American Petroleum Institute v. Environmental Protection Agency

When Congress amended the Clean Air Act, it established a renewable-fuel-standard (RFS) program. The RFS program required the Environmental Protection Agency (EPA) (defendant) to promulgate regulations that ensured transportation fuel sold in the United States contained an increasing volume of renewable fuel each year. The RFS program provided the applicable volumes of each fuel that fuel refiners, importers, and blenders must have purchased each year for compliance with the program. Congress made cellulosic biofuel central to the RFS program. The RFS program called for three quarters of advanced biofuel sold in the United States to be cellulosic biofuel beginning in 2022 even though there was no commercial-scale production in 2007. The RFS program mandated 500 million ethanol-equivalent gallons of cellulosic-biofuel sales in 2012. If actual production was going to fail to meet the program mandates, Congress permitted the EPA to reduce the applicable volume of cellulosic biofuel to the projected volume of cellulosic-biofuel production based on an estimate by the Energy Information Administration (EIA). In its January 2012 Final Rule, the EPA projected that 8.65 million gallons or 10.45 million ethanol-equivalent gallons of cellulosic biofuel would be produced that year. The EIA had projected that 6.9 million gallons of cellulosic biofuel would be produced in 2012. The EPA based its projection on several sources: the EIA’s projection, industry progress, EPA’s own assessment of projected volumes, and comments on the draft rule. The American Petroleum Institute brought a challenge to the 2012 projection for cellulosic biofuel, arguing it was an unreasonable exercise of agency discretion.