Producers ask appeals court to rethink EPA’s import rules

Source: Amanda Reilly, E&E reporter • Posted: Friday, October 28, 2016

A three-judge panel today seemed hesitant to reopen U.S. EPA’s 2010 implementing rules for the federal renewable fuel standard program.

In a lawsuit, the National Biodiesel Board has asked judges to take another look at certain parts of those rules in light of EPA’s approval of a program for certifying the soybean oil that’s used as an input in Argentinian biodiesel production.

The Argentinian program is “broader and fundamentally different” than what EPA’s regulations were designed to do, Bryan Killian, an attorney representing the National Biodiesel Board, told judges today.

But federal judges of the U.S. Court of Appeals for the District of Columbia Circuit this morning largely ignored NBB’s arguments that they should take another look at the rules themselves, focusing only on whether the Argentinian program fits into their requirements.

Judge David Tatel, an appointee of President Clinton, and Judges Janice Rogers Brown and Brett Kavanaugh, both appointees of President George W. Bush, today heard the case.

The provision in question requires foreign producers to certify that biofuels coming into the United States for use in the RFS program are made from only renewable biomass. Foreign countries typically use a “map-and-track” system based on a review of records that is meant to ensure that agricultural land does not expand as a result of the renewable fuel standard.

EPA, however, laid out how countries can apply to use an alternative tracking approach.

Argentina, which is the leading soybean producer and soybean oil exporter in the world, is the first country to use the alternative method.

Under the system approved by EPA in January 2015, the Argentine chamber of biofuels, or CARBIO, is required to classify “go areas” in Argentina where land was cleared or cultivated prior to 2007.

A third party is then required to certify that feedstocks used in biodiesel exports to the United States for use in the RFS program come from those areas. Biodiesel producers arrayed under CARBIO are paying for the third-party reviews under contract.

When EPA announced its approval of the program, NBB immediately characterized it as easing the way for more Argentinian biodiesel to enter the U.S. market and crowd out domestic producers (Greenwire, Jan. 28, 2015).

The group filed two lawsuits in March 2015 challenging both EPA’s approval of the program and the section of the 2010 regulations dealing with alternative tracking methods. The biodiesel group also is challenging EPA’s failure to notify the public or hold a public comment period before approving the program in January 2015.

Along with not wading into industry’s claims that the underlying regulations should be reopened, the three-judge panel today also largely ignored the claims that EPA should have accepted comments on the program. The judges also didn’t touch EPA’s claims that NBB doesn’t have standing to bring its lawsuit.

Instead, they focused on whether satellite imagery could meet EPA’s document-keeping requirements and whether U.S. biodiesel import facilities should have been covered.

EPA is allowing Argentinian producers to use satellite technology to establish the “go areas.”

NBB argues that Argentina lacks the required written historical records and that satellite technology is a poor substitute.

“It’s untested. We just don’t know if satellites can be used in this way,” Killian said.

Tatel, however, asked whether the court should question EPA’s expertise in the subject. “How can we second-guess the agency’s judgment about use of satellites?” Tatel said. “How would we say that’s inadequate?”

Perry Rosen, a Justice Department attorney representing EPA in the case, argued that the agency’s decision to allow satellite imagery deserved deference. He argued that the technology has been proven — even if it has not yet been used to specifically determine whether Argentinian lands were historically used for agriculture.

“You can literally look at these photographs and see was this forested or not,” he said.

Judges today also questioned whether EPA had an obligation to wrap U.S. biodiesel importers into the CARBIO program. The tracking system covers only producers of biodiesel in Argentina.

Kavanaugh several times noted that in some places, EPA’s regulations suggested that both production and import facilities need to be covered, while in other places, the regulations said either one or the other should be part of the program.

“Is there a gap if you only have one and not the other?” Kavanaugh asked.

But Rosen argued that EPA’s regulations are meant to cover only the generator of credits under the renewable fuel standard program. Argentina’s program is sufficient, he said, because the biodiesel producers that generate credits are covered.