OMAHA (DTN) -- A federal court on Friday dismissed all but one legal challenge to EPA's final 2018 volumes for the Renewable Fuel Standard. The court agreed with environmental groups that the EPA did not conduct the proper Endangered Species Act consultation in setting the volumes.
In its opinion, the U.S. Court of Appeals for the District of Columbia Circuit remanded the 2018 rule back to the EPA.
The court dismissed a number of other challenges filed by the National Biodiesel Board, the American Fuel and Petrochemical Manufacturers and others.
The NBB had challenged the EPA's use of small-refinery waivers. The NBB argued EPA should have accounted for retroactively granting small-refinery waivers in calculating percentage standards in the RFS. The court disagreed.
It was unclear as of Friday afternoon what the court's decision means for the 2018 RFS volumes.
"We are reviewing the opinion," EPA said in a statement to DTN.
The court sided with the Gulf Restoration Network and the Sierra Club in their claims the EPA didn't follow proper procedure in determining the 2018 rule's effects on endangered species and critical habitat.
"We conclude that all these challenges lack merit, except for one: that the EPA violated its obligations under the Endangered Species Act by failing to determine whether the 2018 rule may affect endangered species or critical habitat," the court said.
The court pointed to an EPA report from 2018 that concluded the RFS annual standards likely cause the conversion of uncultivated land into agricultural land for growing crops.
"Since the program was enacted, acreage planted with corn and soybeans has increased, and the evidence suggests that some of this increase 'is a consequence of increased biofuel-production mandates,'" the court said.
"In the same vein, a declaration by Dr. Tyler Lark, an associate researcher at the University of Wisconsin-Madison's Center for Sustainability and the Global Environment, explains that many studies have found that the RFS program has heightened demand for ethanol, thus increasing the production of corn, soybeans, and similar crops and incentivizing the conversion of uncultivated land to agricultural land for growing these crops," the court said.
Kurt Kovarik, NBB vice president of federal affairs, said in a statement the court's decision was "frustrating."
"EPA requested comment on its practice of ignoring retroactive small-refinery exemptions but did not give notice of its intent to unleash a flood of the exemptions," he said. "The court, however, faults industry for not commenting specifically on that. EPA's flood of retroactive small-refinery exemptions are causing severe economic harm to biodiesel and renewable diesel producers, forcing some to close their doors and lay off workers. It's disappointing that the court did not take this opportunity to address that harm."
Geoff Cooper, president and CEO of the Renewable Fuels Association said he believes the agency will conduct the necessary ESA review.
"We also disagree with the court's decision to remand the 2018 rule back to EPA to make additional findings to satisfy the agency's consultation requirements under the Endangered Species Act," he said. "We believe EPA met those obligations in the 2018 rulemaking process. In any case, a science-based analysis by EPA will determine that the RFS and biofuels pose no threat to endangered species and reconfirm that biofuels like ethanol offer superior environmental benefits."
As part of their petition, the environmental groups presented specific examples of how critical habitats and endangered species may be harmed by the RFS.
"As to causation, the EPA's alleged failure to comply with its ESA obligations is plainly connected to the setting of standards in the 2018 rule, and those standards might have come out differently if the EPA had complied," the court said in its opinion.
"Also, there is a 'substantial probability' that the EPA's ultimate decision adversely affected local conditions in Kansas, the Gulf, and the Mississippi River Basin, harming cranes and sturgeon. This establishes causation."
The court said the environmental petitioners were not required to show the specific 2018 volumes caused injury.
"They must show only a 'substantial probability' of injury," the court said. "The EPA's triennial report and the Lark declaration provide evidence of just that. The EPA concluded that it is impossible to know whether the 2018 rule will affect listed species or critical habitat. That is not the same as determining that the 2018 rule 'will not' affect them."
Todd Neeley can be reached at email@example.com
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