United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued December 10, 2012 Decided January 25, 2013 

No. 12-1139 

AMERICAN PETROLEUM INSTITUTE, 

PETITIONER

v. 

ENVIRONMENTAL PROTECTION AGENCY, 

RESPONDENT

ADVANCED BIOFUELS ASSOCIATION, ET AL., 

INTERVENORS

On Petition for Review of Final Agency Action of the United 

States Environmental Protection Agency 

Robert A. Long, Jr. argued the cause for petitioner. 

With him on the brief were Kristen E. Eichensehr and Harry 

M. Ng. 

Daniel R. Dertke, Attorney, U.S. Department of 

Justice, argued the cause and filed the brief for respondent. 

John C. O’Quinn, William H. Burgess, Sandra P. 

Franco, David B. Salmons, and Bryan M. Killian were on the 

brief for intervenors. 
2

Before: BROWN and KAVANAUGH, Circuit Judges, and 

WILLIAMS, Senior Circuit Judge. 

Opinion for the Court filed by Senior Circuit Judge

WILLIAMS. 

WILLIAMS, Senior Circuit Judge: This case arises out of 

Congress’s command that the Environmental Protection 

Agency make predictions about a promising technology. 

While the program as a whole is plainly intended to promote 

that technology, we are not convinced that Congress meant for 

EPA to let that intent color its work as a predictor, to let the 

wish be father to the thought. 

In 2005 and again in 2007, Congress amended the Clean 

Air Act (“Act”) to establish a renewable fuel standard 

(“RFS”) program, now codified at 42 U.S.C. § 7545(o). See 

Energy Policy Act of 2005, Pub. L. No. 109-58; Energy 

Independence and Security Act of 2007, Pub. L. No. 110-140. 

Under the RFS program, EPA must promulgate regulations to 

ensure that transportation fuel sold or introduced into 

commerce (hereafter collectively, “sold”) in the 48 contiguous 

U.S. states contains an increasing measure of renewable fuel 

through 2022. See generally 42 U.S.C. § 7545(o)(2). The Act 

enumerates yearly “applicable volume” requirements not only 

for renewable fuel but also for a subclass known as “advanced 

biofuels,” which produce lower greenhouse gas emissions 

than conventional renewable fuels such as corn-based ethanol. 

Id. §§ 7545(o)(1)(B) (definition of advanced biofuel), 

7545(o)(2)(B) (applicable volumes). The “applicable 

volume” for a particular fuel (a phrase used repeatedly in the 

statute and thus in this opinion) determines how much of that 

fuel refiners, importers and blenders must purchase each year 

in order to comply with the RFS program. Id. 

§ 7545(o)(3)(B). 
3

In establishing the RFS program, Congress made 

commercial production of cellulosic biofuel, an advanced 

biofuel derived from sources of lignocellulose such as 

switchgrass and agricultural wastes, central to the program’s 

objective of reducing greenhouse gas emissions. Subject to 

the EPA adjustments that are the subject of this case, the Act 

requires that more than three quarters of advanced biofuel sold 

in the United States after January 1, 2022 be cellulosic 

biofuel. Id. § 7545(o)(2)(B)(i)(III). These standards for 

cellulosic biofuel assumed significant innovation in the 

industry. When Congress introduced the cellulosic biofuel 

requirement in 2007, there was no commercial-scale 

production at all. Yet Congress mandated cellulosic biofuel 

sales in the U.S. of 100 million gallons in 2010, 250 million in 

2011, and half a billion in 2012 (all in ethanol-equivalent 

gallons). Id.; see also Regulation of Fuels and Fuel Additives: 

2012 Renewable Fuel Standards, 77 Fed. Reg. 1,320, 1,325 

(Table II.A-1), 1,330-31 (Table II-B.6-1) (Jan. 9, 2012). 

 Recognizing the technological challenges, Congress 

provided for the possibility that actual production would fall 

short of the stated requirements. Section 7545(o)(7)(D)(i) 

calls for a determination by EPA of the “projected volume of 

cellulosic biofuel production” for each calendar year, to be 

made no later than November 30 of the prior year and to be 

“based on” an estimate of the Energy Information 

Administration (“EIA”). When that projection is less than the 

mandated volume, the Administrator is to “reduce the 

applicable volume of cellulosic biofuel . . . to the projected 

volume.” Id. §§ 7545(o)(3)(B), 7545(o)(7)(D)(i). The Act 

also provides that in the event of such a reduction the 

Administrator “may also reduce the applicable volume of 

renewable fuel and advanced biofuels” required for that year. 

Id. § 7545(o)(7)(D)(i).
4

In a January 2012 Final Rule (the “2012 RFS rule”), EPA 

projected that 8.65 million gallons of cellulosic biofuel (10.45 

million ethanol-equivalent gallons) would be produced in 

2012, well short of the 500 million ethanol-equivalent gallons 

mandated by the Act for that year. See Regulation of Fuels 

and Fuel Additives: 2012 Renewable Fuel Standards, 77 Fed. 

Reg. at 1,324-31. In the same rule, EPA considered but 

rejected a reduction in the volume of total advanced biofuels 

required for 2012, stating that other kinds of advanced 

biofuels could make up for the shortfall. Id. at 1,331-37. 

 Petitioner American Petroleum Institute (“API”) objects 

both to EPA’s 2012 projection for cellulosic biofuel and to its 

refusal to reduce the applicable advanced biofuels volume for 

2012. We reject API’s argument that EPA failed to justify its 

determination not to reduce the applicable advanced biofuels 

volume for 2012. But we agree with API that because EPA’s 

methodology for making its cellulosic biofuel projection did 

not take neutral aim at accuracy, it was an unreasonable 

exercise of agency discretion. 

* * * 

Timeliness of API’s petition. Before turning to the merits 

we address a claim raised by a coalition of intervenors 

representing the biofuel industry. They argue that API is 

jurisdictionally barred from challenging the 2012 RFS rule 

because that rule merely perpetuates an approach that EPA 

first employed a year earlier in its projection of cellulosic 

biofuel volumes for 2011. Had API wanted to challenge the 

methodology employed in the 2012 RFS rule, intervenors 

contend, it should have filed suit within 42 U.S.C. § 7607(b)’s 

60-day time limit after Federal Register publication of EPA’s 

cellulosic biofuel projection for 2011. In support of this 

claim, they point to our decision in Medical Waste Institute v. 

EPA, 645 F.3d 420, 427 (D.C. Cir. 2011), in which we 
5

declined to consider a challenge to a rule because the 

petitioner had not sought judicial review when the agency had 

“first use[d]” the approach that rule reflected. 

Intervenors’ invocation of Medical Waste is inapt. Here, 

unlike in Medical Waste, the petitioner attacks a methodology 

used for prediction, which can look more arbitrary the longer 

it is applied. The reasonableness of adopting a predictive 

methodology is not the same as the reasonableness of 

maintaining one in the face of experience; considering 

whether to maintain a methodology necessarily invites 

reflection on the success of earlier applications. API’s 

challenge to the 2012 RFS rule rests significantly on the 

complete failure of EPA’s prediction for 2011: 6.6 million 

gallons, as against zero in reality. See Regulation of Fuels 

and Fuel Additives: 2011 Renewable Fuel Standards, 75 Fed. 

Reg. 76,790, 76,793 (Dec. 9, 2010); EPA, Fuels and Fuel 

Additives, 2011 RFS2 Data, 

http://www.epa.gov/otaq/fuels/rfsdata/2011emts.htm. We 

agree with API that the 2011 failure colors the rationality of 

EPA’s decision to persist in 2012 and sheds light on the 

weight EPA gave to specific aspects of its approach. 

Accordingly we find API’s petition timely. 

Cellulosic biofuel projection. Section 7545(o)(7)(D)(i) of 

the Act states that an annual “projected volume of cellulosic 

biofuel production” will be “determined by the 

Administrator,” which determination is to be “based on” 

EIA’s estimate. 42 U.S.C. §§ 7545(o)(3)(B), 

7545(o)(7)(D)(i). In the 2012 RFS rule, EPA explained that 

its projection of 8.65 million gallons of cellulosic biofuel was 

“based on several sources of information”: (1) EIA’s 

projection of 6.9 million gallons for 2012; (2) “Progress that 

the cellulosic biofuel industry is making”; (3) the agency’s 

“own assessment of the cellulosic biofuel industry’s projected 

volumes” for 2012; and (4) comments on a draft version of the 
6

rule. 77 Fed. Reg. at 1,324, 1,328. The rule further stated that 

EPA’s projection was “very similar” to EIA’s, and that the 

two agencies’ figures were derived from the same set of 

cellulosic biofuel production facilities. Id. at 1,329. EPA 

attributed its higher results to “slight variations [that] are a 

result of different methodologies.” Id. The most important of 

these variations related to timing: EIA assumed a “standard 

utilization factor” of 25 percent of full-capacity production 

(which EIA applies to all commercial-scale facilities in their 

first year of production), whereas EPA looked to the start-up 

dates of the facilities as anticipated by the facilities’ owners. 

Id. EPA also disagreed with EIA’s assessment of the 

production capacities of two facilities, and with its application 

of a ten percent utilization factor to a “pilot plant,” which 

EPA judged likely to produce fuel on a commercial scale 

rather than (as EIA expected) an experimental one. Id. 

This exposition suggests little more than a technocratic 

exercise of agency discretion. Yet elsewhere in the rule EPA 

expressed a decidedly non-technocratic bent. In a response to 

comments submitted by API and others, EPA observed that 

“[i]n directing EPA to project cellulosic biofuel production for 

purposes of setting the annual cellulosic biofuel standard, 

Congress did not specify what degree of certainty should be 

reflected in the projections.” Id. at 1,325. It went on: 

While the cellulosic biofuel standard that we set 

should be within the range of what can be attained 

based on projected domestic production and import 

potential, the standard that we set helps drive the 

production of volumes that will be made 

available. . . . Thus while any standard we set for 

cellulosic biofuel standard for 2012 will have some 

uncertainty in terms of actual attainment, our 

intention is to balance such uncertainty with the 

objective of promoting growth in the industry. Our 
7

final projected available volume . . . for 2012 reflects 

these considerations. 

Id. (emphasis added). The agency went on to state its concern 

that setting 2012 cellulosic biofuel production figures “at the 

low end of the proposed range, or some lower volume, could 

potentially result in a depressed market for cellulosic biofuel.” 

Id. at 1,330. The figures the agency chose, by contrast, would 

“provide the appropriate economic conditions for the 

cellulosic biofuel industry to grow.” Id.

 In comments to EPA and before us, API offers several 

broad critiques of the agency’s cellulosic biofuel projection 

for 2012. First, API argues that EPA did not base its 

projection on EIA’s estimate, but rather used a 

“supplementary analysis” that “effectively supplanted” EIA’s 

prediction. Pet’r Br. 27-28 (quoting Sierra Club v. EPA, 356 

F.3d 296, 306 (D.C. Cir. 2004)). The table below expresses 

the divergence: 
8

Cellulosic biofuel production, 2010-2012 (millions of 

gallons)1

 2010 2011 2012 

EIA Projected 5.0 3.9 6.9 

EPA Projected 5.0 6.6 8.7 

Actual 0 0 

Putting aside EPA’s deliberate choice of a non-neutral 

purpose, discussed below, and deviations from the EIA 

estimates that seem likely to have been a product of that 

choice, we aren’t persuaded that there is any illegality in 

EPA’s treatment of EIA’s work. The statute called first for 

EIA to supply an estimate of the amount of cellulosic biofuel 

to be sold, 42 U.S.C. § 7545(o)(3)(A), then for EPA to 

“determine” the obligation “based on” that estimate, id. 

§ 7545(o)(3)(B). Plainly Congress didn’t contemplate slavish 

adherence by EPA to the EIA estimate; had it so intended, it 

could have skipped the EPA “determination” altogether. We 

think EPA was entitled under Chevron USA, Inc. v. Natural 

 1 Source: Regulation of Fuels and Fuel Additives: 2012 

Renewable Fuel Standards, 77 Fed. Reg. 1,320, 1,325-30 (Jan. 9, 

2012); Regulation of Fuels and Fuel Additives: 2011 Renewable 

Fuel Standards, 75 Fed. Reg. 76,790, 76,793-97 (Dec. 9, 2010); 

Regulation of Fuels and Fuel Additives: Changes to Renewable 

Fuel Standard Program, 75 Fed. Reg. 14,670, 14,748-49, 51 (Mar. 

26, 2010); EPA, Fuels and Fuel Additives, 2011 RFS2 Data, 

http://www.epa.gov/otaq/fuels/rfsdata/2011emts.htm; EPA, Fuels 

and Fuel Additives, 2010 RFS2 Data, 

http://www.epa.gov/otaq/fuels/rfsdata/2010emts.htm. 
9

Resources Defense Council, Inc., 467 U.S. 837 (1984), to read 

the phrase “based on” as requiring great respect but allowing 

deviation consistent with that respect. 

Second, API claims that EPA’s projection derived from a 

methodology biased towards overstatement, inasmuch as it 

relied largely on statements from cellulosic biofuel facility 

owners, who in 2011 predicted significant production and yet 

generated no fuel at all. Joint Appendix 100; Pet’r Br. at 33-

35. But the producers were not only an almost inevitable 

source of information but were also a principal source of 

EIA’s estimates; at least if EPA regarded that information 

with suitable caution, we can hardly fault it for following 

EIA’s lead. 

Finally, API challenges the special tilt with which EPA 

expressly viewed the data—a tilt, in its words, toward 

“promoting growth” in the cellulosic biofuel industry. We 

agree with API that such a purpose has no basis in the relevant 

text of the Act. 

EPA is correct that one of Congress’s stated purposes in 

establishing the current RFS program was to “increase the 

production of clean renewable fuels.” See Pub. L. No. 110-

140, 121 Stat. 1492, 1492 (2007). But that general mandate 

does not mean that every constitutive element of the RFS 

program should be understood to individually advance a 

technology-forcing agenda, at least where the text does not 

support such a reading. As we observed in American 

Petroleum Institute v. EPA, 52 F.3d 1113, 1119 (D.C. Cir. 

1995), “EPA cannot rely on its general authority to make rules 

necessary to carry out its functions when a specific statutory 

directive defines the relevant functions of EPA in a particular 

area.” Although here EPA invokes not its general rulemaking 

authority, but rather the general purpose of the RFS program, 
10

we think the same principle applies: a broad programmatic 

objective cannot trump specific instructions. 

 We do not think the text of § 7545(o)(7)(D)(i) or the 

general structure of the RFS program supports EPA’s decision 

to adopt a methodology in which the risk of overestimation is 

set deliberately to outweigh the risk of underestimation.2

 

Section 7545(o)(7)(D)(i)’s reference to the “projected volume 

of cellulosic biofuel” seems plainly to call for a prediction of 

what will actually happen. EPA points to no instance in 

which the term “projected” is used to allow the projector to let 

its aspirations for a self-fulfilling prophecy divert it from a 

neutral methodology. 

In fact, the general structure of the RFS program militates 

against such a conclusion. Section 7545(o)(7)(D)(i) serves as 

a non-discretionary safety valve when the refiners and 

importers of transportation fuel subject to § 7545(o)’s 

mandate would otherwise be put in an impossible position, or 

at least a highly punitive one—that is, forced to purchase 

volumes of cellulosic biofuel greater than total production, or 

pay fines for failing to do so. Only with regard to cellulosic 

biofuel did Congress adopt so cautious an approach—perhaps 

because of the industry’s embryonic character. The only other 

fuel-specific waiver provision in the RFS Program is for 

biomass-based diesel; but that waiver authorizes no more than 

a fifteen percent reduction in applicable volumes, does not 

require EPA to project available fuel, and is tied to price 

spikes, not production volumes. See 42 U.S.C. 

§ 7545(o)(7)(E)(ii). In other words, only with respect to 

 2

 More precisely, a methodology that plans for the expected 

value of upside errors (the summation of each upside deviation, 

weighted by its likelihood) to exceed the expected value of 

downside errors. 
11

cellulosic biofuel did Congress evince a clear concern for 

production shortfalls. 

Viewed in this light, the most natural reading of the 

provision is to call for a projection that aims at accuracy, not 

at deliberately indulging a greater risk of overshooting than 

undershooting. Although as EPA notes the Act allows an 

obligated entity to carry over a deficit in renewable fuel 

purchases into the following year, see 42 U.S.C. 

§ 7545(o)(5)(D); 40 C.F.R. § 80.1427(b)(1), that simply 

makes the controlling unit of time two years rather than one—

hardly long enough to sharply reduce the risk of a penalty. As 

reflected in the chart, supra at 8, history suggests the opposite 

conclusion: a refiner forced to carry a deficit in 2010, when 

EPA projected five million gallons of cellulosic biofuel yet 

none was produced, would not have found relief in 2011, 

when the agency predicted 6.6 million and actual production 

was again zero. 

Further, the Act’s requirement that EPA’s projection be 

“based on” EIA’s estimate similarly implicates an outcomeneutral methodology over an aspirational one. Though we 

above rejected API’s advocacy of apparently near carboncopy reliance on EIA, EPA’s effort to kickstart cellulosic 

biofuel production does not look like the sort of 

“supplemental analysis” in pursuit of the same regulatory 

objective that we found permissible in Sierra Club, 356 F.3d 

at 306 n.7, but rather like the adoption of an entirely new goal. 

Our prior decisions relating to technology-forcing 

standards are no bar to this conclusion. We recognize here, as 

we have recognized in the past, that an agency may base a 

standard or mandate on future technology when there exists a 

rational connection between the regulatory target and the 

presumed innovation. In National Petrochemical & Refiners 

Ass’n v. EPA, 287 F.3d 1130 (D.C. Cir. 2002), for example, 
12

we upheld EPA’s adoption of a technology-forcing standard 

for diesel engines on the reasoning that “[i]n the absence of 

theoretical objections to the technology, the agency need only 

identify the major steps necessary for development of the 

device, and give plausible reasons for its belief that the 

industry will be able to solve those problems in the time 

remaining.” Id. at 1144 (quoting Natural Resources Defense 

Council v. EPA, 655 F.2d 318, 333 (D.C. Cir. 1981). We 

invoked similar principles in rejecting challenges to emissions 

standards in Natural Resources Defense Council v. Thomas, 

805 F.2d 410, 428-430 (D.C. Cir. 1986), and Sierra Club v. 

Costle, 657 F.2d 298, 364 (D.C. Cir. 1981). 

In all these cases, government pressure joined forces with 

industry specialization and competence. Here, by contrast, 

EPA applies the pressure to one industry (the refiners), see 

Regulation of Fuels and Fuel Additives: Changes to 

Renewable Fuel Standard Program, 75 Fed. Reg. 14,670, 

14,731 (Mar. 26, 2010); see also 42 U.S.C. § 7545(d)(1); 40 

C.F.R. § 80.1463, yet it is another (the producers of cellulosic 

biofuel) that enjoys the requisite expertise, plant, capital and 

ultimate opportunity for profit. Apart from their role as 

captive consumers, the refiners are in no position to ensure, or 

even contribute to, growth in the cellulosic biofuel industry. 

“Do a good job, cellulosic fuel producers. If you fail, we’ll 

fine your customers.” Given this asymmetry in incentives, 

EPA’s projection is not “technology-forcing” in the same 

sense as other innovation-minded regulations that we have 

upheld. 

Although an agency may flesh out the interstices of a 

technical regime, Catawba Cnty. v. EPA, 571 F.3d 20, 36-38 

(D.C. Cir. 2009), that discretion does not entitle the agency to 

arrogate to itself purposes outside the statutory provision it is 

applying. See also Railway Labor Executives’ Ass’n v. Nat’l 

Mediation Bd., 29 F.3d 655, 671 (D.C. Cir. 1994) (“Were 
13

courts to presume a delegation of power absent an express 

withholding of such power, agencies would enjoy virtually 

limitless hegemony . . . . ”). Yet that is precisely what EPA 

appears to have done in projecting cellulosic biofuel 

production for 2012. 

Advanced biofuels volume. Section 7545(o)(7)(D)(i) 

states that in any year where EPA reduces the applicable 

volume of cellulosic biofuel, “the Administrator may also 

reduce the applicable volume of renewable fuel and advanced 

biofuels.” 42 U.S.C. § 7545(o)(7)(D)(i) (emphasis added). In 

the 2012 RFS rule, EPA concluded that other sources of 

advanced biofuels, in particular imported sugarcane ethanol 

and biomass-based diesel, could make up for the 490 million 

gallon shortfall in cellulosic biofuel it had projected for 2012. 

77 Fed. Reg. at 1,331-37. The agency accordingly declined to 

reduce the applicable volume of advanced biofuels. Id. EPA, 

however, did not specify precisely how much sugarcane 

ethanol or biomass-based diesel it thought would be available, 

nor did it indicate in what combination these two sources 

would amount to 490 million gallons. API asserts that this 

failure to provide numerical projections “reveals the arbitrary 

nature” of EPA’s findings and “violates the agency’s duty to 

provide a reasoned explanation for its decisions.” Pet’r Br. at 

45. 

We find these arguments unpersuasive. Nothing in the 

text of § 7545(o)(7)(D)(i), or any other applicable provision of 

the Act, plainly requires EPA to support its decision not to 

reduce the applicable volume of advanced biofuels with 

specific numerical projections. This stands in contrast to the 

Act’s explicit instruction that EPA make a numerical 

projection for cellulosic biofuel. Certainly EPA must provide 

a reasoned explanation for its actions, but rationality does not 

always imply a high degree of quantitative specificity. 
14

Turning to the explanation that EPA did provide, we 

think EPA has “articulate[d] a satisfactory explanation for its 

action including a rational connection between the facts found 

and the choice made.” Motor Vehicle Mfrs. Ass’n v. State 

Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43 (1983) (quotations 

removed). The agency adequately grounded its determination 

in historical data on sugarcane ethanol imports and biodiesel 

production, as well as governmental and non-governmental 

projections for future production of those fuels. See 77 Fed. 

Reg. at 1,331-37. We find especially relevant EIA’s 

projection of 300 million gallons of sugarcane ethanol imports 

for 2012 and EPA’s estimation of 2.4 billion gallons in U.S. 

biodiesel production capacity. See id. at 1,332, 1,334. These 

data plausibly suggest that some combination of the two 

sources of advanced biofuels will be available to make up for 

the shortfall in cellulosic biofuel. Moreover, in sharp 

distinction with cellulosic biofuel, there appears to be no great 

obstacle to the production of advanced biofuel generally; to 

the extent that estimates in the record are relatively low, that 

seems to be based on want of a market, which of course 

continued pressure will tend to solve. Id. at 1,334-35. 

* * * 

For the reasons set out above, we reject API’s challenge 

to EPA’s refusal to lower the applicable volume of advanced 

biofuels for 2012. However, we agree with API that EPA’s 

2012 projection of cellulosic biofuel production was in excess 

of the agency’s statutory authority. We accordingly vacate 

that aspect of the 2012 RFS rule and remand for further 

proceedings consistent with this opinion. 

 So ordered.