) only by the party who withdraws the renewable natural gas from the pipeline, the party that compresses or liquifies it, or the party that uses or dispenses the compressed or liquified natural gas as transportation fuel. Id. § 80.125(d)(1).

B

Administering the RIN process for biogas-derived renewable fuel has proven difficult. See 88 Fed. Reg. 44468, 44524 (July 12, 2023). That is because the end-product fuel counts as renewable only if it is used for transportation fuel and the gas that produced it comes from the right source. See 42 U.S.C. § 7545(o)(1)(J). Yet it is hard to tell at the start of the chain where the biogas will end up, and it is just as hard to tell at the chain’s end where the biogas began. See 88 Fed. Reg. at 44524–44526. EPA has to meticulously track each step of the 5 process to make sure that only valid RINs are generated and accepted. And parties have incentive to try to pass off non- renewable products as renewable since RINs have “significant value” in the transportation-fuel marketplace. Id. at 44525; J.A. 537 (EPA Response to Comments). The system also risked leaving parties confused or unable to verify whether the fuel they possessed was RIN-eligible, and so inadvertent mistakes could easily be made when generating RINs. 88 Fed. Reg. at 44524–44526.

As a result, in 2023, EPA revamped its approach to biogas- derived renewable fuel’s commercial-distribution and RIN- generation track.

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108 F.4th 846, Counsel Stack Legal Research, https://law.counselstack.com/opinion/coalition-for-renewable-natural-gas-v-epa-cadc-2024.