 United States Court of Appeals
         FOR THE DISTRICT OF COLUMBIA CIRCUIT



Argued April 8, 2013                 Decided July 12, 2013

                       No. 11-1101

        CENTER FOR BIOLOGICAL DIVERSITY, ET AL.,
                     PETITIONERS

                            v.

  ENVIRONMENTAL PROTECTION AGENCY AND LISA PEREZ
                    JACKSON,
                  RESPONDENTS

   AMERICAN FOREST & PAPER ASSOCIATION, INC., ET AL.,
                    INTERVENORS


       Consolidated with 11-1285, 11-1328, 11-1336


     On Petitions for Review of Administrative Action
         of the Environmental Protection Agency


    Ann Brewster Weeks argued the cause for petitioners.
With her on the briefs were Lisa J. Zak, Frank Rambo,
Morgan Butler, Kevin P. Bundy, Vera P. Pardee, Brendan R.
Cummings, David D. Doniger, Meleah A. Geertsma, and
Nathaniel S.W. Lawrence. Jonathan F. Lewis entered an
appearance.
                             2
    Perry M. Rosen, Attorney, U.S. Department of Justice,
argued the cause for respondents. With him on the brief was
Scott Jordan, Attorney, U.S. Environmental Protection
Agency.

     Roger R. Martella Jr. argued the cause for respondent-
intervenors. With him on the brief were Timothy K. Webster,
Lisa E. Jones, Joel F. Visser, Charles H. Knauss, Shannon S.
Broome, Norman W. Fichthorn, and Allison D. Wood.
William R. Murray Jr. entered an appearance.

    D. Cameron Prell, Neal Cabral, and Lisa Sharp were on
the brief for amicus curiae National Association of Clean
Water Agencies in support of respondents.

    Before: HENDERSON, TATEL, and KAVANAUGH, Circuit
Judges.

    Opinion for the Court filed by Circuit Judge TATEL.

    Concurring opinion filed by Circuit Judge KAVANAUGH.

    Dissenting opinion filed by Circuit Judge HENDERSON.

     TATEL, Circuit Judge: As part of its ongoing effort to
limit the emission of greenhouse gases, the Environmental
Protection Agency issued a rule deferring regulation of
“biogenic” carbon dioxide—non-fossil-fuel carbon dioxide
sources such as ethanol—for three years. Citing scientific
uncertainty over how to account for biogenic carbon dioxide’s
unique role in the carbon cycle, EPA justified this “Deferral
Rule” on the basis of the de minimis, one-step-at-a-time, and
administrative necessity doctrines. Several environmental
groups now petition for review, arguing that EPA’s
                                3
invocation of these doctrines was arbitrary and capricious. For
the reasons set forth below, we vacate the Deferral Rule.

                                I.
     Under the Clean Air Act, if EPA determines that an “air
pollutant . . . may reasonably be anticipated to endanger
public health or welfare,” 42 U.S.C. § 7521(a)(1), it must
regulate that air pollutant under the Prevention of Significant
Deterioration of Air Quality (PSD) and Title V permitting
programs. See Coalition for Responsible Regulation, Inc. v.
EPA, 684 F.3d 102, 132–44 (D.C. Cir. 2012) (per curiam).
The PSD program, which applies to areas of the country that
are classified as in “attainment” or “unclassifiable” for any
national ambient air quality standard, 42 U.S.C.
§§ 7407(d)(1)(A), 7471, requires certain specified “major
emitting facilit[ies],” such as iron and steel mills, to obtain
state-issued construction permits if they have the potential to
emit over 100 tons per year (tpy) of “any air pollutant,” and
all other sources to obtain such permits if they have the
potential to emit over 250 tpy, id. §§ 7475, 7479(1). Under
the PSD program, sources need permits before starting a
construction or modification project. See id. §§ 7411(a)(4),
7475, 7479(2)(C). To obtain a PSD permit, covered sources
must install the “best available control technology” (BACT)
for all regulated air pollutants—even for air pollutants whose
emissions levels are insufficient to trigger the PSD permitting
requirement. Id. § 7475(a)(4). In other words, if a source
emits two regulated air pollutants—say sulfur dioxide and
particulate matter—but triggers the PSD permitting
requirement only because it emits 500 tpy of sulfur dioxide, it
must install BACT for both. The Title V program requires
operational permits for stationary sources that have the
potential to emit at least 100 tpy of any regulated air pollutant.
See id. §§ 7661–7661f.
                              4
     In response to the Supreme Court’s decision in
Massachusetts v. EPA, 549 U.S. 497 (2007), EPA published
an Endangerment Finding for greenhouse gases—a “well-
mixed” and “aggregate” group of six gases, including carbon
dioxide (CO 2 ). Endangerment and Cause or Contribute
Findings for Greenhouse Gases Under Section 202(a) of the
Clean Air Act (“Endangerment Finding”), 74 Fed. Reg.
66,496, 66,499 (Dec. 15, 2009). Based on that finding, EPA
issued a “cascading series of greenhouse gas-related rules and
regulations.” Coalition for Responsible Regulation, 684 F.3d
at 114. Partnering with the National Highway Traffic Safety
Administration, EPA first promulgated the Tailpipe Rule,
which established motor-vehicle emissions standards for
greenhouse gases. See Light-Duty Vehicle Greenhouse Gas
Emission Standards and Corporate Average Fuel Economy
Standards; Final Rule, 75 Fed. Reg. 25,324 (May 7, 2010).
Because the “Tailpipe Rule automatically triggered regulation
of stationary greenhouse gas emitters under” the PSD and
Title V permitting programs, EPA then issued two rules
“phasing in stationary source greenhouse gas regulation.”
Coalition for Responsible Regulation, 684 F.3d at 115. In the
Timing Rule, EPA concluded that major stationary emitters of
greenhouse gases became subject to the PSD and Title V
permitting requirements on January 2, 2011—the same date
greenhouse gases were subjected to regulation under the
Tailpipe Rule. See Reconsideration of Interpretation of
Regulations That Determine Pollutants Covered by Clean Air
Act Permitting Programs, 75 Fed. Reg. 17,004, 17,007 (Apr.
2, 2010). And in the Tailoring Rule, EPA, recognizing that
literal application of the PSD and Title V emissions
thresholds would cover millions of sources, “tailored” the
statutory thresholds to “reliev[e] [the] overwhelming
permitting burden[] that would . . . fall on permitting
authorities and sources.” Prevention of Significant
Deterioration and Title V Greenhouse Gas Tailoring Rule
                              5
(“Tailoring Rule”), 75 Fed. Reg. 31,514, 31,516 (June 3,
2010). The Tailoring Rule staggers the applicability of the
PSD and Title V permitting programs, “starting with the
largest [greenhouse gas] emitters.” Id. at 31,514. Under Step
One of the Tailoring Rule, which became effective January 2,
2011, the PSD and Title V permitting programs apply only to
“ ‘anyway’ PSD [and Title V] sources, that is, sources that are
subject to PSD [and Title V] anyway due to their emissions of
conventional pollutants,” i.e., non-greenhouse-gas pollutants.
Id. at 31,567. Under Step Two of the Tailoring Rule, which
became effective six months later, the PSD and Title V
permitting programs apply to sources with the potential to
emit specified amounts of greenhouse gases. See id. at 31,516.
In Coalition for Responsible Regulation, Inc. v. EPA, this
court upheld the Endangerment Finding and Tailpipe Rule as
neither arbitrary nor capricious, concluded that the PSD and
Title V permitting programs were unambiguously triggered
when EPA issued the Tailpipe Rule, and rejected challenges
to the Timing and Tailoring Rules on standing grounds. See
Coalition for Responsible Regulation, 684 F.3d at 113–14.

    This case involves biogenic carbon dioxide emissions,
which EPA defines as carbon dioxide emissions “directly
resulting from the combustion or decomposition of
biologically-based materials other than fossil fuels and
mineral sources of carbon.” Deferral for CO 2 Emissions from
Bioenergy and Other Biogenic Sources Under the Prevention
of Significant Deterioration (PSD) and Title V Programs
(“Deferral Rule”), 76 Fed. Reg. 43,490, 43,493 (July 20,
2011). Biogenic carbon dioxide emissions are generated from,
among other things, “the biological decomposition of waste in
landfills, wastewater treatment[,] or manure management
processes,” “fermentation during ethanol production,” and the
“combustion of biological material, including all types of
wood and wood waste, forest residue, and agricultural
                               6
material.” Id. To use a familiar example, power plants running
on coal emit fossil-fuel carbon dioxide whereas power plants
burning feedstocks emit biogenic carbon dioxide.

     Unlike fossil fuels that emit greenhouse gases only
through human-induced combustion, biogenic sources emit
carbon dioxide via both natural and anthropogenic processes.
A forest fire, for example, will emit biogenic carbon dioxide
regardless of whether it was sparked by lightning or as part of
a clear-cutting operation. Dead trees emit carbon dioxide as
part of the decomposition process. See Deferral for CO 2
Emissions From Bioenergy and Other Biogenic Sources
Under the Prevention of Significant Deterioration (PSD) and
Title V Programs: Proposed Rule (“Proposed Deferral Rule”),
76 Fed. Reg. 15,249, 15,252–54 (Mar. 21, 2011).

     Significantly for the issue before us, biogenic carbon
dioxide has a “unique role and impact . . . in the carbon
cycle.” Deferral Rule, 76 Fed. Reg. at 43,496. “Through
relatively rapid photosynthesis, plants absorb CO 2 from the
atmosphere and add it to their biomass, which contains
roughly 50% carbon by weight, through a process called
sequestration.” Proposed Deferral Rule, 76 Fed. Reg. at
15,252. Carbon dioxide emitted by fossil-fuel combustion is
reabsorbed over millennia, leading to a long carbon “debt”
period. By contrast, carbon dioxide released by biogenic
sources will be sequestered when new plants are grown. The
extent to which biogenic sources can serve as a carbon “sink”
will depend on the type of source and its life cycle. See id. at
15,252–54. Given biogenic carbon dioxide’s role in the
carbon cycle, many state and federal programs treat biofuels
as “renewable resources and promote bioenergy projects
when they are a way to address climate change.” Deferral
Rule, 76 Fed. Reg. at 43,492. But to be clear, once carbon
dioxide is released into the atmosphere, “it is not possible to
                              7
distinguish between the radiative forcing associated with a
molecule of CO 2 originating from a biogenic source and one
originating from the combustion of fossil fuel.” Proposed
Deferral Rule, 76 Fed. Reg. at 15,254. In layman’s terms, the
atmosphere makes no distinction between carbon dioxide
emitted by biogenic and fossil-fuel sources.

     In the Tailoring Rule, EPA acknowledged that “biomass
or biogenic fuels and feedstocks could play [a role] in
reducing anthropogenic [greenhouse gas] emissions.”
Tailoring Rule, 75 Fed. Reg. at 31,590–91. Yet responding to
numerous requests that the Tailoring Rule exempt biogenic
carbon dioxide emissions, EPA stated that because it “ha[d]
not analyzed the administrative burden of permitting projects
that specifically involve biogenic CO 2 emissions,” it would
not take a “final position” on whether an exemption or
“different treatment of biomass combustion” was warranted.
Id. at 31,591. As a result, the Timing and Tailoring Rules
require biogenic carbon dioxide sources to obtain PSD and
Title V permits.

     Shortly after promulgating the Tailoring Rule, EPA
issued a Call for Information seeking technical and scientific
information to “evaluat[e] different accounting approaches”
for measuring biogenic carbon dioxide emissions. Call for
Information: Information on Greenhouse Gas Emissions
Associated with Bioenergy an Other Biogenic Sources, 75
Fed. Reg. 41,173, 41,174 (July 15, 2010). Specifically, EPA
sought information about how to treat biogenic carbon
dioxide sources differently for purposes of measuring the
emissions that trigger the PSD and Title V permitting
programs. For example, EPA requested comments on how to
“determin[e] the net impact on the atmosphere of CO 2
emissions” and the “appropriate spatial/geographic scale for
conducting this determination.” Id. at 41,176. Then in March
                              8
2011, EPA, citing its ongoing efforts to understand the unique
characteristics of biogenic carbon dioxide, issued a notice of
proposed rulemaking seeking comment on whether it should
defer regulation of these sources for a three-year period. See
Proposed Deferral Rule, 76 Fed. Reg. at 15,251.
Simultaneously, it published a guidance document for
determining BACT for biogenic carbon dioxide emissions
from “anyway” sources that were regulated under the PSD
permitting program at Step One of the Tailoring Rule. See
Office of Air and Radiation, U.S. EPA, Guidance for
Determining Best Available Control Technology for
Reducing Carbon Dioxide Emissions from Bioenergy
Production (Mar. 2011).

     Based on comments and studies received during the
notice-and-comment period, and following up on the Call for
Information, EPA issued a rule—the one challenged here—
postponing regulation of biogenic carbon dioxide sources for
three years. In support of this so-called Deferral Rule, EPA
repeatedly emphasized that “the issue of accounting for the
net atmospheric impact of biogenic CO 2 emissions is complex
enough that further consideration . . . is warranted.” Deferral
Rule, 76 Fed. Reg. at 43,492. It explained:

    The information collected to this point underscores
    the complexity and uncertainty associated with
    accounting for biogenic emissions of CO 2 and
    indicates that at present attempting to determine the
    net carbon cycle impact of particular facilities
    combusting particular types of biomass feedstocks
    would require extensive analysis and would therefore
    entail extensive workload requirements by many of
    the permitting authorities. In contrast to other
    sources of [greenhouse gas] emissions, these
    uncertainties and complexities are exacerbated
                              9
    because of the unique role and impact biogenic
    sources of CO 2 have in the carbon cycle. Further,
    methodologies are not sufficiently developed to
    assure that various permitting authorities would be
    able to perform the necessary calculations reasonably
    and consistently to determine the net atmospheric
    impact in many, if not all, instances.

Id. at 43,496. To dispel these uncertainties, EPA announced
that “[d]uring the three-year deferral period” it would
“conduct a detailed examination of the science associated
with biogenic CO 2 emissions from stationary sources.” Id. at
43,492. EPA justified the Deferral Rule by invoking three
principles of administrative law: the de minimis, one-step-at-
a-time, and administrative necessity doctrines. See id. at
43,496–99. For instance, EPA reasoned that it would be a
waste of resources to regulate a biogenic carbon dioxide
source that has a de minimis impact on the net carbon cycle.
See id. at 43,499.

     The Deferral Rule exempts from regulation biogenic
carbon dioxide sources that trigger the PSD and Title V
permitting programs at Step Two of the Tailoring Rule. The
rule accomplishes this by amending the regulatory definition
of “greenhouse gases” to exclude biogenic carbon dioxide.
Thus, biogenic carbon dioxide sources that have the potential
to emit over the statutory thresholds, as modified by the
Tailoring Rule, need not obtain a PSD or Title V permit. See
id. at 43,493. The so-called “anyway” sources that obtained
PSD and Title V permits during Step One of the Tailoring
Rule, however, must still install BACT for their biogenic
carbon dioxide emissions. See id. at 43,500–01.

     The Deferral Rule contains a sunset provision: absent
further agency action, on July 21, 2014, biogenic carbon
                               10
dioxide will be regulated under the PSD and Title V
programs, as modified by the Tailoring Rule. See id. at
43,490, 43,507. Although the Deferral Rule is a temporary
regulation, it functions, in effect, as a permanent exemption
from the PSD permitting requirement for any biogenic carbon
dioxide source constructed during the three-year deferral
period. See id. at 43,499. Exempted sources would have to
obtain PSD permits only if they undertake a modification
project after the deferral period ends. See id. The Deferral
Rule is also voluntary. “Each state may decide if it wishes to
adopt the deferral and proceed accordingly.” Id. at 43,502. At
least one State, Massachusetts, is currently regulating
biogenic carbon dioxide sources at Step Two of the Tailoring
Rule. See Oral Arg. Tr. 3–4.

     Center for Biological Diversity and several other
environmental organizations now petition for review. “We
review the actions of the EPA to determine whether they are
‘(A) arbitrary, capricious, an abuse of discretion, or otherwise
not in accordance with law; (B) contrary to constitutional
right, power, privilege, or immunity; [or] (C) in excess of
statutory jurisdiction, authority, or limitations.’ ” American
Farm Bureau Federation v. EPA, 559 F.3d 512, 519 (D.C.
Cir. 2009) (per curiam) (quoting 42 U.S.C. § 7607(d)(9))
(alternation in original).

                               II.
     Before considering the merits of petitioners’ challenge,
we must determine whether this case is ripe for review. See In
re Aiken County, 645 F.3d 428, 434 (D.C. Cir. 2011)
(explaining that the “ripeness doctrine, even in its prudential
aspect, is a threshold inquiry”). Under the prudential ripeness
doctrine, invoked by our dissenting colleague, see dissenting
op. at 10–17, courts look at two factors in deciding whether to
stay their hand: the “fitness of the issues for judicial decision”
                                 11
and “the extent to which withholding a decision will cause
hardship to the parties.” American Petroleum Institute v. EPA,
683 F.3d 382, 387 (D.C. Cir. 2012) (internal quotation marks
omitted).

     The Deferral Rule satisfies the first factor because it
functions as an exemption from the PSD permit requirement
for those sources constructed during the deferral period. See
supra at 10; Oral Arg. Tr. 13 (EPA conceding that the
Deferral Rule permanently exempts sources constructed
between July 2011 and July 2014). To be sure, once the
deferral period ends, these sources’ “biogenic CO 2 emissions
would have to be appropriately considered in any applicability
determinations . . . conduct[ed] for future stationary source
permitting purposes.” Deferral Rule, 76 Fed. Reg. at 43,499
(emphasis added). But under the PSD program, a source
would be required to obtain a permit only for “a major
modification determination.” Id. Given this, the question
before us is whether EPA may exempt certain biogenic
carbon dioxide sources—not just the air pollutant itself—
from the PSD program. This is the type of “purely legal” and
“sufficiently final” issue that is “fit[] . . . for judicial decision”
and can be resolved without resort to the prudential ripeness
doctrine. American Petroleum Institute, 683 F.3d at 387
(internal quotation marks omitted).

     Regarding the second factor, the parties will suffer
hardship if we decline to decide this issue. We know from
oral argument that a biogenic carbon dioxide source in
Allendale, South Carolina, has been constructed without a
PSD permit, meaning that it has emitted more pollution than it
otherwise would have but for the Deferral Rule. See Oral Arg.
Tr. 5–6, 10. There may well be other such sources. Our
dissenting colleague principally relies on a March 2012
declaration for the proposition that the number of sources
                              12
impacted by the Deferral Rule is negligible. But we have no
idea how many biogenic carbon dioxide sources have been
constructed since March 2012, nor do we have any basis for
predicting how many biogenic carbon dioxide sources will be
constructed during the next year. Because the Deferral Rule
authorizes certain sources to emit more pollutants than they
would otherwise be allowed to under the Tailoring Rule, this
dispute is ripe for review.

                              III.
     Petitioners argue that the Deferral Rule violates the Clean
Air Act’s plain language. They rely on the statute’s definition
of “major emitting facility”: any “stationary source[]” that
“emit[s], or ha[s] the potential to emit,” certain specified
amounts of “any air pollutant.” 42 U.S.C. § 7479(1). Because
EPA regulates carbon dioxide as an “air pollutant,” petitioners
contend that the agency has no authority to exempt any
sources of carbon dioxide, including biogenic sources, from
the PSD permitting program. Acknowledging the scientific
uncertainty about biogenic carbon dioxide’s role in the carbon
cycle, petitioners argue that EPA can regulate biogenic
sources under the PSD permitting program while accounting
for their unique qualities at the BACT stage. For its part, EPA
believes that it has authority under the Clean Air Act to treat
biogenic carbon dioxide sources differently because these
sources have unique characteristics that were “unquestionably
unforeseen when Congress enacted [the] PSD” program.
Respondent’s Br. 40. This statutory analysis, however,
appears nowhere in the Deferral Rule. Instead, the Deferral
Rule rests on the de minimis, one-step-at-a-time, and
administrative necessity doctrines. Because the “grounds
upon which an administrative order must be judged are those
upon which the record discloses that its action was based,”
SEC v. Chenery Corp., 318 U.S. 80, 87 (1943), the Deferral
                             13
Rule must stand or fall on the merits of EPA’s invocation of
these doctrines.

     We can easily reject EPA’s use of the de minimis
doctrine, which allows agencies to grant regulatory
“exemption[s] when the burdens of regulation yield a gain of
trivial or no value.” Alabama Power Co. v. Costle, 636 F.2d
323, 360–61 (D.C. Cir. 1979). In the Deferral Rule, EPA
stated that it had authority to exempt biogenic carbon dioxide
sources that have “a negligible or positive impact on the
carbon cycle and net atmospheric CO 2 levels.” Deferral Rule,
76 Fed. Reg. at 43,499. In its appellate brief, however, EPA
expressly disavows this doctrine, explaining that the Deferral
Rule has a three-year sunset provision whereas the de minimis
doctrine “is used to establish permanent exemptions.”
Respondent’s Br. 35. Given this concession, the Deferral Rule
cannot be sustained under the de minimis doctrine.

     The one-step-at-a-time doctrine, which EPA does defend,
authorizes agencies to promulgate regulations in a piecemeal
fashion. EPA explains that it is proceeding one-step-at-a-
time—that is, postponing regulation of biogenic carbon
dioxide for three years—in order to give it time to study the
science underlying these sources and determine its precise
regulatory approach. See Deferral Rule, 76 Fed. Reg. at
43,497 (“EPA has . . . deferr[ed] the applicability of PSD and
Title V to biogenic emissions of CO 2 from stationary sources
for only as long as necessary for EPA to complete the needed
scientific study of these emissions, develop an accounting
framework, and as appropriate conduct rulemaking specific to
the unique nature and characteristics of these emission
sources.”). According to petitioners, however, federal
agencies have no authority to invoke the one-step-at-a-time
doctrine “to diverge from [a] clear statutory mandate,” and
here, they argue, the Clean Air Act unambiguously requires
                               14
regulation of all carbon dioxide from whatever source.
Petitioners’ Br. 56. But we need not decide whether the one-
step-at-a-time doctrine can justify an agency’s non-
compliance with a clear statutory mandate or whether the
Clean Air Act unambiguously requires the regulation of all
carbon dioxide from whatever source because, as we shall
explain, EPA’s invocation of the one-step-at-a-time doctrine
was arbitrary and capricious. See Grand Canyon Air Tour
Coalition v. FAA, 154 F.3d 455, 477 (D.C. Cir. 1998)
(determining whether agency’s reliance on the one-step-at-a-
time doctrine was arbitrary and capricious).

     The one-step-at-a-time doctrine rests on the notion that
“[s]ince agencies have great discretion to treat a problem
partially, we [sh]ould not strike down [a regulation] if it [is] a
first step toward a complete solution.” City of Las Vegas v.
Lujan, 891 F.2d 927, 935 (D.C. Cir. 1989). Eschewing a
precise doctrinal test for invoking the doctrine, we have
remarked that the one-step-at-a-time inquiry “is in essence a
pragmatic one.” National Association of Broadcasters v.
FCC, 740 F.2d 1190, 1210 (D.C. Cir. 1984). We have
observed that incremental regulation is especially appropriate
in response to evolving economic and technological
conditions. See id. at 1210–11. We have also imposed outer
limits on the one-step-at-a-time doctrine: “it would be
arbitrary and capricious for an agency simply to thumb its
nose at Congress and say—without any explanation—that it
simply does not intend to achieve a congressional goal on any
timetable at all.” Grand Canyon Air Tour Coalition, 154 F.3d
at 477. Although the “circumstances under which [an] agency
may defer [regulation] . . . are [in]capable of being captured in
a single doctrine,” National Association of Broadcasters, 740
F.2d at 1210, an agency invoking the one-step-at-a-time
doctrine must, at a minimum, articulate (1) what it believes
the statute requires and (2) how it intends to achieve that goal.
                              15
Otherwise, reviewing courts will have no basis for evaluating
whether the agency is in fact taking “a first step toward a
complete solution.” City of Las Vegas, 891 F.2d at 935. EPA
itself put it well: “Courts will accept an initial step towards
full compliance with a statutory mandate, as long as the
agency is headed towards full compliance.” Deferral Rule, 76
Fed. Reg. at 43,498.

     In this case, however, EPA failed to explain in the
Deferral Rule what “full compliance” with the “statutory
mandate” means. Specifically, although the Deferral Rule
spends pages explaining the scientific uncertainty about
biogenic carbon dioxide sources, the additional research EPA
plans to undertake, and why three more years of study are
warranted, the rule—as opposed to EPA’s brief here—
nowhere offers an interpretation of the Clean Air Act that
would allow the agency to treat biogenic carbon dioxide
sources differently. This deficiency is not merely the result of
scientific uncertainty. For example, this would be a very
different case had the Deferral Rule interpreted the Clean Air
Act as requiring permits only for biogenic carbon dioxide
sources with an adverse impact on the net carbon cycle and
explained that the agency had deferred regulation due to
scientific uncertainty over which sources meet that standard.
Under those circumstances, we could have determined
whether EPA had correctly interpreted the statute and
properly invoked the one-step-at-a-time doctrine. Here, by
contrast, we simply have no idea what EPA believes
constitutes “full compliance” with the statute. In other words,
the Deferral Rule is one step towards . . . what? Without a
clear answer to that question, EPA has no basis for invoking
the one-step-at-a-time doctrine.

    EPA next invokes the administrative necessity doctrine,
which permits an agency to “avoid implementing a statute . . .
                               16
by showing that attainment of the statutory objectives is
impossible.” Sierra Club v. EPA, 719 F.2d 436, 463 (D.C.
Cir. 1983). Under this doctrine, the agency must also adopt
the narrowest feasible exemption. See id. (criticizing the
agency for failing to explore “less taxing ways to enforce the
law”).

     Emphasizing both the possibility that biogenic carbon
dioxide sources might have a negligible impact on the net
carbon cycle and the “extensive workload of processing
permit applications,” EPA found that requiring permits for
these sources “would frustrate the goals . . . sought to [be]
accomplish[ed] in the Tailoring Rule.” Deferral Rule, 76 Fed.
Reg. at 43,496. In doing so, EPA rejected a proposed middle-
ground option: requiring biogenic carbon dioxide sources to
obtain permits but only if they fail to make “any effort to take
into account net carbon cycle impacts.” Id. Under this
approach, all biogenic carbon dioxide sources that would have
triggered the modified statutory thresholds would have had to
take some steps to reduce their emissions, either voluntarily to
avoid the PSD permit requirement or by installing BACT as a
condition of obtaining a permit. EPA rejected this approach
because it “could result in regulation of sources with trivial or
positive impacts on the net carbon cycle.” Id.

    Without deciding whether the middle-ground option
could pass muster under the statute, we agree with petitioners
that EPA’s rejection of that option was arbitrary and
capricious. EPA has conceded “the possibility . . . that more
detailed examination of the science of biogenic CO 2 will
demonstrate that . . . some biogenic feedstocks . . . have a
significant impact on the net carbon cycle.” Id. at 43,498
(emphasis added). As to these sources, the middle-ground
option would have had the practical effect of reducing their
emissions; by contrast, the Deferral Rule, which functions as
                              17
a permanent exemption, does not. EPA’s reason for rejecting
the middle-ground option—that it would regulate biogenic
sources with a trivial impact—though perhaps accurate, is
thus non-responsive. Given EPA’s obligation to adopt the
narrowest exemption possible, it should have explained why it
rejected an option that would have reduced emissions from
sources the Deferral Rule permanently exempts. See Sierra
Club, 719 F.2d at 464 (remanding regulation because there
was “no evidence that EPA ha[d] adequately explored . . .
regulatory alternatives”).

    This omission is especially troublesome because EPA has
demonstrated that, notwithstanding the scientific uncertainty
about measuring biogenic carbon dioxide emissions at the
PSD applicability stage, the unique characteristics of these
sources can be factored in at the BACT stage. The Deferral
Rule still requires “anyway” sources that obtained PSD
permits under Step One of the Tailoring Rule to regulate
biogenic carbon dioxide emissions. To assist those sources
and permitting authorities in developing BACT standards,
EPA issued a detailed thirty-three page report on biogenic
carbon dioxide. Presumably, permitting authorities are able to
handle the scientific complexity of regulating biogenic carbon
dioxide as to these “anyway” sources. Furthermore, since the
Deferral Rule is voluntary, States may regulate biogenic
carbon dioxide sources under Step Two of the Tailoring Rule.
Indeed, Massachusetts is currently doing just that.

    Finally, for the first time in its brief, EPA relies on the
absurd results doctrine, which embodies “the long-standing
rule that a statute should not be construed to produce an
absurd result.” Mova Pharmaceutical Corp. v. Shalala, 140
F.3d 1060, 1068 (D.C. Cir. 1998). As EPA sees it, because
“emissions of CO 2 derived from certain forms of biomass
may not only fail to endanger public health and welfare, but in
                               18
fact may benefit the public by reducing the net emissions of
CO 2 ,” Respondent’s Br. 59, it would run afoul of
congressional intent to regulate them. Responding to
petitioners’ contention that EPA’s reliance on the absurd
results doctrine is post hoc, the agency points to several
passages in the Deferral Rule that mention the doctrine. These
references fall into two groups. The first, and by far the larger,
appears in a summary of the Tailoring Rule’s legal reasoning.
According to EPA, the Deferral Rule fully incorporates the
Tailoring Rule’s rationales, including the absurd results
doctrine. See Respondent’s Br. 59. But the Deferral Rule
cannot rest on the Tailoring Rule’s invocation of the absurd
results doctrine for a simple reason: the two rules are aimed at
different absurd results. The Tailoring Rule was intended to
alleviate the crushing administrative burden on permitting
authorities and sources, see Tailoring Rule, 75 Fed. Reg. at
31,547; the Deferral Rule, by contrast, was intended to avoid
regulation of biogenic carbon dioxide sources that have a
negligible impact on the net carbon cycle. The second group,
which appears in a section justifying the Deferral Rule itself,
mentions the absurd results doctrine only by analogy to the de
minimis and administrative necessity doctrines. These passing
references, however, fall far short of satisfying EPA’s
“fundamental” obligation to “set forth the reasons for its
actions.” Northeast Maryland Waste Disposal Authority v.
EPA, 358 F.3d 936, 949 (D.C. Cir. 2004) (per curiam). For
these reasons, we agree with petitioners that EPA’s reliance
on the absurd results doctrine is indeed post hoc. See Calpine
Corp. v. FERC, 702 F.3d 41, 46 (D.C. Cir. 2012) (explaining
that an “agency decision[] may not be affirmed on grounds
not actually relied upon by the agency”).

    Because the Deferral Rule cannot be justified under any
of the administrative law doctrines relied on by EPA, this
opinion, contrary to our dissenting colleague’s suggestion, see
                             19
dissenting op. at 8, leaves for another day the question
whether the agency has authority under the Clean Air Act to
permanently exempt biogenic carbon dioxide sources from
the PSD permitting program. If and when EPA adopts a
permanent exemption for some or all biogenic carbon dioxide
sources, we will have the benefit of three years of scientific
study, as well as fully briefed and contextualized arguments
about EPA’s authority under the Clean Air Act.

                             IV.
     For the foregoing reasons, we grant the petitions for
review and vacate the Deferral Rule.

                                                  So ordered.
     KAVANAUGH, Circuit Judge, concurring: Under this
Court’s recent precedent in Coalition for Responsible
Regulation, Inc. v. EPA, this should be an easy case. The
primary question presented is whether EPA has statutory
authority to issue the Deferral Rule and thereby temporarily
exempt biogenic carbon dioxide from the PSD and Title V
permitting programs. In my view, the answer is no. This
Court has ruled that the statute requires pre-construction and
operating permits for stationary sources that emit or have the
potential to emit certain specified amounts of an air pollutant,
including carbon dioxide. There is zero basis in the text of
the Clean Air Act for EPA to distinguish biogenic carbon
dioxide from other sources of carbon dioxide that EPA is
required (under our precedent) to regulate for purposes of the
PSD and Title V permitting programs. See Coalition for
Responsible Regulation, Inc. v. EPA, 684 F.3d 102, 132-44
(D.C. Cir. 2012).

     As a policy matter, EPA may have very good reasons to
temporarily exempt biogenic carbon dioxide from the PSD
and Title V permitting programs. But Congress sets the
policy in the statutes it enacts; EPA has discretion to act only
within the statutory limits set by Congress. The statute does
not give EPA the authority to distinguish a stationary source’s
emissions of biogenic carbon dioxide from emissions of other
forms of carbon dioxide for purposes of these permitting
programs. 1

    EPA cites three administrative law doctrines that,
according to EPA, give it authority to grant the temporary
exemption. But in addition to the reasons given in Judge

    1
       Under current precedent, for EPA to exempt biogenic carbon
dioxide, it presumably would have to tinker with the Endangerment
Finding. Unless EPA does so, there is no statutory basis for
exempting biogenic carbon dioxide from the PSD and Title V
permitting programs.
                               2
Tatel’s opinion for the Court, which I join in full, I would say
that none of those doctrines applies in this case for an even
more fundamental reason: The doctrines do not trump the
fact that EPA simply lacks statutory authority to distinguish
biogenic carbon dioxide from other forms of carbon dioxide
for purposes of the PSD and Title V permitting programs.

     First, EPA relies on the one-step-at-a-time doctrine,
which allows an agency to take incremental steps toward
achieving a statutory mandate if taking incremental steps is
consistent with the statutory text. See Grand Canyon Air
Tour Coalition v. FAA, 154 F.3d 455, 477-78 (D.C. Cir. 1998)
(rule not arbitrary and capricious because it would achieve
statutory mandate in conjunction with other proposed rules
within a reasonable timeframe). An agency typically invokes
that doctrine in response to a claim that an agency is
exercising its statutory discretion in an arbitrary and
capricious manner.

     But EPA has no such statutory discretion here. Under the
statute as this Court has interpreted it, EPA must regulate
carbon dioxide under the PSD and Title V permitting
programs. Coalition for Responsible Regulation, 684 F.3d at
144 (Clean Air Act “requires PSD and Title V permits for
major emitters of greenhouse gases”). And there is no basis
in the statute for distinguishing biogenic carbon dioxide from
other forms of carbon dioxide.

    Second, EPA cites the administrative necessity doctrine,
which can excuse agency non-compliance with a statute if the
agency lacks sufficient funds or resources. See Alabama
Power Co. v. Costle, 636 F.2d 323, 359 (D.C. Cir. 1979)
(shortage of funds, of “time, or of the technical personnel
needed to administer a program” grants agency authority “to
cope with the administrative impossibility of applying the
                               3
commands of the substantive statute”). But EPA has the
funds and resources to apply the PSD and Title V programs to
biogenic carbon dioxide. Indeed, in the Deferral Rule, EPA
acknowledged that it has the resources to “apply PSD and
Title V to all facilities with biogenic CO2 emissions that emit
at or above the Tailoring Rule thresholds.” 76 Fed. Reg.
43,490, 43,496 (July 20, 2011).

     EPA decided against that option, however, because EPA
thought it might be bad policy. Specifically, EPA said that “it
is conceivable that as a result of the scientific examination of
biogenic CO2 emissions, [EPA] could conclude that the net
carbon cycle impact for some biomass feedstocks is trivial,
negative, or positive.” Id. EPA reached that conclusion
because it thinks that regrowth of plant life – and the resulting
recapture of carbon dioxide – might “offset” emissions of
biogenic carbon dioxide. But the statute forecloses that kind
of “offsetting” approach because the statute measures
emissions from stationary sources that “emit” (or have the
potential to emit) air pollutants. See 42 U.S.C. §§ 7475(a),
7479(1). The statute does not allow EPA to exempt those
sources’ emissions of a covered air pollutant just because the
effects of those sources’ emissions on the atmosphere might
be offset in some other way.

     Relatedly, EPA suggests that it has appropriately
balanced the costs and benefits of regulating biogenic carbon
dioxide under the PSD and Title V programs. But EPA is not
permitted to substitute its view of the costs and benefits of
regulation for Congress’s view of the costs and benefits of
regulation. See Sierra Club v. EPA, 719 F.2d 436, 462 (D.C.
Cir. 1983) (EPA not permitted to create exemption “based
upon its perceptions of the costs and benefits of enforcing the
law”); Alabama Power Co., 636 F.2d at 357 (“[T]here exists
no general administrative power to create exemptions to
                               4
statutory requirements based upon the agency’s perceptions of
costs and benefits.”). Allowing an agency to substitute its
own policy choices for Congress’s policy choices in this
manner would undermine core separation of powers
principles. The Constitution gives Congress the legislative
power to set policy in the first instance, and agencies then
must act within those statutory boundaries – even if the
agency believes it possesses expertise or policy views
superior to Congress’s. See Federal Power Commission v.
Texaco, 417 U.S. 380, 400 (1974) (agencies cannot use
administrative necessity “to overturn congressional
assumptions embedded into the framework of regulation” by
Congress); Natural Resources Defense Council, Inc. v. Costle,
568 F.2d 1369, 1377 (D.C. Cir. 1977) (doctrine not a
“revisory power” granting agency authority to act
“inconsistent with the clear intent of the relevant statute”).

     Third, EPA has also invoked the absurd results doctrine.
The crux of EPA’s position is that it would be absurd to
interpret the Clean Air Act in a way that would require EPA
to regulate biogenic carbon dioxide. But with EPA having
already applied the PSD and Title V programs to carbon
dioxide (and with this Court having agreed with that
interpretation of the statute), there is certainly nothing absurd
about applying those programs to biogenic carbon dioxide. It
is hardly absurd for Congress to tackle the problem of
emissions from the smokestack in the first instance. And the
fact that an exemption for biogenic carbon dioxide would be
better policy (in EPA’s view) does not make it absurd to
apply the statute to biogenic carbon dioxide. See Landstar
Express America, Inc. v. Federal Maritime Commission, 569
F.3d 493, 498 (D.C. Cir. 2009) (“A statutory outcome is
absurd if it defies rationality.”). If it would be better overall
                                  5
to exempt biogenic carbon dioxide from these permitting
programs, EPA can always recommend that Congress do so. 2

                               * * *

     All of that said, I have mixed feelings about this case.
That’s because I believe, contrary to this Circuit’s precedent,
that the PSD statute does not cover carbon dioxide, whether
biogenic or not. See Coalition for Responsible Regulation,
Inc. v. EPA, No. 09-1322 (D.C. Cir. 2012) (Kavanaugh, J.,
dissenting from denial of rehearing en banc). And as I see it,
EPA’s decision to temporarily exempt biogenic carbon
dioxide from regulation simply highlights the legal problems
in applying the PSD program to greenhouse gases, including
carbon dioxide, in the first place. To review the bidding:
EPA has read the PSD statute broadly to cover not just the
NAAQS pollutants but also greenhouse gases, although EPA

     2
        To be sure, the Executive may decline to follow a statutory
mandate or prohibition applicable to the Executive if the President
concludes that it is unconstitutional, unless and until a final Court
order says otherwise. But EPA has not claimed that the statutory
requirement to apply these permitting programs to biogenic carbon
dioxide would be unconstitutional. It is also true that the Executive
possesses a significant degree of prosecutorial discretion to decline
to initiate criminal or civil enforcement actions against violators of
a federal law. But EPA’s decision here is not such a non-
enforcement action, and EPA has not claimed otherwise. See
Massachusetts v. EPA, 549 U.S. 497, 527-28, 533 (2007)
(explaining difference between prosecutorial discretion and
agency’s choice whether to regulate); see generally In re Aiken
County, No. 11-1271, slip op. at 2 n.1 (D.C. Cir. 2012)
(Kavanaugh, J., concurring) (describing prosecutorial discretion);
Seven-Sky v. Holder, 661 F.3d 1, 50 n.43 (D.C. Cir. 2011)
(Kavanaugh, J., dissenting) (referring to possibility that a President
might exercise prosecutorial discretion not to seek civil penalties
against those who fail to comply with health insurance mandate).
                              6
expressly recognized that such an interpretation would lead to
a result that was “so contrary to what Congress had in mind”
and “in fact so undermines what Congress attempted to
accomplish with the PSD requirements” that “it should be
avoided under the ‘absurd results’ doctrine.” 74 Fed. Reg.
55,292, 55,310 (Oct. 27, 2009). To try to deal with those
admittedly absurd results, EPA then has repeatedly re-written
the statute – first in the Tailoring Rule and now in the
Deferral Rule. But the absurdities and anomalies flowing
from EPA’s statutory interpretation just underscore how
flawed EPA’s interpretation was from the get-go. EPA could
have adopted a narrower interpretation of the PSD statute that
would have avoided those absurdities and, to boot, would
have been more consistent with the statutory text and
structure. What we are left with now is a statute that is a far
cry from what Congress intended or enacted. So EPA is
necessarily making it up as it goes along. That is not how the
administrative process is supposed to work.

     In saying that, I do not want to diminish EPA’s vital
public objectives in addressing global warming. The task of
dealing with global warming is urgent and important at the
national and international level. My concern about EPA’s
approach does not stem from policy beliefs (courts don’t have
the authority or the expertise to assess policy well anyway)
but rather from separation of powers principles.

     But EPA’s broad interpretation of the statute was upheld
by this Court in Coalition for Responsible Regulation.
Although I respectfully think the case was wrongly decided
on this issue, that’s water over the dam in this Court. We are
bound to apply that precedent.            Under that case’s
interpretation of the governing statute, EPA is required to
regulate carbon dioxide under the PSD and Title V permitting
                             7
programs. There is no statutory basis for exempting biogenic
carbon dioxide.
    KAREN LECRAFT HENDERSON, Circuit Judge, dissenting:
     We must decide whether the Environmental Protection
Agency (EPA) may temporarily defer regulation of biogenic
carbon dioxide (CO2) emissions against a backdrop of
uncertain but expanding scientific knowledge and rapid
regulatory changes. Deferral for CO2 Emissions from
Bioenergy, 76 Fed. Reg. 43,490 (July 20, 2011) (Deferral
Rule). I believe EPA can—and should—defer regulation until
it has the time it says it needs to study and resolve the issue it
is charged with regulating. I would therefore uphold the
Deferral Rule. Alternatively, given that the Deferral Rule
expires or will be superseded in a matter of months—and by
then EPA will have at least crystallized the issue before us—
we should hold the case in abeyance as unripe. Accordingly, I
respectfully dissent.
                                I.
     The Deferral Rule delays for three years—from July 20,
2011 until July 21, 2014—the EPA’s factoring in of biogenic
CO2 emissions “when determining whether a stationary
source meets the” emissions thresholds for permitting under
the Prevention of Significant Deterioration (PSD) and Title V
permitting systems of the Clean Air Act (CAA), 42 U.S.C.
§§ 7401 et seq. See Deferral Rule, 76 Fed. Reg. at 43,492. In
so deferring, EPA has used, correctly, I believe, the long-
recognized step-at-a-time regulatory procedure. This
procedure recognizes the reality and complexity of
administrative regulation. “In an ideal world . . . agencies
would act only after comprehensive consideration of how all
available alternatives comported with a well-defined policy
objective . . . .” Nat’l Ass’n of Broadcasters v. FCC, 740 F.2d
1190, 1210 (D.C. Cir. 1984). Nonetheless, “administrative
action generally occurs against a shifting background in
which facts, predictions, and policies are in flux and in which
an agency would be paralyzed if all the necessary answers had
to be in before any action at all could be taken.” Id. Thus,
                                2
“agencies have great discretion to treat a problem partially”
and we will “not strike down [a regulation] if it [is] a first step
toward a complete solution, even if we thought it ‘should’ ”
have been finished. City of Las Vegas v. Lujan, 891 F.2d 927,
935 (D.C. Cir. 1989). Moreover, “nothing in the
[Administrative Procedure Act] precludes an agency from
collecting data and monitoring real-world experience with
regulatory standards before adopting new standards governing
periods of time far into the future—especially in cases, as
here, that involve unpredictable technological change. Indeed,
gathering evidence before making a long-term decision is
eminently sensible.” Pub. Citizen, Inc. v. Nat’l Highway
Traffic Safety Admin., 374 F.3d 1251, 1263 (D.C. Cir. 2004);
see also id. at 1262-63 (agency’s temporarily declining to
make crash test requirements stricter was not arbitrary and
capricious because it “offered rational reasons for adopting an
‘interim final rule’ establishing the unbelted crash test speed
through August 2006 only” while it undertook “multi-year
effort to obtain additional data”).
    The Deferral Rule must be read in light of the fact that
EPA did not regulate greenhouse gases (GHGs) under the
CAA at all until the end of 2009, see Endangerment and
Cause or Contribute Findings for Greenhouse Gases, 74 Fed.
Reg. 66,496 (Dec. 15, 2009), and did not regulate them under
PSD and Title V until 2011, see Prevention of Significant
Deterioration and Title V Greenhouse Gas Tailoring Rule, 75
Fed. Reg. 31,514, 31,521 (June 3, 2010) (Tailoring Rule). By
postponing regulation of biogenic CO2 emissions under PSD
and Title V, the Deferral Rule simply keeps in place the pre-
                                 3
2011 status quo. The question, then, is whether the petitioners
can compel EPA to act before July 21, 2014.1
     Although the step-at-a-time doctrine is “pragmatic” and
cannot be “captured in a single doctrinal formulation,” we ask
two questions when an agency uses it to “defer resolution of
problems.” Nat’l Ass’n of Broadcasters, 740 F.2d at 1210.
First, we ask whether the agency (1) has “made some
estimation, based upon evolving economic and technological
conditions, as to the nature and magnitude of the problem it
will have to confront when it comes to resolve the postponed
issue”; and (2) “whether it was reasonable, in the context of
the decisions made in the proceeding under review, for the
agency to have deferred the issue.” Id. at 1210-11. Regarding
the second question, “postponement will be most easily
justified when an agency acts against a background of rapid
technical and social change and when the agency’s initial
decision as a practical matter is reversible should the future
proceedings yield drastically unexpected results.” Id. at 1211;
see also Massachusetts v. EPA, 549 U.S. 497, 527 (2007)
(“[A]n agency has broad discretion to choose how best to
marshal its limited resources and personnel to carry out its


   1
     Our review is highly deferential. See Interstate Natural Gas
Ass’n of Am. v. FERC, 285 F.3d 18, 57 (D.C. Cir. 2002) (“The
policy originates in past decisions; FERC did not here decide to
continue it, in the sense of confronting the substance and making an
affirmative decision; it decided only that it would defer substantive
treatment to a different—and necessarily later—context. In essence,
then, the claim is of a violation of the [Administrative Procedure
Act]’s mandate that an agency decide matters within a reasonable
time, and calls on us to compel agency action unlawfully withheld
or unreasonably delayed. Our review is [therefore] highly
deferential.” (quotation marks and citations omitted)).
                                  4
delegated responsibilities.”). I believe EPA’s rationale for the
Deferral Rule easily fits within this framework.
     EPA has reasonably attempted to balance its
acknowledged CAA duty to regulate GHGs with the reality
that both EPA itself as well as other permitting authorities
have limited resources and experience in this area. The
Tailoring Rule, which EPA promulgated in 2010, created a
phase-in process whereby, at first, only the largest GHG
emitters would be subject to PSD and Title V on the basis of
GHG emissions. Tailoring Rule, 75 Fed. Reg. at 31,516. The
phase-in was necessary both to alleviate high costs to
permitting authorities, id. at 31,533, and to give EPA time to
decide how to permanently implement GHG regulation, id. at
31,526. EPA promulgated the Deferral Rule because of
similar cost and scientific uncertainty. Specifically, EPA did
not know in 2011 which, if any, biofuel feedstocks cause a net
increase in atmospheric CO2 levels when used as fuel for a
stationary source. Deferral Rule, 76 Fed. Reg. at 43,492. EPA
was concerned that, if it regulated all sources’ biogenic CO2
emissions without taking net increase vel non into account, its
regulation of the sources could result in high cost but
negligible benefit.2 EPA also concluded that immediate, one-
   2
      Earlier, EPA had predicted that, had it not adopted the
Tailoring Rule’s phase-in approach, permitting authorities would
have faced a 140-fold increase in PSD permitting activity, or $1.5
billion in additional annual costs; and a 400-fold increase in Title V
permitting activity, or $21 billion in additional annual costs.
Tailoring Rule, 75 Fed. Reg. at 31,539-40. Even under the phase-in
approach, EPA projected a 42% increase in administrative costs per
year. Id. at 31,540, Table V-1. In the Deferral Rule, EPA reasoned
that “requiring regulation of biogenic sources of CO2 at this time
may,” inter alia, “exacerbate[ ] the regulatory burdens . . . the
Tailoring Rule was intended to avoid.” Deferral Rule, 76 Fed. Reg.
at 43,499.
                               5
size-fits-all regulation of biogenic CO2 could be
counterproductive by discouraging the construction of low-
net-carbon stationary facilities. Id. at 43,496. Absent deferral,
EPA concluded, permitting authorities—primarily, states—
would face a heavy administrative burden due to, inter alia,
the need to take the carbon cycle into account in determining
best available control technology (BACT) during the
permitting process. See id. at 43,492; see also id. at 43,496
(“[T]he extensive workload associated with analyzing and
accounting for biogenic CO2 emissions as part of processing
permit applications from biomass facilities justifies exempting
those sources for a period of time . . . . ”). While EPA
attempted to alleviate the administrative burden by
promulgating interim guidance to help permitting authorities
conduct BACT analysis for biogenic CO2 emissions—
explaining that in some instances, combustion of biomass can
be considered BACT—the case-by-case analysis that
permitting authorities, without the Deferral Rule, would be
required to undertake immediately “would likely be
prohibitively time-consuming and complex.” EPA Office of
Air & Radiation, Guidance for Determining Best Available
Control Technology for Reducing Carbon Dioxide Emissions
from Bioenergy Production 23 (Mar. 2011), http://www.epa.
gov/nsr/ghgdocs/bioenergyguidance.pdf. Accordingly, EPA
promulgated the Deferral Rule as an “initial step toward full
compliance” with the statutory mandate to regulate GHGs.
Deferral Rule, 76 Fed. Reg. at 43,498. The Deferral Rule
expires on July 21, 2014, at which time biogenic CO2
emissions will automatically be treated like all other CO2
emissions unless, on or before that date, EPA “undertake[s]
additional rulemaking to clarify the applicability of PSD and
Title V permitting requirements.” Id. (citing Grand Canyon
Air Tour Coalition v. FAA, 154 F.3d 455, 476-77 (D.C. Cir.
1998)); see also id. at 43,494 (quoting Massachusetts, 549
U.S. at 524 (agencies may implement regulatory programs
                                 6
over time, “refining their preferred approach as circumstances
change and as they develop a more nuanced understanding of
how best to proceed.”)). In the meantime, EPA planned to
study the science and ultimately either establish an
appropriate carbon accounting framework for biogenic CO2
emissions or, to repeat, allow the Deferral Rule to expire and
treat biogenic CO2 emissions like other CO2 emissions.
     My colleagues attack the Deferral Rule because it
“nowhere offers an interpretation of the Clean Air Act that
would allow the agency to treat biogenic carbon dioxide
sources differently.” Maj. Op. 13-14. But EPA is not
permanently treating biogenic CO2 emissions differently. As
the Deferral Rule explains, EPA believes, based on the
evidence currently in its possession, that further study may
support a decision to give special treatment to some biogenic
emissions. Deferral Rule, 76 Fed. Reg. 43,496; see also id. at
43,499 (“EPA believes based on information currently before
the Agency that at least some biomass feedstocks . . . have a
negligible impact on the net carbon cycle, or possibly even a
positive net effect.”). If further study does not bear this out,
EPA has implicitly acknowledged that it will treat biogenic
CO2 emissions as it does other CO2 emissions. Cf. id. at
43,498 (“[EPA] will be using the three-year deferral period to
better understand the science associated with biogenic CO2
emissions and to explore whether or not a permanent
exemption is permissible . . . . ” (emphasis added)).3

   3
      Contrary to my colleagues’ suggestion, the step-at-a-time
doctrine does not require that an agency articulate precisely what
constitutes full compliance with the statute at the time it takes an
incremental step. Compare Maj. Op. 14 (criticizing EPA because
“we simply have no idea what EPA believes constitutes ‘full
compliance’ with the statute”), with Pub. Citizen, 374 F.3d at 1263
(permitting agency to delay “a final decision regarding the
                                 7
     To be sure, in Coalition for Responsible Regulation, 684
F.3d 102 (D.C. Cir. 2012), we held that “once the Tailpipe
Rule set motor-vehicle emission standards for greenhouse
gases, they became a regulated pollutant under the Act,
requiring PSD and Title V greenhouse permitting.” Id. at 115.
But, just as EPA proceeded gradually in regulating GHGs
under the Tailoring Rule, EPA has delayed its regulation of a
specific GHG via the Deferral Rule.4 The fact that EPA is
required to take action does not preclude it from phasing in
the action using the step-at-a-time method. In Grand Canyon
Air Tour, the Congress required the Federal Aviation
Administration (FAA), within 120 days of enactment of the
Overflights Act, to “prepare and issue a final plan for the
management of air traffic in the air space above the Grand
Canyon.” See 154 F.3d at 460. After the FAA promulgated
only interim measures, the Grand Canyon Trust challenged it
as “too little” and “too late.” Id. at 473. We rejected its
challenge, declaring that, although “it would be arbitrary and
capricious for an agency simply to thumb its nose at Congress
and say—without any explanation—that it simply does not
intend to achieve a congressional goal on any timetable at all .
. . . the FAA has not taken that course here. It has never
defended the Final Rule as the sole means for [satisfying the
statute], but only as the first of three steps.” Id. at 477; cf.
Ala. Power Co. v. Costle, 636 F.2d 323, 357 (D.C. Cir. 1979)


maximum test speed for unbelted dummy testing” until agency
completed gathering information and analysis). The rationale for a
deferral period is that delay is necessary to allow the agency to
determine what it is unable to determine at the time, i.e., full
compliance with a statutory mandate.
   4
      In Coalition for Responsible Regulation, we rejected a
challenge to the Tailoring Rule, albeit on lack of standing. 684 F.3d
at 113-14.
                               8
(“Certain limited grounds for the creation of exemptions are
inherent in the administrative process, and their unavailability
under a statutory scheme should not be presumed, save in the
face of the most unambiguous demonstration of congressional
intent . . . . ”). While the CAA requires EPA to regulate CO2,
it does not foreclose, as one step toward full compliance,
EPA’s deferring regulation of a unique type of CO2 in order
to study whether EPA can—and should—treat it differently.
EPA does not defend the Deferral Rule as the sole or final
means of dealing with biogenic CO2 emissions nor has it
thumbed its nose at the Congress. By July 21, 2014, EPA will
take its next step—either by regulating biogenic CO2
emissions like other CO2 emissions by default (i.e., the
expiration of the Deferral Rule) or by handling biogenic CO2
emissions specifically.
     The necessary implication of the majority opinion is that,
no matter the results of EPA’s study, EPA lacks authority to
treat biogenic CO2 emissions differently from other
emissions. The CAA defines a major emitting source (i.e., a
source subject to PSD and Title V permitting requirements) as
a source that “emit[s] or [has] the potential to emit” above-
threshold amounts of a regulated pollutant “from” the source.
42 U.S.C. § 7479(1). The petitioners believe, and my
colleagues apparently agree, this language precludes EPA
from considering “off-site” factors, such as the carbon cycle
of the biomass used as a source’s fuel, in determining whether
the source is subject to PSD. But the language has not
precluded EPA from recognizing de minimis exceptions from
the statute. Under the de minimis doctrine, “[c]ourts should be
reluctant to apply the literal terms of a statute to mandate
pointless expenditures of effort.” Ala. Power, 636 F.2d at 360.
Unless the Congress has been “extraordinarily rigid,” we will
uphold an exemption from the statute’s literal terms “when
the burdens of regulation yield a gain of trivial or no value.”
Id. at 360-61. PSD and Title V are meant to protect against
                                 9
harm resulting from the emission of regulated pollutants, see,
e.g., 42 U.S.C. § 7470, and EPA has found that GHGs such as
CO2 cause harm by accumulating in excess amounts in the
atmosphere, see, e.g., Tailoring Rule, 75 Fed. Reg. at 31,519.
If EPA’s review shows, however, that the combustion of
certain biomass feedstocks has no effect on—or even
reduces—atmospheric CO2 levels, EPA could then use this
information to support a de minimis exception to the
regulation of certain biogenic CO2 emissions. Cf. Ala. Power,
636 F.2d at 330 (“[T]he application of BACT requirements to
the emission of all pollutants . . . no matter how miniscule . . .
could impose severe administrative [and economic] burdens .
. . . [T]he proper way to resolve this difficulty is to define a de
minimis standard . . . . ”). Exempting from regulation a source
with a negligible—and particularly, a beneficial—effect on
atmospheric CO2 levels would be perfectly consistent with the
overarching PSD and Title V permitting regime—a regime
which expressly does not regulate “minor” sources that cause
little harm because they release below-threshold levels of
pollutants. See 42 U.S.C. §§ 7479(1), 7661(2), 7602(j). Given
the availability of a de minimis exception, it is not as though,
as the majority necessarily assumes, that the Deferral Rule
delays the inevitable.5




   5
     Moreover, to the extent it could be shown that the CAA is so
“extraordinarily rigid” as to bar EPA from considering off-site
activity in determining a stationary source’s “potential to emit”
CO2, EPA is also studying “the nature of the fuel combusted on site
at the ‘stack,’ ” which does not involve off-site activity. Br. of
Resp’ts 49. If EPA concludes it cannot consider off-site activity, it
could adjust its regulation using only on-site activity like stack
combustion.
                                10
    In sum, EPA’s decision to stop and think before
regulating in a complex—and changing—area is eminently
reasonable.
                                II.
      Alternatively, under the prudential ripeness doctrine, I
believe we should not have reached the merits of this case.
The ripeness doctrine prevents the court from prematurely
adjudicating a dispute. Abbott Labs. v. Gardner, 387 U.S.
136, 148-49 (1967). The doctrine comes “from Article III
limitations on judicial power and from prudential reasons for
refusing to exercise jurisdiction.” Reno v. Catholic Soc.
Servs., Inc., 509 U.S. 43, 57 n.18 (1993). “The ripeness
doctrine, even in its prudential aspect, is a threshold inquiry . .
. .” In re Aiken Cnty., 645 F.3d 428, 434 (D.C. Cir. 2011). The
court stays its hand so the “administrative process [can] run
its course before binding parties to a judicial decision.” Am.
Petroleum Inst. v. EPA, 683 F.3d 382, 386 (D.C. Cir. 2012)
(challenge to EPA rule continuing to regulate certain
materials held unripe because EPA subsequently issued
NPRM significantly changing regulatory scheme). This
doctrine gives “the challenging party [time] to convince the
agency to alter a tentative position,” “provides the agency an
opportunity to correct its own mistakes and to apply its
expertise,” narrows the legal and factual issues at play and
“comports with our theoretical role as the governmental
branch of last resort.” Id. at 386-87 (quotation marks omitted).
It thus “ensures that Article III courts make decisions only
when they have to, and then, only once.” Id. at 387.
     We consider two factors in assessing prudential ripeness:
(1) the “fitness of the issues for judicial decision” and (2) “the
extent to which withholding a decision will cause hardship to
the parties.” Id. (quotation marks omitted).
                              11
                      A. Fitness for Review
     The first factor—fitness—is “meant to protect the
agency’s interest in crystallizing its policy before that policy
is subjected to judicial review and the court’s interests in
avoiding unnecessary adjudication and in deciding issues in a
concrete setting.” Id. (quotation marks omitted). We must
consider, inter alia, “whether [the issue] is purely legal,
whether consideration of the issue would benefit from a more
concrete setting, and whether the agency’s action is
sufficiently final.” Id. (quotation marks omitted). An issue is
particularly unfit for review if, by staying our hand
temporarily, we need never address it. See Nat’l Treasury
Emps. Union v. United States, 101 F.3d 1423, 1431 (D.C. Cir.
1996). We
    decline to review “tentative” agency positions
    because doing so “severely compromises the
    interests” the ripeness doctrine protects: “The agency
    is denied full opportunity to apply its expertise and
    to correct errors or modify positions in the course of
    a proceeding, the integrity of the administrative
    process is threatened by piecemeal review of the
    substantive underpinnings of a rule, and judicial
    economy is disserved because judicial review might
    prove unnecessary if persons seeking such review
    are able to convince the agency to alter a tentative
    position.”
Am. Petroleum Inst., 683 F.3d at 387 (quoting Pub. Citizen
Health Research Grp. v. Comm’r, FDA, 740 F.2d 21, 31
(D.C. Cir. 1984)).
     The Deferral Rule—a temporary rule that expires or will
be replaced by July 21, 2014—is not fit for review. First, by
staying our hand, we would give the petitioners an
opportunity to convince EPA to promulgate a rule more to
                              12
their liking. If EPA promulgated such a rule, or simply
allowed the Deferral Rule to expire on July 21, 2014, the
petitioners’ challenge could be resolved. See also Tex. Indep.
Producers & Royalty Owners Ass’n v. EPA, 413 F.3d 479,
483 (5th Cir. 2005) (EPA decision to defer permit
requirements for certain oil and gas construction sites unripe
because “[g]iven that EPA has specifically stated its intent to
examine, during the Deferral Period, the issue of how best to
resolve questions . . . regarding section 402(l)(2) of the Clean
Water Act, any interpretation we would provide would
necessarily prematurely cut off EPA’s interpretive process”
(quotation marks omitted)).
     Second, even assuming EPA issues a superseding rule to
which the petitioners object, the Deferral Rule will crystallize
the issues raised by their challenge. See, e.g., Am. Petroleum
Inst., 683 F.3d at 388 (“In the ongoing rulemaking, EPA
could change its mind and keep the transfer-based exclusion,
in which case the issue goes away; or, if EPA stays the course
and abolishes the transfer-based exclusion, the dispute will
become concrete and straightforward.”); Nat’l Treasury, 101
F.3d at 1431 (“[W]hile the broad legal theory advanced by
appellants may be as complete as it ever will, the facts upon
which its resolution may depend are not ‘fully crystallized’ . .
. . ”). The current dispute is whether EPA may postpone
regulatory action based on insufficient information. If EPA
promulgated a superseding rule exempting biogenic CO2 from
regulation, the dispute would be whether EPA may
promulgate a permanent (or at least more crystallized)
exemption. See Deferral Rule, 76 Fed. Reg. at 43,492-93; see
also Am. Petroleum Inst., 683 F.3d at 387 (finding lack of
ripeness when “EPA responds that the pyrophoric properties
                                 13
of the catalysts warrant further consideration to make sure
they will not be discarded during transfer”).6
     To be sure, “an agency can[not] stave off judicial review
of a challenged rule simply by initiating a new proposed
rulemaking that would amend the rule in a significant way.”
Am. Petroleum Inst., 683 F.3d at 388. While EPA has not yet
proposed a final rule, it has also not engaged in a “thinly
veiled attempt to evade review,” id., but instead committed
itself to act by a date certain—July 21, 2014. See Oral Arg.
Tr. 28-29 (Apr. 8, 2013) (EPA’s Science Advisory Board has
issued final report now being analyzed); see also Wheaton
Coll. v. Sebelius, 703 F.3d 551, 552 (D.C. Cir. 2012) (“We
take the government at its word and will hold it to it.”).
     For the foregoing reasons, I believe the Deferral Rule is
not fit for review at this time.
                     B. Hardship to the Parties
    “To outweigh the[ ] institutional interests in the deferral
of review, any hardship caused by that deferral must be
immediate and significant. Considerations of hardship that
might result from delaying review will rarely overcome the . .

   6
      The majority opinion does not bar EPA from ultimately
exempting biogenic CO2 from PSD and Title V regulation. Instead,
my colleagues strike down a temporary agency position almost
certain to be recast. They thus threaten the “integrity of [the]
administrative process . . . by piecemeal review of the substantive
underpinnings of a rule.” Pub. Citizen, 740 F.2d at 31; see also Am.
Petroleum Inst., 683 F.3d at 388 (“[T]o the extent API and EPA
dispute whether some sort of transfer-based exclusion for hazardous
secondary materials is necessary to comport with the concept of
‘discard,’ that issue also is best addressed once EPA finally decides
whether to eliminate the transfer-based exclusion it adopted in the
2008 Rule.”).
                               14
. fitness problems inherent in attempts to review tentative
positions.” Am. Petroleum Inst., 683 F.3d at 389 (emphases
added) (quotation marks omitted).
     The petitioners argue, and my colleagues agree, Maj. Op.
10, that the hardship caused by the Deferral Rule is especially
serious because the Deferral Rule could result in a
“permanent” exemption from PSD permitting. Specifically, a
stationary source constructed during the deferral period
without obtaining a PSD permit (because of its temporary
biogenic CO2 exemption) could, in theory, escape permitting
forever because a PSD permit would then be required only if
the source is modified. See 42 U.S.C. § 7475(a). It is possible,
then, that even if EPA decides to regulate biogenic CO2
emissions like all other CO2 emissions, a source constructed
during the deferral period would never need to obtain a PSD
permit if it remains unmodified.
     The Deferral Rule does not open the floodgates as the
petitioners and my colleagues fear. It allows a source to avoid
PSD permitting only if (1) it has the potential to emit CO2 as a
result of biogenic emissions; (2) its potential to emit biogenic
CO2 exceeds Tailoring Rule thresholds; (3) it is not otherwise
subject to PSD permitting based on its potential to emit other
pollutants or non-biogenic CO2 emissions; and (4) it is able to
obtain a minor source (non-PSD) permit and commence
construction7 no later than July 21, 2014. And a source could
permanently avoid PSD permitting only if it met the above
requirements and never underwent a “major modification


   7
     Tailoring Rule, 75 Fed. Reg. at 31,594 (“PSD preconstruction
permitting requirements do not generally preclude a source from
continuing actual construction that began before the source was a
source required to obtain a PSD permit.”).
                                15
determination.” See Deferral Rule, 76 Fed. Reg. at 43,499.8
At oral argument, the petitioners were able to name only one
source—a facility located in Allendale, South Carolina—that
has been able to avoid PSD permitting “in direct reliance on”
the Deferral Rule. Oral Arg. Tr. 5-6, 10. The intervenors
describe the number of sources that could take advantage of
the Deferral Rule as “a handful,” Oral Arg. Tr. 32. The
petitioners submitted with their opening brief the declaration
of Ranajit Sahu, an environmental, mechanical and chemical
consultant, listing eight sources he reviewed that had obtained
“minor source” (non-PSD) permits but “[e]scape[d] PSD
[d]ue to the Biomass Exemption:” the Allendale facility plus
seven others. Sahu Decl. at 14, 20-24. Six of them, however,
obtained their minor source permits before the Deferral Rule
was promulgated. Compare Sahu Decl. 22-24 (referencing
Biogreen, Concord, Dorchester, Kershaw, Kamath Falls,
Mancelona and Menominee facilities), with Sahu Decl. 5
(Biogreen obtained permit on December 15, 2010; Dorchester
and Kershaw obtained permits on June 30, 2011; Klamath
Falls obtained permit on December 30, 2010; Mancelona
obtained permit on February 9, 2010; and Menominee
obtained permit on May 11, 2011). If any of these sources
commenced construction before July 2011, as is likely, the
Deferral Rule would not affect that source because no source




   8
     The petitioners seem to concede that the hardship they face is
remediable. Br. for Pet’rs 26 (“[E]ven if the plants commence
construction under the illegal Exemption, upon a reversal of the
Exemption they can be required to source more sustainably grown
fuel and/or comply with more stringent limits requiring full
operation and maintenance of their pollution control equipment.”).
                                 16
was subject to PSD based solely on CO2 emissions before that
date.9
    To sum up, not only is this case unfit for review but the
hardship of which the petitioners complain is hyperbolically
overblown. The Deferral Rule does not deregulate scores of
polluters.10 Instead, it temporarily maintains the heretofore
long-time status quo11 for a limited number of stationary

   9
    While Sahu avers that “many” of the six facilities “have not
commenced construction,” he does not identify any of the “many.”
Sahu Decl. 20.
   10
      In discussing the hardship prong, the majority declares that
“we have no idea how many biogenic carbon dioxide sources have
been constructed since March 2012.” Maj. Op. 12. This assertion is
way off the mark. The petitioners themselves could name only one
source meeting the Deferral Rule exception. Their expert’s affidavit
isolated only eight, six of which might not fit the exception. See
supra pp. 15-16 & n.9. If the petitioners have not been able to
establish severe harm by now, we should not attempt to fill the
jurisdictional gap in their challenge.
   11
      As an aside—my colleagues do not address this point—what
the petitioners complain of is not massive deregulation but instead
temporary maintenance of the status quo. Significantly, the harm
they allege does not come from unregulated biogenic CO2
emissions; rather, their primary alleged harm is that the Deferral
Rule allows for the less strict regulation of emissions of certain
non-CO2 pollutants (such as particulate matter and nitrogen oxides)
from biogenic CO2 emitters. But if a stationary source—biogenic or
otherwise—has the potential to emit above-threshold amounts of a
regulated pollutant other than GHGs, it must obtain a PSD permit
and meet BACT not only for the pollutant(s) that made it subject to
PSD but also for all pollutants emitted over certain thresholds (even
for a pollutant not emitted in a quantity sufficient by itself to
subject the source to PSD). See Deferral Rule, 76 Fed. Reg. at
43,493. While the Deferral Rule exempts from PSD a source whose
                                 17
sources that—until July 1, 2011—had never been subject to
regulation as a major source under PSD. Given these
circumstances, and our role as “the governmental branch of
last resort,” Aiken Cnty., 645 F.3d at 434, I believe we should
deny the petition; in the alternative, we should hold the case
in abeyance pending either the expiration of the Deferral Rule
on July 21, 2014 or EPA action taken by that date.12


biogenic CO2 emissions alone make it subject to PSD, it does not
allow a source with the potential to emit above-threshold quantities
of other regulated pollutants to escape regulation. See id. at 43,492
(“This deferral applies only to biogenic CO2 emissions and does not
affect non-GHG pollutants or other GHGs . . . emitted from the
combustion of biomass fuel.”). The Deferral Rule’s effect on PSD
applicability, then, is minimal: as noted earlier, it simply preserves
the pre-July 2011 status quo. Before July 1, 2011, a stationary
source was subject to PSD if it had the potential to emit certain
quantities of pollutants other than CO2. Under the Tailoring Rule, a
source that was not otherwise subject to PSD became, as of July 1,
2011, subject to PSD based on its GHG emissions. The Deferral
Rule exempts from this set of newly-regulated sources those subject
to PSD based only on their biogenic CO2 emissions. Preserving the
status quo for this limited category for—now—only a matter of
months does not constitute “immediate and significant” hardship.
   12
      As my colleagues note, Maj. Op. 10, the Deferral Rule makes
it optional for permitting authorities (e.g., states) not to regulate
biogenic CO2 emissions during the deferral period but they identify
only a single state—Massachusetts—that continues to regulate
biogenic CO2 emissions. Maj. Op. 10. That only one permitting
authority has seen fit to regulate biogenic CO2 emissions during the
life of the Deferral Rule underscores the reasonableness of EPA’s
decision to study the science before imposing burdensome
regulatory obligations to achieve uncertain and potentially
negligible benefits.
