Amicus Curiae Brief — HollyFrontier Cheyenne Refining, LLC, et al., Petitioners v. Renewable Fuels Association, et al.

No. 20-472

IN THE

Supreme Court of the United States

___________

HOLLYFRONTIER CHEYENNE REFINING, LLC, et al.,

Petitioners,

v.

RENEWABLE FUELS ASSOCIATION, et al.,

Respondents.

___________

On Writ of Certiorari to the United States

Court of Appeals for the Tenth Circuit

___________

AMICUS CURIAE BRIEF OF

THE AMERICAN FUEL & PETROCHEMICAL

MANUFACTURERS IN SUPPORT OF

PETITIONERS

___________

RICHARD MOSKOWITZ

MARK W. DELAQUIL

AMERICAN FUEL &

ANDREW M. GROSSMAN

Counsel of Record

PETROCHEMICAL

CHRISTOPHER H. MARRARO

MANUFACTURERS

1800 M Street, NW,

CORY N. BARNES

BAKER & HOSTETLER LLP

Ste. 900 North

Washington, D.C. 20036 1050 Connecticut Ave., N.W.

(202) 844-5474

Washington, D.C. 20036

rmoskowitz@afpm.org (202) 861-1697

agrossman@bakerlaw.com

Counsel for the Amicus Curiae

i

TABLE OF CONTENTS

INTEREST OF THE AMICUS CURIAE ............ 1

INTRODUCTION AND SUMMARY OF

ARGUMENT ................................................... 2

ARGUMENT ........................................................ 3

I. Section 7545(o)(9)(B)(i) Does Not Require

Consecutive Exemptions in all Prior

Compliance Years ........................................... 3

A. The Text ..................................................... 3

B. Statutory Context ...................................... 9

C. The History .............................................. 12

D. Congress’s Logic ...................................... 17

II. The Small Refining Industry is Still

Reeling from the Decision Below ................. 20

CONCLUSION ................................................... 28

ii

TABLE OF AUTHORITIES

Page(s)

Cases

Almendarez-Torres v. United States,

523 U.S. 224 (1998)..............................................10

Ass’n for Cmty. Affiliated Plans v. U.S.

Dep’t of Treasury,

392 F. Supp. 3d 22 (D.D.C. 2019) ........................11

Astoria Federal Savings & Loan Ass’n

v. Solimino,

501 U.S. 104 (1991)................................................9

Auburn Hous. Auth. v. Martinez,

277 F.3d 138 (2d Cir. 2002) ...................................9

Castiglia v. INS,

108 F.3d 1101 (9th Cir. 1997)................................5

Campbell River Timber Co. v. Vierhus,

86 F.2d 673 (9th Cir. 1936)....................................6

Cent. Bank of Denver, N.A. v. First

Interstate Bank of Denver, N.A.,f

511 U.S. 164 (1994)..............................................11

Christopher v. SmithKline Beecham

Corp.,

567 U.S. 142 (2012)................................................5

iii

Credit Suisse Sec. (USA) LLC v.

Simmonds,

566 U.S. 221 (2012)..............................................12

Deal v. United States,

508 U.S. 129 (1993)................................................6

Field v. Mans,

157 F.3d 35 (1st Cir. 1998) ....................................6

Food Mktg. Inst. v. Argus Leader

Media,

139 S. Ct. 2356 (2019)............................................9

Johnson v. U.S. R.R. Retirement Bd.,

969 F.2d 1082 (D.C. Cir. 1992) ..............................8

Lawson v. FMR LLC,

571 U.S. 429 (2014) (Sotomayor, J.,

dissenting) ............................................................10

N.L.R.B. v. General, Inc.,

137 S. Ct. 929 (2017) (Sotomayor, J.,

dissenting) ............................................................16

N.Y. State Dept. of Soc. Servs. v.

Dublino,

413 U.S. 405 (1973)..............................................17

Nat’l Org. of Veterans’ Advocates, Inc. v.

Sec’y of Veterans Affairs,

981 F.3d 1360 (Fed. Cir. 2020) ............................11

Pennsylvania Co. for Ins. v. Rothensies,

146 F.2d 148 (1944) ...............................................6

iv

Renewable Fuels Ass’n v. EPA,

948 F.3d 1206 (10th Cir. 2020)......................17, 18

Robinson v. Shell Oil Co.,

519 U.S. 337 (1997)..............................................10

SEC v. C.M. Joiner Leasing Corp.,

320 U.S. 344 (1943)..............................................17

Sinclair Wyo. Ref. Co. v. EPA,

887 F.3d 986 (10th Cir. 2017)..........................5, 16

Sprietsma v. Mercury Marine,

537 U.S. 51 (2003)..................................................9

United States v. Gonzales,

520 U.S. 1 (1997)....................................................5

United States v. Nordic Village, Inc.,

503 U.S. 30 (1992). .................................................8

United States v. Principie,

531 F.2d 1132 (2d Cir. 1976) .................................6

Zuni Pub. Sch. Dist. No. 89 v. Dept. of

Educ.,

550 U.S. 81 (2007)...............................................16

Legislative Authorities

77 Fed. Reg. 1,320 .....................................................15

17 U.S.C. § 110(6)........................................................7

42 U.S.C. § 1314(h)(2)(A)-(B) ......................................7

42 U.S.C. § 7410(l) ....................................................12

v

42 U.S.C. § 7502(e) ....................................................12

42 U.S.C. § 7545(o)(2) ...............................................19

42 U.S.C. § 7545(o)(5) .................................................2

42 U.S.C. § 7545(o)(9) ..................................... 3, 10, 11

42 U.S.C. § 7545(o)(9)(A) .................................. passim

42 U.S.C. § 7545(o)(9)(B) .................................. passim

42 U.S.C. § 7545(o)(9)(B)(i) ............................... passim

42 U.S.C. § 7545(o)(9)(B)(ii) ........................................4

42 U.S.C. § 7545(o)(9)(B)(iii) .................................4, 11

H.R. Rep. No. 111-278 (2009) ...................................13

Pub. L. No. 114-126, § 2 ..............................................7

S. REP. NO. 111-45 (2009)..........................................13

S. REP. NO. 114-281 (2016)........................................14

Other Authorities

ANTONIN SCALIA & BRYAN GARNER,

READING LAW § 27 (2012) .......................................9

vi

CONG. RESEARCH SERVS., THE

RENEWABLE FUEL STANDARD (RFS):

FREQUENTLY ASKED QUESTIONS

ABOUT SMALL REFINERY EXEMPTIONS

(SRES) (March 2, 2020) .......................................18

DEPT. OF ENERGY, SMALL REFINERY

EXEMPTION STUDY: AN

INVESTIGATION INTO

DISPROPORTIONATE ECONOMIC HARM

(March 2011) ..................................................13, 14

Elliott Blackburn, Marathon Petroleum

to shut two US refineries: Update,

ARGUS MEDIA (Aug. 3, 2020)................................22

EPA Signals New Position on Small

Refinery Exemptions, EPA (Feb. 22,

2021) .....................................................................27

Erwin Seba & Laura Sanicola, Oil

Refiners Face Reckoning as Demand

Plummets, REUTERS (Apr. 2, 2020) .....................22

Extension, Cambridge Online

Dictionary...............................................................7

Extension, Lexico Online Dictionary ..........................8

Extension, Merriam-Webster Online

Dictionary...............................................................7

vii

Letter from Oklahoma Governor J.

Kevin Stitt to EPA Administrator

Andrew Wheeler (Mar. 2, 2020) ..........................24

Letter from Senator John Barrasso et

al. to President Trump (Feb. 27,

2020) .....................................................................23

Letter from Utah Energy Advisor

Robert Simmons to President Trump

(March 5, 2020) ....................................................24

Letter from Wyoming Governor Mark

Gordon to President Trump (Feb. 28,

2020) .....................................................................23

Overview of Small Refinery Exemptions

Data (Table 2), EPA .............................................26

RIN Trades and Price Information

(Annual RIN Sales Report Table),

EPA ......................................................................21

Robert Brelsford, Marathon

Permanently Idles Two US

Refineries, OIL & GAS J. (Aug. 3,

2020) .....................................................................22

Sathya Narayanan, Oil Outlook for

2021 Hit by New COVID-19 Strain:

Reuters Poll, REUTERS (Dec. 31,

2020) .....................................................................25

Short-Term Energy Outlook, ENERGY

INFORMATION ADMINISTRATION (Feb.

9, 2021) .................................................................25

viii

Stephanie Kelly, U.S. Gasoline Refining

Profits Slump to 2008 Levels Amid

Coronavirus Fears, REUTERS (Mar.

16, 2020) ...............................................................22

This Week in Petroleum, ENERGY

INFORMATION ADMINISTRATION (Feb.

18, 2021) ............................................. 15, 21, 24, 25

This Week in Petroleum, ENERGY

INFORMATION ADMINISTRATION (Sept.

2, 2020) .................................................................22

U.S. Petroleum Refining Capacity Falls

to Its Lowest Levels Since May 2016,

ENERGY INFORMATION

ADMINISTRATION (Dec. 10, 2020) .........................25

Webster’s Third New International

Dictionary (1986) ...................................................8

1

INTEREST OF THE AMICUS CURIAE 1

The

American

Fuel

&

Petrochemical

Manufacturers (AFPM) is the leading trade

association for the domestic refining and

petrochemical industry, and its members produce

most of the refined petroleum products and

petrochemicals manufactured in the United States.

Many of AFPM’s members operate small refineries

whose survival depends on the continued availability

of small refinery economic hardship exemptions from

the Renewable Fuel Standards program under the

Clean Air Act. These refineries provide a crucial

source of transportation fuel to local communities

located far from major fuel production and

transportation hubs. AFPM’s members have a strong

and direct interest in ensuring the continued

operation and success of the program’s hardship

exemption provision, which the decision below has

cast into uncertainty.

1 In accordance with Rule 37.6, counsel for the amicus curiae

certifies that no counsel for any party authored this brief in

whole or in part and that no person or entity other than the

amicus curiae, its members, or its counsel made a monetary

contribution intended to fund the brief’s preparation or

submission. Counsel for the amicus curiae further certifies that,

pursuant to Rule 37.3(a), all parties have consented to the filing

of this brief.

2

INTRODUCTION AND

SUMMARY OF ARGUMENT

When Congress enacted the Clean Air Act’s

Renewable Fuel Standards (RFS) program, it

specifically exempted all small refineries for several

years and authorized the Environmental Protection

Agency to issue additional small refinery exemptions

(“hardship exemptions”) “at any time” thereafter on a

showing of disproportionate economic hardship. 42

U.S.C. § 7545(o)(9)(A)-(B). In this way, Congress

recognized that small refineries often lack the

financial resources, infrastructure, and economies of

scale needed to comply with the RFS program’s

general mandate that fuel manufacturers blend

renewable fuels (e.g., ethanol) into their products or

purchase credits known as “Renewable Identification

Numbers” (RINs) on the open market. See id. at

§ 7545(o)(5). Following Congress’s instruction, EPA

has regularly issued exemptions to small refineries

that

demonstrate

disproportionate

economic

hardship, with 32 of the 56 small refineries in the

United States receiving exemptions for compliance

year 2018.

The decision below threatens to impair this

necessary safety valve at a time when the entire fuel

industry is struggling due to the COVID-19

pandemic, causing a double-blow to small refineries,

some of which have already been forced to cease

operations. And it does so based on a backwards

reading of the Clean Air Act that not only disregards

the plain meaning of the term “extension,” but

nonsensically creates a hollow statutory right for

3

small refineries to petition for exemptions that EPA

is bound by statute to deny. This Court should apply

the traditional tools of statutory construction to hold

that the Clean Air Act means what it says: small

refineries are eligible for hardship exemptions any

time they are disproportionately burdened by the RFS

program. Doing so would ensure national uniformity

to the RFS program as Congress intended and

prevent the destruction of an entire sector of the

refining industry.

ARGUMENT

I.

Section 7545(o)(9)(B)(i) Does Not Require

Consecutive Exemptions in all Prior

Compliance Years

Congress could not have been clearer that hardship

exemptions for small refineries are available “at any

time.” Text, context, implementation history, and

logic all demonstrate that Congress intended for

hardship exemptions to be available “at any time” a

small refinery applies for an exemption and EPA

determines that the exemption is justified “based on

disproportionate economic hardship.” 42 U.S.C.

§ 7545(o)(9)(B). The Tenth Circuit plainly erred by

failing to give effect to the statute’s clear language

and Congress’s equally clear intent.

A.

The Text

The hardship exemption provisions of the Clean Air

Act’s RFS program are set forth at 42 U.S.C.

§ 7545(o)(9). The program contains two types of

exemptions from the program’s increasing renewable

volume obligations (RVOs): (A) a temporary

4

exemption for all small refineries until 2011 that

could be extended for at least two years if a study by

the Secretary of Energy determined the small

refineries would be subject to disproportionate

economic hardship under the program; and

(B) exemptions “based on disproportionate economic

hardship.” § 7545(o)(9)(A)-(B). This case, and all

small refinery exemptions to the RFS program in

effect today, concern this second type of exemption

based on economic hardship. For these types of

exemptions, Congress expressly stated that “[a] small

refinery may at any time petition the Administrator

for an extension of the exemption under

subparagraph (A) for the reason of disproportionate

economic hardship.” § 7545(o)(9)(B)(i). Upon receipt of

the petition, the EPA Administrator is directed to act

within 90 days, and to evaluate the petition in

consultation with the Secretary of Energy,

considering the economic factors and findings of

DOE’s prior hardship study. § 7545(o)(9)(B)(ii)-(iii).

Congress afforded these exemptions to small

refineries because it understood the RFS program’s

potential threat to their economic viability and did not

intend the RFS program to wipe out this industry

segment through attrition in years with unfavorable

market conditions. The problem is that small

refineries typically depend solely on RIN-credit

purchases to comply with RFS obligations, and RIN

prices can vary dramatically from year to year. Unlike

larger refineries of transportation fuels, smaller

refineries often lack the financial resources and

appropriate infrastructure needed to blend renewable

fuels cost-effectively or spread out, and recover, their

5

RFS compliance costs across the entire fuel supply

chain. See Sinclair Wyo. Ref. Co. v. EPA, 887 F.3d 986,

989 (10th Cir. 2017) (explaining that “Congress was

aware the RFS Program might disproportionately

impact small refineries because of the inherent scale

advantages of large refineries and therefore created

three classes of exemptions to protect these small

refineries”). Because they generally cannot blend

renewable fuels themselves, small refineries often

have no choice but to purchase variably priced RIN

credits on the open market to satisfy their RFS

obligations.

That is why Congress provided that small

refineries may petition for exemptions “at any time,”

a statutory term that is construed to mean “at any

time at all.” Castiglia v. INS, 108 F.3d 1101, 1103-04

(9th Cir. 1997). It would have made no sense, given

Congress’s express recognition of the economic

hardships that small refineries can suffer in years

with unfavorable market conditions, to impose any

temporal limitation on the availability of exemptions.

And so Congress made crystal clear what would

otherwise have been implied in the statutory scheme:

that exemptions are available “at any time.” To

ensure that this was unmistakable, it used language

that it well understood to denote breadth and the

absence of limitation: “Read naturally, the word ‘any’

has an expansive meaning, that is, one or some

indiscriminately of whatever kind.” United States v.

Gonzales, 520 U.S. 1, 5 (1997) (citations and

quotations omitted); see also Christopher v.

SmithKline Beecham Corp., 567 U.S. 142, 162 (2012).

6

Given Congress’s injunction that small refineries

may petition for exemptions “at any time,” it

naturally follows that the “ordinary meaning” of

“extension” in § 7545(o)(9)(B)(i) is simply “to make

available.” This is a case where, as “ordinarily” occurs,

“all but one” of a word’s potential meanings is

“eliminated by context.” Deal v. United States, 508

U.S. 129, 131-32 (1993). The “at any time” temporal

flexibility rules out definitions of “extension” that

would impose conflicting timing limitations. What

remains is an ordinary meaning of “extension” that

has been recognized and applied by many courts.

In Field v. Mans, for example, the First Circuit

noted that, absent definition, an “ordinary meaning”

of the term “extension” in a statute can be “an offer to

make available (as a fund or privilege).” 157 F.3d 35,

43 (1998). Likewise, in United States v. Principie, the

Second Circuit found there was an “extension” of a

previous authorization for a wiretap even though the

original order had expired before the extension was

granted, and even though the renewed authorization

was amended to cover a new location. 531 F.2d 1132,

1142 (1976). Furthermore, in Pennsylvania Co. for

Ins. v. Rothensies, the Third Circuit noted “[t]he word

‘renewal,’ when used in like context, has been

construed as synonymous with extension.” 146 F.2d

148, 152 (1944). See also Campbell River Timber Co.

v. Vierhus, 86 F.2d 673, 674-75 (9th Cir. 1936) (same).

As these decisions recognize, the word “extension”

does not demand continuity of something already in

existence.

Indeed, Congress itself has frequently used the

word “extend” or “extension” as a way of making

7

something available (such as an exemption) that

previously was not. In the Copyright Act, Congress

stated “the exemption provided by this clause shall

extend to any liability for copyright infringement that

would otherwise be imposed ….” 17 U.S.C. § 110(6)

(emphasis added). In that context, “extend” was not

used as a way of lengthening a period of time or

adding to an existing exemption. See also 42 U.S.C.

§ 1314(h)(2)(A)-(B) (“The exemption granted by

paragraph (1) shall not extend” to certain payments

or during certain times); Pub. L. No. 114-126, § 2

“Extension of Privacy Act Remedies to Citizens of

Designated Countries.”

These judicial and statutory uses of the term

“extension” are also consistent with dictionary

definitions of “extension,” as evidenced by the very

same dictionaries used by the court below. MerriamWebster defines “extension” as “an enlargement in

scope or operation.” Extension, Merriam-Webster

Online Dictionary. 2 Cambridge Online Dictionary

states that “extension” can mean “an increase in the

size or range of something.” Extension, Cambridge

Online Dictionary. 3 Lexico Online Dictionary notes

that an “extension” can mean “[a]n application of an

existing system or activity to a new area.” Extension,

Available

at

https://www.merriamwebster.com/dictionary/extension (last visited Feb. 23, 2021).

2

Available

at

https://dictionary.cambridge.org/us/dictionary/english/extension

(last visited Feb. 11, 2021).

3

8

Lexico Online Dictionary. 4

Similarly, Webster’s

Third defines “extend” as “to make available (as a

fund or privilege) often in response to an explicit or

implied request; GRANT.” Webster’s Third New

International Dictionary 804 (1986). Accordingly, the

plain text of § 7545(o)(9)(B)(i) does not require an

unbroken line of hardship exemptions.

Confirming as much is the principle that Congress

does not grant hollow or meaningless rights. In

United States v. Nordic Village, Inc., for instance, this

Court favored a particular interpretation because a

contrary meaning would have reduced a statutory

provision to “trivial application.” 503 U.S. 30, 35-36

(1992). The Court went on to reason that an

interpretation without “practical consequences”

would violate the “settled rule that a statute must, if

possible, be construed in such fashion that every word

has some operative effect.” Id. See also Johnson v.

U.S. R.R. Retirement Bd., 969 F.2d 1082, 1089 (D.C.

Cir. 1992) (finding it “unreasonable to conclude that

Congress meant to create an entitlement with one

hand and snatch it away with the other”). Because

Congress specifically provided that small refineries

may petition for exemptions “at any time,” it

necessarily follows that EPA is authorized to grant

such exemptions, absent some clear indication in the

statute to the contrary. There being no such thing, the

“at any time” language” controls the question of

timing, and any interpretation that arbitrarily reads

an across-the-board timing restriction into a word like

4 Available at https://www.lexico.com/definition/extension (last

visited Feb. 11, 2021).

9

“extension” must be rejected as inconsistent with

Congress’s mandate.

The decision below illustrates the problem with the

contrary interpretation. Under that decision’s

interpretation, while small refineries may petition “at

any time,” EPA is bound by statute to deny every

single petition as out of time when there has been any

break in the temporal continuity of a refinery’s

exemption status. In this way, that interpretation

nullifies Congress’s precise prescription of when a

small refinery may seek an exemption: at any time.

That interpretation obviously violates the canon

against superfluity. Astoria Federal Savings & Loan

Ass’n v. Solimino, 501 U.S. 104, 112 (1991); see also

Sprietsma v. Mercury Marine, 537 U.S. 51, 63 (2003).

And it contravenes the cardinal rule that “[t]he

provisions of a text should be interpreted in a way

that renders them compatible, not contradictory.”

ANTONIN SCALIA & BRYAN GARNER, READING LAW § 27

(2012).

B.

Statutory Context

The structure of § 7545(o)(9)(A) and (B) further

evidences that Congress intended petitions for

hardship exemptions to be judged on their merits, and

not based on continuity of a prior exemption.

The structure of a statute as a whole is a critical

interpretive tool in determining the meaning of

individual statutory provisions. See, e.g., Food Mktg.

Inst. v. Argus Leader Media, 139 S. Ct. 2356, 2364

(2019) (statutory interpretation begins with “the

ordinary meaning and structure of the law itself”);

Auburn Hous. Auth. v. Martinez, 277 F.3d 138, 144

10

(2d Cir. 2002) (the “meaning of a particular section in

a statute can be understood in context with and by

reference to the whole statutory scheme, by

appreciating how sections relate to one another”

(citing Robinson v. Shell Oil Co., 519 U.S. 337, 341

(1997)). In addition, descriptive section headings in a

statute are another available tool for the “resolution

of a doubt about the meaning of a statute.”

Almendarez-Torres v. United States, 523 U.S. 224,

234 (1998) (internal quotations omitted). See also

Lawson v. FMR LLC, 571 U.S. 429, 466 (2014)

(Sotomayor, J., dissenting) (“[W]here the captions

favor one interpretation so decisively, their

significance should not be dismissed so quickly.”).

Both of those tools weigh against the Tenth Circuit’s

interpretation here.

As both the statutory structure and the section

headings show, one subsection here is based on time,

the other is available “at any time” and based on

merit. If Congress intended for hardship exemptions

to be limited to continuous “extensions” of the blanket

exemptions established under subsection (A) that

would become permanently unavailable once there

was even a single year in which a small refinery could

comply without one, then why did it establish a

separate subsection for hardship exemptions in

subsection (B) apart from the “[t]emporary”

exemptions in subsection (A)? The most logical

answer, and the one best supported by the overall

statutory text, is that Congress did not intend

hardship exemptions under subsection (B) to be

available only if a temporary exemption under

subsection (A) remained in place. Rather, the

11

reference in subsection (B)(i) to the “exemption under

subparagraph (A)” is best viewed as just that—a

reference to the exemption of RFS obligations

established under subsection (A), but available “based

on disproportionate economic hardship” instead of on

a “temporary” basis.

If Congress sought to impose temporal or

continuity restrictions on small refineries seeking

hardship exemptions under § 7545(o)(9)(B)(i), then it

certainly knew how to do just that, as § 7545(o)(9)

includes the type of temporal or continuity

restrictions that the court below improperly read into

eligibility for such hardship exemptions. Most

notably, § 7545(o)(9)(A) uses terms like “temporary”

and “until” and “not later than” in connection with

certain dates that set an explicit temporal limit on the

duration of the exemption available under that

subsection. And in § 7545(o)(9)(B)(iii), which is just

below the provision at issue here, Congress explicitly

imposed a temporal “[d]eadline” for EPA action on a

petition for hardship exemptions “not later than 90

days” after receipt. That Congress did not provide any

similar time-restricted language in subpart (B)(i)—

and instead used the contrary phrase “at any time”—

confirms that Congress did not intend for small

refinery hardship exemptions to be restricted

temporally. See, e.g., Cent. Bank of Denver, N.A. v.

First Interstate Bank of Denver, N.A., 511 U.S. 164,

176-77 (1994); Ass’n for Cmty. Affiliated Plans v. U.S.

Dep’t of Treasury, 392 F. Supp. 3d 22, 39 (D.D.C.

2019); Nat’l Org. of Veterans’ Advocates, Inc. v. Sec’y

of Veterans Affairs, 981 F.3d 1360, 1385 (Fed. Cir.

2020).

12

Congress likewise could have chosen (but did not

choose) to include an “anti-backsliding” provision in

§ 7545(o)(9)(B)(i), as it has in other parts of the Clean

Air Act to ensure that EPA will not relax certain

standards already in place. See, e.g., 42 U.S.C.

§§ 7502(e) (ensures EPA’s alteration of ambient air

quality standards does not result in any less stringent

standards for areas not in currently compliance);

§ 7410(l) (prohibiting EPA from approving revisions

to state implementation plans (SIPs) if the revision

would interfere with attainment of national ambient

air quality standards (NAAQS) or reasonable further

progress towards obtaining the NAAQS).

Just like with the non-existent temporal or

continuity restrictions in § 7545(o)(9)(B)(i), if

Congress had wished to prevent small refineries from

obtaining discontinuous exemptions in the future and

“relapsing” on their RFS obligations, then it could

easily have included such an “anti-backsliding”

provision in the Act. But again, it did not. An

interpretation of “extension” based on the assumption

that Congress implicitly sought to prevent small

refineries from “backsliding” on their RFS obligations

is, therefore, demonstrably wrong. See Credit Suisse

Sec. (USA) LLC v. Simmonds, 566 U.S. 221, 228

(2012) (“Had Congress intended this result, it most

certainly would have said so.”).

C.

The History

In addition to the text and structure of the Act,

there is also considerable evidence that Congress

expected hardship exemptions to be openly available

for small refineries that are disproportionately

13

burdened by the RFS program. For example, after

DOE initially determined in 2009 that small

refineries would not face disproportionate economic

hardships under the RFS program, the Senate

explicitly rejected those findings, since DOE “did not

assess the economic condition of the small refining

sector, take into account regional factors or accurately

project RFS compliance costs.” S. REP. NO. 111-45, at

109 (2009). It also instructed DOE to “reopen and

reassess” the study. Id. And a subsequent House

Conference Report echoed the Senate’s directives to

DOE in response to the deficient study. H.R. Rep. No.

111-278, at 126 (2009).

Following Congress’s direction, DOE’s revised

study in 2011 confirmed that certain small refineries

were, in fact, subject to disproportionate economic

hardships when “blending renewable fuel … or

purchasing [RIN credits] increases their costs of

products relative to competitors to the point they are

not viable, either due to loss of market share or lack

of working capital to cover the costs of purchasing

RINs.” 5 Many factors determined by DOE to create a

disproportionate economic hardship to small

refineries were found to be variable from year to year

based on changing market conditions. For example,

RFS costs in “lower refining margin environment[s]”

can have “a material effect on small refinery

DEPT. OF ENERGY, SMALL REFINERY EXEMPTION STUDY: AN

INVESTIGATION INTO DISPROPORTIONATE ECONOMIC HARM vii

(March 2011), https://www.epa.gov/sites/production/files/201612/documents/small-refinery-exempt-study.pdf.

5

14

profitability.” 6 The same is true in scenarios where

RIN prices “might be substantially higher than their

historical value” 7 or when small refineries “must

purchase RINs that are far more expensive than those

that may be generated through blending[.]” 8

Similarly, in 2015 and 2016 in response to EPA’s

denial of hardship exemptions for small refineries

that could incur RFS compliance costs without

substantially impacting their viability, the Senate

rebuked the agency, explaining that “Congress

directed [EPA], in consultation with ... [DOE], to

grant hardship relief to small refineries if compliance

with the … [RFS] would impose a disproportionate

economic hardship,” regardless of whether “the small

refinery remained profitable notwithstanding the

disproportionate economic impact.” S. REP. NO. 114281, at 70-71 (2016). As the Senate explained,

Congress instead “explicitly authorized the Agency to

grant small refinery hardship relief to ensure that

small refineries remained both competitive and

profitable,” recognizing that “[i]n the intensely

competitive transportation fuels market, small

entities cannot remain competitive and profitable if

they face disproportionate structural or economic

metrics such as limitations on access to capital, lack

of other business lines, disproportionate production of

diesel fuel, or other site specific factors.” Id.

6 Id. at 23.

7 See id. at vii.

8 Id. at 2.

15

As such, EPA’s historic administration of hardship

exemptions under § 7545(o)(9)(B)(i) was on a case-bycase basis—considering a small refinery’s competitive

position in the marketplace and corresponding

demonstration of disproportionate economic hardship

in a given compliance year. See 77 Fed. Reg. 1,320,

1,340 (Jan. 9, 2012), available at 2012 WL 32558

(“[S]eparate from the DOE determination, EPA may

extend the exemption for individual small refineries

on a case-by-case basis if they demonstrate

disproportionate economic hardship.”). This practice

reflected the reality that economic circumstances

facing small refineries vary substantially from year to

year. As RFS mandates are continuously increasing

by design and RIN prices are unpredictably volatile,

small refineries may not face disproportionate

economic hardship when RINs cost a few pennies

apiece and market conditions are lucrative. But the

same is not true in years when the price of RIN credits

has surged. For example, in the past year alone RIN

prices fluctuated between 10 cents in early 2020 and

approximately $1.10 thus far in 2021. 9

EPA’s past implementation of “extension[s]” under

§ 7545(o)(9)(B)(i) thus permitted small refineries to

receive an exemption from RFS mandates “at any

time” upon a showing of disproportionate economic

hardship, without regard to whether a small refinery

had received continuous exemptions in each prior

This Week in Petroleum, ENERGY INFORMATION

ADMINISTRATION

(Feb.

18,

2021),

https://www.eia.gov/petroleum/weekly/archive/2021/210218/incl

udes/analysis_print.php.

9

16

compliance year. That consistent agency practice—

and the absence of any objection by Congress, in an

area that it is clear Congress was closely

monitoring—confirms that the proper interpretation

of § 7545(o)(9)(B)(i) provides for hardship exemption

eligibility for small refineries regardless of whether

those refineries have maintained a continuous line of

prior exemptions. See Zuni Pub. Sch. Dist. No. 89 v.

Dept. of Educ., 550 U.S. 81, 90 (2007) (“As far as we

can tell, no Member of Congress has ever criticized

the method the 1976 regulation sets forth nor

suggested at any time that it be revised or

reconsidered.”); N.L.R.B. v. General, Inc., 137 S. Ct.

929, 954 (2017) (Sotomayor, J., dissenting) (“And yet,

this legion of would-be-violations promoted no

response…. Congressional silence in the face of a

decade-plus practice of [a particular interpretation]

casts serious doubt on the [contrary] interpretation.”).

Even the Tenth Circuit itself, in an opinion that now

stands in stark contrast to the decision below,

previously held that EPA wrongly withheld hardship

exemptions in 2015 based on an overly restrictive

view that a meritorious economic hardship

demonstration

required

showing

that

RFS

compliance meant a near-certain “death knell” rather

than “simple privation”—without ever suggesting

that the exemption should be denied anyway if the

small refinery had ever failed to obtain one in the

past. Sinclair, 887 F.3d at 996-97.

Each of these cues points in the same direction, and

together

they

overwhelmingly

support

an

interpretation of “extension” under § 7545(o)(9)(B)(i)

that makes hardship exemptions available to small

17

refineries whenever they are necessary for the

refineries to remain “competitive and profitable” in

the marketplace, regardless of whether the refinery

received a hardship exemption in every prior

compliance year. The decision below manifestly erred

by reaching the opposite conclusion.

D.

Congress’s Logic

Finally,

construing

“extension”

under

§ 7545(o)(9)(B)(i) to mean “making available” is the

only interpretation that makes sense given

Congress’s overarching purposes in the RFS program

and how it operates in practice.

This Court does not “interpret federal statutes to

negate their own stated purposes.” N.Y. State Dept. of

Soc. Servs. v. Dublino, 413 U.S. 405, 419-20 (1973).

See also SEC v. C.M. Joiner Leasing Corp., 320 U.S.

344, 350-51 (1943) (“[C]ourts will construe the details

of an act in conformity with its dominating general

purpose, will read text in the light of context and will

interpret the text so far as the meaning of the words

fairly permit so as to carry out in particular cases the

generally expressed legislative policy.”).

Congress’s overriding interest in the RFS program

was to secure American energy independence and

security in response to the United States’ reliance on

unpredictable foreign energy markets. See Renewable

Fuels Ass’n v. EPA, 948 F.3d 1206, 1215, 1218-19

(10th Cir. 2020). It would thus be a distortion of the

RFS program to interpret key provisions (like the

hardship exemption program) in a way that detracts

from the central purpose of promoting a stable supply

of domestic transportation fuels.

18

Yet disproportionate hardships, and negative

impacts to domestic fuel supply, are exactly what a

narrow interpretation of § 7545(o)(9)(B)(i) threatens

to cause. “[S]mall refineries consist of about 40% of

the nation’s total number of operating refineries” and

“comprise about 12% of total crude oil distillation

capacity in the United States.” 10 In many states and

communities that are located far from major fuel

production and transportation hubs, small refineries

provide the only economic source of transportation

fuels for consumers and businesses. For example, the

only refineries in Montana, North Dakota, Utah,

West Virginia, Wisconsin, and Wyoming are small

refineries. Without these domestic small refineries

producing much-needed transportation fuels for

millions of Americans, the RFS program’s main

objectives will be at best curtailed, and at worst

impossible.

The apparent belief of the court below that small

refineries

will

never

be

disproportionately

economically harmed “once a small refinery figures

out how to put itself in a position of annual

compliance” defies basic economics. 948 F.3d at 1246.

RFS compliance costs for small refineries are not

static and are not reasonably predictable. Neither are

oil prices, fuel demand, small refinery profits,

compliance budgets, and regional market conditions.

The same is true for annual RVOs which, by design,

CONG. RESEARCH SERVS., THE RENEWABLE FUEL STANDARD

(RFS): FREQUENTLY ASKED QUESTIONS ABOUT SMALL REFINERY

EXEMPTIONS

(SRES)

4

(March

2,

2020),

https://crsreports.congress.gov/product/pdf/R/R46244.

10

19

increase every year. See 42 U.S.C. § 7545(o)(2). A

small refinery that annually produces 200 million

gallons of transportation fuel with an RVO of

10 percent and RIN prices around fifteen cents ($0.15)

per gallon (as was the case shortly before the decision

below in January 2020), would face RFS compliance

costs of approximately $3 million.11 But if RIN prices

increase to more than a dollar per gallon or higher (in

line with current market prices), the same refinery’s

compliance costs would increase almost 700 percent to

$20 million or more as a result. This rudimentary

example demonstrates why a small refinery cannot

simply be funneled into complete RFS compliance

over time: there are too many economic variables

changing each year.

Congress, which designed the RFS program to

include variable conditions like RIN prices and

increasing RVOs, understood these challenges and

thus created exemptions “based on disproportionate

economic hardship” that could be sought “at any

time.” § 7545(o)(9)(B)(i). It would thus be implausible

to believe that Congress meant the RFS program to

operate in a manner that (i) ignores the necessary

consequences of its regulatory scheme, and

(ii) destabilizes the viability of the very small

refineries Congress sought to protect.

Furthermore, a restrictive view of “extension”

under subpart (B)(i) creates the harsh result of

effectively punishing small refineries for meeting the

goals of the RFS program. The fact that the RFS

200 million gallons, multiplied by 10 percent RVO (0.10),

multiplied by RIN price of $0.15 equals $3 million.

11

20

program may not disproportionately burden a small

refinery in favorable or neutral economic conditions

should not forever exclude it from seeking relief when

conditions

change

and

that

refinery

is

disproportionately burdened. This is especially true

when, as here, small refineries are subject to

countless circumstances affecting their economic

performance that are entirely outside their control.

Currently, that includes a raging global pandemic,

but it also includes other circumstances such as

hurricanes and volatile crude oil prices.

Any

interpretation

of

“extension”

under

§ 7545(o)(9)(B)(i) that does not allow for flexible

hardship relief for small refineries—including the one

adopted by the court below and supported by

Respondents—would therefore result in consequences

that could not have been intended by Congress and

would negate the very relief Congress sought to

afford.

II.

The Small Refining Industry is Still

Reeling from the Decision Below

The crippling effects of the decision below on the

small refinery industry remain ongoing and are

unlikely to subside unless this Court returns the RFS

program to the status quo ante by holding that

eligibility for a hardship exemption under

§ 7545(o)(9)(B)(i) does not require an unbroken line of

prior exemptions.

The decision below has thrown the industry and

RFS program into disarray. Small refineries—who

are heavily dependent on purchasing RINs to comply

with their RFS obligations—have seen RIN prices

21

skyrocket in the past year. Before the Tenth Circuit’s

decision in early January 2020, average RIN prices

traded around $0.10 to $0.15. 12 In the months

following, however, RIN prices skyrocketed by several

factors, reaching a high of approximately $1.10 in late

January and early February of 2021—almost eleven

times their pre-decision levels. 13

Figure 1: 2020-2021 RIN Prices (D6 Ethanol) 14

This exponential increase in RFS compliance costs

coincided with historically low fuel prices caused by

reduced fuel demand during the COVID-19 pandemic.

In April of 2020, analysts reported that the

coronavirus outbreak cut global gasoline demand by

12 RIN Trades and Price Information (Annual RIN Sales Report

Table), EPA, https://www.epa.gov/fuels-registration-reportingand-compliance-help/rin-trades-and-price-information

(last

updated Feb. 10, 2021).

13 Note 9, supra.

14 Id.; Note 12, supra.

22

50% and jet fuel demand by 70%. 15 The U.S. Energy

Information Administration (EIA) later found that as

of September 2, 2020, average gasoline retail prices

were at their lowest seasonal levels since 2004.16 As a

result, refineries saw their margins crater by up to

95%. 17

Due to these combined blows, at least three small

refineries nationwide (two alone in the Tenth Circuit,

including Petitioner HollyFrontier’s Cheyenne,

Wyoming, refinery) have either permanently shut

down or idled operations indefinitely. 18 This

prompted a public outcry from many state governors

and U.S. Senators who called attention to how the

decision below will likely have devastating effects on

15 Erwin Seba & Laura Sanicola, Oil Refiners Face Reckoning as

(Apr.

2,

2020),

Demand

Plummets,

REUTERS

https://www.reuters.com/article/us-health-coronavirus-refineryruncuts/oil-refiners-face-reckoning-as-demand-plummetsidUSKBN21K0C8.

This Week in Petroleum, ENERGY INFORMATION

ADMINISTRATION

(Sept.

2,

2020),

https://www.eia.gov/petroleum/weekly/archive/2020/200902/incl

udes/analysis_print.php.

16

17 Stephanie Kelly, U.S. Gasoline Refining Profits Slump to 2008

Levels Amid Coronavirus Fears, REUTERS (Mar. 16, 2020),

https://financialpost.com/pmn/business-pmn/u-s-gasolinerefining-profits-slump-to-2008-levels-amid-coronavirus-fears-2.

Robert Brelsford, Marathon Permanently Idles Two US

&

GAS

J.

(Aug.

3,

2020),

Refineries,

OIL

https://www.ogj.com/refiningprocessing/refining/article/14180915/marathon-permanentlyidles-two-us-refineries; Elliot Blackburn, Marathon Petroleum to

shut two US refineries: Update, ARGUS MEDIA (Aug. 3, 2020),

https://www.argusmedia.com/en/news/2128888-marathonpetroleum-to-shut-two-us-refineries-update.

18

23

small refineries and the communities that rely upon

them:

x February 27, 2020 letter from Sen. John

Barrasso et al. to President Trump: “If allowed

to stand and applied or adopted nationwide, it is

believed that only two small refineries would

still be eligible for hardship relief, putting tens

of thousands of jobs at dozens of ineligible small

refineries at risk.” 19

x February 28, 2020 letter from Wyoming

Governor Mark Gordon to President Trump:

“Wyoming is home to five refineries that are

disproportionately harmed by the RFS. In

Wyoming, the refining and petrochemical

industry employees [sic] nearly 10,000

individuals and contribute $266 million dollars

in local and state tax revenue.” 20

x March 2, 2020 letter from Oklahoma Governor

Kevin Stitt to EPA Administrator Wheeler:

“[S]everal entities that are vital to Oklahoma’s

economy will be negatively impacted by this

decision. Within the 10th Circuit alone, it is

estimated that this decision will put nearly a

19 Letter from Senator John Barrasso et al. to President Trump

(Feb.

27,

2020)

(available

https://www.fuelingusjobs.com/library/public/Statements/227_Senators-Call-on-President-Trump-to-Fight-for-SmallRefineries.pdf).

at

Letter from Wyoming Governor Mark Gordon to President

Trump

(Feb.

28,

2020)

(available

at

https://www.fuelingusjobs.com/library/public/Letters/doc060809

20200228141613.pdf).

20

24

dozen small refineries under severe financial

stress and put many jobs at risk.”21

x March 3, 2020 letter from Utah Energy Advisor

Robert Simmons to President Trump: “Utah’s

refineries are at the center of Utah’s thriving

energy economy, providing hundreds of highpaying jobs and over a billion dollars annually to

Utah’s economy. These refineries also provide a

critical market for Utah’s rural oil and gas

producers.” 22

Market conditions have not improved in the

months since. EIA reports that RIN credits “have

been steadily rising in recent months and are

approaching their highest nominal levels in the

history of the [RFS] program.” 23 Corn ethanol (D6)

RIN prices are at their highest prices since 2013—the

previous all-time high. 24 EIA attributes these highly

inflated RIN prices to “limited fuel production as a

result of lower fuel demand related to responses to

COVID-19, fewer approved new Small Refinery

Letter from Oklahoma Governor J. Kevin Stitt to EPA

Administrator Andrew Wheeler (Mar. 2, 2020) (available at

https://www.fuelingusjobs.com/library/public/Letters/10thCircut-Court-Letter.pdf).

21

Letter from Utah Energy Advisor Robert Simmons to

President

Trump

(March

5,

2020)

(available

at

https://www.fuelingusjobs.com/library/public/Letters/UtahEnergy-Advisor-Support-of-RFS-Decision-Review-3-5-20.pdf).

22

23 Note 9, supra.

24 Id.

25

Exemptions [] since 2018, and uncertainty around

future RFS levels.”25

At the same time, EIA also predicts that, while U.S.

gasoline consumption will rise in 2021, overall

demand and average fuel prices will nonetheless

remain lower than 2019 levels. 26 More conservative

estimates, however, fear that depressed oil demand

may extend into 2022 or 2023 based on the spread of

newer strains of the coronavirus. 27 For small

refineries with mounting RFS compliance costs and

all-time low profit margins, this bleak outlook is likely

to result in more small refineries exiting the

market. 28

Moreover, the decision below has sowed confusion

and inaction with EPA on how to implement the RFS

program nationwide. This has caused a substantial

backlog of more than 35 currently outstanding

25 Id.

Short-Term Energy Outlook, ENERGY INFORMATION

ADMINISTRATION

(Feb.

9,

2021),

https://www.eia.gov/outlooks/steo/report/us_oil.php.

26

27 Sathya Narayanan, Oil Outlook for 2021 Hit by New COVID-

19 Strain: Reuters Poll, REUTERS (Dec. 31, 2020),

https://www.reuters.com/article/us-oil-prices-poll/oil-outlookfor-2021-hit-by-new-covid-19-strain-reuters-pollidUSKBN2950Y9.

28 See U.S. Petroleum Refining Capacity Falls to Its Lowest Level

Since May 2016, ENERGY INFORMATION ADMINISTRATION (Dec.

10,

2020),

https://www.eia.gov/todayinenergy/detail.php?id=46216.

26

petitions for hardship exemptions situated before

EPA. 29

Figure 2: Hardship Exemption Petition Data

(2016-2020) 30

Despite this backlog, EPA has signaled that it has

no intention of acting on these outstanding petitions

until this case is resolved by the Court. 31 Nor has EPA

released RVOs for 2021 so that refineries can

anticipate and rationally plan for their 2021

compliance costs.

All the while, small refineries that need RFS

compliance relief due to untenable market conditions

and agency indecision are being left out in the cold.

29 Overview of Small Refinery Exemptions Data (Table 2), EPA,

https://www.epa.gov/fuels-registration-reporting-andcompliance-help/rfs-small-refinery-exemptions (last

Feb. 18, 2021).

30 See id.

31 See Petitioners’ Reply Cert. Br. at 9.

updated

27

Beyond mere agency indecision, EPA announced in a

press release 32 on the date Petitioners’ brief was due

in this Court that it has reversed its position on the

issue under review and that continuous exemptions

are required for small refinery hardship exemptions.

EPA’s new position purports to allow one EPA

Administration to forever sever small refineries right

to receive hardship exemptions, no matter how severe

the economic consequences in later years. But EPA’s

midnight reversal of its longstanding interpretation,

without notice to affected refineries and the

opportunity for public comment, is entitled to no

deference. Given Congress’s unambiguous directive

that small refineries be permitted to petition EPA “at

any time,” the Court should interpret the Act

according to its plain terms and prevent the hardship

exemption program from becoming an unstable game

of political football that undermines certainty and

ultimately will harm both small refineries and

consumers.

Returning the RFS program to the status quo

ante—so that EPA retains authority to grant

hardship exemptions on a case-by-case basis “at any

time” there is a showing of disproportionate economic

hardship—would not only read the Clean Air Act

correctly but would also ensure that small refineries

around the nation, and the communities that rely on

them, receive the protection Congress intended that

they should have at a time when it is needed most.

32 EPA Signals New Position on Small Refinery Exemptions, EPA

(Feb. 22, 2021), https://www.epa.gov/renewable-fuel-standardprogram/epa-signals-new-position-small-refinery-exemptions.

28

CONCLUSION

The Court should reverse.

Respectfully submitted,

RICHARD MOSKOWITZ

AMERICAN FUEL &

PETROCHEMICAL

MANUFACTURERS

1800 M Street, NW,

Ste. 900 North

Washington, D.C. 20036

(202) 844-5474

rmoskowitz@afpm.org

MARCH 2021

MARK W. DELAQUIL

ANDREW M. GROSSMAN

Counsel of Record

CHRISTOPHER H. MARRARO

CORY N. BARNES

BAKER & HOSTETLER LLP

1050 Connecticut Ave., N.W.

Washington, D.C. 20036

(202) 861-1697

agrossman@bakerlaw.com