Federal Appeals Court Throws Out EPA Rule Temporarily Exempting Biogenic Carbon Emissions From New

On July 12, 2013, the U.S. Court of Appeals for the District of Columbia issued its decision in Center for Biological Diversity v. EPA. In a 2-1 decision, the court vacated the U.S. Environmental Protection Agency's (EPA) rule (the Deferral Rule) exempting bioenergy and other biogenic sources of greenhouse gas emissions from new greenhouse gas permitting requirements under EPA's Tailoring Rule for a period of three years. This deferral was meant to allow EPA time to study and develop a proper method of accounting for greenhouse gas emissions from these sources. The court held that EPA did not meet the standards to justify its Deferral Rule under any of the four doctrines it had invoked.

According to EPA, biogenic carbon emissions are "emissions of CO2 from a stationary source directly resulting from the combustion or decomposition of biologically-based materials other than fossil fuels and mineral sources of carbon." Examples of biogenic CO2 include: CO2 generated from the biological decomposition of waste in landfills, fermentation during ethanol production, combustion of the biological fraction of municipal solid waste or biosolids, combustion of the biological fraction of tier-derived fuel, and combustion of biological material, including all types of wood and wood waste, forest residue, and agricultural material, among others. Therefore, carbon emissions from some facilities producing biofuels and renewable chemicals could be subject to these new permitting requirements under the Tailoring Rule. The requirements of the Tailoring Rule are triggered when stationary sources meet certain emissions thresholds.

This decision is important for industry and creates uncertainty going forward. Without future legal, legislative, or regulatory action, it appears likely that stationary sources meeting the emissions thresholds under the Tailoring Rule will be subject to the new permitting requirements.