Coffeyville Resources Refining & Marketing, LLC v. EPA

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued October 5, 2018 Decided August 30, 2019

No. 16-1052

ALON REFINING KROTZ SPRINGS, INC.,

PETITIONER

v.

ENVIRONMENTAL PROTECTION AGENCY,

RESPONDENT

MONROE ENERGY, LLC, ET AL.,

INTERVENORS

Consolidated with 16-1055, 17-1255, 17-1259, 18-1021,

18-1024, 18-1025, 18-1029

On Petitions for Review of Agency Action of the

United States Environmental Protection Agency

Samara L. Kline argued the cause for petitioners. With her

on the briefs were Evan A. Young, Megan H. Berge, Lisa M.

Jaeger, Brittany M. Pemberton, Clara Poffenberger, Richard

S. Moskowitz, Robert J. Meyers, Thomas A. Lorenzen,

Elizabeth B. Dawson, Warren R. Neufeld, LeAnn M. Johnson,

and Jonathan G. Hardin. Albert M. Ferlo Jr. and Krista

Hughes entered appearances.

2

Meghan E. Greenfield, Trial Attorney, U.S. Department of

Justice, argued the cause for respondent. With her on the brief

was Jeffrey H. Wood, Acting Assistant Attorney General.

Daniel R. Dertke, Attorney, entered an appearance.

Robert A. Long Jr. argued the cause for intervenors

American Petroleum Institute and Growth Energy. With him

on the brief were Kevin King, Seth P. Waxman, David M. Lehn,

Saurabh Sanghvi, and Claire Chung. Stacy R. Linden entered

an appearance.

Shannen W. Coffin and Linda C. Bailey were on the brief

for amici curiae NACS, et al. in support of respondent EPA.

3

No. 17-1044

COFFEYVILLE RESOURCES REFINING & MARKETING, LLC AND

WYNNEWOOD REFINING COMPANY, LLC,

PETITIONERS

v.

ENVIRONMENTAL PROTECTION AGENCY,

RESPONDENT

ALON REFINING KROTZ SPRINGS, INC., ET AL.,

INTERVENORS

Consolidated with 17-1045, 17-1047, 17-1049, 17-1051,

17-1052

On Petitions for Review of Action of the

United States Environmental Protection Agency

Brian Killian argued the cause for petitioner The National

Biodiesel Board. With him on the briefs was Douglas A.

Hastings.

Samara L. Kline and Thomas Allen Lorenzen, argued the

causes for Obligated Party Petitioners. With them on the briefs

were Evan A. Young, Lisa M. Jaeger, Brittany M. Pemberton,

Clara Poffenberger, Richard S. Moskowtiz, Robert J. Meyers,

Elizabeth B. Dawson, David W. DeBruin, Thomas J. Perrelli,

Matthew E. Price, LeAnn M. Johnson, and Jonathan G.

4

Hardin. David Y. Chung, Eric D. Miller, and Albert M. Ferlo

Jr. entered appearances.

Patrick R. Jacobi and Samara M. Spence, Attorneys, U.S.

Department of Justice, argued the causes for respondent. With

them on the brief was Jeffrey H. Wood, Acting Assistant

Attorney General.

Thomas Allen Lorenzen argued the cause for intervenors

American Fuel & Petrochemical Manufacturers and American

Petroleum Institute in support of respondent regarding

Biomass-Based Diesel Issues. With him on the brief were

Robert J. Meyers, Elizabeth B. Dawson, Richard S. Moskowitz,

Robert A. Long, Jr., and Kevin King. Stacy R. Linden entered

an appearance.

Robert A. Long, Jr., Kevin King, Bryan M. Killian,

Douglas A. Hastings, Seth P. Waxman, David M. Lehn,

Saurabh Sanghvi, and Claire H. Chung were on the brief for

intervenors Growth Energy, et al. in support of respondent.

Eric D. Miller entered an appearance.

Before: PILLARD and KATSAS, Circuit Judges, and

WILLIAMS, Senior Circuit Judge.

Opinion for the Court filed PER CURIAM.

Opinion concurring in part and concurring in the judgment

filed by Senior Circuit Judge WILLIAMS.

TABLE OF CONTENTS

I. Introduction ..................................................................... 6

II. Background ..................................................................... 7

5

A. Legal Background ........................................................ 7

B. Procedural Background ............................................. 12

1. 2007, 2010, and 2017 Point of Obligation

Proceedings ............................................................ 12

2. 2017 Annual Volumetric Proceedings ................... 15

III. Standard of Review .................................................... 17

IV. 2010 Point of Obligation Rule ................................... 17

A. Jurisdiction................................................................. 17

1. Final Agency Action Under Section 7607(b)(1).... 19

2. After-Arising Grounds Under Section

7607(b)(1) .............................................................. 28

3. Mandatory Reconsideration Under Section

7607(d)(7)(B) ......................................................... 29

B. Merits of Challenges to EPA’s Refusal to Revise

the 2010 Point of Obligation Rule ............................. 32

V. 2017 Annual Volumetric Rule ...................................... 41

A. Point of Obligation .................................................... 42

1. Jurisdiction ............................................................. 42

2. Merits ..................................................................... 43

B. Cellulosic Biofuel Projection..................................... 53

C. Cellulosic Waiver ...................................................... 58

VI. 2018 Volume for Biomass-Based Diesel ................... 62

A. NBB’s Standing ......................................................... 63

B. Merits of NBB’s Challenges ...................................... 65

VII. Conclusion ................................................................. 70

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PER CURIAM:

I. Introduction

The Clean Air Act requires EPA to publish “renewable

fuel standards,” ultimately expressed as “applicable

percentages,” each year to ensure that the total supply of

transportation fuel sold or imported into the United States

contains specified proportions of each of four categories of

renewable fuels. Congress intended the Renewable Fuel

Standards (RFS) program to “move the United States toward

greater energy independence and security” and “increase the

production of clean renewable fuels.” See Energy

Independence and Security Act of 2007 (EISA), Pub. L. No.

110-140, preamble, 121 Stat. 1492 (2007) (codified at 42

U.S.C. § 7545(o)).

In these related cases, Alon Refining Krotz Springs,

together with other petroleum refineries and their trade

associations—the “Alon Petitioners”—seek review of EPA’s

decision not to revise its 2010 point of obligation regulation

requiring refineries and importers, but not blenders, to bear the

direct compliance obligation of ensuring that transportation

fuels sold or introduced into the U.S. market include the

requisite percentages of renewables. Coffeyville Resources

Refining & Marketing and another group of refineries and trade

associations—the “Coffeyville Petitioners”—challenge EPA’s

refusal to reassess the appropriateness of the point of obligation

in the context of its 2017 annual volumetric rule, which set the

2017 applicable percentages for all four categories of

renewable fuel and the 2018 applicable volume for one subset

of such fuel, biomass-based diesel. See 81 Fed. Reg. 89,746

(Dec. 12, 2016) (2017 Rule). The Coffeyville Petitioners also

contend that EPA arbitrarily set the 2017 percentage standards

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too high. The National Biodiesel Board (NBB)—a biomass-

based diesel industry trade association—separately contends

that EPA set the 2018 applicable volume for biomass-based

diesel too low. Various trade associations representing

refineries and producers of renewable fuels have intervened in

support of EPA. For the reasons that follow, we deny each of

the petitions for review, many of which recycle arguments

raised and rejected in prior challenges.

II. Background

A. Legal Background

Congress established the RFS program in 2005 as part of

the Energy Policy Act, Pub. L. No. 109-58, 119 Stat. 594

(2005) (as amended at 42 U.S.C. § 7545(o)). The statute

mandates the gradual introduction of four nested categories of

renewable fuels into the United States’ supply of gasoline,

diesel, and other transportation fuels. See 42 U.S.C.

§ 7545(o)(2)(B). These categories include: (1) total renewable

fuel; (2) advanced biofuel; (3) cellulosic biofuel; and (4)

biomass-based diesel. Id. § 7545(o)(2)(A)(i), (B). The

umbrella category, total renewable fuel, covers the three other

categories plus any conventional renewable fuels, such as corn-

based ethanol. See id. § 7545(o)(1)(F), (J), (2)(A)(i). The

advanced biofuel subset includes any renewable fuel (except

ethanol from cornstarch) that has at least 50% lower lifecycle

greenhouse gas emissions than fossil fuels. Id.

§ 7545(o)(1)(B). The statute further specifies two

nonexclusive subsets of advanced biofuels: cellulosic biofuel

(a renewable fuel derived from cellulose materials such as corn

stalks and husks) and biomass-based diesel (a diesel fuel

substitute made from feedstocks such as animal fats). Id.

§ 7545(o)(1)(B), (D), (E); EPA Coffeyville Br. 4–5. The

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following figure depicts the nested nature of the four fuel

categories.

Source: Coffeyville Br. 11.

Four tables in the statute set forth gradually increasing

annual “applicable volume” requirements for each category of

renewable fuel. See 42 U.S.C. § 7545(o)(2)(B)(i). The statute

sets applicable volumes for biomass-based diesel through

2012, id. § 7545(o)(2)(B)(i)(IV), and applicable volumes for

the other three categories through 2022, id.

§ 7545(o)(2)(B)(i)(I)–(III). Under those tables, as the total

quantities of renewable fuel rise over time, the ratio of

advanced biofuels relative to conventional renewable fuel

gradually increases. Id. For compliance years (which match

calendar years) after those specified in the tables, the statute

requires EPA, in coordination with the Secretaries of Energy

and Agriculture, to set the annual applicable volumes based on

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a review of the implementation of the program plus an analysis

of six listed factors. Id. § 7545(o)(2)(B)(ii). For years not

specified in the table, EPA must publish the applicable volumes

fourteen months before the year in which they will apply—

volumes that, shortly before the start of the compliance year,

EPA translates into percentage standards. Id.

Various “waiver” provisions require or permit EPA to

lower the annual applicable volumes. Two are relevant for the

purposes of this case. First, under the “cellulosic waiver

provision,” EPA must make its own projection of the volume

of cellulosic biofuel that will be produced in the following year.

Id. § 7545(o)(7)(D)(i). If that projection is less than the

statutory figure, the agency must use its own projection as the

applicable volume of cellulosic biofuel. Id.; see Am. Petroleum

Inst. v. EPA, 706 F.3d 474, 477–80 (D.C. Cir. 2013) (API). The

same cellulosic waiver provision authorizes (but does not

require) EPA to also reduce the advanced biofuel and total

renewable biofuel volume requirements “by the same or a

lesser volume” as the cellulosic biofuel reduction, 42 U.S.C.

§ 7545(o)(7)(D)(i), and EPA has “broad discretion” regarding

whether and how to do that, Monroe Energy, LLC v. EPA, 750

F.3d 909, 915 (D.C. Cir. 2014). Separately, under the “general

waiver provision,” EPA may reduce any of the statutory

applicable volumes if it determines “that implementation . . .

would severely harm the economy or environment,” or “that

there is an inadequate domestic supply.” 42 U.S.C.

§ 7545(o)(7)(A); see Ams. for Clean Energy v. EPA, 864 F.3d

691, 707–13 (D.C. Cir. 2017) (ACE).

After EPA determines the waiver-adjusted applicable

volumes, it must translate those volumes into “renewable

volume obligation[s]” for each category of renewable fuel for

the upcoming compliance year. 42 U.S.C. § 7545(o)(3)(B)(i).

The volume obligation for each category of renewable fuel is

expressed as an “applicable percentage,” also known as a

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“percentage standard,” calculated by dividing the adjusted

applicable volume for that category of fuel by the total

anticipated volume of non-renewable transportation fuel that

will be introduced into commerce (which EPA derives based

on an estimate provided by the Energy Information

Administration) in the coming compliance year. Id.

§ 7545(o)(3)(A), (B)(ii)(II); 40 C.F.R. § 80.1405(c). The

statute calls on EPA to publish the percentage standards not

later than November 30—a month before the start of the

compliance year. 42 U.S.C. § 7545(o)(3)(B)(i).

EPA must place the renewable volume obligations on

“refineries, blenders, and importers, as appropriate.” 42 U.S.C.

§ 7545(o)(3)(B)(ii)(I); see also id. § 7545(o)(2)(A) (requiring

EPA to promulgate implementing regulations, including

“compliance provisions applicable to refineries, blenders,

distributors, and importers, as appropriate,” designed to ensure

that transportation fuel sold or introduced into the United States

“contains at least” the required annual applicable volumes).

The entities that EPA designates to meet the volume

obligations are known as “obligated parties.” Monroe Energy,

750 F.3d at 912. Each obligated party must ensure that the

volume of non-renewable fuel it sells or introduces into U.S.

commerce is matched by selling or introducing a corresponding

volume of each category of renewable fuel at the level EPA’s

percentage standard requires for that category. See ACE, 864

F.3d at 699. The percentage standards are set in the

anticipation that, if each obligated party meets them and EPA’s

projection regarding the country’s total transportation fuel

supply bears out, the amount of each category of renewable

fuel introduced into the economy in the upcoming compliance

year will equal the applicable volumes for that year. Id.

Obligated parties bear no direct responsibility for any shortfalls

in the applicable volumes so long as they comply with the

percentage standards.

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EPA assigns a set of “renewable identification numbers”

(RINs) to each batch of renewable fuel that is produced or

imported for use in the United States. 40 C.F.R. § 80.1426; see

42 U.S.C. § 7545(o)(5); Monroe Energy, 750 F.3d at 913. The

number of RINs assigned to each batch corresponds to the

amount of ethanol-equivalent energy per gallon in that batch.

See 40 C.F.R. § 80.1415; Monroe Energy, 750 F.3d at 913.

RINs remain attached to the renewable fuel until that fuel is

purchased by an obligated party or blended into fossil fuels to

be used for transportation fuel. See ACE, 864 F.3d at 699

(citing 40 C.F.R. § 80.1429(b)(1)–(2)). At that point the RINs

become “separated,” meaning they are, in effect, a form of

compliance credit. Id. Obligated parties demonstrate their

compliance with their renewable fuel obligations by “retiring”

RINs in annual compliance demonstrations to EPA. 40 C.F.R.

§§ 80.1427(a), 80.1451(a)(1).

Because the four categories of renewable fuel are nested,

obligated parties can comply with their obligations for a type

of fuel by retiring any combination of RINs corresponding to

that category of fuels or any subset thereof. See 40 C.F.R.

§ 80.1427(a)(3)(i). For instance, retiring a cellulosic biofuel or

biomass-based diesel RIN counts not only toward the volume

obligation for that fuel, but also toward both the advanced

biofuel and total renewable fuel obligations. Thus, “if one

million gallons of cellulosic biofuel are blended into the fuel

supply, the statute allows those one million gallons to be

credited toward the advanced biofuel and total renewable fuel

obligations in addition to the cellulosic biofuel obligation.”

ACE, 864 F.3d at 698.

Obligated parties who have more RINs than they need may

sell or trade their excess, 40 C.F.R. § 80.1428(b), or they may

“bank” those RINs for use to meet up to 20 percent of their

obligations for the following compliance year, Monroe Energy,

750 F.3d at 913; see 40 C.F.R. § 80.1427(a)(1), (5); Regulation

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of Fuels and Fuel Additives: Changes to Renewable Fuel

Standard Program, 75 Fed. Reg. 14,670, 14,734–35 (Mar. 26,

2010). Obligated parties without enough RINs to meet their

compliance obligations may purchase RINs, use banked RINs

from the prior year, or carry a deficit forward to the following

year to be satisfied together with the following year’s

obligations. See ACE, 864 F.3d at 699–700; see also 42 U.S.C.

§ 7545(o)(5)(D); 40 C.F.R. § 80.1427(b).

B. Procedural Background

The procedural history of these cases follows two paths:

first, the proceedings relevant to the challenge that EPA

arbitrarily declined to initiate a rulemaking to modify the 2010

regulation designating refineries and importers, but not

blenders, as obligated parties; and second, the proceedings

challenging the 2017 Rule.

1. 2007, 2010, and 2017 Point of Obligation

Proceedings

In its 2007 regulations implementing the RFS program,

EPA designated refiners and importers, but not blenders, as the

“appropriate” parties to meet the renewable fuel obligation. 72

Fed. Reg. 23,900, 23,923–24 (May 1, 2007). At the time, those

designations were not challenged in court. EPA reaffirmed its

designations in a 2010 regulation now commonly known as the

“point of obligation rule.” 75 Fed. Reg. at 14,721–22 (codified

at 40 C.F.R. § 80.1406(a)(1)). During the 2010 rulemaking,

several refiners—including petitioner Valero Energy

Corporation—argued that failing to obligate blenders, who

combine renewable fuel with fossil fuels, would make the RFS

program unworkable. EPA concluded that the program was

functioning adequately and that the burdens and disruption

from changing the point of obligation would outweigh any

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benefits. See Summary and Analysis of Comments 3.9.2, Alon

J.A. 287–90. Although other aspects of the 2010 regulations

were challenged in court, see, e.g., Nat’l Chicken Council v.

EPA, 687 F.3d 393 (D.C. Cir. 2012); Nat’l Petrochemical &

Refiners Ass’n v. EPA, 630 F.3d 145 (D.C. Cir. 2010), the point

of obligation rule was not.

On December 14, 2015, EPA promulgated the volume

requirements for 2014, 2015, and 2016. Renewable Fuel

Standard Program, 80 Fed. Reg. 77,420 (Dec. 14, 2015). In so

doing, EPA exercised its general waiver authority to lower the

total renewable fuel volumes based on a finding of inadequate

domestic supply due to market factors “affecting the ability to

distribute, blend, dispense, and consume . . . renewable fuels”

at the levels required by statute. Id. at 77,435/2. Among those

factors was “the slower than expected development of the

cellulosic biofuel industry.” Id. at 77,422. The agency thought

an additional “real world constraint[]” was the “E10

blendwall”—the difficulty for most American vehicle engines

to run on blends containing more than 10% ethanol. Id. at

77,423. EPA explained that those factors made the statutory

requirements “impossible to achieve.” Id. at 77,422/2. This

Court later vacated the general waiver on the ground that EPA

had misinterpreted the statutory term “inadequate domestic

supply” to include demand-side constraints such as the E10

blendwall. See ACE, 864 F.3d at 704–13.

On February 12, 2016, sixty days after EPA promulgated

the volume requirements for 2014–16, the Alon Petitioners

petitioned this Court for review of the 2010 point of obligation

rule. These petitions contend that the rule was arbitrary and

capricious insofar as it failed to impose the obligation on

downstream blenders—the parties petitioners think are best

able to comply with it. The petitions assert jurisdiction under

the after-arising provision in 42 U.S.C. § 7607(b)(1), which

14

permits otherwise-untimely challenges to a rule if the

challenges are “based solely on grounds arising after” the sixty-

day deadline for seeking judicial review. The petitioners assert

that EPA’s exercise of its general waiver authority in the 2014–

16 volume regulations, and its acknowledgment of the RFS

program’s shortcomings as of that time, provided such an after-

arising ground.

The Alon Petitioners simultaneously petitioned EPA to

revise the point of obligation rule. Some of their requests were

styled as petitions for a rulemaking. Others were styled as

petitions for mandatory reconsideration under 42 U.S.C.

§ 7607(d)(7)(B), which requires EPA to reconsider a rule if

centrally important objections were impracticable to raise

during the comment period or “arose after” that period “but

within the time specified for judicial review.” The petitions

cited the waiver in the 2014–16 volume regulations and EPA’s

acknowledgment of program difficulties as grounds supporting

mandatory reconsideration. This Court held in abeyance the

petitions for review of the point of obligation rule pending

resolution of the petitions to revise it.

On November 10, 2016, EPA published a proposed denial

of the petitions to revise the point of obligation rule. On

November 22, 2017, after reviewing more than 18,000

comments on the proposal, EPA denied the petitions. It

concluded that the statutory requirements for mandatory

reconsideration were not met, so it treated all the filings as

petitions for a rulemaking. Denial of Petitions for Rulemaking

to Change the RFS Point of Obligation, EPA-HQ-OAR-2016-

0544-0525, at 7 (Nov. 22, 2017) (EPA Denial), Alon J.A. 61.

EPA then denied the petitions on the ground that “changing the

point of obligation would . . . likely result in a decrease in the

production, distribution, and use of [renewable] fuels” and

would “do nothing to incentivize the research, development,

15

and commercialization of cellulosic biofuel technologies

critical for the growth of the RFS program in future years.”

EPA Denial at 8–9, Alon J.A. 62–63.

Within sixty days (in December 2017 and January 2018),

the Alon Petitioners sought judicial review of that denial,

which it cast as a final agency action under section 7607(b)(1).

The two sets of petitions—the February 2016 petitions for

review of the 2010 point of obligation rule and the 2017–18

petitions for review of EPA’s refusal to reconsider the rule—

were consolidated and are now before us.

2. 2017 Annual Volumetric Proceedings

EPA issued its 2017 annual volumetric rule on December

12, 2016. The 2017 Rule establishes: (1) the applicable volume

for biomass-based diesel for 2018, 81 Fed. Reg. at 89,751/2;

(2) the waiver-adjusted applicable volumes for cellulosic

biofuel, advanced biofuel, and total renewable fuel for 2017,

id. at 89,747 tbl. I-1; and (3) percentage standards for all four

fuel types for 2017, id. at 89,751, tbl. I.B.6-1.

EPA exercised its mandatory cellulosic waiver authority to

decrease the 2017 applicable volume for cellulosic biofuel by

more than 94 percent, dropping 5.189 billion gallons from the

statutory target of 5.5 billion gallons, to 311 million gallons.

Id. at 89,750/2; 42 U.S.C. § 7545(o)(2)(B)(i)(III). EPA then

had discretion under that same waiver authority to cut as much

as 5.189 billion gallons off the statutory volumes for advanced

biofuel and total renewable fuel. See 42 U.S.C.

§ 7545(o)(7)(D)(i); 81 Fed. Reg. at 89,762 & tbl. IV.A-1. EPA

partially exercised that authority, reducing the 9-billion-gallon

statutory target for advanced biofuel by 4.72 billion gallons,

resulting in an adjusted applicable volume of 4.28 billion

gallons—a greater than 50% decrease. 81 Fed. Reg. at 89,750–

51; 42 U.S.C. § 7545(o)(2)(B)(i)(II). EPA reduced the total

16

renewable fuel volume requirements by the same amount,

lowering the statutory target of 24 billion gallons to 19.28

billion gallons. 81 Fed. Reg. at 89,751/1; 42 U.S.C.

§ 7545(o)(2)(B)(i)(I). EPA considered but decided against also

using its general waiver authority to further lower the

applicable volume of total renewable fuel. 81 Fed. Reg. at

89,751/1.

Using the waiver-adjusted applicable volumes, EPA set

the 2017 percentage standards for each of the four renewable

fuel categories. See id. at 89,751, 89,799–801. Finally, EPA

set the biomass-based diesel applicable volume for 2018 at 2.1

billion gallons. Id. at 89,751/2. EPA received comments

urging it to reassess the point of obligation in the 2017 Rule,

but declined to address them on the grounds that the comments

were “beyond the scope” of the 2017 rulemaking. Response to

Comments at 542, Coffeyville J.A. 761.

After EPA published the 2017 Rule, various parties

petitioned for judicial review. The Coffeyville Petitioners

contend that EPA erred by refusing to reconsider which types

of parties would bear the direct compliance obligation under

the 2017 Rule. They also argue that EPA arbitrarily calculated

the 2017 production of cellulosic biofuel and arbitrarily

exercised its discretionary cellulosic waiver authority, resulting

in percentage standards that are too high. NBB argues that

EPA set the 2018 applicable volume for biomass-based diesel

too low by considering factors it should not have and omitting

or incorrectly assessing others. Two trade associations

representing refineries have intervened in defense of EPA’s

biomass-based diesel decision, and a coalition of trade

associations representing renewable fuel producers and

refineries have intervened to oppose the Coffeyville

17

Petitioners’ claims. None of the petitioners’ challenges

succeeds.

III. Standard of Review

“This court applies the familiar, deferential standard

announced in Chevron, U.S.A., Inc. v. Natural Resources

Defense Council, Inc., to sustain any reasonable agency

interpretation of ambiguity in the Clean Air Act.” Nat’l Ass’n

for Surface Finishing v. EPA, 795 F.3d 1, 7 (D.C. Cir. 2015).

“We employ the deferential State Farm standard of review

when reviewing arguments based on allegedly arbitrary or

unreasoned agency action.” ACE, 864 F.3d at 726 (citing

Motor Vehicle Mfrs. Ass’n of U.S., Inc. v. State Farm Mut.

Auto. Ins. Co., 463 U.S. 29, 43 (1983)). Under that rubric,

EPA’s actions are “presumptively valid provided [they] meet[]

a minimum rationality standard.” Nat. Res. Def. Council, Inc.

v. EPA, 194 F.3d 130, 136 (D.C. Cir. 1999). We uphold EPA’s

actions so long as they are “reasonable and reasonably

explained.” Jackson v. Mabus, 808 F.3d 933, 936 (D.C. Cir.

2015).

IV. 2010 Point of Obligation Rule

We start with the Alon Petitioners and their challenges to

the 2010 point of obligation rule.

A. Jurisdiction

We begin, as we must, with our jurisdiction. In general

terms, the question presented involves our review of rules

promulgated under the Clean Air Act, or EPA’s failure to

amend them, after the initial window for seeking judicial

18

review has passed. Various statutory provisions frame this

inquiry.

Section 7607(b)(1) of Title 42 provides for judicial review

of regulations promulgated by the Administrator of EPA under

the Clean Air Act. The first sentence of section 7607(b)(1)

vests this Court with exclusive jurisdiction to review

“nationally applicable regulations promulgated, or final action

taken, by the Administrator” under the Act. The fourth

sentence of section 7607(b)(1) specifies the time for seeking

judicial review. It imposes a sixty-day time limit, but provides

an exception for petitions based on grounds arising after the

limit: “Any petition for review under this subsection shall be

filed within sixty days from the date notice of such

promulgation, approval, or action appears in the Federal

Register, except that if such petition is based solely on grounds

arising after such sixtieth day, then any petition for review

under this subsection shall be filed within sixty days after such

grounds arise.”

Section 7607(d) of Title 42 sets forth provisions for

various rulemakings under the Clean Air Act, including for the

“promulgation or revision of any regulation” involving the RFS

program. Id. § 7607(d)(1)(E). Section 7607(d)(7)(B)

addresses various issues regarding exhaustion, agency

reconsideration, and judicial review. The first sentence of that

provision imposes a conventional exhaustion requirement,

limiting judicial review to objections “raised with reasonable

specificity during the period for public comment.” The second

sentence requires EPA to reconsider regulations in certain

narrow circumstances: “If the person raising an objection can

demonstrate to the Administrator that it was impracticable to

raise such objection within such time or if the grounds for such

objection arose after the period for public comment (but within

the time specified for judicial review) and if such objection is

19

of central relevance to the outcome of the rule, the

Administrator shall convene a proceeding for reconsideration

of the rule and provide the same procedural rights as would

have been afforded had the information been available at the

time the rule was promulgated.” The third sentence of section

7607(d)(7)(B) makes any “refusal” to provide such mandatory

reconsideration judicially reviewable.

At various times in this litigation, the petitioners have

asserted three different jurisdictional theories. First, EPA’s

refusal to revise the point of obligation rule in 2017 was a final

action reviewable under the first sentence of section

7607(b)(1), regardless of the after-arising provision. Second,

EPA’s statements and actions in its 2014–16 volume regulation

constitute after-arising grounds permitting a challenge to the

point of obligation rule as promulgated in 2010. Third, these

same EPA statements and actions triggered a right to

mandatory reconsideration under section 7607(d)(7)(B), which

in turn makes the denial of reconsideration judicially

reviewable. As explained below, we conclude that the first

contention is correct, the second has been abandoned, and the

third lacks merit.

1. Final Agency Action Under Section 7607(b)(1)

In 2016, various refiners petitioned EPA for a rulemaking

to modify the point of obligation rule. The petitions urged that

the need for a modification became evident in 2015, when EPA

waived certain statutory volume requirements and concluded

that changing economic conditions had made the requirements

“impossible to achieve.” 2014–16 Rule, 80 Fed. Reg. at

77,422/2. In November 2017, EPA denied the rulemaking

petitions on the ground that any current problems with the RFS

program were manageable and that changing the point of

obligation at this juncture would be disruptive. EPA Denial at

20

8–9, Alon J.A. 62–63. The refiners sought review of the denial

in December 2017 and January 2018. As petitioners in this

Court, they contend that the November 2017 denial constituted

final agency action reviewable under section 7607(b)(1). We

agree.

As noted above, the first sentence of section 7607(b)(1)

gives this Court exclusive jurisdiction to review any nationally

applicable “final action” taken by EPA under the Clean Air

Act. The parties agree that the denial of the rulemaking

petitions was nationally applicable, final, and taken under the

Clean Air Act. It was also agency “action” within the meaning

of the statute. That word “bears the same meaning in [section

7607(b)(1)] that it does under the Administrative Procedure

Act,” Whitman v. Am. Trucking Ass’ns, 531 U.S. 457, 478

(2001), which defines “agency” to include EPA, 5 U.S.C.

§ 551(1), and “agency action” to include “the whole or a part

of an agency rule, order, license, sanction, relief, or the

equivalent or denial thereof, or failure to act,” id. § 551(13)

(emphases added). So, EPA’s denial of the petitions for

rulemaking was a reviewable “action.”

The petitions for review were timely. As a general matter,

section 7607(b)(1) requires a petition for review to be filed

within sixty days of when “notice of such promulgation,

approval, or action appears in the Federal Register.” Here, the

“action” at issue—denial of the petitions for rulemaking—was

published in the Federal Register on November 22, 2017, and

the petitions for review of that action were filed within sixty

days of that date. Moreover, this conclusion does not depend

on the after-arising provision. To the contrary, because the

petitions for review were filed within sixty days of the “action”

under review, the exception for “grounds arising after such

sixtieth day” was not triggered.

21

Our caselaw confirms this framing of the jurisdictional

issue. In Massachusetts v. EPA, 415 F.3d 50 (D.C. Cir. 2005),

this Court held that EPA’s denial of a petition to regulate

greenhouse gas emissions as air pollutants was itself “final

action” reviewable under section 7607(b)(1). See id. at 53–54

(opinion of Randolph, J.); id. at 61 (Sentelle, J., concurring in

the judgment). The Supreme Court reversed our judgment on

the merits, but agreed that we had jurisdiction. Massachusetts

v. EPA, 549 U.S. 497 (2007). In particular, the Court noted that

section 7607(b)(1) “expressly permits review” of EPA’s

“rejection of [a] rulemaking petition.” Id. at 520, 528; see also

id. at 517 (section 7607(b)(1) affords “the right to challenge

[this] agency action unlawfully withheld”). Likewise, in

Natural Resources Defense Council v. EPA, 824 F.2d 1146

(D.C. Cir. 1987) (en banc) (NRDC), we held that a 1985

decision to withdraw proposed amendments to certain 1976

regulations—which we described as a “decision not to amend”

the regulations—was “reviewable agency action” under

section 7607(b)(1). Id. at 1150 (quotation marks omitted). We

concluded that the petition for review at issue, which on its face

challenged the 1985 withdrawal decision, was not, in

substance, an untimely “‘back-door’ challenge to the 1976

regulations.” Id. On that point, we reasoned that the petitioners

claimed legal errors in the 1985 withdrawal and sought vacatur

only of that order. Likewise, in this case, the petitions for

review filed in 2017 and 2018 raise no back-door challenge to

the 2010 regulation: the petitions contend that EPA in 2017

arbitrarily refused to take account of changing economic

conditions, and they seek vacatur only of the 2017 order

denying a new rulemaking going forward.

Background principles of administrative law reinforce our

conclusion that the denial of a petition to modify a rule based

on changed circumstances is itself a reviewable order.

Ordinarily, the denial of a petition to amend or rescind a

22

regulation is judicially reviewable. See, e.g., NLRB Union v.

FLRA, 834 F.2d 191, 195–96 (D.C. Cir. 1987). When the

petition to amend attacks defects in the regulation as originally

promulgated, and when the time limit for seeking review of the

regulation has passed, questions can arise about whether the

time limit is being improperly circumvented. In these

circumstances, we have held that the petitioner cannot raise

procedural challenges to the regulation, but can raise

substantive arguments that the regulation is unauthorized by or

conflicts with a statute. See id. at 196–97. But the

circumvention concern does not even arise when the petitioner

raises arguments about changed circumstances or new

information. Those kinds of arguments—that recent

developments compel the amendment of an older regulation—

are always cognizable through review of the denial of a petition

to amend, though they trigger an “extremely limited” review

on the merits. Id. at 196. Our decision today harmonizes the

judicial-review provisions of the Clean Air Act with this

general background principle.

EPA recognizes the general rule that, under the NLRB

Union line of cases, the denial of a petition to amend a rule is a

reviewable order, which supports both challenges based on

recent developments and substantive challenges to the original

regulation. Nonetheless, EPA urges a different rule where the

applicable judicial-review provision contains a time limit for

seeking review and an exception for grounds arising after the

time limit, as in the Clean Air Act. In those circumstances,

according to EPA, a challenge to the denial of a petition to

amend is untimely—and the denial is thus entirely

unreviewable—unless the after-arising provision is satisfied.

EPA rests this conclusion on National Mining Ass’n v.

Department of Interior, 70 F.3d 1345 (D.C. Cir. 1995), and

American Road & Transportation Builders Ass’n v. EPA, 588

23

F.3d 1109 (D.C. Cir. 2009) (ARTBA), but neither decision

supports its position.

National Mining involved judicial review under the

Surface Mining Control and Reclamation Act (SMCRA),

which requires petitions for review to be filed “within sixty

days” of the agency action at issue “or after such date if the

petition is based solely on grounds arising after the sixtieth

day.” See 70 F.3d at 1350. In 1986, parties petitioned the

Department of Interior to rescind a 1979 SMCRA regulation

on two grounds. First, the petitioners argued that the rule was

inconsistent with the statute—an argument attacking the

regulation itself and “available” when the regulation was

originally promulgated. See id. After the agency declined to

rescind the rule, the challengers sought judicial review. We

held that the after-arising provision made this first challenge

untimely, by explicitly requiring challenges to a regulation

either to be filed “within the statutory period” or to “meet the

after-arising test.” Id. at 1350–51. At the same time, however,

we held that the petitioners’ second challenge—to the agency’s

1986 decision refusing to “repeal” the regulation based on

changed circumstances—was timely and reviewable. Id. at

1352. To be sure, we described the latter challenge as resting

on “grounds that arose after the sixtieth day.” Id. But we failed

to explain what jurisdictional theory that observation

supported: a challenge to the 1979 regulation rendered timely

by the after-arising exception; or a challenge, in substance as

well as form, to the 1986 refusal to repeal, akin to the challenge

that we held reviewable in NRDC. Instead, we simply

concluded that, under the “limited scope of our review,” the

agency did not “act[] unreasonably in denying the petition for

rulemaking.” Id. at 1352–53. Thus, while National Mining

blessed jurisdiction to review agency refusals to amend

regulations based on changed factual circumstances, it did not

24

ultimately address what we clarify today—the precise statutory

basis for that jurisdiction.

ARTBA applied the reasoning of National Mining to the

Clean Air Act, which also contains a time limit for judicial

review and an exception for after-arising grounds. ARTBA

involved a 2002 petition to amend 1997 regulations on the

ground that they allowed states “to adopt precisely the kinds of

regulations that the statute forbids.” 588 F.3d at 1110. As in

National Mining, the challenge was thus a substantive attack

on a regulation as originally promulgated. We held that, under

National Mining, EPA’s “denial of a revision-seeking petition

does not allow review of alleged substantive defects in the

original rule even under the deferential standards applicable to

review of such denials, outside the statutory limitations period

running from the rule[’s] original promulgation.” Id. at 1113

(emphasis added). In other words, National Mining “require[d]

us to treat ARTBA’s petition to EPA as a challenge to the

regulations it sought revised.” Id. at 1110. As a result,

dismissal was necessary unless the petition satisfied the

exception for after-arising grounds, which it did not. See id.

Neither decision controls here, where the 2017 and 2018

petitions for review challenge not the point of obligation

regulation as originally promulgated in 2010, but the failure to

amend the regulation in light of changed circumstances flagged

by EPA in 2015. EPA rejected that argument in 2017, and the

petitioners sought review of the rejection within sixty days. In

substance as well as form, the challenge was to the 2017 refusal

to amend, not to the underlying 2010 regulation. Under these

circumstances, there was no risk of circumventing the original

time limit. Therefore, there was also no reason to treat the 2010

promulgation and the 2017 refusal to amend as one-and-the-

same agency action, despite binding APA definitions treating

them as separate.

25

Precedent aside, EPA’s proposed approach—making the

after-arising provision the exclusive vehicle for challenging

refusals to amend regulations based on new information or

changed circumstances—creates various difficulties. For one

thing, there is a conceptual mismatch between that provision

and these kinds of challenges. Though the after-arising

exception and the opportunity to seek rule revision based on

post-rulemaking events may seem similar, the first allows an

intervening event to secure judicial review on the basis of

defects extant at the time of the rulemaking, whereas the

second allows review on the question whether intervening

events have fatally undermined the original justification for the

rule. The arrow of time runs forward, not backward, so it is at

best awkward—and at worst incoherent—to speak of a later

development rendering unlawful an earlier promulgation.

Economic developments in 2015 may have made it arbitrary

for EPA to adhere to the point of obligation rule in 2017, but

they cannot have retroactively made arbitrary its promulgation

in 2010.

Even worse, the Clean Air Act’s after-arising provision, if

used to judge the timeliness of challenges based on new

information, would be difficult to apply, capriciously narrow,

or both. To satisfy that provision, a petition for review must be

both (i) based “solely” on after-arising grounds and (ii) filed

“within sixty days after such grounds arise.” 42 U.S.C.

§ 7607(b)(1). Yet the case for changing an environmental

regulation will almost never manifest itself at one discrete

moment. Instead, it will accumulate progressively over time,

as scientific knowledge advances or economic conditions

change. And so, under EPA’s approach, the relevant filing

deadlines would become practically unknowable. When did

some environmental risk become serious and obvious enough

to compel a rulemaking to strengthen an existing regulation?

That will usually be a hard question, and it would be little short

26

of miraculous if the answer turned out to be on a date certain

within sixty days of the filing of a petition for review, as

required to satisfy the after-arising provision.

In contrast, the approach we have sketched out produces

simple questions and discernible deadlines: ask when EPA

denied the rulemaking petition, then add sixty days. If

possible, we should avoid trying to fix arbitrarily precise

accrual dates for events that develop incrementally over time.

See Nat’l R.R. Passenger Corp. v. Morgan, 536 U.S. 101, 115–

21 (2002). And we should avoid jurisdictional tests that are

complex as opposed to straightforward. See, e.g., Hertz Corp.

v. Friend, 559 U.S. 77, 94 (2010). Treating the denial of a

petition to amend a rule based on changed circumstances as

reviewable agency action honors both principles, while

attempting to shoehorn such denials into the after-arising

provision does the opposite.

We acknowledge that, in Oljato Chapter of Navajo Tribe

v. Train, 515 F.2d 654 (D.C. Cir. 1975), we assumed that the

after-arising provision would govern review of orders denying

petitions to modify EPA rules based on changed circumstances.

But our only holdings were that such petitions must first be

presented to EPA, id. at 666, and then are reviewable directly

in the courts of appeals, id. at 657–65. Moreover, our

assumption was understandable in context; the petitioners had

missed the statutory deadline to file a petition for review (then

thirty days), see id. at 657, so they pressed alternative

jurisdictional theories (involving either district-court review or

the after-arising provision) that would avoid that deadline.

Furthermore, we expressly reserved the precise bounds of what

constituted a petition based solely on after-arising grounds. See

id. at 666–68. Finally, we stressed that review should generally

be available “when new information casts doubt upon the

validity of a [regulatory] standard.” Id. at 665. At the time, the

27

after-arising provision contained no separate deadline

requiring a petition for review to be filed within sixty days of

the after-arising ground. See id. at 657 n.3. So the difference

between “direct review” of a regulation through the after-

arising provision and review of a “refusal to revise” the

regulation appeared largely semantic. See id. at 666. But, two

years after Oljato was decided, Congress amended section

7607(b)(1) to include the separate filing deadline, see Pub. L.

No. 95-95 § 305(c)(3), 91 Stat. 685, 776 (1977), which, as

explained above, made the after-arising provision a singularly

poor vehicle for securing the review that Oljato assumed would

be readily available.

After Oljato, we held in Group Against Smog & Pollution

v. EPA, 665 F.2d 1284 (D.C. Cir. 1981), that the failure to

challenge a 1974 regulation within the original sixty-day

deadline did not bar “judicial review of the agency’s

subsequent refusal to revise the standard on the basis of new

information.” Id. at 1291. Quoting liberally from Oljato, we

suggested that such review would proceed through the after-

arising provision. Id. at 1289. But we permitted review even

though the after-arising provision, as amended, could not have

applied. The case involved comments filed with EPA in April

1977, which we treated as a petition for a rulemaking. Id. at

1290 & n.47. On April 13, 1978, EPA declined to amend the

rule as requested. Id. at 1288. The ensuing petition for review

was filed on June 12, 1978—more than a year after the

technological changes discussed in the comments, but precisely

sixty days after the refusal to amend. See id. Because the

petition for review was not filed within sixty days of the

asserted after-arising grounds, the after-arising provision

plainly did not apply. So, review must have rested on the

theory that the refusal to amend was itself a reviewable action

triggering its own sixty-day filing window.

28

The approach we follow here—treating denials of

rulemakings based on new facts as independently reviewable

decisions—does not reduce the after-arising provision to

surplusage. Our cases have recognized other circumstances

triggering the after-arising provision, including judicial

decisions that significantly “changed the legal landscape”

faced by petitioners, Honeywell Int’l, Inc. v. EPA, 705 F.3d

470, 473 (D.C. Cir. 2013), and “the occurrence of an event that

ripens a claim,” Coalition for Responsible Regulation v. EPA,

684 F.3d 102, 129 (D.C. Cir. 2012) (per curiam). In cases like

these—where, for example, an intervening statute, regulation,

or judicial decision extends old regulations to new parties—the

after-arising ground is easily dated, the relevant filing

deadlines are clear, and so the provision functions predictably.

Moreover, where the after-arising provision does apply, it

permits the petitioner to contend not only that changed

circumstances warrant amending an existing regulation but

also that the regulation was unlawful as originally

promulgated. See, e.g., Honeywell, 705 F.3d at 473.

For these reasons, we conclude that we have jurisdiction

to consider the petitioners’ argument that EPA arbitrarily

refused to amend the point of obligation rule based on the

changed circumstances cited by the petitioners.

2. After-Arising Grounds Under Section 7607(b)(1)

The February 2016 petitions for review, filed before EPA

resolved any of the rulemaking petitions, rested on the

alternative jurisdictional theory that EPA’s publication of the

2014–16 volume requirements constituted an after-arising

ground within the meaning of section 7607(b)(1). Our

conclusion above does not moot this question, because if this

alternative theory were valid, then the petitioners could directly

attack the point of obligation rule as originally promulgated.

29

Nonetheless, the petitioners have abandoned this theory of

jurisdiction. In their merits briefs, they never actually attack

the 2010 rule as originally promulgated; instead, they challenge

only the 2017 denial of their rulemaking petitions. Moreover,

in requesting relief, they do not ask us to set aside the 2010

rule, but only to “vacate the [2017] Denial[] and remand to

EPA” for a rulemaking to change the point of obligation rule

going forward. Alon Br. 58. And at oral argument, they

disclaimed any challenge to the 2010 rule itself and confirmed

that their only challenge was to EPA’s 2017 refusal to revise

the point of obligation rule. See Rec. of Oral Argument at

2:18:50–2:19:15.

3. Mandatory Reconsideration Under Section

7607(d)(7)(B)

Finally, the petitioners assert jurisdiction under section

7607(d)(7)(B), on the ground that EPA erroneously denied

petitions for mandatory reconsideration of the point of

obligation rule. To review, section 7607(d)(7)(B) provides in

relevant part that only objections “raised . . . during the period

for public comment” may be “raised during judicial review.”

But if the objector “can demonstrate to the Administrator that

it was impracticable to raise such objection within such time or

if the grounds for such objection arose after the period for

public comment (but within the time specified for judicial

review) and if such objection is of central relevance to the

outcome of the rule,” then EPA must “convene a proceeding

for reconsideration of the rule,” and any refusal to do so is

judicially reviewable. Here, the petitioners assert that the

ground for their objections—EPA’s statements and actions in

its 2014–16 volume regulation—arose “after the period for

public comment” on the 2010 point of obligation rule, and that

30

the objections are “of central relevance to the outcome of the

rule.”

The petitioners misapprehend the statutory text and

structure. Section 7607(d)(7)(B) does not extend the

jurisdictional deadline to seek judicial review imposed in

section 7607(b)(1); instead, it specifies a non-jurisdictional

exhaustion requirement. See EPA v. EME Homer City

Generation, L.P., 572 U.S. 489, 512 (2014). Its first sentence

generally requires parties to raise objections “during the period

for public comment” in order to later present them in court. Its

second sentence allows a narrow exception when a centrally

important objection cannot feasibly be raised during the

comment period—either because “the grounds for such

objection arose after the period for public comment,” or

because commenting was otherwise “impracticable.” If an

objection fits within this exception, the consequences are

weighty: EPA must grant reconsideration and conduct a new,

full-dress, notice-and-comment rulemaking. And if EPA

denies reconsideration, the objector may seek judicial review.

This “limited exception” to the normal exhaustion

deadline, Util. Air Regulatory Grp. v. EPA, 744 F.3d 741, 746

(D.C. Cir. 2014), does not come with a free pass from the

subsequent deadline to seek judicial review. To the contrary,

the second sentence of section 7607(d)(7)(B) covers only

objections that arise after the close of the comment period, yet

within the time specified for judicial review. As noted above,

that time for judicial review—sixty days from the promulgation

of the final rule—is specified in section 7607(b)(1). Section

7607(d)(7)(B) does not enlarge that filing period, but merely

fills a narrow gap within it: allowing orderly exhaustion of

important objections that “first became known to the petitioner

after the comment period ended, but before the period for

petitioning for review expired.” Am. Petroleum Inst. v. Costle,

31

665 F.2d 1176, 1192 (D.C. Cir. 1981). We recognize that, as a

textual matter, the statutory phrase “but within the time

specified for review” qualifies the requirement that the grounds

must have arisen “after the period for public comment,” but not

the alternative requirement that “it was impracticable” to raise

the objection “during the period for public comment.”

However, the petitioners do not invoke the impracticability

prong of section 7607(d)(7)(B). Moreover, we have construed

that prong to cover instances when the final rule was not a

logical outgrowth of the proposed rule, Clean Air Council v.

Pruitt, 862 F.3d 1, 10 (D.C. Cir. 2017) (per curiam), which

likewise involve problems during the period for public

comment on or petitioning for review of the regulation itself—

not problems that arise when circumstances change years or

decades later.

The petitioners argued in briefing that the “time specified

for judicial review” referenced in section 7607(d)(7)(B)

encompasses not only the initial sixty-day window after a

rule’s promulgation, but also the secondary sixty-day limit

from after-arising grounds in the fourth sentence of section

7607(b)(1). But as noted above, the petitioners abandoned at

oral argument any reliance on the latter after-arising provision.

Moreover, their theory would transform what we have

described as a “limited” gap-filling provision, Util. Air

Regulatory Grp., 744 F.3d at 746, into a perpetually looming

threat of mandatory notice-and-comment reconsideration.

Tellingly, the petitioners can cite no case employing section

7607(d)(7)(B)’s mandatory reconsideration procedure for

objections that arose after the close of the initial window for

judicial review. Their interpretation would “make a mockery

of Congress’[s] careful effort to force potential litigants to

bring challenges to a rule issued under this statute at the

32

outset.” Am. Rd. & Transp. Builders Ass’n v. EPA, 705 F.3d

453, 458 (D.C. Cir. 2013) (quotation marks omitted).

Because the petitioners’ objections to the point of

obligation rule did not arise within the initial window for

judicial review of the 2010 point of obligation rule, but only

some five years later, EPA properly denied mandatory

reconsideration.

B. Merits of Challenges to EPA’s Refusal to Revise the

2010 Point of Obligation Rule

The Alon Petitioners offer an array of arguments to

challenge the denial. None, however, is persuasive.

We are reviewing EPA’s denial of a petition for

rulemaking to amend the agency’s point of obligation rule. See

supra Part IV.A.1. Accordingly, our review is “‘extremely

limited’ and ‘highly deferential.’” New York v. EPA, 921 F.3d

257, 261 (D.C. Cir. 2019) (quoting Massachusetts, 549 U.S. at

527–28). “To set aside the agency’s judgment, [we] must

conclude that EPA had not ‘adequately explained the facts and

policy concerns relied on’ or that those facts did not ‘have some

basis in the record.’” Id. (quoting WildEarth Guardians v.

EPA, 751 F.3d 649, 653 (D.C. Cir. 2014)). We have no basis

for such a conclusion. In denying the petition for rulemaking,

EPA considered the “information currently before” it and

determined “that the point of obligation is appropriately

placed,” wrestling with the petitioners’ claims to the contrary.

EPA Denial at 8, Alon J.A. 62. As is evident from our

discussion below, EPA did so with enough thoroughness and

reasonableness to satisfy our limited, deferential review.

We start with EPA’s reasoning, which petitioners say is

arbitrary and capricious. See 42 U.S.C. § 7607(d)(9)(A).

33

At the root of petitioners’ claim is a single premise: that

the current point of obligation misaligns incentives by

requiring those who refine fossil fuel, but not those who blend

it, to meet the RFS program’s annual standards. In petitioners’

view, this misalignment forces refiners to purchase RINs to

satisfy their RFS obligations, jacking up their costs, while

giving windfall profits to blenders, who produce (but don’t

consume) RINs. From this cycle of “RINsanity,” petitioners

say, flow harms galore. Alon Reply Br. 25. Higher RIN prices

not only threaten the financial viability of refiners (putting our

economy and energy security in jeopardy), see, e.g., Alon Br.

46, but they incentivize RIN hoarding, which feeds market

volatility, and gives some market participants an unfair leg up,

see, e.g., id. at 40.

The problem with this argument, however, is that EPA

reasonably explained why, in its view, there is no misalignment

in the RFS program. According to EPA, refiners “recover the

cost of the RINs they purchase” by passing that cost along in

the form of “higher prices for the petroleum based fuels they

produce.” EPA Denial at 25, Alon J.A. 79. It grounded that

conclusion in studies and data in the record. EPA and the

authors of the pertinent studies took advantage of the fact that

there are pairs of petroleum products in which one variant is

subject to the RIN obligation (such variants being awkwardly

called “obligated fuels”), whereas its not-quite-identical twin is

not. For example, gasoline and diesel sold for use in the United

States are “obligated,” whereas the same fuels sold for export

are not. EPA Denial at 23, Alon J.A. 77. The same goes for

domestic diesel fuel, which is “obligated,” and jet fuel, which

is not. Christopher R. Knittel et al., The Pass-Through of RIN

Prices to Wholesale and Retail Fuels Under the Renewable

Fuel Standard 4 (July 2015) (Knittel), Alon J.A. 534.

Comparing these pairs, the agency found that as RIN prices

increased, a gap “open[ed] up between” the price for obligated

34

and unobligated fuels, a gap rather precisely matching the

contemporaneous increase in RIN price—a strong indication

that refiners were “recoup[ing] the costs associated with RIN

prices.” EPA Denial at 23, Alon J.A. 77.

Further confirming the price relationship, Professor

Knittel and his colleagues found that 73% of a change in RIN

price was passed through in the form of higher petroleum prices

in the same day, 98% within two business days. Knittel 26,

Alon J.A. 536.

Reviewing the findings, EPA (accurately) reported that the

papers by Knittel and his colleagues, and by Argus Consulting

Services, “concluded that the RIN cost was generally included

in the sale prices of obligated fuels.” EPA Denial at 25, Alon

J.A. 79; see Knittel 26, Alon J.A. 536; Argus Consulting

Services, Do Obligated Parties Include RINs Costs in Product

Prices? 15 (Feb. 2017), Alon J.A. 564 (“There are very specific

correlating price data for diesel that indicate that refiners . . .

pass along the RINs cost . . . .”).

A similar analysis, EPA concluded, reveals that just as

(obligated) refiners do not pay excess costs, neither do blenders

(who are not obligated under the program) nor integrated

refiners (who perform their own in-house blending) reap

windfall profits. True, both earn RINs, without purchasing

them on the open market, by blending renewable fuel into

petroleum blendstock. And true, as well, both can sell those

RINs, enjoying whatever revenues market conditions and their

own efficiencies permit. But as EPA quite accurately

explained, this is only half the equation. In a competitive

market there’s no such thing as a free lunch, and blenders and

integrated refiners pay their tab just as others do; they just do

so indirectly. To offer finished fuel without attached RINs at a

competitive price, these entities must discount their blended

35

fuel by roughly the value of the RINs that they detached and

kept for themselves. EPA Denial at 29, Alon J.A. 83. In other

words, they “sell the finished transportation fuel at a loss,” but

“maintain[] profitability through RIN sales.” Id. at 27–28, 29,

Alon J.A. 81–82, 83.

To be sure, in response to EPA’s proposed denial,

commenters criticized the studies relied on by the agency.

They contended, for example, that Professor Knittel and his

colleagues erred by removing certain spreads from the analysis,

by including others, and by pooling the results of various

comparisons. See EPA Denial at 25, Alon J.A. 79. But

petitioners have not raised these arguments here, and for that

reason we do not consider them. While petitioners do complain

that EPA relied on a “preliminary” analysis, see Alon Br. 54;

Alon Reply Br. 23, that objection—whatever its persuasive

force—says nothing about the other studies in the record (for

example, by Professor Knittel et al.).

Petitioners try, instead, to trace various refiner problems to

EPA’s refusal to obligate blenders. They suggest that the

alleged misplacement of the point of obligation causes

bankruptcies, see, e.g., Alon Br. 3, 47, and inflicts economic

hardship on small refineries, see, e.g., id. at 49, especially in

the form of inflicting wildly disproportionate RIN acquisition

costs on them, see, e.g., Alon Reply Br. 26. But some of these

events occurred after EPA issued its denial, see, e.g., Alon Br.

49 (“following the Denial”); Alon Reply Br. 26 (“just after the

Denial”), and are therefore not properly before us, see

Environmental Defense Fund, Inc. v. Costle, 657 F.2d 275, 284

(D.C. Cir. 1981). More importantly, the claims presuppose that

refiners cannot recover their RIN costs and that blenders reap

windfall profits—suppositions that, as discussed above, EPA

reasonably rejected.

36

Petitioners respond by plucking snippets from the denial,

stringing them together with contrasting (bolded) conjunctions,

and asserting that EPA’s “discussion of RIN prices” is

“irreconcilably inconsistent.” Alon Br. 53. But we find no

inconsistency on EPA’s part.

Take one of petitioners’ examples:

. . . RIN prices had no “significant impact on retail

gasoline (E10) prices,” JA75;

although “RINs . . . provide a price signal to

consumers to help achieve . . . greater renewable fuel

production and use,” JA75.

Alon Br. 53 (second and third alterations in original) (quoting

EPA Denial at 21, Alon J.A. 75). At first blush, the two

comments, located on the very same page, seem inconsistent.

How could RIN prices have no “significant impact” on retail

prices, while, at the same time, provide “a price signal to

consumers”?

They can do so for the simple reason that the remarks refer

to different things, a detail omitted from petitioners’ brief. This

becomes apparent when the passage from which petitioners

plucked their quotes (bolded and underscored below) is viewed

in full:

External, non-EPA assessments similarly concluded

that increased RIN prices had not had a significant

impact on retail gasoline (E10) prices. When RIN

prices rise, the market price of the petroleum

blendstocks produced by refineries also rise to cover

the increased RIN costs, in much the same way as they

would rise in response to higher crude oil prices. The

effective price of renewable fuels (the price of the

37

renewable fuel with attached RIN minus the RIN

price), however, decreases as RIN prices increase.

When renewable fuels are blended into petroleum

fuels these two price impacts generally offset one

another for fuel blends such as E10 with a renewable

content approximately equal to the required

renewable fuel percentage standard. Higher RIN

prices also generally result in higher prices for fuels

with lower renewable content (such as E0 or

petroleum diesel) and lower prices for fuels with

higher renewable content (such as E85 or B20). The

cost of the RIN therefore serves as a cross-subsidy,

reducing the price of renewable fuels and increasing

the price of petroleum based fuels in transportation

fuel blends, thus incentivizing increased blending of

renewable fuels into the transportation fuel pool. In

this way the RINs also help provide a price signal to

consumers to help achieve the Congressional goals

of greater renewable fuel production and use.

Fuels with higher renewable content are relatively

cheaper to consumers than they would be absent high

RIN prices, while fuels with lower renewable content

are relatively more expensive when RIN prices are

high.

EPA Denial at 20–21, Alon J.A. 74–75.

As we can see, the first statement (no significant price

impact) is referring to the price of E10—a blend of 90%

gasoline, 10% ethanol. As EPA explained, RINs work as a

“cross-subsidy,” effectively taxing the use of petroleum-based

fuels (e.g., gasoline) and subsidizing the use of renewables

(e.g., ethanol) in making a blended transportation fuel like E10.

EPA Denial at 21, Alon J.A. 75.

38

Before we dig in further, let’s take a step back. We must

first recognize that EPA assumes that we are talking of a market

where the RFS program, in effect, mandates minimum levels

of renewables in marketed fuels, a mandate that necessarily

impacts fuel prices. EPA is not making a claim that the

mandatory inclusion of renewables in transportation fuel

renders a gallon of gasoline lawfully purchased at the pump

cheaper than it would have been absent the RFS program.

To see what this means, start on the subsidy side: Suppose

a blender can realize $2.25 on a gallon of ethanol with an

attached RIN. If the blender can detach and sell that RIN for

$0.05, then the net ethanol value is only $2.20—a $0.05

savings that in a competitive market should pass through to

consumers. Now take the tax side: Because refiners must

purchase RINs to satisfy the RFS obligations that arise from

selling gasoline to blenders, a blender’s value for a gallon of

gasoline may rise, due to the RFS program, from, say, $2.75 to

$2.76. See Dallas Burkholder, Office of Transportation & Air

Quality, EPA, A Preliminary Assessment of RIN Market

Dynamics, RIN Prices, and Their Effects 17, EPA-HQ-OAR-

2016-0544-0009 (May 14, 2015), Alon J.A. 337. As a result

of both price impacts, EPA described, blended fuels with a

higher percentage of renewable content (e.g., 85% ethanol) will

be cheaper than they would have been (absent the program),

whereas fuels with a lower percentage of renewable content

(e.g., pure gasoline) will be more costly than they would have

been (absent the program). EPA Denial at 21, Alon J.A. 75.

For E10, the “two price impacts generally offset one another,”

so (back to the first statement) any change in RIN price

generally has no “significant impact on” the E10 price. Id.

But that’s just E10. There is an effect (of differing

magnitude) on, say, E85 or E0. And that is where the second

statement (“provide a price signal”) comes in: the signal arises

39

from a comparison of relative prices across the spectrum of

transportation fuels. Again, as EPA explains, “[f]uels with

higher renewable content are relatively cheaper to consumers

than they would be absent high RIN prices, while fuels with

lower renewable content are relatively more expensive when

RIN prices are high.” Id. The two statements are consistent.

Continuing the search for inconsistency, petitioners direct

our attention to “EPA’s past pronouncements.” Alon Br. 50.

In them, they see an irrational “about-face”—with EPA saying,

at first, that “low RIN prices [were] a sign that the [RFS

program] was working,” but claiming, now, “that high RIN

prices are . . . desirable.” Id. at 51–52. Again, that’s not quite

right. All EPA originally said was that when it first adopted

the point of obligation, it did so based, in part, on its

“expectation at that time that there would be an excess of RINs

at low cost.” Regulation of Fuels and Fuel Additives: Changes

to Renewable Fuel Standard Program, 74 Fed. Reg. 24,904,

24,963/2 (May 26, 2009) (proposed rule); see also Alon Br. 50

(citing EPA Denial at 13, Alon J.A. 67 (citing, in turn, 74 Fed.

Reg. at 24,963)). EPA did not suggest that low RIN prices were

a sign of market health—nor that high prices were a cause for

alarm.

In any case, EPA addressed petitioners’ concern over high

RIN prices head on; the agency explicitly determined, on the

current record, that “higher RIN prices” are not “indicative of

a dysfunctional RIN market.” EPA Denial at 19, Alon J.A. 73.

Rather, EPA explained, these prices accurately reflect the

increasing cost associated with “getting ever-greater volumes

of renewable fuel into the transportation fuel pool—the explicit

goal [of] the RFS program.” Id. Put more bluntly, the increases

in RIN prices are a completely understandable effect of the

program’s ever-increasing pressure to expand renewable

volumes. Pushing out along the supply curve takes the raw

40

market price of the RIN-eligible fuel steadily into higher

realms—except to the extent that production innovations or

economies may tend to lower costs. So far as appears, it has

nothing to do with EPA’s allocation of the obligation.

What about EPA’s concern, petitioners ask, that including

blenders in the point of obligation would expand the number of

obligated parties and, as a result, ratchet up the program’s

complexity? Isn’t that hard to square with EPA’s claim, made

years earlier, that “essentially all downstream blenders . . . are

[already] regulated parties”? Alon Br. 42 (quoting 75 Fed.

Reg. at 14,722/2). Again, not at all. Although the participation

of all (or nearly all) blenders in the RIN market subjects them

to RFS registration, recordkeeping, and reporting

requirements, “the majority of these downstream [regulated]

parties are . . . currently not obligated parties.” EPA Denial at

69, Alon J.A. 123 (emphasis added). As EPA explained, there

“is a significant distinction between being a ‘regulated party’

and being an ‘obligated party.’” Id. “Obligated parties must

meet all of [the requirements faced by regulated parties] and

also calculate an annual renewable volume obligation, acquire

the appropriate number of RINs in the market, practic[e] due

diligence to ensure [the RINs’] validity, file annual compliance

reports demonstrating compliance, and maintain records to that

effect.” Id. at 69 n.205, Alon J.A. 123 (emphasis added); see,

e.g., 40 C.F.R. §§ 80.1427(a), 80.1450(a), 80.1451(a),

80.1454(a). It was not unreasonable for EPA to conclude that

imposing these burdens on additional entities would add to the

program’s complexity (and therefore be undesirable absent an

adequate offsetting benefit).

Nor was it unreasonable to find that going down this

route—overhauling a foundational element of the program—

would create “uncertainty in the fuels marketplace.” EPA

Denial at 2, Alon J.A. 56. As EPA said, “all parties regulated

41

in the RFS program have made significant investments and

decisions about their participation in the program and their

position in the market on the basis of the existing regulations,

including the definition of obligated parties.” EPA Denial at

79, Alon J.A. 133. In these circumstances, it isn’t hard to

imagine how changing course could throw players off their

game. Of course, as petitioners note, uncertainty may have

“plagued the RFS Program for years.” Alon Br. 37. But true

or not, EPA needn’t pile on; the cure for uncertainty isn’t

spawning more uncertainty.

Taking a step back, petitioners launch a closing broadside

against the entire process. They assert that EPA “disregarded

this Court’s remand” in ACE, 864 F.3d at 737, and arbitrarily

credited some comments over others. Alon Br. 31–32, 55–56.

But the ACE remand required, at most, that the agency “address

the point of obligation issue.” 864 F.3d at 737. And, as

detailed throughout this opinion, the agency has done so

reasonably, analyzing the data and explaining its decision.

Nothing more was required.

* * *

We have considered the Alon Petitioners’ other arguments

and have found them to be either without merit or, in the case

of the argument relying on 42 U.S.C. § 7545(o)(5)(A), see

Alon Br. 34, insufficiently developed, see, e.g., Masias v. EPA,

906 F.3d 1069, 1077 (D.C. Cir. 2018). For the foregoing

reasons, the petitions for review are denied.

V. 2017 Annual Volumetric Rule

We turn now to the Coffeyville Petitioners’ challenges.

42

A. Point of Obligation

We first consider the Coffeyville Petitioners’ challenge to

EPA’s decision in the 2017 Rule not to reassess which

categories of industry players are “obligated parties” under the

renewable fuel program. As the Coffeyville Petitioners read it,

the statutory provision requiring EPA to set annual renewable

fuel percentage standards also imposes on EPA a

nondiscretionary duty to reconsider—every year—which types

of entities are obligated to demonstrate to EPA compliance

with the percentage standards. See 42 U.S.C. § 7545(o)(3)(B).

They claim EPA shirked that duty when it treated the issue as

beyond the scope of its 2017 annual rulemaking. EPA counters

that it identified the obligated parties in 2007 pursuant to

Congress’s mandate to set “compliance provisions” for the new

renewable fuel program, id. § 7545(o)(2), reaffirmed that

decision in 2010, and that nothing in the mandate to calculate

the annual percentage standards requires it to reconsider the

point of obligation each year. EPA also asserts that it

appropriately addressed the Coffeyville Petitioners’ complaints

that it obligated the wrong parties in a separate proceeding from

its annual volumetric rulemaking.

1. Jurisdiction

EPA and a coalition of Respondent-Intervenors

representing the renewable fuel and refinery industries assert

that we lack jurisdiction because the Coffeyville Petitioners

effectively challenge the compliance rule that has been on the

books for a decade or so, see 40 C.F.R. § 80.1406(a)(1), and

did not petition within 60 days of its publication or within 60

days of any valid “grounds arising” thereafter. See 42 U.S.C.

§ 7607(b)(1); Med. Waste Inst. v. EPA, 645 F.3d 420, 427

(D.C. Cir. 2011). But petitioners are not challenging EPA’s

decision to adopt the rule in 2007 or retain it in 2010. Rather,

43

they contend that the provision calling on EPA to set annual

volumes of biofuels “applicable to refineries, blenders, and

importers, as appropriate,” requires EPA to reassess each year

whether the point of obligation set when the agency established

the program is still “appropriate,” or if EPA should re-assign it

and restructure the RIN market and other compliance

infrastructure going forward. See 42 U.S.C.

§ 7545(o)(3)(B)(ii)(I). That challenge was timely filed within

60 days of the promulgation of the annual fuel standards. See

supra Part IV.A.1.

2. Merits

This dispute turns on the roles of two provisions of the

statute directing the EPA to establish and run a Renewable Fuel

Program, 42 U.S.C. § 7545(o)—paragraphs (2) and (3).

Paragraph (2) directs EPA to “promulgate regulations”

setting up a program to “ensure that transportation fuel sold or

introduced into commerce in the United States . . . contains at

least the applicable volume[s] of renewable fuel,” as specified

in subparagraph (2)(B). Id. § 7545(o)(2)(A)(i). Among the

parameters Congress required EPA to include were

“compliance provisions applicable to refineries, blenders,

distributors, and importers, as appropriate,” to ensure that the

requirements of paragraph (2), including the applicable volume

requirements specified in subparagraph (2)(B), are met. Id.

§ 7545(o)(2)(A)(iii)(I), (B). There is no question that EPA has

authority to set those parameters, including the point of

obligation, and to adjust them if a change is needed.

Paragraph (3), in turn, requires EPA to determine and

publish annual renewable fuel obligations designed to

“ensure[] that” the applicable volumes specified in paragraph

(2) are met. Id. § 7545(o)(3)(B)(i). Those renewable fuel

obligations must:

44

(I) be applicable to refineries, blenders, and

importers, as appropriate;

(II) be expressed in terms of a volume percentage

of transportation fuel sold or introduced into

commerce in the United States; and

(III) . . . consist of a single applicable percentage

that applies to all categories of persons

specified in subclause (I).

Id. § 7545(o)(3)(B)(ii)(I)–(III).

The parties’ dispute centers on the meaning of “as

appropriate” in subclause (3)(B)(ii)(I). The Coffeyville

Petitioners contend that the phrase unambiguously requires

EPA annually to reconsider which parties it is “appropriate” to

obligate to meet the renewable fuel obligations. EPA responds

that the statute is, at most, ambiguous as to whether Congress

expected EPA annually to revisit the obligated-parties

designation, or whether the agency may generally rely on the

“appropriate[ness]” finding it made pursuant to its paragraph

(2) authority. We begin by asking “whether Congress has

directly spoken to the precise question at issue,” and conclude

that it has not. Chevron, 467 U.S. at 842.

EPA reads “as appropriate” in paragraph (3) to mean that

the agency has “discretion” to decide whether, when, and how

to reassess which of three types of industry actors—refineries,

blenders, and importers—should continue to bear the point of

obligation, as originally designated in the compliance

provisions. See EPA Denial, Coffeyville J.A. 779–80. At oral

argument, the agency conceded that its exercise of this

discretion is reviewable, so that the exclusion of the point of

obligation issue from an annual rulemaking could, under other

circumstances, constitute an abuse of discretion. Rec. of Oral

Arg. 1:22:22–1:24:00; 1:37:45–1:40:11.

45

The Coffeyville Petitioners object that the phase

“applicable . . . as appropriate” means applicable as

contemporaneously determined to be appropriate in the annual

volumetric rulemakings. Coffeyville Br. 30–33; see also Conc.

Op. 4–5, 7. But paragraph (3) does not specify when or in what

context EPA must make its appropriateness determination, nor

does the phrase “as appropriate” itself specify a particular

temporal dimension—as between, for example, parties

appropriately designated in the past (as EPA interprets it) and

parties now appropriately selected (as Coffeyville insists). The

term “appropriate” “naturally and traditionally includes

consideration of all the relevant factors,” Michigan v. EPA,

135 S. Ct. 2699, 2707 (2015) (quoting White Stallion Energy

Center, LLC v. EPA, 748 F.3d 1222, 1266 (D.C. Cir. 2014)

(Kavanaugh, J., concurring in part and dissenting in part)), but

it does not dictate when that consideration must be made. In

other words, the requirement that the point of obligation be

“appropriate” is at most grounds for assessing whether the

agency adequately explained its policy choices regarding the

appropriateness determination, not for imposing our own gloss

on that broad term as a matter of law. See Kisor v. Wilkie, 139

S. Ct. 2400, 2448–49 (2019) (Kavanaugh, J., concurring in the

judgment) (“[S]ome cases involve regulations that employ

broad and open-ended terms like ‘reasonable,’ ‘appropriate,’

‘feasible,’ or ‘practicable.’ Those kinds of terms afford

agencies broad policy discretion, and courts allow an agency to

reasonably exercise its discretion to choose among the options

allowed by the text of the rule. But that is more State Farm

than Auer” or Chevron (emphasis added)). Here, as explained

below, EPA reasonably exercised its discretion, and explained

its decision, to address the point of obligation issue in a

separate proceeding from its annual volumetric rulemaking.

The fact that paragraphs (2) and (3) both include the phrase

“as appropriate” does not make the Coffeyville Petitioners’ the

46

only permissible interpretation. Even if, as our colleague

contends, Conc. Op. 7, the two phrases bear the exact same

meaning, but see Coffeyville Br. 30–31 (arguing that

paragraphs (2) and (3) are “worded differently” and have

“different contexts”), paragraph (3) simply does not dictate

when or in what context EPA must make the appropriateness

determination. It is the surrounding context, not the phrases

themselves, that suggests when EPA might make that choice.

Unable to point to any express textual requirement that

EPA annually reconsider the point of obligation, the

Coffeyville Petitioners contend that, had Congress intended to

allow EPA in annual volumetric rulemakings to rest on its

paragraph (2) appropriateness determination, subclause

(3)(B)(ii)(I) could have more simply cross-referenced

paragraph (2). But replacing subclause (3)(B)(ii)(I) with a

simpler cross-reference would not have achieved quite the

same effect. While refineries, blenders, importers, and

distributors may all be subject to compliance provisions under

paragraph (2), paragraph (3)’s applicability provision points to

a more limited universe of potential obligated parties—to

refineries, blenders, and importers, but not distributors. That

supports EPA’s understanding of subclause (3)(B)(ii)(I) as a

cross-reference that also clarifies a limit on EPA’s options in

setting the point of obligation. See 72 Fed. Reg. at 23,923/2

(preamble for compliance rule referencing paragraph (3)’s

applicability provision).

We are unpersuaded by the suggestion that such limitation

was so clear even without subclause (3)(B)(ii)(I) that EPA’s

reading of that applicability provision renders it superfluous.

The suggestion is that, because distributors do not “introduce”

fuel into commerce, they could not be obligated parties in any

event, with or without the applicability provision. Our

colleague posits that blenders—but not distributors—can in

fact “introduce” transportation fuel into commerce by blending

47

gasoline and diesel fuel with other fuels that have not already

been introduced by someone else. Conc. Op. 11. But that

argument rests on a complicated series of inferences from spare

statutory text, as well as post-enactment regulations that do not

necessarily show what the statute must have meant. For

example, our colleague reasonably infers that the national

“volume[] of transportation fuel,” 42 U.S.C. § 7545(o)(3)(A),

must be counted at the first moment each gallon of fuel enters

commerce, in order to avoid double-counting. But, the statute

nowhere states the point directly. Still less clearly does the

statute state our colleague’s corollary—necessary to the

surplusage argument—that the point of obligation must also be

placed, if at all, at the first moment a gallon of fuel enters

commerce. That corollary is less obvious, because the

statutory link between the point of obligation and entry into

commerce is not ironclad: All parties agree that not every

gallon of transportation fuel must be subject to the point of

obligation upon entry into commerce. The statute plainly

allows EPA to obligate an “appropriate” subset of the three

categories of parties. And obligating blenders would involve

double counting unless the transportation fuel they use to create

blends were not already counted upon its importation or sale to

them. Under the circumstances, it is reasonable to read

subclause (3)(B)(ii)(I) as clarifying what is at best a non-

obvious inference that distributors cannot be subjected to the

point of obligation.

So subclause (3)(B)(ii)(I) as EPA reads it is not a

superfluity, but makes clear that EPA may have permissibly

placed the point of obligation on refineries, blenders, and

importers, but not distributors. For the same reason, subclause

(3)(B)(ii)(III), which requires that the annual standards apply

“to all categories of persons specified in subclause (I),” id.

§ 7545(o)(3)(B)(ii)(III), does not contain what our colleague

views as an unnecessary double cross-reference to paragraph

48

(2), because it, too, is operative in not just cross-referencing,

but also clarifying a limit on the three permissible targets of its

“single applicable percentage.”

The thrust of the Coffeyville Petitioners’ retort—that if

Congress had wanted to confer discretion or provide a limiting

cross-reference to paragraph (2), it would have said so more

plainly—applies with greater force against their own reading.

Had Congress intended EPA to consider on an annual basis

whether to redo the point of obligation designation—a

designation that no-one disputes is a necessary cornerstone of

the paragraph (2) compliance provisions—it knew how to

impose such a requirement. The Clean Air Act’s provisions on

ambient air quality, for instance, require EPA to “complete a

thorough review” of the air quality standards “at five-year

intervals” and “promulgate such new standards as may be

appropriate.” Id. § 7409(d)(1). The Act’s provisions

controlling hazardous air pollutants emitted from major and

area sources require EPA to “review, and revise as necessary”

the applicable emission standards “no less often than every 8

years.” Id. § 7412(d)(6). Paragraph (3) of the RFS program,

in contrast, does not tell EPA to “complete a thorough review,”

or “review, and revise as necessary” its point of obligation

decision—or anything even close.

To be sure, EPA’s reading is not ineluctable. We do not

doubt that Congress could have more directly provided that the

renewable fuel obligations do not apply to distributors. See

Conc. Op. 8. But, for the reasons discussed, we are

unconvinced that paragraph (3) plainly requires EPA to

consider adjusting the point of obligation each year. See

Valero Energy Corp. v. EPA, No. 7:17-cv-00004-O, 2017 WL

8780888, at *4 (N.D. Tex. Nov. 28, 2017) (holding that “there

is no clear statutory mandate . . . obligating [EPA] to evaluate

or adjust . . . what entities are ‘appropriate[ly]’ forced to

comply with” the annual renewable fuel obligations

49

(alterations in original) (quoting 42 U.S.C.

§ 7545(o)(3)(B)(ii)(I))). Accordingly, we conclude that the

meaning of “as appropriate” in paragraph (3) is ambiguous and

turn now to whether EPA’s construction is “based on a

permissible construction of the statute.” Chevron, 467 U.S. at

843.

The difficulty of squaring the Coffeyville Petitioners’

reading of “as appropriate” with the structure and purpose of

the statute convinces us of the reasonableness of EPA’s

interpretation. As a structural matter, the RFS program

contains not only “annual” volumetric determinations, Conc.

Op. 1, but also a slew of compliance provisions that are not

annually re-determined. As a practical matter, the point of

obligation is the foundational “compliance provision” of the

entire renewable fuels program; EPA could not “ensure” that

applicable volumes of renewable fuels are introduced into the

nation’s transportation fuel supply without designating the

parties responsible for carrying the renewable fuel standards

into operation. Id. § 7545(o)(2)(A)(i). To that end, in writing

the compliance provisions, EPA placed the renewable fuel

obligation on the entities at the head of the United States supply

chain for nonrenewable fuels—domestic refiners, and

importers of fuel refined elsewhere. See 72 Fed. Reg. at

23,923–24. After additional consideration, EPA in 2010

adhered to that decision. See 75 Fed. Reg. at 14,721–22

(codified at 40 C.F.R. § 80.1406(a)(1)); see also Monroe

Energy, 750 F.3d at 912. No one challenged EPA’s decision

in 2007 or 2010, and EPA declined to revisit the issue in

response to comments in the 2017 annual rulemaking urging it

to shift the 2017 point of obligation to blenders. See Response

to Comments at 542, Coffeyville J.A. 761.

The focus of the annual rulemakings, in contrast, is to

translate the applicable volumes—as specified in paragraph

(2), or set according to the process there described—into

50

percentage requirements for each renewable fuel. 42 U.S.C.

§ 7545(o)(3)(B)(ii). It would be strange indeed if Congress

required EPA, as it went about its annual quantitative standard-

setting duties, also to rethink a choice so basic to the RFS

program’s architecture. This implausibility is illuminated by

the fact that Congress required EPA to facilitate statutory

compliance through a credit trading program, which of

necessity requires some year-to-year stability. See id.

§ 7545(o)(5). EPA responded by setting up the RIN system,

with flexibility anchored to a fixed baseline—the point of

obligation. The compliance system is flexible in that RINs may

be retired in compliance demonstrations not only in the

compliance year during which they were generated, but also

throughout the ensuing compliance year, 40 C.F.R.

§ 80.1427(a)(6), and obligated parties may carry over excess

RINs or RIN deficits from year to year, id. § 80.1427(a)(1),

(5)–(6); see Monroe Energy, 750 F.3d at 913.

Annual changes to the point of obligation could cause

“disparities in RIN-holdings,” leaving formerly obligated

parties with “significantly more RINs, including carryover

RINs, than they desire or can use” and newly obligated parties

with “lower balances than they would desire to protect

themselves against shortfalls in RIN availability or RIN price

volatility.” EPA Denial at 78, Coffeyville J.A. 850. “[A]

change to the point of obligation could also cause volatility in

the [RIN] market,” inhibiting the “ability [of] parties that

possess excess carryover RINs to recover the cost of the RINs

they hold by selling them to other parties.” Id. It is not

plausible that Congress meant EPA to consider uprooting the

baseline of the RFS program every year. The real stretch is that

Congress would have imposed such an onerous and potentially

disruptive duty merely by use of the phrase “as appropriate.”

The Coffeyville Petitioners’ reading is not made any more

plausible by highlighting the likelihood that, on annual

51

consideration of the point of obligation, EPA would only need

to consider recent information, and likely would stay its course.

Even if the point of obligation in fact rarely changed, the mere

“reconsider[ation]” of the framework would “likely cause

delays to the investments necessary to expand the supply of

renewable fuels in the United States.” See EPA Denial at 2,

Coffeyville J.A. 774. EPA reasoned that “fuel[] industry

participants [would] withhold significant investment decisions

until the EPA’s final decision and the fallout from the decision

are known.” Id. at 81–82, Coffeyville J.A. 853–54. Insisting

that the issue be on the regulatory agenda every year would sow

“significant market uncertainty and potential turmoil” into the

RFS program without offsetting benefit. Id.

Furthermore, any requirement that an agency repeatedly

go through a regulatory process on an issue that promises to

draw a regular parade of criticism from interest groups with

ample resources is itself burdensome. See AT&T Corp. v. FCC,

220 F.3d 607, 630–31 (D.C. Cir. 2000). This issue is no

exception. As discussed above, EPA in 2016 and 2017

considered and decided against reopening its point of

obligation rule. In so doing, it received upwards of 18,000

comments and published an exhaustive, 85-page decision. See

EPA Denial at 1–85, Coffeyville J.A. 771–857. “Given the

time pressure associated with its annual standards rulemaking,”

EPA believes it would not be feasible or worthwhile to

undertake such reconsideration annually. Id. at 7 n.10,

Coffeyville J.A. 779. Indeed, as EPA acknowledged at oral

argument, the agency “has been late on [its annual rules]

before,” even “when [it hasn’t] taken up the point of

obligation.” Rec. of Oral Arg. 1:25:44–52. “[A]dd[ing] on

the” duty to reassess the point of obligation annually, EPA tells

us, “would be a significant burden.” Id. at 1:25:55–1:26:05.

Our colleague doubts that EPA’s year-to-year burden would be

appreciable, but we see no ground to question EPA’s judgment

52

to the contrary. It seems unlikely that Congress wrote the

applicability provision in order to heap that annual duty onto

EPA’s plate. It seems even less likely given the absence of

reason to think that yearly second-guessing of program

fundamentals makes sense, or that, when and if the need for a

program restructuring arises, EPA would fail to act. Indeed,

the statute elsewhere explicitly requires EPA to conduct

“periodic reviews of . . . the feasibility of achieving compliance

with the [applicable volume] requirements.” 42 U.S.C. §

7545(o)(11). That provision has not been briefed, but would

appear to require EPA to reconsider the point of obligation if it

concluded that its placement was obstructing compliance.

Finally, EPA’s approach coheres with basic principles of

administrative law. In general, the choice between various

procedural channels lies within the “informed discretion of the

administrative agency.” SEC v. Chenery Corp., 332 U.S. 194,

203 (1947). That discretion properly includes judgments about

the scope of rulemakings and when to relegate ancillary issues

to separate proceedings: “Agencies, like legislatures, do not

generally resolve massive problems in one fell regulatory

swoop.” Massachusetts, 549 U.S. at 524; see, e.g., Grp.

Against Smog & Pollution, 665 F.2d at 1292 (“. . . EPA cannot

soundly be charged with arbitrariness merely because it chose

a separate rulemaking proceeding as the process for proposing

a revised standard in lieu of an undertaking to do so in the

narrower context of the opacity standard proceedings as

petitioners requested.”). Once the agency has resolved an issue

in a separate proceeding, it may defend against related criticism

by “simply refer[ing]” to the other proceeding, so long as the

“reasoning remains applicable and adequately refutes the

challenge.” Bechtel v. FCC, 10 F.3d 875, 878 (D.C. Cir. 1993).

EPA reasonably reads “as appropriate,” in paragraph (3)(B), to

leave undisturbed these background norms of broad but

reviewable procedural discretion.

53

Our holding today does not give EPA the limitless and

unreviewable discretion feared by our colleague. As we have

said, EPA’s determination as to whether it is “appropriate” to

reconsider the point of obligation in the context of an annual

volumetric rulemaking is reviewable for abuse of discretion.

EPA did not abuse its discretion in refusing to do so here.

Indeed, it considered whether to change the point of obligation

rule in a separate, contemporaneous proceeding that yielded a

final order that we also have reviewed and found to be

adequately justified. See supra Part IV.B. We do not address

whether it would be an abuse of discretion for EPA to refuse to

reconsider the point of obligation—in an annual volumetric

rulemaking or otherwise—in extreme circumstances akin to

those posited by our colleague’s hypothetical about the

continuing study of an abolished tort. See Conc. Op. 5.

In sum, we hold that EPA permissibly rejected the claim

that paragraph (3) requires the agency annually to reassess the

point of obligation in the renewable fuel program. Because

EPA has no duty to reconsider the appropriateness of its point

of obligation regulation as part of its yearly determination of

volumetric requirements, it was not arbitrary for EPA to treat

comments complaining that it obligated the wrong parties as

appropriately assessed in a separate proceeding, and beyond

the scope of proceedings for the 2017 volumetric rulemaking.

For these reasons, we deny the Coffeyville Petitioners’ petition.

B. Cellulosic Biofuel Projection

The Coffeyville Petitioners lob a variety of challenges at

EPA’s cellulosic biofuel projection for 2017. Many of these

petitioners, however, raised many of the same arguments

before. See ACE, 864 F.3d at 727–29 (addressing challenges

to EPA’s 2014–16 projection). We rejected those arguments

once—and do so again.

54

First, the Coffeyville Petitioners contend that “EPA’s

[m]ethodology” for projecting cellulosic biofuel production is

invalid because it “[c]hronically [o]verestimates [a]ctual

[p]roduction.” Coffeyville Br. 40. But that argument—that

EPA has “repeatedly . . . overshot the mark,” id. at 41—doesn’t

apply to the methodology EPA actually used here, as we found

in ACE, 864 F.3d at 727–28. As we explained when petitioners

deployed this same argument in challenging the 2014–16

projection, “the majority of EPA’s prior overestimations”

utilized a different methodology—one that we rejected in API,

706 F.3d at 478–81, and that the EPA accordingly abandoned.

ACE, 864 F.3d at 727. The new methodology—the one EPA

used here—has been applied only twice before. At the time

EPA made its final evaluation for 2017, that methodology had

(as detailed in the table below) undershot for 2015 and overshot

for 2016. See Assessment of the Accuracy of Cellulosic

Biofuel Production Projections in 2015 and 2016, EPA-HQ-

OAR-2016-0004-3687, at 1–4 (Dec. 12, 2016), Coffeyville

J.A. 515–18. This is hardly a pattern of chronic overestimation.

EPA Actual

RFS

Estimate Production EPA Record

Compliance

(millions of (millions of Error ** Citation

Year

RINs) RINs)

Q1

Q2 [No Data in the Record]

2015

Q3

Q4 35.00 53.36 - 34.4% J.A. 515

Q1

Q2 J.A.

2016 230.00 198.39* + 15.9%

Q3 516–17

Q4

55

* At the time of EPA’s assessment, the agency had actual RIN

production data for only the first nine months of 2016 (123.99 million

gallons). To calculate actual production for the year, EPA extrapolated the

likely RIN generation for the last three months of the year based on the

historical relation (a multiple of 1.8) between the average quarterly

generation in the first three quarters and that of the last quarter, yielding a

figure of 74.39 million RINs for the last quarter. See Coffeyville J.A. 516–

17.

** The EPA error has been calculated as the difference between the

EPA estimate and actual production, divided by the actual production.

Second, the Coffeyville Petitioners claim that EPA failed

to generate a projection “based on” the cellulosic biofuel

estimate provided by the Energy Information Administration

(EIA), as required by statute. 42 U.S.C. § 7545(o)(7)(D)(i).

That is so, they say, because 96% of EPA’s projected volume

was biogas, a type of cellulosic biofuel that EIA did not include

in its estimate. See Coffeyville Br. 43–44. The problem for

petitioners, however, is that this closely parallels an argument

we rejected in ACE: “[W]e do not agree that EPA failed to

generate projections ‘based on’ the [EIA’s] estimates,” even

though those “estimates did not contain figures for [biogas]

production—production that accounts for the vast majority of

cellulosic biofuel” (“around 90 percent”). ACE, 864 F.3d at

724, 729. Here, as there, EPA showed sufficient “respect” for

EIA’s estimates. Id. at 729. When limited to fuels actually

analyzed by EIA, EPA’s estimates were “very similar” to

EIA’s, id.; see 2017 Rule, 81 Fed. Reg. at 89,758/1, a fact that

the Coffeyville Petitioners do not contest.

Congress demanded no more. Nothing in the statute

required EPA to, as the Coffeyville Petitioners insist, “work[]

with the EIA to develop information” about biogas.

Coffeyville Br. 44. “[T]he Administrator of the Energy

Information Administration shall provide . . . an estimate,” 42

U.S.C. § 7545(o)(3)(A), and EPA shall “respect” it, API, 706

56

F.3d at 478. That’s it. In showing such respect, EPA, of

course, must “understand how EIA derived” its estimate.

Coffeyville Reply Br. 24. But, contrary to the Coffeyville

Petitioners’ contention, EPA did just that. The agency

identified the types of cellulosic biofuels that EIA considered

and then, to test the integrity of its projection, conducted an

apples-to-apples comparison, “limiting the scope of [its]

projection to the companies assessed by EIA.” See 2017 Rule,

81 Fed. Reg. at 89,757–58. Nothing more was required.

Third, the Coffeyville Petitioners object that EPA relied on

“information from the [biogas] industry”—an industry “with a

direct financial interest in the outcome of the rule.” Coffeyville

Br. 45. The Petitioners characterize this as “reliance on

undisclosed information.” Id. But EPA did disclose the

information from the biogas industry—and that the information

came from that industry; it just did so in the aggregate. See

October 2016 Assessment of Cellulosic Biofuel Production

from Biogas (2017), EPA-HQ-OAR-2016-0004-3711, at 2–6

(Dec. 12, 2016), Coffeyville J.A. 536–40. All the agency

withheld was company-specific information, claiming that it

had to withhold such data as confidential business information,

see id. at 7, Coffeyville J.A. 541; see also 40 C.F.R. § 2.211(b),

a claim that petitioners never even attempt to rebut, see Masias

v. EPA, 906 F.3d 1069, 1077 (D.C. Cir. 2018) (“It is not enough

merely to mention a possible argument in the most skeletal

way, leaving the court to do counsel’s work . . . .” (quoting

Schneider v. Kissinger, 412 F.3d 190, 200 n.1 (D.C. Cir.

2005))).

As for the implication of bias, we have previously upheld

EPA’s reliance on “biofuel producers’ own forecasts.” ACE,

864 F.3d at 728; see also API, 706 F.3d at 478 (recognizing

that producers are an “almost inevitable source of

information”). Here, as in ACE, EPA did not “blindly adopt[]

57

the facilities’ own forecasts”; it “performed its own

investigation.” 864 F.3d at 728; see October 2016 Assessment

of Cellulosic Biofuel Production from Biogas, supra, at 4,

Coffeyville J.A. 538 (“To verify the reasonableness of these

projections, EPA compared the projected volume from each

registered facility to the registered capacity of that facility.”).

Petitioners point to no unreasonable step by EPA in its efforts

to address “the uncertainty and unreliability identified by the

[Coffeyville] Petitioners.” ACE, 864 F.3d at 728.

Fourth, the Coffeyville Petitioners protest EPA’s reliance

on “facilities’ actual production in prior years” as a floor for

projecting future cellulosic biofuel production. Coffeyville Br.

46. This was error, they say, because some companies might

cease production. Perhaps so. But, as we said in ACE,

although unforeseen issues “could prevent a producer from

meeting” its prior year’s production, it was “reasonable” for

EPA to expect, as a general matter, “that a company’s output

would grow year-over-year as the company gained

experience.” 864 F.3d at 728. This seems especially true in an

industry with the government’s wind surging at its back. And

even were EPA’s assumption not true for each company, any

one facility’s shortfall, EPA explained, could be “off-set” by

new facilities coming online or existing facilities exceeding the

high end of their projected production range. See Renewable

Fuel Standard Program—Standards for 2017 and Biomass-

Based Diesel Volume for 2018: Response to Comments, EPA-

HQ-OAR-2016-0004-3753, at 444 (Dec. 12, 2016),

Coffeyville J.A. 707. This explanation fulfills EPA’s “duty to

articulate a ‘reasonable and reasonably explained’ approach to

setting the low end of the production ranges.” ACE, 864 F.3d

at 729 (quoting Comtys. for a Better Env’t v. EPA, 748 F.3d

333, 335 (D.C. Cir. 2014)).

58

Fifth, the Coffeyville Petitioners complain that EPA

should have based its cellulosic biofuel projections on “actual”

prior production. Coffeyville Br. 47. But this backward

looking approach would have, in EPA’s view, “ignore[d] the

potential for facilities . . . to increase their fuel production

rates” and would have been “inappropriately conservative” in

light of the “year-over-year increases” that EPA had observed

“in recent years.” 2017 Rule, 81 Fed. Reg. at 89,761/1. We

cannot say that in rejecting such an approach EPA violated “its

duty to take a ‘neutral aim at accuracy.’” ACE, 864 F.3d at 727

(quoting API, 706 F.3d at 476).

For these reasons, we reject the Coffeyville Petitioners’

challenges to EPA’s cellulosic biofuel projection for 2017. See

ACE, 864 F.3d at 729.

C. Cellulosic Waiver

The Coffeyville Petitioners also challenge EPA’s decision

to use less than all of its discretionary cellulosic waiver

authority to lower the 2017 requirements for advanced biofuel

and total renewable fuel. Having reduced the 2017 cellulosic

biofuel requirement by 5.189 billion gallons, EPA had

authority to reduce the advanced biofuel and total renewable

fuel requirements “by the same or a lesser volume.” 42 U.S.C.

§ 7545(o)(7)(D)(i). To decide by how much to reduce these

statutory requirements, EPA first determines what reduction in

the advanced biofuel requirement will yield a “reasonably

attainable” volume, and it then mechanically applies an

equivalent reduction to the total renewable fuel volume. 2017

Rule, 81 Fed. Reg. at 89,752–53. Petitioners do not directly

challenge this methodology. Instead, they argue that EPA

applied it arbitrarily in deciding to waive only 4.719 billion

gallons of the advanced biofuel volume for 2017, rather than

the maximum available waiver of 5.189 billion gallons. We

59

again reject some of their arguments as foreclosed by precedent

and others on their own terms.

First, the Coffeyville Petitioners argue that EPA sought to

justify its 2017 advanced biofuel volume in part by making an

impermissible comparison to the statutory volume set by

Congress for 2022. In response to a comment expressing

concerns about utilization of non-cellulosic advanced biofuels

(which could be food-based) and possible adverse effects on

food availability, EPA noted that its “reasonably attainable”

non-cellulosic advanced biofuel volume for 2017

(approximately 4 billion gallons) was “somewhat higher than

the level envisioned in the statute for 2017” (3.5 billion), “but

well below the level of such fuels Congress expected would be

used by 2022” (5 billion). Response to Comments at 214,

Coffeyville J.A. 689. According to petitioners, “by comparing

2017 volumes with 2022 statutory targets, EPA departed from

Congress’s intent.” Coffeyville Br. 50.

However, nothing in the statute forbids EPA from taking

account of future statutory volumes in this way. Although

Congress specified presumptively applicable volumes for

certain years, it also provided waiver authority to depart from

those volumes. Indeed, the discretionary waiver provision

necessarily empowers EPA to depart upward from the statutory

level of non-cellulosic advanced biofuel for a given year:

reducing the advanced biofuel volume by less than the

reduction in cellulosic biofuel, as section 7545(o)(7)(D)(i)

permits, is mathematically equivalent to increasing the volume

of non-cellulosic advanced biofuels, to “partially backfill for

missing cellulosic biofuel.” 2017 Rule, 81 Fed. Reg. at

89,763/1. As we have noted, the cellulosic waiver provision

“grants EPA ‘broad discretion’ to consider a variety of factors”

in exercising this authority to depart from the presumptive

statutory volumes. ACE, 864 F.3d at 733 (quoting Monroe

60

Energy, 750 F.3d at 915). In this case, while deflecting a

comment about food availability, EPA observed that its non-

cellulosic advanced biofuel volume for 2017—while higher

than the statutory volume envisioned for that year—was lower

than the presumptive statutory volume for the near future. And

it then reasonably concluded that this “somewhat higher

interim volume reflect[ed] [its] assessment that it is appropriate

to allow non-cellulosic advanced biofuels to partially backfill

for missing cellulosic volumes in light of the associated

[greenhouse gas] and energy security benefits.” Response to

Comments at 214, Coffeyville J.A. 689.

Second, the Coffeyville Petitioners argue that EPA failed

to explain its estimate of reasonably attainable 2017 imports of

sugarcane ethanol, a type of non-cellulosic advanced biofuel.

Sugarcane ethanol imports have varied greatly from year to

year, reaching a high of 681 million gallons in 2006 but falling

to 64 million gallons in 2014 and 89 million gallons in 2015.

See 2017 Rule, 81 Fed. Reg. at 89,764. At the time of the 2017

Rule, EPA expected only 76 million gallons to be imported in

2016, but it nonetheless adhered to its proposed estimate of 200

million gallons for 2017—an estimate originally based on

EPA’s judgment that circumstances in 2017 were “not . . .

significantly different” from circumstances in 2016, for which

EPA had also projected 200 million gallons. Id. at 89,763/3.

EPA acknowledged the “recent low import levels,” but also

cited “the difficulty in precisely identifying the reasons” for the

historical “high variability,” given “uncertainty” as to market

factors including “ongoing growth in gasoline demand in

Brazil, and competing world demand for sugar.” Id. at 89,764–

65. The agency accordingly reaffirmed that 200 million

gallons “reflects a reasonable intermediate point between the

lower levels imported recently and the considerably higher

levels that have been achieved in earlier years.” Id. at 89,765/2.

61

There is some force to petitioners’ objection to EPA’s

adherence to an estimate well over double the actual imports in

the three preceding years. However, our review is “particularly

deferential in matters implicating predictive judgments.”

Music Choice v. Copyright Royalty Bd., 774 F.3d 1000, 1015

(D.C. Cir. 2014) (quoting Rural Cellular Ass’n v. FCC, 588

F.3d 1095, 1105 (D.C. Cir. 2009)). We accordingly upheld

EPA’s identical 2016 sugarcane ethanol estimate as

“reasonable and reasonably explained” in ACE, 864 F.3d at 736

(quotation marks omitted). In that case, we held that EPA

reasonably “concluded that ‘a somewhat lower level of imports

will occur than the historic average’ of 300 million,” based on

a similar analysis of market factors. Id. (quoting 2014–16

Rule, 80 Fed. Reg. at 77,478/2). Here, we cannot say that one

more year of low imports made it arbitrary for EPA to adhere

to that same projection for 2017.

Third, the Coffeyville Petitioners object to EPA’s analysis

of supply and demand for regular gasoline (E0) and gasoline

with added ethanol (E15 and E85). However, this analysis

played no role in EPA’s exercise of its discretionary cellulosic

waiver authority under section 7545(o)(7)(D)(i). As noted

above, EPA’s exercise of that authority rested entirely on its

determination of reasonably attainable advanced biofuel

volumes. See 2017 Rule, 81 Fed. Reg. at 89,773–74. The

disputed analysis of E0, E15, and E85 supported EPA’s

separate decision not to invoke its “general waiver” authority,

under section 7545(o)(7)(A)(ii), based on “inadequate

domestic supply.” See generally ACE, 864 F.3d at 705–13.

But in their opening brief, petitioners failed to challenge EPA’s

decision not to invoke that separate waiver provision for 2017.

Although their reply brief gestures at this point, “an argument

first made in a reply brief is forfeited.” Bartko v. SEC, 845

F.3d 1217, 1225 n.7 (D.C. Cir. 2017).

62

Finally, the Coffeyville Petitioners take issue with EPA’s

response to various comments. We have considered these

arguments and find them to be without merit.

For these reasons, we reject the Coffeyville Petitioners’

challenges to EPA’s exercise of its discretionary cellulosic

waiver authority to reduce advanced biofuel and total

renewable fuel volumes for 2017.

VI. 2018 Volume for Biomass-Based Diesel

Since 2012, EPA, acting in coordination with the

Secretaries of Energy and Agriculture, has calculated the

annual applicable volume (also known as the “volume

requirement”) for biomass-based diesel based on a holistic,

backward- and forward-looking consideration of relevant

factors. In particular, it has set the volume requirement “based

on a review of the implementation of the program during

calendar years specified in the tables, and an analysis of” six

statutorily enumerated factors: (1) “the impact of the

production and use of renewable fuels on the environment”; (2)

“the impact of renewable fuels on the energy security of the

United States”; (3) “the expected annual rate of future

commercial production of renewable fuels, including advanced

biofuels in each category (cellulosic biofuel and biomass-based

diesel)”; (4) “the impact of renewable fuels on the

infrastructure of the United States”; (5) “the impact of the use

of renewable fuels on the cost to consumers of transportation

fuel and on the cost to transport goods”; and (6) “the impact of

the use of renewable fuels on other factors, including job

creation, the price and supply of agricultural commodities,

rural economic development, and food prices.” 42 U.S.C.

§ 7545(o)(2)(B)(ii)(I)–(VI).

EPA set the 2018 applicable volume for biomass-based

diesel at 2.1 billion gallons, up from 2.0 billion gallons in 2017,

63

and 1.1 billion gallons above a statutory minimum that

Congress set to plateau at 1 billion gallons as of 2012. 2017

Rule, 81 Fed. Reg. at 89,798/1; see 42 U.S.C.

§ 7545(o)(2)(B)(i)(IV), (v). NBB had asked EPA to set the

biomass-based diesel volume at 2.5 billion gallons, and now

challenges the volume EPA set as arbitrary and capricious and

contrary to the Clean Air Act.

A. NBB’s Standing

Before considering the merits of NBB’s claims, we must

satisfy ourselves that NBB has standing to assert them.

Respondent-Intervenors, the American Fuel & Petrochemical

Manufacturers and the American Petroleum Institute, contend

that NBB lacks standing because, they say, it has not shown

that the 2017 Rule inflicted a cognizable injury on any of its

members.

NBB has associational standing here for the same reasons

we held it did in National Biodiesel Board v. EPA, 843 F.3d

1010, 1015 (D.C. Cir. 2016) (NBB v. EPA), where EPA’s

actions “incentivize[d] . . . compet[ition] with [NBB’s

members’] domestic production.” Here, too, NBB’s members

“compete with” the other industry players EPA’s rule is

designed to affect. Id. at 1016. Recall that biomass-based

diesel is a nested subset of advanced and total renewable fuels,

such that NBB’s members get (1) a market for compelled

buyers of the specified volume of biomass-based diesel, for

which they are the exclusive suppliers, plus (2) a market for

compelled buyers of advanced and other renewable fuels

alongside a broad array of competing suppliers. See supra at

6–8, 11. The 2017 Rule preamble explains that biomass-based

diesel “compet[es] for research and development dollars with

other types of advanced biofuels,” and that, “[b]y establishing

[the biomass-based diesel] volume requirement[] at [a] level[]

64

lower than . . . the expected production of [biomass-based

diesel],” EPA was “creating the potential for some competition

between [biomass-based diesel] and other advanced biofuels to

satisfy the advanced biofuel” applicable volume and providing

“incentives for the continued development of” those

competitors’ fuels. 81 Fed. Reg. at 89,797; see also EPA

Coffeyville Br. 24 (“Above 2.1 billion gallons, biomass-based

diesel will have to compete with other types of advanced

biofuel.”). Such competition will likely “temper to some extent

[biomass-based diesel] prices.” Final Statutory Factors

Assessment for the 2018 Biomass Based Diesel (BBD)

Applicable Volume, EPA-HQ-OAR-2016-0004-3708, at 10

(Dec. 12, 2016) (Supplemental Assessment), Coffeyville J.A.

533. That is a cognizable injury to NBB’s members. See NBB

v. EPA, 843 F.3d at 1015–16; see also Delta Constr. Co. v.

EPA, 783 F.3d 1291, 1299 (D.C. Cir. 2015) (per curiam).

Though NBB failed to identify any of its members—

ordinarily a prerequisite for organizations alleging

associational standing, see Summers v. Earth Island Inst., 555

U.S. 488, 497–98 (2009)—that omission is not fatal here

because NBB’s members comprise “the entire biomass-based

diesel category of the Renewable Fuel Standard[s]” and

represent no other interests. Coffeyville J.A. 134. Consistent

with “the real purpose of the [standing] inquiry—that is, for the

court to be satisfied that the requisite injury really has occurred

or will occur in the future to members of the organization[],”

Pub. Citizen v. FTC, 869 F.2d 1541, 1552 (D.C. Cir. 1989),

there is no need to identify injured members when “all the

members of the organization are affected by the challenged

activity,” Summers, 555 U.S. at 499 (citing NAACP v. Ala. ex

rel. Patterson, 357 U.S. 449, 459 (1958)). Because EPA’s rule

subjects the biomass-based diesel industry to increased

competition, with anticipated pricing effects, NBB “meet[s] the

65

constitutional prerequisites of injury, causation, and

redressability.” NBB v. EPA, 843 F.3d at 1015.

B. Merits of NBB’s Challenges

NBB advances two challenges to the applicable volume

EPA set for biomass-based diesel: First, that EPA erred in

considering the interaction of biomass-based diesel with the

yet-to-be established 2018 advanced biofuel applicable

volume, and second, that EPA’s consideration of the six

statutory factors was arbitrary and capricious and contrary to

law. We reject both claims.

First, EPA reasonably chose a 2018 biomass-based diesel

applicable volume that would “maintain[] support for growth

in [biomass-based diesel] volumes” while also encouraging the

“development of other advanced biofuels.” 2017 Rule, 81 Fed.

Reg. at 89,798/1. Congress directed EPA to consider the

lessons learned from its retrospective “review” of the program,

apply them in its prospective “analysis of” the six statutory

factors, and set a biomass-based diesel volume that will apply

fourteen months in the future. See 42 U.S.C.

§ 7545(o)(2)(B)(ii).

EPA’s approach is consistent with the structure and

purposes of the statute. Congress set a minimum applicable

volume for biomass-based diesel of one billion gallons for each

year from 2012 forward, id. § 7545(o)(2)(B)(i)(IV), (v), while

specifying statutory minimum volumes for the advanced

biofuel category containing biomass-based diesel that grow

year by year to 21 billion gallons by 2022, id.

§ 7545(o)(2)(B)(i)(II), (iii). EPA reasonably concluded that,

by nesting biomass-based diesel together with cellulosic (and

other unspecified) biofuels within the advanced biofuel

category, and specifically charting a higher, steeper, and longer

initial growth curve for advanced biofuel, Congress anticipated

66

that production of other types of advanced biofuels could step

up to help meet the advanced biofuel volume requirement. See

2017 Rule, 81 Fed. Reg. at 89,797/1. EPA also reasonably

concluded that increasing fuel diversity serves one of

Congress’s primary goals in establishing the Renewable Fuel

Standards program: improving the nation’s “energy

independence and security.” See Pub. L. No. 110-140,

preamble; see also 2017 Rule, 81 Fed. Reg. at 89,798/3. EPA

also reasonably anticipated that enhanced competition in the

advanced biofuels market would help “temper to some extent

[biomass-based diesel] prices,” Supplemental Assessment 10,

Coffeyville J.A. 533, thereby ameliorating Congress’s concern

that, with a too-high target volume, the “price of biomass-based

diesel fuel” would “increase significantly,” 42 U.S.C.

§ 7545(o)(7)(E)(ii). And fuel diversity may produce

environmental benefits insofar as certain advanced biofuels,

such as ethanol from food waste, will “likely have significantly

lower impacts on wetlands, ecosystems, and wildlife habitats”

than would greater reliance on biomass-based diesel.

Supplemental Assessment 6, Coffeyville J.A. 529.

NBB’s arguments to the contrary turn on reading the

statutory directive that EPA “review . . . the implementation of

the program during calendar years specified in the tables,” id.

§ 7545(o)(2)(B)(ii), to confine EPA’s consideration to

biomass-based diesel’s statutory volumes and actual

performance, and to prevent EPA from considering other fuel

categories or future years. In particular, NBB takes issue with

EPA’s consideration of the not-yet-finalized 2018 advanced

biofuel applicable volume, which NBB contends led EPA to

set the biomass-based diesel volume too low.

NBB’s objections are not supported by the text or purpose

of the statute. Assuming NBB is right that EPA’s “review of

the implementation of the program” consists of a retrospective

67

assessment, the agency must also conduct “an analysis of” six

statutory factors. Id. § 7545(o)(2)(B)(ii). And those factors

plainly require a prospective assessment—an assessment that

would likely miss “important aspects of the problem,” State

Farm, 463 U.S. at 43, if it ignored the interaction, now and in

the future, of the requirements for all the categories of

renewable fuels. See, e.g., 42 U.S.C. § 7545(o)(2)(B)(ii)(I)

(requiring an “analysis of” the “impact of the production and

use of renewable fuels on,” among other things, “the

environment”). Though EPA set the biomass-based diesel

requirement lower than NBB wished, Congress did not intend

to incentivize growth of biomass-based diesel “at all costs.”

ACE, 864 F.3d at 714 (quoting Am. Express Co. v. Italian

Colors Rest., 570 U.S. 228, 234 (2013)).

NBB objects that setting the 2018 biomass-based diesel

applicable volume below expected production might lead to a

depressed advanced biofuel volume for 2018. But the agency

specifically anticipated “that the 2018 advanced biofuel

requirement will be larger than the 2017 advanced biofuel

volume requirement.” 2017 Rule, 81 Fed. Reg. at 89,798/1.

EPA has never set the biomass-based diesel applicable volume

at the “maximum potential production” level, id. at 89,799/3,

yet the “growing supply of” biomass-based diesel has

consistently “allowed EPA to establish higher advanced

biofuel” applicable volumes, id. at 89,797/3. EPA opted for

“allowing room within the advanced biofuel volume

requirement for the participation of non-[biomass-based diesel]

advanced fuels” as a reasonable way “to encourage the

development and production of a variety of advanced biofuels

over the long term without reducing the incentive for [biomass-

based diesel] beyond the [biomass-based diesel applicable

volume] in 2018.” Id. at 89,797–98.

68

Second, in setting the 2018 biomass-based diesel

applicable volume, EPA reasonably compared the advantages

and disadvantages of biomass-based diesel to those of other

fuels. NBB contends that the statute confines EPA to assessing

advantages of biomass-based diesel over petroleum, not

considering other renewable fuels, and that the agency failed to

“meaningfully” consider the six factors. NBB Br. 9–10. Both

arguments miss the mark.

NBB suggests that, because the statute “was intended to

‘increase the production of clean renewable fuels’ as a

substitute for petroleum fuel,” id. at 21 (quoting Pub. L. No.

110-140, preamble), the only relevant comparison is to

petroleum, not to other categories of renewable fuel. But NBB

identifies nothing in section 7545(o)(2)(B)(ii) or any other

section that requires EPA to assess the performance of a

particular renewable solely by reference to petroleum fuel. Its

analysis would require us to read the term “renewable fuels”

used throughout section 7545(o)(2)(B)(ii) to refer to the single

renewable fuel being analyzed, even though the statutory

definition of “renewable fuel” includes all types of renewables.

See 42 U.S.C. § 7545(o)(1)(J). And if EPA could compare the

benefits of each specific fuel only to petroleum, it might be

unable to set rational applicable volumes for each specified

category of renewable fuel after 2022, when the statute no

longer sets any specific volumes. See id. § 7545(o)(2)(B)(iii)–

(v). EPA could easily conclude, for example, that each

renewable fuel had a lower “impact . . . on the environment”

than petroleum fuel, see id. § 7545(o)(2)(B)(ii)(I), but, no

matter their differing merits in serving the statute’s goals, the

agency would be barred from making relative judgments

among renewable fuel categories.

NBB also argues that EPA failed to give meaningful

consideration to the six statutory factors, and instead “pre-

69

determined the outcome,” NBB Br. 20, but the record shows

otherwise. EPA considered in detail how setting the biomass-

based diesel applicable volume at a level higher or lower than

2.1 billion gallons would affect the six statutory factors. See

2017 Rule, 81 Fed. Reg. at 89,798–99. EPA further elaborated

its analysis of the factors in an 11-page supplemental

memorandum evaluating effects of its proposed biomass-based

diesel volume on renewable fuel production rates, the

environment, and the economy. See Supplemental Assessment

1–11, Coffeyville J.A. 524–34. EPA concluded that, over the

long term, “[a] variety of different types of advanced biofuels,

rather than a single type such as [biomass-based diesel], would

positively impact energy security . . . and increase the

likelihood of the development of lower cost advanced biofuels

that meet the same [greenhouse gas] reduction threshold as

[biomass-based diesel].” Supplemental Assessment 3,

Coffeyville J.A. 526. EPA thus concluded that the statutory

factors supported its biomass-based diesel applicable volume.

See 2017 Rule, 81 Fed. Reg. at 89,798/3.

At bottom, NBB’s objections rest on a policy

disagreement: NBB urges that, instead of setting a level that

would support continued investment in the biomass-based

diesel industry while also encouraging producers of other types

of advanced biofuel to compete to satisfy the 2018 advanced

biofuel applicable volume at lower cost, EPA should have

reserved to biomass-based diesel alone a volume nearer to that

industry’s maximum production potential. But NBB’s

proposed “simple solution”—that EPA should have “set[] a

meaningful [biomass-based diesel] volume” while planning to

“increas[e] the 2018 advanced-biofuel volume to provide room

for the production of other advanced biofuels when it set that

volume a year later,” NBB Br. 23—describes what EPA

actually did. A mere disagreement with the particular

calibration of a line drawn in the exercise of an agency’s

70

reasonable judgment is no basis to invalidate a rule. Therefore,

we deny NBB’s petition.

VII. Conclusion

For these reasons, the petitions for review are denied.

So ordered.

WILLIAMS, Senior Circuit Judge, concurring in part and

concurring in the judgment:

The Clean Air Act’s Renewable Fuel Program operates on

an annual cycle. It provides annual credits, authorizes annual

waivers, and calls for annual reviews, see, e.g., 42 U.S.C.

§ 7545(o)(5), (7), (10)—all to implement Congress’s annual

goals, see id. § 7545(o)(2)(B).

Each year, as part of this annual affair, the Environmental

Protection Agency embarks on an elaborate rulemaking. Id.

§ 7545(o)(3)(B). In doing so, it receives an annual estimate of

the total volume of fuel to be sold to inform it in setting the

annual “renewable fuel obligation,” id. § 7545(o)(B)(i), which

“shall . . . be applicable to refineries, blenders, and importers,

as appropriate,” id. § 7545(o)(3)(B)(ii)(I). So EPA is to specify

appropriateness among those three categories. But

“appropriate” as of when?

Coffeyville Petitioners say appropriate as of the annual

rulemaking.

But EPA says appropriate as of the last time EPA happened

to consider the issue, no matter how many years earlier that

was. The initial determination sticks for “all years,” EPA says,

“unless and until” EPA chooses, in its “discretion,” to

“undertake [an] annual reevaluation[].” Denial of Petitions for

Rulemaking to Change the RFS Point of Obligation, EPA-HQ-

OAR-2016-0544-0525, at 7 (Mar. 13, 2018) (“EPA Denial”),

J.A. 779; see also EPA Br. 66 (claiming “discretion” to decide

“whether, how, and when” it will “reconsider its initial

designation”). Even when affected parties point to a series of

market “disparities” that they say have developed and render

the earlier determination “not appropriate,” and point to

§ 7545(o)(3)(B)(ii)(I) as entitling them to a fresh

determination, see, e.g., Valero Energy Corporation

2

Comments, EPA-HQ-OAR-2016-0004-1746, at 1, 14 (July 11,

2016), J.A. 138, 151, EPA claims that that section does nothing

of the sort, see EPA Denial at 8, J.A. 780 (asserting full

“discretion” to decide “when” and “under what circumstances”

it will consider the issue). In Part V.A of the court’s opinion,

my colleagues accept EPA’s theory. I, however, disagree. So

while I otherwise join the court’s opinion in full, I cannot joint

Part V.A—though I do, in the end, concur in the judgment.

* * *

At the risk of oversimplifying, we can boil this annual

process down to three steps.

First, the annual goal. Congress sets annual (steadily

increasing) goals for the volume of renewable transportation

fuel to be sold or introduced into commerce in the United

States, with special targets for some subsets of renewable fuel.

42 U.S.C. § 7545(o)(2)(B)(i).

Next, the annual estimate. The Energy Information

Administration projects the total volume of transportation fuel

that will be sold into commerce in a given year (as well as

volumes of biomass-based diesel and cellulosic biofuel). 42

U.S.C. § 7545(o)(3)(A); see, e.g., Letter from Adam Sieminski,

Administrator, U.S. Energy Information Administration, to

Gina McCarthy, Administrator, U.S. Environmental Protection

Agency, EPA-HQ-OAR-2016-0004-3646 (Oct. 19, 2016), J.A.

494.

Finally, the annual obligation. This is set by EPA during

the agency’s annual rulemaking. And it is expressed in terms

of a single percentage of transportation fuel sold into commerce

(the “renewable fuel obligation”) by any obligated party

(regardless of category). 42 U.S.C. § 7545(o)(3)(B)(ii); see,

e.g., Renewable Fuel Standard Program: Standards for 2017

3

and Biomass-Based Diesel Volume for 2018, 81 Fed. Reg.

89,746, 89,751/3 (Dec. 12, 2016) (“2017 Rule”). The basic

idea is this: If EPA knows (i) the annual goal for the volume of

renewable fuel introduced into commerce (see step one above),

and (ii) the annual estimate for the total volume of fuel to be

introduced into commerce (see step two above), then EPA—

after filling in any gaps in the goals left by Congress, see 42

U.S.C. § 7545(o)(2)(B)(ii), and making any necessary

adjustments to the estimates provided by the Energy

Information Administration, see id. § 7545(o)(3)(A)—can set

the minimum percentage of renewable fuel that must be

introduced into commerce by “obligated parties.” If everything

works out well, Congress’s annual goal should, more or less,

be met.

But who are these “obligated parties”? Under the Act,

EPA must tell us. The first among the three “Required

elements” of the annual determination is that it “be applicable

to refineries, blenders, and importers, as appropriate.” 42

U.S.C. § 7545(o)(3)(B)(ii)(I) (emphasis added).

Even though EPA “determine[s] and publish[es]” the

annual obligation anew “[e]ach [] calendar year[],” 42 U.S.C.

§ 7545(o)(3)(B)(i), since 2010 it hasn’t considered what parties

are “appropriate” to obligate. Regulation of Rules and Fuel

Additives, 75 Fed. Reg. 14,670, 14,722 (Mar. 26, 2010); see

also Regulation of Fuels and Fuel Additives, 72 Fed. Reg.

23,900, 23,923/2 (May 1, 2007). Rather, year in and year out,

the agency has simply “indicated,” “in passing,” that the

renewable fuel obligation “would apply to ‘. . . producers and

importers,’” “consistent with [its] preexisting” determination.

EPA Br. 69–70 (quoting 2017 Rule, 81 Fed. Reg. at 89,746/2).

That’s it. In my view, however, the language of the statute

requires more. EPA’s contrary reading seems to me to go

unreasonably “beyond the meaning that the statute can bear.”

U.S. Postal Serv. v. Postal Regulatory Comm’n, 886 F.3d 1253,

4

1255 (D.C. Cir. 2018) (quoting MCI Telecomm. Corp. v. AT&T

Co., 512 U.S. 218, 229 (1994)).

* * *

The key provision says, “[n]ot later than November 30 of

each [] calendar year[],” EPA “shall determine and publish in

the Federal Register . . . the renewable fuel obligation.” 42

U.S.C. § 7545(o)(3)(B)(i). The first of the “Required

elements” of that annual obligation is that it shall “be applicable

to refineries, blenders, and importers, as appropriate.” Id.

§ 7545(o)(3)(B)(ii)(I).

This much tells us a few things. First, Congress required

EPA to set the renewable fuel obligation annually. That feature

of the requirement pretty clearly indicates a congressional

expectation of possible year-to-year variation in all the

mandatory elements—not merely in the percentage chosen

(which is addressed in subclauses (II) and (III)). Second, one

explicitly required element of this annual determination is a

selection among “refineries, blenders and importers,” a

selection that must be “appropriate.” Taken together, the Act

seems inevitably to require EPA to apply (at least) some

thought to the issue of what market sectors should be

obligated—thought that the agency must apply each time it sets

the annual obligation. After all, the term “appropriate”

“naturally and traditionally includes consideration of all the

relevant factors,” not just a recitation that some time ago the

agency considered the factors that it then thought relevant.

Michigan v. EPA, 135 S. Ct. 2699, 2707 (2015) (emphasis

added) (quoting White Stallion Energy Center, LLC v. EPA,

748 F.3d 1222, 1266 (D.C. Cir. 2014) (Kavanaugh, J.,

concurring in part and dissenting in part)). The agency, in other

words, must “exercise its discretion to choose among the

options” that Congress has given it, Maj. op. 45 (quoting Kisor

5

v. Wilkie, 139 S. Ct. 2400, 2449 (2019) (Kavanaugh, J.,

concurring in the judgment)), not “explain[]” why, in the

agency’s opinion, it’s “appropriate” not to choose among the

options that Congress has given it, id.; see Response to

Comments, EPA-HQ-OAR-2016-0004-3753, at 542 (Dec. 12,

2016), J.A. 761 (declaring the point-of-obligation “issue”

“beyond the scope of this rulemaking”).

Suppose a law school charter—adopted at the school’s

founding in 1920—calls on the dean to annually set a “tort

credits obligation,” consisting of a minimum number of credit

hours students must devote to certain tort subjects; the dean is

to make the obligation “applicable to negligence, defamation,

battery, and alienation of affections, as appropriate.” The first

dean, in 1921, sets the obligation at three credit hours per

subject—and applies it to all the subjects. For the 2020–21

academic year, the tenth dean likewise duly requires students

to devote at least three credits hours to those same subjects—

including alienation of affections. Students understandably

protest, since that tort is now a bygone relic. See Fitch v.

Valentine, 2005-CA-01800-SCT (¶¶ 79–81) (Miss. 2007)

(Dickinson, J., concurring), 959 So. 2d 1012, 1036 (noting 31

states have “completely abolished” it). But the dean adamantly

refuses even to consider their entreaties, “explain[ing]” (Maj.

op. 45) they’re “beyond the scope” (J.A. 761) of topics relevant

to the annual credit determination, which, after all, is perfectly

“consistent with [a] preexisting” 1921 determination that that

application was “appropriate” (EPA Br. 70). EPA’s reasoning

(on the procedural point—whether or not the phrase

“applicable . . . as appropriate” requires it to consider the issue)

is, in essence, as startling as the dean’s. Never mind whether,

as a substantive matter, studying the tort—or exempting

blenders—is actually “appropriate.” Cf. Maj. op. 52. EPA tells

us it need not even address the point—ever again.

6

EPA’s response does more to hurt than to help its cause.

The agency points us to similarities between the provision

we’ve been discussing, § 7545(o)(3)(B)(ii)(I), and

§ 7545(o)(2)(A)(iii)(I), which I’ll call the “compliance

provision.” The two echo each other, see Oral Arg. Tr. 70:19–

25, both using the “applicable . . . as appropriate” formulation.

Annual determination, 42 U.S.C. § 7545(o)(3)(B)(i), (ii)(I):

[E]ach . . . calendar year[] . . . , the Administrator of the

Environmental Protection Agency shall determine and

publish in the Federal Register . . . the renewable fuel

obligation . . . . The renewable fuel obligation . . . shall . . .

be applicable to refineries, blenders, and importers, as

appropriate.

Compliance provision, 42 U.S.C. § 7545(o)(2)(A)(i), (iii)(I):

Not later than [August 8, 2006], the Administrator shall

promulgate regulations . . . . [T]he regulations . . . shall

contain compliance provisions applicable to refineries,

blenders, distributors, and importers, as appropriate . . . .

As EPA reads the two, the agency may define the point of

obligation once—while announcing the compliance provisions

at the outset of the program. See EPA Br. 66. Congress’s

command to make the annual renewable fuel obligation

“applicable . . as appropriate” is simply, in the agency’s view,

a cross-reference back to the “applicable . . . as appropriate”

determination made by EPA at the outset in its adoption of

compliance regulations. See, e.g., id. at 69–70; Oral Arg. Tr.

70:19–71:15, 72:13–24, 73:16–74:13.

The agency’s reading, however, seems utterly implausible.

When Congress uses “identical words” in “different parts of the

same statute,” we normally infer that those words carry “the

same meaning.” Henson v. Santander Consumer USA Inc., 137

7

S. Ct. 1718, 1723 (2017) (quoting IBP, Inc. v. Alvarez, 546 U.S.

21, 34 (2005)). So if “applicable . . . as appropriate,” in the

context of setting the compliance regulations, means (as

everyone agrees it means) that EPA is to contemporaneously

assess the appropriateness of its decision, then the same phrase,

in the context of setting the annual renewable fuel obligation,

must mean the same thing: EPA is to make a contemporaneous

assessment of appropriateness—rather than, as the agency

implausibly claims, treat a decision made long ago as

dispositive for the present.

The majority responds—somewhat bafflingly—that

nothing in the phrase “applicable . . . as appropriate” indicates

“when or in what context EPA must make the appropriateness

determination.” Maj. op. 46 (emphasis added). But that can’t

be right. Imagine a daycare advertises that it will dress kids for

recess, “as appropriate.” Would any reasonable speaker of

English really harbor any doubt as to whether there existed a

“particular temporal” connection between the selection made

and the selection’s appropriateness? Id. at 45. Surely parents

would be surprised to learn that the school’s clothing selection

for a snowy, December day was not “appropriate” in light of

the then-pounding blizzard, but, rather, was “appropriate” in

light of the sunshine from six months earlier, when the daycare

first opened.

In fact, had Congress wanted EPA to readopt a prior

determination, without any contemporaneous analysis as to

appropriateness, “it could easily have chosen clearer language”

to do just that. NLRB v. SW General, Inc., 137 S. Ct. 929, 939

(2017). Related provisions of the same statute provide

examples of such straightforward wording. An obvious

possibility would be to replace “applicable to refineries,

blenders, and importers, as appropriate,” with “applicable to

Obligated Parties (as defined by the Administrator under 42

U.S.C. § 7545(o)(2)),” thus using the pattern adopted in

8

§ 7545(h)(1), (k)(3)(B)(i). Another obvious way of expressing

what EPA says Congress meant would have been to modify

“refineries, blenders, and importers” with the phrase, “in

conformity with the compliance provisions established by the

Administrator,” thus paralleling the approach of § 7545(b)(2).

Both formulations, relying on a past participle, easily invite the

construction that EPA prefers—allowing the administrator to

rely on a decision made at some unspecified time in the past.

“The fact that [Congress] did not adopt [any of these] readily

available and apparent alternative[s] strongly supports rejecting

[EPA’s] reading.” Knight v. Commissioner, 552 U.S. 181, 188

(2008).

Further, rather than using such easy alternatives, Congress

chose language that, as read by EPA, makes a mess of virtually

all of § 7545(o)(3)(B)(ii). Again, subclause (I) requires the

“renewable fuel obligation” to “be applicable to refineries,

blenders, and importers, as appropriate.” 42 U.S.C.

§ 7545(o)(3)(B)(ii)(I). If Congress had envisioned EPA

“identif[ying] the ‘appropriate’ obligated parties” in its exercise

of the compliance provision (§ 7545(o)(2)(A)(iii)(I)), rather

than of this clause, as EPA says it did, see EPA Br. 7, then

subclause (I) would be doing no work at all—contrary to the

“principle of statutory construction that we must ‘give effect, if

possible, to every clause and word of a statute,’” Williams v.

Taylor, 529 U.S. 362, 404 (2000) (quoting United States v.

Menasche, 348 U.S. 528, 538–39 (1955)).

EPA and the majority respond that subclause (I) is needed

to “clarify[]” that distributors—who can be subjected to the

compliance provisions—“cannot be” subjected to the

renewable fuel obligation. Oral Arg. Tr. 75:9–12 (emphasis

added); see also Maj. op. 47. Compare 42 U.S.C.

§ 7545(o)(2)(A)(iii)(I) (providing that the compliance

provisions shall be “applicable to refineries, blenders,

distributors, and importers, as appropriate” (emphasis added)),

9

with id. § 7545(o)(3)(B)(ii)(I) (providing that the renewable

fuel obligation shall be “applicable to refineries, blenders, and

importers, as appropriate”). But the need for clarity could be

attributed to “most superfluous language.” SW General, 137 S.

Ct. at 941. And if clarity were actually Congress’s goal, if all

Congress wanted to do in subclause (I) was exclude

“distributors” from the universe of potential obligated parties,

Maj. op. 47, it chose an exceedingly odd way of getting there:

inserting into an annual exercise the task of indicating what

entities are “appropriate” targets for the renewable fuel

obligation. Wouldn’t it have been more straightforward to just

reference EPA’s prior determination, and then directly state—

for the purpose of clarity—that the renewable fuel obligation

may not apply to “distributors”?

In any case, it’s hard to see what distributor-based

obscurity EPA sees a need for subclause (I) to correct. Because

the renewable fuel obligation concerns only fuel that is “sold or

introduced into commerce in the United States,” 42 U.S.C.

§ 7545(o)(2)(A)(i), (o)(3)(B)(ii)(II) (emphasis added), the

obligation applies, for any gallon of fuel, only once—i.e., when

the fuel enters the American economy upstream, not when

distributors transport the same fuel downstream.

Once the sale or introduction “into” commerce is

complete—once a given unit of fuel is already flowing through

American commerce—that same unit of fuel cannot be sold or

introduced “into” American commerce again; it’s already there.

While one, for example, might say that a fuel line, which carries

fuel from a car’s tank to its engine, carries fuel “in” the car, no

one would say that it carries fuel “into” the car. So too, while

one might say that a distributor, which transports fuel from the

economy’s refineries to its retailers, see 40 C.F.R. § 80.2(l);

EPA Denial at 9, J.A. 781, transports fuel “in” the economy, no

one would say that it transports (or sells or introduces) fuel

“into” the economy; again, the fuel is already in the relevant

10

process. Congress itself recognizes the distinction, referring to

fuel that is “sold or introduced into commerce,” 42 U.S.C.

§ 7545(o)(2)(A)(i), (o)(3)(B)(ii)(II) (emphasis added), and fuel

that is “sold or distributed in . . . commerce,” id. § 7545(u)(4)

(emphasis added). Because distributors do only the latter—

they move fuel “in,” not “into,” commerce—there is nothing

for subclause (I) to clarify. These downstream intermediaries

can never fall within the universe of potentially obligated

parties.

My colleagues don’t claim to disagree; at most, they

declare it “non-obvious” that “distributors cannot be subjected

to the point of obligation.” Maj. op. 47. But what’s “non-

obvious” about it, even if we put the plain meaning of “into

commerce in the United States” aside? That phrase appears

throughout the statute—and can’t possibly include

downstream, distributor transactions. Take the statutory

provision concerning the Energy Information Administration,

which says that the agency must provide EPA with an estimate

of the “volume[] of transportation fuel . . . projected to be sold

or introduced into commerce in the United States.” 42 U.S.C.

§ 7545(o)(3)(A). Does Congress really expect that estimate—

and the regulatory burdens “based on” that estimate, id.

§ 7545(o)(3)(B)(i), (o)(7)(D)(i)—to radically fluctuate based

on the frequency of transactions among the distributors that

happen to line the distribution network? So if every distributor

starts selling to another distributor, or several of them, the

calculated volume of fuel “sold or introduced into commerce in

the United States” would balloon overnight? I doubt it.

EPA, it seems, shares my skepticism. The agency itself

describes the renewable fuel obligation, not in terms of

downstream intermediaries, like distributors, but in terms of the

initial, upstream players—those “responsible for introducing

[fuel] into the domestic gasoline pool.” 72 Fed. Reg. at

23,904/1 (emphasis added). Indeed, when defining the

11

renewable fuel obligation, EPA speaks not of sales that happen

to occur, distributor-to-distributor, along the supply chain, but

only of initial injections into U.S. commerce as a consequence

of the upstream “produc[tion]” or “import[ation]” of

transportation fuel. 40 C.F.R. § 80.1407(a), (b).

What about blenders, asks the majority? Aren’t they

potentially obligated parties, even though they, like

distributors, handle fuels that have already been “introduce[d]”

into U.S. commerce by other upstream entities, like refineries?

Maj. op. 46–47. Yes, of course, they are. But that’s because

blenders—unlike distributors—are the ones who initially sell

or introduce various types of finished transportation fuel “into

commerce in the United States.” E15, for instance, a blend of

85% gasoline, 15% ethanol, generally enters “into” American

commerce at the hands of a blender—the entity that actually

blends the various components. Just ask EPA, which

references the “ethanol blenders that introduce E15 into

commerce.” 76 Fed. Reg. 44,406, 44,410/3 (July 25, 2011). A

distributor, in contrast—and by definition, whether that’s a

“post-enactment regulat[ory]” definition, Maj. op. 47, or a pre-

enactment dictionary definition—never introduces anything

“into” commerce. It only distributes (i.e., “transports” or

“deliver[s]”) finished transportation fuel, such as E15, from one

point to another. See 40 C.F.R. § 80.2(l); Webster’s Third New

International Dictionary 660 (1961) (defining “distribute”). So

subclause (I), as EPA reads it, is, in fact, a superfluity, because

the agency could not place the point of obligation on

distributors whether that clause existed or not.

The muddle generated by EPA’s reading doesn’t end there.

Consider the effect on subclause (III). That provision provides

that the “renewable fuel obligation . . . shall . . . consist of a

single applicable percentage that applies to all categories of

persons specified in subclause (I).” 42 U.S.C.

§ 7545(o)(3)(B)(ii)(III). But if EPA is right, and the point of

12

obligation is determined, not under subclause (I), but under the

compliance provision, why does Congress take such a

circuitous route to get there—a reference in subclause (III) to

subclause (I), which, in turn, in EPA’s reasoning (but without

linguistic underpinning), refers back to the compliance

provision? Couldn’t Congress in subclause (III) have just

alluded to decisions made by EPA under the compliance

provision directly? Cf., e.g., 42 U.S.C. § 7545(o)(4)(A). EPA

doesn’t say.

Instead, the agency puts essentially all its eggs in the

compliance provision basket. EPA argues, first and foremost,

that its power to promulgate compliance provisions is broad

and includes the power to set the point of obligation. And

“nothing,” it says, requires it to “reconsider” that

determination. See, e.g., EPA Br. 67–68. My colleagues offer

a similar thought, claiming that Congress knew how to call for

a “redo” if that is what it really wanted. Maj. op. 48. Both

arguments, however, miss the point. When Congress mandates

an annual “determin[ation]” in 42 § 7545(o)(3)(B)(ii), there is

nothing to be redone or reviewed. The determination must

happen anew each year, and the specific instruction to apply

that determination “to refineries, blenders, and importers, as

appropriate,” controls, id. § 7545(o)(3)(B)(ii)(I); any general

authorization to promulgate compliance provisions (including,

I’ll assume, license to not “reconsider” them) must yield to that

specific instruction. See SW General, 137 S. Ct. at 941 (“[I]t is

a commonplace of statutory construction that the specific

governs the general.” (alteration in original) (quoting RadLAX

Gateway Hotel, LLC v. Amalgamated Bank, 566 U.S. 639, 645

(2012)).

“[B]asic principles of administrative law,” unfortunately

for the majority, only further erode EPA’s position. Maj. op.

52. We “generally ‘presume[] that Congress expects it statutes

to be read in conformity with the[] [Supreme] Court’s

13

precedents.’” Porter v. Nussle, 534 U.S. 516, 528 (2002)

(second alteration in original) (quoting United States v. Wells,

519 U.S. 482, 495 (1997)). And those precedents make clear

that an agency, when exercising its congressionally delegated

authority, must “consider [every] important aspect of the

problem.” Motor Vehicle Mfrs. Ass’n of U.S. v. State Farm

Mutual Ins. Co., 463 U.S. 29, 43 (1983). Failure to do so

“would be arbitrary and capricious.” Id. With that background

in mind, it “would be strange indeed” if Congress really

expected EPA, year in and year out, to set the renewable fuel

standards for the entire economy, yet allowed the agency—sub

silentio—to do so without considering ever again whether a

“foundational” element of the regulatory program was

“appropriate.” Maj. op. 49.

Retreating from the statutory language, EPA claims that

reading the Act to require it to appropriately identify the point

of obligation each year would be inconsistent with Congress’s

“purpose.” Specifically, the agency says, it would “reduce the

regulatory certainty required for private parties to plan for

growth.” EPA Br. 72. But EPA’s fears are vastly overblown.

Its concern about upsetting investment-backed expectations is

a reason to not change the point of obligation; it is not a reason

to not consider doing so. The same goes for my colleagues’

concerns about the credit trading program, see Maj. op. 50,

even if that program really does require (as my colleagues seem

to assume it does) rock solid stability in the point of

obligation—a dubious proposition, given that credits are held

individual-entity-by-individual-entity, so that shrinkage or

swelling of the number of covered entities has no impact on the

needed computations. EPA’s duty is to “articulate a

satisfactory explanation for its action,” State Farm, 463 U.S. at

43—an explanation that must consider the industry’s

(including the credit traders’) reliance on a prior determination,

see, e.g., FCC v. Fox Television Stations, Inc., 556 U.S. 502,

515 (2009) (explaining that it “would be arbitrary and

14

capricious to ignore” the fact that a “prior policy has

engendered serious reliance interests”); Nat’l Cable &

Telecomms. Ass’n v. FCC, 567 F.3d 659, 670 (D.C. Cir. 2009)

(similar). In fact, given the substantial reliance interests at

stake, along with the agency’s prior findings, it seems likely

that (in the absence of significantly changed circumstances or

a compelling new analysis) EPA would be able to make rather

short work of the annual analysis. In most years, the prior

analyses and the reliance interests would probably dictate the

conclusion.

In any event, especially when the alleged downside of

petitioners’ claim is so chimerical, our “role is not to ‘correct’

the [statutory] text so that it better serves [Congress’s]

purposes.” Va. Dep’t of Medical Assistance Servs. v. U.S.

Dep’t of Health & Human Servs., 678 F.3d 918, 926 (D.C. Cir.

2012) (some internal quotation marks omitted) (quoting Engine

Manufacturers Ass’n v. EPA, 88 F.3d 1075, 1089 (D.C. Cir.

1996)). That is a job for Congress.

For these reasons, I respectfully disagree with the panel’s

conclusion, which grants EPA essentially unfettered discretion

as to when—or even if—it will consider the appropriateness of

the point of obligation.

Indeed, the panel, it seems to me, arrived at its conclusion

only by extending to EPA the type of “reflexive” deference that

the Supreme Court has recently criticized. Kisor, 139 S. Ct. at

2415 (quoting Pereira v. Sessions, 138 S. Ct. 2105, 2120 (2018)

(Kennedy, J., concurring)). The Court has made clear that

before we may declare a statute genuinely ambiguous—and,

thus, before we, an Article III court, may surrender to an

executive agency’s (often self-serving) declaration of what the

law means—we must exhaust all the “traditional tools” of

statutory construction. Kisor, 139 S. Ct. at 2415 (quoting

Chevron U.S.A. Inc. v. Natural Resources Defense Council,

15

Inc., 467 U.S. 837, 843 n.9 (1984)). Then and only then—

“when that legal toolkit is empty”—may we “wave the

ambiguity flag.” Id.

The majority, however, in apparent haste to bow to EPA’s

admittedly self-serving declaration of what the law means, see

Maj. op. 51 (describing the “burden[s]” that EPA would rather

avoid), doesn’t actually use any of the tools of statutory

construction in an attempt to discern Congress’s meaning. For

example, besides acknowledging that EPA’s reading of the

phrase “applicable . . . as appropriate” “is not ineluctable,” Maj.

op. 48, the majority has almost nothing to say about that

phrase’s ordinary meaning. Although the majority declares it

“ambiguous,” id. at 49, my colleagues do not offer a single

example of the phrase being used in the way EPA desires—

where the duty to make a selection, “as appropriate,”

(somehow) permits the decisionmaker wholly to ignore the

contemporaneous context of his selection. But see supra pp. 5,

7 (offering examples where EPA’s interpretation makes no

sense). The majority’s treatment of the presumption of

consistent usage isn’t much better. It says that there are

multiple “permissible” ways to ascribe the same meaning to the

same words, but doesn’t offer any, see Maj. op. 46—all the

while overlooking an obvious interpretation that satisfies the

presumption (i.e., EPA must consider the factors that are

relevant at the time of its decision), see supra pp. 6–7. Finally,

the majority writes off the canon against surplusage without

actually finding that the language at issue isn’t superfluous.

The majority avers that a finding of superfluity “rests on a

complicated series of inferences,” Maj. op. 47, but that’s not

unusual, or reason to shy away from wading through the

muddle. Complex regulatory schemes “can sometimes make

the eyes glaze over. But hard interpretive conundrums, even

relating to complex rules, can often be solved.” Kisor, 139 S.

Ct. at 2415. To solve such conundrums, however, we must

embrace the canons of interpretation as the useful tools that

16

they are for discerning Congress’s meaning, not as pests to be

dodged and swatted away in our rush to deference. Here, when

those tools are properly applied, we can discern Congress’s

meaning—which “is the law and must be given effect.”

Chevron, 467 U.S. at 843 n.9.

Nonetheless, I concur in the judgment. As we explain

today with regard to claims brought by the Alon Petitioners,

EPA adequately explained, at around the time it set the annual

obligation for 2017, why it was not “appropriate” (in light of

the facts as they then existed) to change the point of obligation.

See Maj. op., Part IV.B. Although that explanation arose in the

context of a petition for rulemaking—and was thus subject to a

more deferential form of arbitrary and capricious review—I

would hold here (for the same reasons that we give in Part IV.B

of the majority opinion) that EPA’s reasoning was sufficient

even under the deference level that demands more of the

agency.

The difference in our standard of review between an appeal

from the agency’s annual determination under

§ 7545(o)(3)(B)(i), (ii)(I), on the one hand, and an agency’s

conventional duty to entertain a petition for a rulemaking to

revise an existing regulation, on the othe

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