While I concede that there should be questions about the environmental impact of all of it, I overall think it's a net positive to get people outdoors, and offroading is another avenue that people can use.
I think the agency is missing the forest for the trees here, you want to encourage people to get out and about. When you only consider the emissions it's a net negative, but when you extrapolate and start thinking about the benefits to society when you have more people going out, being active, etc, it becomes a net positive.
Also typically you do not do much driving (distance wise) when offroad. Average speeds are anywhere between 10-30MPH depending on what you're going over and it's typically over relatively short distances (10 miles offroad might take you an hour+ to traverse).