In National Chicken Council v Environmental Protection Agency (EPA), 2012 WL 2948506 (D.C. Cir. 2012), the court addressed a petition by the meat industry to review final agency action of the EPA regarding the reduction of greenhouse gasses through ethanol production. The Energy Independence and Security Act (EISA) encouraged the production of renewable fuel through a system of credits. The EISA further provides that ethanol qualifies as a renewable fuel if it achieves a 20% reduction in greenhouse gas emissions, but older plants were grandfathered and did not need to meet the 20% reduction requirement. The act was unclear regarding how long this grandfathering was to last and EPA, by rule published at 75 Fed. Reg. 14,688, concluded that the grandfathering was permanent.
The meat industry challenged EPA’s interpretaton of the statute and the petition was dismissed for lack of standing. The standing requirement provides that a person cannot bring a claim to challenge any action unless the challenger can show that the action is likely to injure him. The meat industry argued that it would be harmed by EPA’s ethanol rule because the rule would make it cheaper to produce ethanol, which will increase the amount of ethanol produced, which will increase the demand for corn, which will cause an increase in the price of corn and thereby harm the meat producers who purchase corn to feed their animals. The court started its discussion by noting that petitioners needed to show a substantial probability that a ruling in their favor would reduce the production of ethanol. Absent such a showing, the petitioners could not show that the rule would injure them. Examining the evidence, the court found the evidence of how ethanol producers would react to the rule to be insufficient to show a substantial probability.
Environmental regulation always has business/economic impacts and businesses that track the regulatory process should follow the lead of the petitioners and comment on the business/economic impacts of regulations as well as commenting on the environmental impacts. The decision demonstrates, however, how difficult it can be to establish the business/economic impact of a proposed regulation. One lesson from this case is that it is never enough to show that the challenged rule will have negative effects; one must also show that absent the challenged rule, those negative effects will not occur.