Environmental Law Strategy

Environmental Law Strategy

News & Commentary on Developments in Environmental Law and Policy

The State and Local GMO Regulatory Landscape – Post-Election Edition

Posted in Genetically Modified Organisms

The November election changed the regulatory landscape for genetically modified organisms (“GMO”). Though none of the proposed GMO labeling laws on state ballots succeeded, two counties were successful in passing either a ban or moratorium on the growth or cultivation of bioengineered crops.

Two major GMO labeling laws were presented to voters for consideration in Oregon and Colorado. Each measure failed. In Colorado, the voters defeated the proposed labeling law by a wide margin: approximately 66% of voters rejected the measure. In Oregon, the election results were significantly closer, with the opposition prevailing by less than a 0.5% margin. The election results leave Vermont as the only state with an applicable labeling law that will impose affirmative labeling obligations on food manufacturers and retailers.

Two county measures regulating the growth of GMOs passed this election, one in Maui County, Hawaii, and the other in Humboldt County, California.

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Ninth Circuit Rebuffs Shell’s Declaratory Judgment Act Suit

Posted in APA, Declaratory Judgment Act

The Ninth Circuit recently rejected “a novel litigation strategy” under the Declaratory Judgment Act (DJA). Shell Gulf of Mex. v. Ctr. for Biological Div., 13-35835 (9th Cir. Nov. 12, 2014) (Slip Op.). According to the Ninth Circuit, a beneficiary of a federal agency action cannot establish a case or controversy under Article III in a DJA action against nongovernment parties where the legal interests of the beneficiary and the federal agency are not adverse. The court reached this determination notwithstanding the fact that the DJA suit was filed against groups vehemently opposed to the agency action that had threatened litigation. This opinion may reduce the potential strategies that a beneficiary can employ to protect its rights from the threat of litigation regarding a federal agency decision under the Administrative Procedure Act (APA).

This lawsuit began as a result of Shell Gulf of Mexico’s (Shell) efforts to explore the Arctic for oil and gas development. In order to do so, Shell obtained lease rights to areas in the Beaufort and Chukchi Seas from the federal government and as part of this process submitted oil spill response plans with the federal Bureau of Safety and Environmental Enforcement (BSEE) for approval. The BSEE approved the plans in accordance with the Oil Pollution Act. During the review period a large number of environmental organizations opposed the approvals and threatened to sue if the BSEE granted its approval.

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The State and Local Regulatory Landscape for Bioengineered Plants

Posted in Genetically Modified Organisms

Across the country, numerous state and local governments have enacted or are considering laws affecting the cultivation, use, and labeling of genetically engineered plants (“GMOs”).  These laws are best described in three different categories: (1) laws that ban the cultivation of GMOs; (2) laws that regulate the handling of GMOs; and (3) laws that impose disclosure requirements on the sale of GMOs, such as food labeling.  The landscape of GMOs laws is constantly in flux.  Although only a few laws are currently in effect, many more are being proposed.  Additionally, some laws are subject to legal challenges, and at least one has been overturned.

Laws that ban GMOs are straightforward prohibitions against any form of growing a bioengineered plant.  Currently, there are versions of these laws in California (Marin, Mendocino, Santa Cruz, and Trinity counties, and the cities of Arcata and Point Arena), Hawaii (Hawaii County), Maine (Town of Montville), Oregon (Jackson and Josephine counties), and Washington (San Juan County).  Generally, these laws make it unlawful for “any person or entity to propagate, cultivate, raise, or grow genetically modified organisms” in the specified jurisdiction.  Some versions of these laws are more stringent, making it unlawful to “sell, distribute, propagate, cultivate, raise or grow seeds or crops of genetically engineered organisms.”  Arcata Ordinance 1350; see also Point Arena Code § 8.25 (same).  Other versions, such as Hawaii County’s, impose a general prohibition on the open air cultivation, propagation, development, and testing of genetically engineered crops or plants, but exempt certain crops (e.g., papaya) and allow for continued cultivation on land where GMOs were already planted before the ordinance became effective.  Hawaii County Code § 14-128. Continue Reading

OSHA Expands Employers’ Reporting Requirements for Work-Related Injuries and Fatalities

Posted in OSHA

On Sept. 11, 2014, the U.S. Department of Labor’s Occupational Safety and Health Administration (“OSHA”) announced revisions to its rule that requires employers to notify OSHA when employees suffer a work-related hospitalization or fatality. Under the previous rule, OSHA’s regulations required an employer to report the work-related fatality of one or more persons and the hospitalization of three or more workers for more than first aid. OSHA did not require employers to report the hospitalization of one employee, amputations, or the loss of an eye under the previous version of the rule.

The revisions announced in September 2014 expand employers’ reporting requirements. Under the revised rule, employers will be required to notify OSHA of work-related fatalities within eight hours, and work-related in-patient hospitalizations, amputations, or losses of an eye within 24 hours. Occupational Injury and Illness Recording and Reporting Requirements—NAICS Update and Reporting Revisions, 79 Fed. Reg. 181 (Sept. 18, 2014) (to be codified at 29 C.F.R. pt. 1904). Continue Reading

District of Arizona Rethinks NEPA’s Zone of Interests in Light of Recent Supreme Court Opinion on “Prudential” Standing

Posted in NEPA

On September 30, 2014, the United States District Court for the District of Arizona (Campbell, D.J.) issued an order in Yount v. Salazar, Nos. 11-8171 et al., 2014 WL 4904423 (D. Ariz. Sept. 30, 2014).  As part of this order, the court determined that certain business plaintiffs’ alleged injuries did not fall within the “zone of interests” of the National Environmental Policy Act (“NEPA”), drawing in part on a recent Supreme Court opinion clarifying the zone-of-interests doctrine.

In Yount, a group of counties, business associations, businesses, and one individual sued the Secretary of the Interior and other federal officials and agencies.  The Secretary had withdrawn over one million acres surrounding Grand Canyon National Park from uranium mining (the “withdrawal”), and plaintiffs sought to set aside that withdrawal as illegal under NEPA and other federal statutes.  The September 30 order granted summary judgment in favor of defendants.  Id. at *1.

In a prior order of January 8, 2013, the court had dismissed several plaintiffs’ NEPA claims, but declined to dismiss the NEPA claims of three plaintiffs: the Nuclear Energy Institute (“NEI”), the National Mining Association (“NMA”), and the Arizona Utah Local Economic Coalition (the “Coalition”).  Id. at *2.  In that earlier order, the court reasoned that these plaintiffs had demonstrated Article III standing for their NEPA claims because the withdrawal imposed lengthy and expensive examination processes on their members and reduced the value of existing mining claims.  Id. at *5.  The court then determined that these plaintiffs also satisfied the requirements of so-called “prudential” standing, because their alleged injuries were within NEPA’s “zone of interests.”  Id.  Although purely economic injuries do not fall within that zone, in the January 8 order the court had held that, so long as a party alleges an economic interest that satisfies Article III, that party’s asserted environmental interests under NEPA need not independently satisfy Article III, but need only satisfy “prudential” standing requirements.  Id. at *5-6.

In the September 30 order, the court “stands by” its earlier Article III decision with respect to these plaintiffs’ NEPA claims.  Id. at *5.  However, it revisited the second aspect of its decision, concluding that the same asserted injury must satisfy both constitutional and zone-of-interests requirements.  Id. at *6.

In so ruling, the district court looked to the Supreme Court’s decision last term in Lexmark International, Inc. v. Static Control Components, Inc., 134 S. Ct. 1377 (2014).  2014 WL 4904423, at *5, 6-7.  In Lexmark, a copyright and false-advertising case, the Court explained that “prudential” standing is a “misleading” term.  134 S. Ct. at 1386.  Instead, the Court clarified, Article III establishes the familiar tripartite “‘irreducible constitutional minimum of standing’”: injury-in-fact, causation, and redressability.  Id. (quoting Lujan v. Defenders of Wildlife, 504 U.S. 555, 560 (1992)).  As for the “zone of interests” tests, it is a matter of statutory interpretation: a court must determine “whether a legislatively conferred cause of action encompasses a particular plaintiff’s claim.”  Id. at 1387.  This is not an exercise of a court’s “prudence,” but a determination of Congressional intent.  See id. at 1388.

Applying these principles, the district court determined that NEPA’s purposes are “exclusively environmental.”  2014 WL 4904423, at *6.  Therefore, “it makes sense to require that the gravamen of Plaintiff’s complaint—the wrong that brings them to court—must fall within NEPA’s zone of interests.”  Id.  In other words, the same asserted injury that satisfies Article III’s requirements must also fall within the statute’s requirements.  Holding that NEI and NMA “fail to establish a single injury that both satisfies the requirements of Article III and falls within NEPA’s zone of interests,” the court granted defendants summary judgment on those plaintiffs’ NEPA claims.  Id. at *7.  (As for the Coalition, its alleged injuries did meet this double requirement.  The court went on to reject its NEPA claims on the merits.  Id. at *8, 9-14.)

The district court’s order represents an early attempt to apply the teachings of Lexmark to environmental law.  It is too soon to predict whether its application will persuade other courts or survive possible appellate challenge.  Nevertheless, this issue merits close attention by businesses and trade associations, and all others interested in environmental law and regulation.

District Court Rules that Claims Challenging National Park Management Are Ripe and Final

Posted in NEPA

Last week, the United States District Court for the Middle District of Florida determined that a group of plaintiffs could bring a claim against the U.S. National Park Service challenging actions that were characterized by the Park Service as not ripe for judicial review.  The court found that where an agency begins taking action signaling that it is “at least substantially less likely” to change course, such action may be ripe for adjudication.  Additionally, the court stated that where an agency takes action in furtherance of a management policy, this may constitute final agency action even where additional authorization is required for the action to be complete. Though the court denied plaintiffs any of the relief they requested, this case serves as an example of a federal agency action that can be challenged before it is fully implemented.

In National Parks Conservation Association v. U.S. Department of Interior, Nos. 11-578, 11-647 (M.D. Fla. Sept. 19, 2014), the plaintiffs brought suit against the Park Service regarding certain land management decisions for the Big Cypress National Preserve Addition that included a determination of the portions of land that would be subject to motorized off-road vehicle (ORV) use and would be designated as wilderness areas.  As part of this decision process, the Park Service prepared an environmental impact statement (EIS) pursuant to the National Environmental Policy Act.  In 2011, the Park Service issued a record of decision (ROD) that adopted the preferred management alternative.  This alternative identified areas where ORV trails could be located and delineated the areas eligible for protection as “wilderness” under the Wilderness Act.  This decision amended a previous decision in 2006 by reducing the acreage of land to be proposed as wilderness area by approximately 40,000 acres.  The plaintiffs’ suit claimed that the 40,000 acre reduction and the ORV Plan governing motorized vehicle use were unlawful under the Administrative Procedure Act (APA).

Though the ROD contained designations for both ORV use and wilderness areas, it did not authorize ORV use, nor did it conclude the wilderness-designation process.  As the Park Service noted, “recreational ORV use in the Addition … cannot lawfully occur absent completion of the rulemaking process.”  Slip Op. at 19.  Regarding the designation of wilderness lands under the Wilderness Act, the Park Service provides a recommended eligibility determination to the President, who in turn makes a recommendation to Congress.  Ultimately, Congress has the sole power to declare land a wilderness area.  16 U.S.C. § 1132(c).  In its decision, the court noted that Congress had not approved the proposed designation of wilderness lands.  Thus, the Park Service argued that the plaintiffs’ claims were not ripe and that there was no final agency action to review under the APA.

The court held that the plaintiffs’ claims were ripe for review and that the Park Service had taken a final action reviewable under the APA.  The lynchpin of the court’s decision was the fact that the Park Service had taken certain actions in furtherance of its proposed decisions regarding both the exclusion of certain land as proposed wilderness areas and creation of ORV trails.  The court noted that the Park Service was “no longer managing the 40,000 acres to preserve eligibility for wilderness designation, as its policy would dictate if the 40,000 acres had been found wilderness eligible.”  Slip Op. at 20.  The court also stated that it was “undisputed that the NPS has begun to implement the Plan and has begun to spend money, even without a final rule” because construction of access points and access facilities had commenced and the record demonstrated that the Park Service had begun “groundtruthing” some ORV trails.  Id. at 40.  The court found these actions to constitute implementation of the decision approved by the ROD, making the claims both ripe and final under the APA.  Id. at 44 (“Here, it is clear that a decisionmaking process has been consummated, and implementation has begun (although it is far from completed).”).

Though the facts of this case are narrow, the court’s decision may provide an avenue for challenging a federal action even where additional rulemaking procedures are necessary before the action transitions from the planning stage to the operational stage.

 

Judge Overturns Kauai County Pesticide and GMO Law

Posted in Genetically Modified Organisms

On August 25, the federal district court for Hawaii vacated Kauai County’s Ordinance 960, which imposed mandatory disclosure obligations regarding the use of certain pesticides and the cultivation of genetically modified crops (“GMOs”).  The Court’s ruling is important because it is the first major decision to address a county’s ability to regulate GMO cultivation and pesticide use.

Last year, Kauai County passed a law requiring all commercial agricultural entities to make certain disclosures regarding the growing of GMOs and the use of restricted use pesticides.  The law also imposed buffer zones prohibiting the use of certain pesticides within varying distances of neighboring properties.  A group of agricultural companies filed suit against the law claiming that it was preempted by both state and federal law.  The court vacated the law finding that Hawaii state law preempted the County Ordinance.  Syngenta Seeds, Inc. v. Cnty. of Kauai, No. 14-00014 (D. Haw. Aug. 25, 2014).  The court rejected the federal preemption argument.

The district court recognized that “the State of Hawaii has established a comprehensive framework for addressing the application of restricted use pesticides and the planting of GMO crops.”  Op. at 2.  Though the court determined that the County possessed authority to enact regulations that affect agriculture, it found that the challenged law exceeded such authority.

The court first addressed the pesticide provisions of Ordinance 960 by comparing them to the corresponding state law.  In Hawaii, a local law is preempted where it “legislates in an area already staked out by the legislature for exclusive and statewide statutory treatment.”  Id. at 15 (citing Richardson v. City & Cnty. of Honolulu, 868 P.2d 1193, 1207 (Haw. 1994)).  The court found that the Hawaii Pesticide Law (HRS §§ 149A-31 through 149A-37) evidenced the legislature’s intent to establish a statewide regulatory system because it empowers the Hawaii Department of Agriculture to enforce the law and promulgate regulations through a comprehensive legal framework that does not include participation of counties or local governments.  Id. at 19-20.  Because the state law addressed recordkeeping and reporting requirements as well as use restrictions, the court found that the County law impermissibly overlapped with the state law and was thereby preempted.

The court employed the same analysis in finding that the GMO provision of Ordinance 960 was preempted by state law.  Hawaii law designates the state Department of Agriculture as the agency  responsible for restricting the importation of plants and controlling and eradicating noxious weeds that can be injurious to agricultural, horticultural, aquacultural, or livestock industry.  Id. at 22 (citing HRS § 152-1).  The court found that the state law proscribed a manner for “identifying potentially harmful plants” and held that the County law attempted to do the same.  Id. at 23.  This state law also did not include the counties or local governments within the regulatory regime, and the court therefore found the County law to be preempted in this respect as well.

The court rejected plaintiffs’ federal preemption arguments, however.  It found that the Federal Insecticide Fungicide and Rodenticide Act (“FIFRA”) did not expressly preempt the law because FIFRA provides for state and local government regulation and FIFRA’s privacy provisions were not contradicted by the Kauai Ordinance.  Id. at 26-30.  The court also held that the Plant Protection Act (“PPA”) did not preempt the GMO provision of the county law because the Ordinance did not prevent the importing, growing, or exporting of any GMO crop.

The decision is important because it sets a precedent for an existing case and potential future cases challenging local anti-GMO laws.  The court’s opinion is likely a bellwether for the resolution of a similar suit before the same judge where a group of plaintiffs are challenging Hawaii County’s law that prohibits GMO cultivation.  See Hawaii Floriculture & Nursery Ass’n v. Cnty. of Hawaii, No. 14-cv-00267 (D. Haw. filed June 6, 2014).  A motion for summary judgment on the issues of state and federal preemption is currently pending before the court, with a hearing on the motion scheduled for October 23.  Given that the court has just found a similar law preempted by state law, the Hawaii County law may meet the same fate as the Kauai County law.  Additionally, because the Hawaii County law actually prohibits the cultivation of GMOs (with the exception of papaya), the court may determine that federal preemption also applies.

This decision may also impact future litigation against local laws that seek to ban the growing and cultivation of GMOs.  Certain counties in California (Mendocino, Marin), Oregon (Jackson, Josephine), and Washington State have GMO bans in place that could be subject to similar lawsuits.  If lawsuits against those local laws are filed, the district court’s decision here will likely have a significant influence in how those cases are presented and resolved.

10th Circuit Limits ESA Consultation Obligations To Boundaries Of The Agency Action

Posted in ESA

This past week, the 10th Circuit held that the Environmental Protection Agency (EPA) had no obligation to engage in consultation pursuant to Section 7 of the Endangered Species Act (ESA) where the potential effects on endangered species are attributed to an agency’s failure to act as opposed to actions actually taken by the agency.  In WildEarth Guardians v. EPA, 13-9524 (10th Cir. July 23, 2014) the petitioner challenged the EPA’s promulgation of a Federal Implementation Plan to reduce regional haze by regulating emissions of nitrogen oxides and particulate matter from the Four Corners Power Plant on the Navajo Reservation in northwestern New Mexico.  The petitioner claimed that the EPA had discretion to regulate mercury and selenium emissions in the FIP, and the failure to do so triggered a duty to consult with the Fish and Wildlife Service about the effect of the FIP on two species of endangered fish near the Plant.  The court denied the petition for review, finding that the promulgation of the FIP did not create a duty to consult under the ESA because it would have required EPA “to exceed the clearly delineated boundaries of the FIP.”  Slip Op. at 3.

The challenged FIP regulated emissions of nitrogen oxides and particulate matter pursuant to EPA’s authority under the Clean Air Act to address regional haze by requiring the installation of available retrofit technology or BART to remedy visibility impairments in Federal Class I areas.  See 42 U.S.C. § 7491(a), (b).  Section 7491 does not govern “hazardous air pollutants,” however, which are regulated under Section 112 of the Clean Air Act.  See id. § 7412(b)(6) (stating that “[t]he provisions of [the regional-haze program] shall not apply to pollutants listed under this section.”).  Both mercury and selenium compounds are listed as hazardous pollutants. See id. § 7412(b)(1).

Petitioners claimed that the EPA had discretionary authority to regulate mercury and selenium emissions as part of the FIP.  Accordingly, they requested the EPA to consider the benefits of any control technologies on mercury and selenium emissions because these emissions have a negative impact on the listed fish species.  “Under the ESA, whenever a federal agency proposes an action in which it has discretion to act for the benefit of an endangered species, it must consult to insure that the action ‘is not likely to jeopardize the continued existence of any endangered species or threatened species.’” Slip Op. at 7 (citing 16 U.S.C. § 1536(a)(2)).  Consultation is required for affirmative actions, as “action” as defined in the applicable provision of the ESA does not include a failure to act.  Id. (citing 50 C.F.R. § 402.2).

The EPA disagreed it had authority to regulate mercury and selenium emissions in the FIP, and thus had no obligation to consult under the ESA.  The 10th Circuit found the issue of EPA’s regulatory authority over the emissions to be irrelevant to the question before it, holding that “even if the EPA had power to regulate these hazardous air pollutants in a FIP rulemaking, the EPA’s ‘action’ did not encompass the possibility of such direct regulation.”  Slip Op. at 22.  Accordingly, the court focused on the scope of the EPA’s action, stating that “the subject matter of the duty to consult is limited to the agency’s action.”  Id. The court identified the challenged action as EPA’s decision to regulate nitrogen oxides and particulate matter based on the agency’s finding it was “necessary or appropriate to protect air quality” as required by the Tribal Authority Rule—the rule giving EPA the ability to issue a FIP for facilities on the Navajo Reservation. See 40 C.F.R. Part 49.

Based on this characterization, the court rejected the petitioner’s claim as an attempt to challenge non-action “by claiming that the nonaction is really part of some broader action.”  Slip Op. at 24.  The court stated that “[w]hen an agency action has clearly defined boundaries, we must respect those boundaries and not describe inaction outside those boundaries as merely a component of the agency action.”  Id.

This decision represents an important restriction on a federal agency’s obligation under the ESA.  As the court noted, an agency’s general discretionary authority to regulate does not impose a duty to consult under the ESA where such authority is inapplicable to the action being considered.  See Slip Op. at 26 (“[T]he possibility that the EPA would have discretion–in some other regulatory proceeding–to directly regulate mercury and selenium emissions at the Plant did not impose a duty to consult under the ESA before taking the only action under consideration at the time.”).  Though the facts of this case are narrow, the court’s reasoning is broad in scope, and can help to prevent additional delay in the federal decision-making process.

 

Seventh Circuit Holds Federal Agencies Can Be Sued for Public Nuisance, But Affirms Dismissal of Claim

Posted in APA

On July 14, 2014, the Seventh Circuit decided Michigan et al. v. U.S. Army Corps of Engineers et al. (Wood, C.J., writing for a unanimous panel).  While the court ultimately affirmed dismissal of the underlying action, the opinion’s holding concerning federal-agency liability for the federal common-law tort of public nuisance deserves notice.  It may support future litigation on such a theory of liability across a broad range of environmental issues.

In Michigan, five states and a native tribe sued federal and state government entities under the Administrative Procedure Act (“APA”) and the federal common law of public nuisance.  The plaintiffs alleged that two invasive species of Asian carp, introduced to southern fish farms in the 1970s to control plant growth, have migrated so far up the Mississippi River system that they now threaten to invade the Great Lakes.  The defendants are jointly responsible for controlling the Chicago Area Waterway System (“CAWS”), part of a series of canals and channels that connect the lakes to the river.  Plaintiffs requested preliminary and permanent injunctive relief directing the defendants to effect “hydrological separation” between the river and the Lakes.  (There is evidence that the carp have already reached CAWS, and may be as little as six miles from reaching Lake Michigan.)

On an earlier appeal, the Circuit had affirmed the district court’s denial of preliminary relief, holding it unlikely that the requested injunction would meaningfully lower the risk that the carp would reach the lakes before a ruling on the merits.  667 F.3d 765.  On that first appeal, the Circuit held that the suit fell within the APA’s waiver of federal sovereign immunity, but did not decide whether a federal common-law nuisance claim can be stated against the federal government.  Following that appeal, the district court dismissed the complaint for failure to state a claim, holding that “maintenance of the hydrologic connection” between the river and the lakes is lawful, authorized, and indeed required by the federal Rivers and Harbors Act.

On the second, instant appeal, the Circuit reached the question it had not decided before: whether federal agencies are liable to federal common-law nuisance claims.  Rejecting the position that federal government action is by definition in the public interest, the court distinguished between, on the one hand, “[a]ctivities commanded or authorized by statute” and “agency rules promulgated pursuant to congressional delegation—which are presumed to reflect the public interest—and, on the other, an “agency’s choice of a particular course of action” that “may or may not be consistent with the underlying statute and regulations.”  The latter may give rise to public-nuisance liability.

The Circuit then disagreed with the district court’s holding that federal law commanded the defendants to maintain the connection between the river and the lakes.  None of the statutes relied on below require the connection to be kept open “for navigation at all times and under all circumstances.”  The defendants are authorized to maintain that connection, but are not authorized to maintain it in such a manner as to permit passage of an invasive species.

Nonetheless, the Circuit ultimately affirmed the dismissal.  It determined that the complaint did not plausibly allege that the Corps’ current operation of the CAWS will allow the carp to pass through.  And it expressed reluctance to direct the Corps to implement any particular solution to the problem.  While reiterating that it took the threat of invasive species seriously, the court noted that the Corps is “making diligent efforts to find the solution” that will balance ecological interests with the public benefits the CAWS affords.  (However, the court expressly rejected defendants’ argument that they could not have “caused” the carps’ migration: “It is the defendants’ apparent diligence, rather than their claimed helplessness, that is key to our holding today.”)  Finally, the court noted that plaintiffs may have additional remedies under the APA, now or in the future, especially “if the Corps stalls on progress toward a solution.”

While these plaintiffs have been dealt a setback, the broader significance of this opinion lies in its thoughtful discussion of the history and scope of the federal common law of nuisance.  Its clear holding that federal agencies can in some circumstances be liable under that law may well inspire future litigation in this and other environmental subject areas.

EPA Issues New RFS Rule; Expands Advanced Biofuel Pathways

Posted in EPA

On July 2, EPA published a final rule that amends three separate sets of regulations relating to fuels.  These regulations clarify the number of cellulosic biofuel renewable identification numbers (RINs) that may be generated for fuel made with a range of cellulosic feedstocks, establish new and amended pathways for the production of renewable fuels made from biogas, and clarify or amend a number of Renewable Fuel Standard (RFS) program regulations that define terms or address registration, recordkeeping, and reporting requirements.  The rule did not finalize provisions regarding the proposed advanced butanol pathway or proposed pathway for the production of renewable diesel, naphtha and renewable gasoline from biogas, or the proposed additional compliance requirements for non-RIN-generating foreign renewable fuel producers.  It also did not finalize provisions related to the definition of “producer” for renewable natural gas and electricity from biogas sources, the definition of responsible corporate officer, or the proposed amendments to compliance related provisions for the alternative reporting method.

The amendments to the pathways regulations are noteworthy because they expand the number of renewable fuels that qualify as cellulosic or advanced fuels under the RFS program.  According to the rule, three new “fuels” will qualify as cellulosic and advanced fuel: (1) compressed natural gas, (2) liquefied natural gas, and (3) electricity so long as each is produced from biogas from landfills, municipal wastewater (MSW) treatment facility digesters, agricultural digesters, and separated MSW digesters.  The production of these fuels will qualify for cellulosic RINs that can be sold to convention fuel producers and blenders to meet the RFS volume requirements.

Though the rule expands the number of fuels that may qualify as advanced biofuels, it appears to raise two significant questions related to the RFS program.  First, the new pathways rule does not avert the lack of production of advanced biofuel in the domestic market.  In the rule, the EPA claims that it will assist regulated parties in complying with RFS volume requirements.  One of these requirements involves satisfying the proposed cellulosic target of 17 million gallons in the draft 2014 RFS, which is considerably greater than the 810,000 gallon requirement in the 2013 RFS.  However, the rule fails to state the volume of cellulosic fuel anticipated to be available on account of the new pathways, and thus leaves the proposed volume requirements in the draft 2014 RFS for cellulosic biofuel as purely speculative.

Second, EPA’s rule most likely contravenes the Clean Air Act’s statutory definition of “cellulosic biofuel” by establishing a pathway for fuel to qualify as cellulosic biofuel despite being produced partially from non-cellulosic sources.  However, the Clean Air Act defines cellulosic biofuel as “renewable fuel derived from any cellulose, hemicellulose, or lignin that is derived from renewable biomass and that has lifecycle greenhouse gas emissions, as determined by the Administrator, that are at least 60 percent less than the baseline lifecycle greenhouse gas emissions.”  42 U.S.C. § 7545(o)(1)(E).  Arguably, the statutory definition appears to require that “cellulosic biofuel” be derived from only the listed sources.  EPA reinterpreted the statute by calling the definition “ambiguous” and issued an interpretive rule stating that “fuels made from feedstocks that are ‘predominantly’ cellulosic should be considered cellulosic biofuel and that all of the volume of fuels from such feedstocks could generate cellulosic biofuel RINs.”  EPA defines “predominantly” to be 75% or greater.  Thus, EPA finds that a fuel made from 75% cellulosic feedstock would be considered 100% cellulosic biofuel.  This produces in a situation where fuel derived from 75% cellulosic content will receive 100% of a RIN, while fuel derived from 74% cellulosic content will receive only 74% of a RIN.