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

BRIEF OF ADVANCED BIOFUELS

ASSOCIATION AS AMICUS CURIAE

SUPPORTING RESPONDENTS

Rafe Petersen

Counsel of Record

Holland & Knight LLP

800 17th Street, N.W., Suite 1100

Washington, D.C. 20006

(202) 419-2481

rafe.petersen@hklaw.com

March 31, 2021

Counsel for Amicus Curiae

Advanced Biofuels Association

i

TABLE OF CONTENTS

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

OVERVIEW OF THE RFS PROGRAM AND

SMALL REFINERY EXEMPTIONS ................... 2

SUMMARY OF ARGUMENT............................ 11

ARGUMENT ...................................................... 13

I.

The ability of EPA to issue sporadic,

unforeseeable, and largely unreviewable

exemptions to small refineries imposes

significant economic damage on biofuels

producers. ............................................. 13

II.

Affirming the Tenth Circuit’s opinion

will rightfully undercut EPA’s ability to

arbitrarily award secret financial

windfalls to small refineries that escape

judicial review and disrupt biofuels

markets. ............................................... 18

CONCLUSION ................................................... 24

ii

TABLE OF AUTHORITIES

Page(s)

Cases

Advanced Biofuels Ass’n v. EPA,

792 Fed. Appx. 1 (D.C. Cir. 2019) ............... passim

Advanced Biofuels Ass’n v. EPA,

No. 18-1115, 2019 WL 2615356 (D.C.

Cir. June 25, 2019)................................... 17, 19, 22

Renewable Fuels Ass’n v. EPA,

No. 19-1220 (D.C. Cir. Oct. 22,

2019) .....................................................................22

Renewable Fuels Ass’n v. EPA,

No. 18-2031, 2021 WL 602913 (D.C.

Cir. Feb. 16, 2021)............................................5, 21

Statutes

42 U.S.C. §7545(o)(9)(A)(i) ..........................................3

42 U.S.C. § 7545(o)(9)(B)(i) ............................. 4, 18, 24

Other Authorities

Calumet Specialty Products Partners,

L.P. 2017 Form 10-K, p.19,

https://www.sec.gov/Archives/edgar/

data/1340122/000134012218000067/

clmt-20171231x10k.htm ........................................5

iii

EPA, Denial of Small Refinery GapFilling Petitions (Sept. 14, 2020),

https://www.epa.gov/sites/production

/files/2020-09/documents/rfs-denialsmall-refinery-gap-filling-petitions2020-09-14.pdf. ..................................................6, 7

Jarrett Renshaw, U.S. Refiners Reap

Big Rewards from EPA Biofuel

Waivers, Reuters (May 8, 2018) ..........................21

Letter from William Wehrum, EPA

Assistant Administrator, to Charles

Grassley, U.S. Senate (July 12,

2018) .......................................................................5

Office of Policy & Int’l Affairs, Dep’t of

Energy, Small Refinery Exemption

Study

(Mar. 2011), p. vii,

https://www.epa.gov/sites/production

/files/2016-12/documents/smallrefinery-exempt-study.pdf. ....................................3

Small Refinery Exemptions and

Biomass-Based Diesel Demand

Destruction, FarmDoc Daily (9):45

(Mar. 14, 2019),

https://farmdocdaily.illinois.edu/201

9/03/small-refinery-exemptions-andbiomass-based-diesel-demanddestruction.html ....................................................9

iv

U.S. Energy Information

Administration, EPA refinery

exemptions reduced renewable fuel

blending requirements in 2018,

https://www.eia.gov/todayinenergy/d

etail.php?id=41794 ................................................8

U.S. Energy Information

Administration, U.S. Biodiesel Plant

Production Capacity (Oct. 23, 2020),

https://www.eia.gov/biofuels/biodiese

l/capacity/ .............................................................17

U.S. EPA, Denial of Petitions for

Rulemaking to Change the RFS

Point of Obligation, EPA-420-R-17008 (Nov. 2017), ...................................................16

U.S. EPA, Fuels Registration,

Reporting, and Compliance Help:

RINS Generated Transactions,

https://www.epa.gov/fuelsregistration-reporting-andcompliance-help/rins-generatedtransactions............................................................8

U.S. EPA, Regulation of Fuels and Fuel

Additives: Renewable Fuel Standard

Program; Final Rule, 72 Fed. Reg.

23900, 23926 (May 1, 2007) .................................16

U.S. EPA, Renewable Fuel Standard

Program, 72 Fed. Reg. 23900, 23924

(May 1, 2007) .........................................................3

v

U.S. EPA, RFS Small Refinery

Exemptions,

https://www.epa.gov/fuelsregistration-reporting-andcompliance-help/rfs-small-refineryexemptions .............................................................6

U.S. Ethanol Groups Bristle as EPA

Frees Refiners from Biofuels Law,

Reuters (Apr. 4, 2018), available at

https://www.reuters.com/article/ususa-biofuels-epa-refineries/u-sethanol-groups-bristle-as-epa-freesrefiners-from-biofuels-lawidUSKCN1HB2AH (last visited Dec.

19, 2018). ................................................................9

1

INTEREST OF AMICUS CURIAE

The Advanced Biofuels Association (“ABFA”)1

is an independent 501(c)(6) nonprofit trade

association. ABFA represents more than 35

companies in the United States and around the world

engaged in the production, marketing, and

distribution of advanced renewable fuels. Currently,

ABFA members produce over 4.7 billion gallons of

renewable fuel each year, including billions of gallons

of biodiesel and renewable diesel as well as a variety

of drop-in fuels such as renewable gasoline,

isobutanol, dimethyl ether, cellulosic diesel, and

cellulosic heating oil.

ABFA’s mission is to secure on behalf of its

members a stable and predictable regulatory

environment and level playing field for advanced

renewable fuels. ABFA has been particularly active,

including through litigation, in connection with

disputes about how the EPA has used or abused its

authority regarding small refinery exemptions

because the issuance of such exemptions affects the

market for advanced renewable fuels as well as the

market value for “Renewable Identification

Numbers,” as discussed below.

1 Pursuant to Sup. Ct. R. 37.3(a), ABFA states that counsel for

Petitioners and Respondents have provided written consent to

the filing of this brief. Pursuant to Sup. Ct. R. 37.6, ABFA

affirms that no counsel for a party authored this brief in whole

or in part; no such counsel or a party made a monetary

contribution to fund its preparation or submission; and no

person other than ABFA, its members, or its counsel made such

a monetary contribution.

2

OVERVIEW OF THE RFS PROGRAM AND SMALL

REFINERY EXEMPTIONS

Advanced biofuels are regulated under the

Clean Air Act’s Renewable Fuel Standard (“RFS”)

provisions. The background, purpose, and structure of

the RFS program are set forth succinctly in the briefs

of Respondents and Federal Respondent. Resp’ts’ Br.

6-8, Fed. Resp’t’s Br. 4-9.

Through the RFS program, the percentage of

biofuels required to be blended into the nation’s

gasoline and diesel supplies is slowly but steadily

increased by EPA, furthering the goal of the RFS

program to help achieve national energy

independence.2 From the inception of the RFS

program in 2005 until approximately 2017, the

program functioned largely as intended. This

predictable market for biofuels allowed American

innovation to flourish and biofuels began to be

produced across the nation from a wide variety of

feedstocks. ABFA’s members are able to generate

biofuels from used cooking oil, landfill gas, grease

collected at wastewater treatment plants, soybean oil,

corn oil, and organic waste biodigesters.

In 2005, at the outset of the RFS program,

there were 59 petroleum refineries defined as “small

refineries.”3 These refineries were awarded a blanket

The RFS program sought “to reduce dependence on foreign

sources of petroleum, increase domestic sources of energy, and

help transition to alternatives to petroleum in the transportation

sector.” U.S. EPA, Renewable Fuel Standard Program, 72 Fed.

Reg. 23900 (May 1, 2007).

3 Small refineries, defined at 42 U.S.C. § 7545(o)(1)(K), have an

average aggregate daily crude oil throughput of 75,000 barrels

or less per day.

2

3

temporary exemption from complying with the biofuel

blending mandates until calendar year 2011. See 42

U.S.C. §7545(o)(9)(A)(i). At the end of the temporary

blanket exemption, “small refineries would be

required to meet the same renewable fuel obligations

as all other refineries, unless their exemption is

extended . . . .”4 To determine whether an additional

blanket exemption was warranted, the U.S.

Department of Energy (“DOE”) solicited detailed

information from each of the 59 facilities that

qualified as a “small refinery” to determine the

economic impact of the RFS program. Of those 59

facilities, only 18 came forward with information

about the hardships they might face if they were

required to comply with RFS requirements.5 DOE

attributed the industry’s low participation rate to the

fact that many small refineries operating as “part of

large integrated oil companies or large geographically

diverse refiners . . . notified DOE that they were not

going to respond to the survey because they did not

believe they faced disproportionate economic

hardship.”6 In light of this record, EPA decided to

extend the temporary small refinery exemption for

two years – compliance years 2011 and 2012 – to 24

small refineries. The other 35 small refineries did not

get such an exemption, meaning that they were

4 U.S. EPA, Renewable Fuel Standard Program, 72 Fed. Reg.

23900, 23924 (May 1, 2007).

5 Office of Policy & Int’l Affairs, Dep’t of Energy,

Exemption

Study

(Mar.

2011),

https://www.epa.gov/sites/production/files/201612/documents/small-refinery-exempt-study.pdf.

6

Id.

Small Refinery

p.

vii,

4

required to comply with RFS requirements starting in

2011.

The only avenue provided to small refineries to

avoid RFS obligations once these temporary

exemptions ended was a process where “[a] small

refinery may at any time petition the Administrator

[of EPA] for an extension of the exemption under

subparagraph (A) [temporary exemptions] for the

reason of disproportionate economic hardship.” 42

U.S.C. § 7545(o)(9)(B)(i).

Although the statute allowed a small refinery

to come forward to ask for an extension of its

exemption, EPA refused to make even basic

information available about the number of petitions

received, the number of petitions granted, the identity

of the small refineries benefitting from such

exemptions, or the volume of renewable fuel that

would no longer have to be blended as a result of the

exemptions.

The rationale

given for

this

unprecedented veil of secrecy was that small

refineries who were petitioning for exemptions

claimed that all the information in their petitions was

confidential business information (“CBI”). When EPA

makes a final decision on a small refinery exemption

petition, the agency treats all information in the

decision document—including information as simple

as the name of the company applying for and

receiving the lucrative exemption—as CBI. EPA

maintains that it is bound by 40 C.F.R. §§ 2.204,

2.205, and 2.208 to treat as CBI any information that

small refineries claim is confidential until EPA can

evaluate the veracity of that claim. In practice,

however, EPA makes no effort to review the small

refineries’ over-inclusive claims of CBI. For example,

5

the identity of the small refineries awarded

exemptions for the 2013 compliance year are still

secret eight years later.

Because of EPA’s treatment of exemption

requests as confidential, EPA has issued small

refinery exemptions free from oversight or scrutiny

from the public, Congress, the judicial branch, or

industry, including ABFA. EPA has even refused,

based on claims of CBI, to provide detailed

information about its small refinery exemption

decisions in response to requests from Congress.7

EPA maintains this policy even after a refinery

publicly discloses its receipt of a small refinery

exemption in public filings to the U.S. Securities and

Exchange Commission.8 Even in the face of protracted

Freedom of Information Act litigation, EPA refused to

identify the name or location of small refineries

receiving exemptions, thereby shielding those

decisions from judicial review. See Renewable Fuels

Ass’n v. EPA, No. 18-2031, 2021 WL 602913 at *1

(D.C. Cir. Feb. 16, 2021).

7 Letter from William Wehrum, EPA Assistant Administrator, to

Charles

Grassley,

U.S.

Senate

(July

12,

2018)

https://www.eenews.net/assets/2018/07/13/document_daily_01.p

df (“Your letter requests information related to those small

refineries granted exemptions in 2016, 2017, and 2018. EPA is

unable to provide information that is fully responsive to your

request, as we treat both the names of individual petitioners and

EPA’s decision on those petitions as Confidential Business

Information . . . .”)

8 See, e.g., Calumet Specialty Products Partners, L.P. 2017 Form

10-K, p.19 (“We have received small refinery exemptions for our

fuel products refineries for the full year 2016 and 2017.”),

https://www.sec.gov/Archives/edgar/data/1340122/00013401221

8000067/clmt-20171231x10k.htm.

6

Finally, in the summer of 2018, this veil of

secrecy was partially lifted when EPA – facing

political and media scrutiny and legal pressure from

ABFA – began to publish basic data9 about the

functioning of its small refinery exemption program

on an online dashboard. For compliance years 2013

to 2015, it is now known that an average of only 14

small refineries petitioned EPA for extensions of their

temporary exemptions. Over that three-year period,

EPA granted 23 of the 43 petitions received, an

approval rate of 53 percent.10

Today, EPA’s Small Refinery Exemption

Dashboard indicates that additional petitions for

small refinery exemptions for compliance years 2013

to 2015 were received. This reflects an effort by small

refineries, in response to this case, to apply for

extensions years after the fact so as to present the

illusion of having been continuously exempted from

the RFS program. To date, EPA has rejected these

attempts to obtain retroactive exemptions.11

Although it was not publicly known at the time,

for compliance year 2017, the number of small

Advanced Biofuels Ass’n v. EPA, 792 Fed. Appx. 1, 4 (D.C. Cir.

2019)(“The dashboard does not identify the refineries that

received extensions, the date of decisions, the regulatory

standards being applied to evaluate applications, or the reasons

for granting or denying the exemptions.”)

10

U.S.

EPA,

RFS

Small

Refinery

Exemptions,

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

11 EPA, Denial of Small Refinery Gap-Filling Petitions (Sept. 14,

2020),

https://www.epa.gov/sites/production/files/202009/documents/rfs-denial-small-refinery-gap-filling-petitions2020-09-14.pdf.

9

7

refineries submitting petitions for extensions of

exemptions for compliance year 2016 increased

markedly from 14 the previous year to 20. Included in

these petitions were filings by at least a dozen

petitioners who did not have active exemptions—in

other words, they were seeking “extensions” of a

nonexistent exemption. The rate at which EPA

granted these petitions also increased dramatically,

without public explanation, to 95 percent (19 out of 20

petitions).12 This sudden and significant increase in

the number of SRE requests would soon ripple

through the market for biofuels and impact ABFA

members.

While EPA at this time did not publish any

information about the number of small refinery

petitions received or granted, the small refining

industry clearly got the message that the odds of

receiving an exemption had dramatically improved.

For compliance year 2018, the number of small

refineries seeking exemptions grew again, from 20 to

37, a year-over-year increase of 80 percent. Of those

37 petitions, 35 were granted exemptions, zero were

rejected, one was withdrawn, and one is still pending,

an approval rate that again approached 95 percent.

In two short years from 2016 to 2018, therefore, the

number of small refinery exemptions granted

increased fivefold, from seven to 35.13

The increased traffic in small refinery

exemptions had a direct effect on the market for

Renewable Identification Numbers (“RINs”). RINs

are the currency of the RFS program and a robust,

12 EPA Small Refinery Exemption Dashboard,

13

Id.

supra note 10.

8

nationwide marketplace exists in which obligated

parties that need RINs to satisfy RFS obligations can

purchase them from companies, such as ABFA’s

members, that produce and blend renewable fuels. In

compliance year 2020, over 18 billion RINs were

generated.14

With the sudden and dramatic increase in the

number of small refinery exemptions came a

corresponding decrease in the number of RINs that

exempt small refineries needed to buy or generate.

The number of RINs exempted from the RFS program

grew from 290 million in compliance year 2015 to 1.82

billion in compliance year 2017.15 A sudden decrease

in the need of obligated parties to purchase RINs to

comply with the RFS naturally reduced the amount of

biofuels that producers of renewable fuels—such as

ABFA’s members—generate, and in turn caused RIN

prices to drop precipitously.16 Moreover, because

RINs have a two-year shelf life and no value outside

of the RFS program, producers of renewable fuel

cannot cure or minimize losses in the event of a

sudden drop in RIN demand.

Due to the secrecy surrounding EPA’s

administration of the small refinery exemptions,

ABFA and its members were not immediately aware

of EPA’s drastic increase in the number of exemptions

U.S. EPA, Fuels Registration, Reporting, and Compliance

Help: RINS Generated Transactions, https://www.epa.gov/fuels14

registration-reporting-and-compliance-help/rins-generatedtransactions.

15 EPA Small Refinery Exemption Dashboard, supra note 10.

16 U.S. Energy Information Administration, EPA refinery

exemptions reduced renewable fuel blending requirements in

2018, https://www.eia.gov/todayinenergy/detail.php?id=41794

9

that would be granted to small refineries. On April 4,

2018, Reuters published a newspaper story that EPA

had granted approximately 25 small refinery

waivers.17 The market price for RINs immediately

declined on the news and remained suppressed as

additional information emerged over the coming

years about the number of exemptions being granted

by EPA and the corresponding volume of renewable

fuels that were exempted from the RFS program. EPA

and the obligated refineries caused the RIN market to

plummet by reducing both the number of RINs that

would need to be purchased and the purchase price

for those RINs. The economic damage to renewablefuels producers caused by EPA’s small refinery

exemptions for compliance years 2017 to 2019 is

estimated to be $7.6 billion.18

In May 2018, ABFA petitioned the U.S. Court

of Appeals for the District of Columbia Circuit for

review of what it alleged was a change to the

methodology used by EPA to evaluate petitions from

small refineries alleging “disproportionate economic

hardship” and EPA’s unlawful practice of granting

extensions of temporary exemptions to small

refineries that did not receive exemptions in all prior

Jarrett Renshaw and Chris Prentice, U.S. Ethanol Groups

Bristle as EPA Frees Refiners from Biofuels Law, Reuters (Apr.

17

4, 2018), available at https://www.reuters.com/article/us-usabiofuels-epa-refineries/u-s-ethanol-groups-bristle-as-epa-freesrefiners-from-biofuels-law-idUSKCN1HB2AH (last visited Dec.

19, 2018).

18 Scott Irwin, Small Refinery Exemptions and Biomass-Based

Diesel Demand Destruction, FarmDoc Daily (9):45 (Mar. 14,

2019), https://farmdocdaily.illinois.edu/2019/03/small-refineryexemptions-and-biomass-based-diesel-demanddestruction.html.

10

compliance years. See Advanced Biofuels Ass’n v.

EPA, 792 Fed. Appx. 1, 4 (D.C. Cir. 2019). In doing

so, ABFA was the first to advance the argument that

is now before this Court, namely that EPA lacks

authority to grant an extension of a temporary

exemption from the RFS program that has lapsed.

However, because of the blanket assertion that all

aspects of considering requests for extensions are

CBI, ABFA faced numerous challenges in framing its

case.

As a result of its lawsuit, ABFA ultimately

obtained – after more than eight months of objections

from EPA and subject to a protective order – copies of

all of EPA’s final decision documents on small

refinery exemption applications for compliance years

2017 and 2018. As a general matter, these documents

confirm the story that the raw numbers tell, namely

that EPA issued dozens of “extensions” of temporary

exemptions to small refineries in 2017 and 2018 that

had not received – and in most cases had not applied

for – exemptions in preceding years. By its own words

EPA changed its methodology for determining what

constitutes “disproportionate economic hardship” in

order to allow for a flood of small refinery exemptions.

Ultimately, the D.C. Circuit held that it lacked

jurisdiction over ABFA’s claims given that the agency

had not memorialized its change in methodology in a

written memo or guidance document that constitutes

final agency action, but only expressed it in small

refinery decision documents, which amount to

individual

adjudications.

The

D.C.

Circuit

acknowledged, however, that “EPA’s briefing and oral

argument paint a troubling picture of intentionally

shrouded and hidden agency law that could have left

11

those aggrieved by the agency’s actions without a

viable avenue for judicial review. Id.

SUMMARY OF ARGUMENT

Petitioners claim that small refineries will

shutter if they are not permitted to receive sporadic

and essentially limitless exemptions from complying

with the renewable-fuel-blending obligations of the

RFS program. Pet’rs’ Br. 4, 17. Petitioners do not

acknowledge the adverse economic impact that the

renewable fuels industry must absorb when dozens of

small refineries are excused from their statutory RFS

obligations.

The briefs of Respondents and Federal

Respondent both explain at length how the small

refinery exemption mechanism in the RFS program

was designed by Congress to serve as a bridge to

compliance that would provide to struggling small

refineries the ability to use the economic windfall

from the exemptions to invest in infrastructure

upgrades or other measures to strengthen long-term

prospects for success. Resp’ts’ Br. 42-46 and Fed.

Resp’t’s Br. 24-29. This reading is consistent with the

text of the statute and the underlying purpose of the

RFS program.

The maximum downside from a small refinery

complying with the RFS program is that it must offset

its renewable fuels deficit by purchasing RINs from

the marketplace, the cost of which can largely be

passed on to consumers.19 The downside to a producer

19 85 Fed. Reg. 7,016, 7,067–68 (Feb. 6, 2020)( “We have reviewed

and assessed the available information, which shows that

obligated parties, including small entities, are generally able to

recover the cost of acquiring the RINs necessary for compliance

12

of biofuels—especially advanced biofuels produced by

ABFA’s members which tend to have high production

costs—from the sudden and unexpected reduction in

the volume of biofuels that must be blended is that

producers will be left holding fuel for which they can

no longer command a fair price. When small refineries

are excused from the obligation to blend their own

fuels or to obtain RINs, that excuse directly harms the

biofuels industry. While Petitioners and their

supporting amici curiae go to great lengths to try to

link isolated small refinery closures and conversions

to the lack of small refinery exemptions, these

closures clearly relate to external factors such as the

recent COVID-19 pandemic that have no relation to

the RFS program. ABFA’s members, on the other

hand, have suffered losses – ranging from business

closures to shelving expansion plans – that are

directly attributable to dozens of small refineries

receiving extensions of exemptions for which they

were statutorily ineligible.

This Court’s decision should be driven by the

clear intent of Congress, through the express

language used in 42 U.S.C. §7545(o)(9), to limit small

refineries’ relief from complying with the RFS

obligations to continuous extensions of their earlier

temporary exemptions. The Court should take

comfort, however, that such a ruling will have the

additional benefit of largely ending EPA’s practice of

awarding large economic windfalls to unidentified

with the RFS standards. . . . Even if we were to assume that the

cost of acquiring RINs was not recovered by obligated parties . .

. a cost-to-sales ratio test shows that the costs to small entities

of the RFS standards are far less than 1 percent of the value of

their sales.”)

13

small refineries, in unknown amounts, for unknown

reasons, through the issuance of confidential decision

documents that are largely immune from judicial

review yet send economic ripple effects through the

RINs market to the detriment of biofuels producers

and traditional refineries not receiving such largess.

ARGUMENT

I.

The ability of EPA to issue sporadic,

unforeseeable, and largely unreviewable exemptions

to small refineries imposes significant economic

damage on biofuels producers.

Petitioners portray the small refinery

exemption provisions of the RFS program as a flexible

tool created by Congress to guarantee small refineries

perpetual financial success. Regardless of the

underlying cause of a small refinery’s financial

trouble – from a global COVID-19 pandemic to its

inability to adapt to the slow and foreseeable

increases in biofuel blending requirements of the RFS

program – Petitioners believe the solution is for EPA

to issue small refineries extensions of their

exemptions from RFS obligations “at any time”

regardless of how long it has been since the small

refinery last held an exemption. Curtailing EPA’s

supposed authority to issue dozens of exemptions,

Petitioners argue, will produce a wave of small

refinery failures. Pet’rs’ Br. 4, 17. This argument

ignores the original purpose of the RFS program, its

structure, the recent history of small refinery

viability, and the countervailing harm that a RFS

program administered in that manner causes to

biofuels producers across the country.

14

Congress did not grant EPA unilateral

authority to put its thumb on the scale in order to

influence the price of biofuels. The briefs of

Respondents and Federal Respondent explain that

the small refinery exemption aspect of the RFS

program was designed by Congress to serve as a

bridge that would allow initially disadvantaged small

refineries to eventually attain the ability to ensure

perpetual compliance with the RFS biofuel blending

mandates. Resp’ts’ Br. 42-46 and Fed. Resp’t’s Br. 2429. Respondents and Federal Respondent further

explain that the plain and most logical reading of the

relevant statutory text at 42 U.S.C. §7545(o)(9) uses

the term “extension” in its temporal sense and

includes a continuity element. Resp’ts’ Br. 19-33 and

Fed. Resp’t’s Br. 17-23.

Petitioners’ claim that small refineries are on

the cusp of closure if the availability of small refinery

exemptions is curtailed is not supported by the

evidence. For compliance years 2013 to 2015, a mere

eight, seven, and seven small refinery exemptions

were

granted,

respectively.20

Nevertheless,

Petitioners do not provide evidence that any of the

remaining 50+ refineries that did not receive

exemptions during that time were forced to close.

The reason for the refineries’ continued success

without the crutch of a small refinery exemption is

their ability to purchase RINs from the open market

to compensate for their inability to blend biofuels at a

reasonable price. The refineries are able to large pass

the costs of those RINs to consumers. While EPA’s

administration of the RFS program and its

20 EPA Small Refinery Exemption Dashboard,

supra note 10.

15

interpretation of relevant provisions has been

inconsistent over the years, EPA has consistently

maintained that the cost to purchase RINs on the

open market can largely be passed to consumers.

While the CAA is sprinkled with several

mandates that provide regulated parties the ability to

apply for general hardship exemptions or temporary

exemptions based on unforeseen circumstances, EPA

explained in its promulgation of its initial RFS

program regulations that the ability of obligated

parties to purchase RINs from the nationwide trading

program rendered such exemptions unnecessary

under the RFS program.

In recent rulemakings, we have included

a general hardship exemption for parties

that are able to demonstrate severe

economic hardship in complying with

the standard. We proposed not to include

provisions for a general hardship

exemption in the RFS program. Unlike

most other fuels programs, the RFS

program includes inherent flexibility

since compliance with the renewable

fuels standard is based on a nationwide

trading program, without any per gallon

requirements,

and

without

any

requirement that the refiner or importer

produce the renewable fuel. By

purchasing RINs, obligated parties will

be able to fulfill their renewable fuel

obligation without having to make

capital investments that may otherwise

be necessary in order to blend renewable

fuels into gasoline. We believe that

16

sufficient RINs will be available and at

reasonable prices, given that EIA

projects that far greater renewable fuels

will be used than required. Given the

flexibility provided in the RIN trading

program, including the provisions for

deficit carry-over, and the fact that the

standard is proportional to the volume of

gasoline actually produced or imported,

we continue to believe a general

hardship exemption is not warranted. As

a result, the final rule does not contain

provisions for a general hardship

exemption.21

A decade later and under a different

Presidential Administration, EPA’s conclusion on that

critical aspect of the RFS program had not changed.

“All obligated parties, including merchant refiners,

are generally able to recover the cost of the RINs they

need for compliance with the RFS obligations through

the cost of the gasoline and diesel fuel they produce.”22

Even if Petitioners could supply evidence of

scattered small refinery closures during the years in

which few exemptions were granted, that outcome

does not run contrary to the larger purpose of the RFS

program when you consider that during that same

time a plethora of new domestic biofuels production

facilities were constructed. For example, as of October

Regulation of Fuels and Fuel Additives: Renewable

Fuel Standard Program; Final Rule, 72 Fed. Reg. 23900, 23926

21 U.S. EPA,

(May 1, 2007).

22 U.S. EPA, Denial of Petitions for Rulemaking to Change the

RFS Point of Obligation, EPA-420-R-17-008 (Nov. 2017),

https://nepis.epa.gov/Exe/ZyPDF.cgi?Dockey=P100TBGV.pdf.

17

of 2020, there are 91 operating biodiesel plants in the

United States.23 The market worked efficiently

because every party was playing by the same rules.

That changed in 2017.

Unlike traditional refineries, who always

retain the ability to purchase market rate RINs to

account for any compliance shortfall under the RFS

program, producers of renewable fuels—particularly

advanced biofuels—are left economically vulnerable

by sudden changes to the nationwide demand for their

products, which is primarily driven by the mandates

of the RFS program. When market demand for

renewable fuels declines, which occurred when EPA

removed 1.8 billion gallons of renewable fuel demand

through its issuance of an unprecedented number of

small refinery exemptions, some biofuels can no

longer be economically produced. EPA’s previous

actions destroyed demand and killed the market.

In the face of declining RIN prices following the

unprecedented wave of small refinery exemptions,

ABFA members experienced negative impact to their

revenues, delayed long-term renewable fuel

investments, and reduced biofuel blending activities

that left underutilized the blending infrastructure in

which they had already heavily invested.24 Some

23 U.S. Energy Information Administration, U.S. Biodiesel Plant

Production

Capacity

(Oct.

23,

2020),

https://www.eia.gov/biofuels/biodiesel/capacity/.

24 Brief of Petitioner at 81-84, 89-92 (Decl. of ABFA members M.

Whitney and J. Baines), Advanced Biofuels Ass’n v. EPA, No. 181115, 2019 WL 2615356 (D.C. Cir. June 25, 2019)(explaining

reduced blending of biofuels using existing equipment and

delayed long-term investment in biofuels in response to lower

RIN demand following large number of small refinery

exemptions).

18

smaller ABFA members that produce biofuels were

unable to economically produce and market their

biofuels in the wake of low RIN prices and were forced

to cease production and lay off workers.25

Accordingly, it is clear that the practical effect

of allowing EPA to grant sporadic and wildly varied

numbers of small refinery exemptions from year-toyear undermines the purpose of the RFS program to

promote domestic energy independence through the

increased utilization of renewable biofuels.

II.

Affirming the Tenth Circuit’s opinion will

rightfully undercut EPA’s ability to arbitrarily award

secret financial windfalls to small refineries that

escape judicial review and disrupt biofuels markets.

The briefs of Respondents and Federal

Respondent present compelling explanations as to

why the only logical and practical reading of RFS

small refinery extension language is for the word

“extension” in 42 U.S.C. § 7545(o)(9)(B)(i) to have a

temporal meaning and to include an inherent

continuity requirement. Resp’ts’ Br. 19-46 and Fed.

Resp’t’s Br. 17-30. It is worth noting that in ABFA’s

litigation against EPA in the D.C. Circuit, which was

the first time the question at issue regarding

extensions of exemptions was raised in federal court,

Petitioner HollyFrontier Refining and Marketing

LLC (then acting as Intervenor-Respondent in

support of EPA) agreed that the “plain meaning of the

Id. at 85-88 (Declaration of ABFA member S. Lamb explaining

that business creating renewable fuels from waste grease from

wastewater treatment plants was required to cease production

and lay off the majority of its workforce following a drop in RINs

prices).

25

19

noun ‘extension’ (or its verb, ‘extend’)” is “prolong” or

“to increase the length or duration of . . . .” Brief of

Intervenor-Respondents at 48, Advanced Biofuels

Ass’n v. EPA, No. 18-1115, 2019 WL 2615358 at *38

(D.C. Cir. June 25, 2019). Petitioner HollyFrontier

Refining and Marketing LLC now argues that

“extension” means “to grant.” Pet’rs’ Br. 18-19.

This Court’s decision should be driven by the

clear intent of Congress, through the express

language used in 42 U.S.C. §7545(o)(9), to limit small

refineries relief from complying with the RFS

obligations to extensions of their earlier temporary

exemptions. The Court should take comfort, however,

that such a ruling will have the additional benefit of

largely ending EPA’s practice of awarding large

economic windfalls to unidentified small refineries, in

unknown amounts, for unknown reasons, through the

issuance of confidential decision documents that are

largely immune from judicial review yet send

economic ripple effects through the RINs market to

the detriment of biofuels producers and refineries not

receiving such largess.

As explained above, EPA’s small refinery

exemption decisions are shrouded by secrecy. While

EPA now publishes on an online dashboard basic data

about the number of petitions for extensions of small

refinery exemptions that it has received, granted, or

denied as well as the estimated number of gallons of

renewable fuel and RINs exempted from the RFS

program, the agency still refuses to publish the

identifies of the refineries that have applied for or

received extensions of exemptions or the rationales

for those decisions. Incredibly, only EPA, the

companies and ABFA’s counsel knows who received

20

exemptions for compliance years 2016 and 2017 and

why, which is subject to a protective order.

The dubious legal rationale underpinning this

veil of secrecy is that all small refineries that petition

for extensions of exemptions claim that the

information in the petitions is confidential business

information (“CBI”). EPA then unquestioningly treats

as CBI all information in its final decision document,

even down to the name of the company seeking the

exemption. EPA claims that regulations at 40 C.F.R.

§§ 2.204, 2.205, and 2.208 require it to treat as CBI

any information that small refineries claim is

confidential until EPA can evaluate that claim. In

reality, however, EPA makes no effort to review the

small refineries’ over-inclusive claims of CBI and

never releases additional information about the

recipients of the exemptions.

EPA and the refineries had every reason to

proceed in secrecy. This practice allows EPA to issue

small refinery exemptions free from oversight or

scrutiny from the public, Congress, or courts. EPA has

refused, based on claims of CBI, to provide detailed

information about its small refinery exemption

decisions in response to requests from Congress.26

EPA maintains this policy even after a refinery

publicly discloses its receipt of a small refinery

exemption in public filings to the U.S. Securities and

Exchange Commission. Even in the face of protracted

Freedom of Information Act litigation, EPA refused to

identify the name or location of small refineries

receiving exemptions, thereby shielding those

decisions from judicial review. See Renewable Fuels

26

See Grassley letter, supra note 7.

21

Ass’n v. EPA, No. 18-2031, 2021 WL 602913 at *1

(D.C. Cir. Feb. 16, 2021).

These exemptions are lucrative for the small

refineries that receive them. While privately-owned

refineries hold their exemption status close to the

chest, public companies that must update

shareholders with the news have trumpeted their

windfalls in financial disclosures.27 It is worth noting

here that the case at hand filed by Respondents was

only made possible thanks to public disclosures made

by the companies themselves. Privately held small

refineries that may have received exemptions based

on identical agency rationales cannot, as a practical

matter, be subject to any legal challenges because

their identifies remain unknown. Before EPA began

publishing its online Small Refinery Exemption

Dashboard, this secrecy would have also allowed the

small refineries that received exemptions to dump

their now unnecessary RINs into the marketplace,

where they were privy to information that other

market participants were not. The biofuel producers,

on the other hand, were unaware that EPA was

undermining its own renewable volume obligation

(“RVO”) through dozens of small refinery exemptions

and continued to produce biofuels to meet an

U.S. Refiners Reap Big Rewards from EPA

Waivers,

Reuters

(May

8,

2018),

27 Jarrett Renshaw,

Biofuel

https://www.reuters.com/article/us-usabiofuelssavings/u-s-refiners-reap-big-rewards-from-epa-biofuelwaiversidUSKBN1I91ZG

(documenting claims of cost savings of $100 million by

Andeavor, $120 million by CVR Refining, and $79 million by

Delek U.S. Holdings).

22

anticipated market demand for RINs that never

materialized.

With its final decision documents shielded from

the public scrutiny and facing an unprecedented

volume of petitions, the level of detail and legal

analysis that EPA began to provide in its final

decision documents became shockingly sparse. As

ABFA explained in the undisputed allegations in its

litigation against EPA in the D.C. Circuit, where

previous decision documents had contained 20 pages

of refinery-specific analysis, EPA’s decision

documents for compliance years 2016 and 2017 were

typically only five pages of legal boilerplate following

by a few paragraphs, or in some cases a few sentences,

of refinery specific information.28 Apparently even

this minimal amount of work proved too much for

EPA, such that for compliance year 2018 the agency

issued final determinations on 42 petitions through a

two-page letter that is currently subject to a separate

legal challenge in the D.C. Circuit.29

ABFA’s 2018 litigation against EPA was not

successful due to the fact that EPA had not yet

reduced its change in methodology for compliance

years 2016 and 2017 to a written memo or guidance

document. Hence, the D.C. Circuit found that EPA’s

Advanced Biofuels Ass’n v. EPA,

No. 18-1115, 2019 WL 2615356 (D.C. Cir. June 25, 2019)(“After

May 4, 2017, however, most of EPA’s decision documents are

only five pages and after setting aside boilerplate language

contain only a short paragraph—often a single sentence—

justifying a full exemption . . . .”

29 Petition for Review at 10-11, Renewable Fuels Ass’n v. EPA,

No.

19-1220,

(D.C.

Cir.

Oct.

22,

2019),

https://www.epa.gov/sites/production/files/201911/documents/rfa_19-1220_pfr_10222019.pdf.

28 Brief of Petitioner at 39-40,

23

acknowledgement of changed methodologies in

individual decision documents were informal

adjudications that, in its estimation, did not amount

to final agency action announcing the adoption of a

new rule or methodology.30 While the D.C. Circuit

dismissed ABFA’s petition on these technical

grounds, it did not do so without first raising an alarm

about EPA’s secretive conduct that leaves aggrieved

parties without a viable avenue for judicial review:

To be sure, the EPA’s briefing and oral

argument paint a troubling picture of

intentionally shrouded and hidden agency

law that could have left those aggrieved by

the agency’s actions without a viable

avenue for judicial review. But we need

not decide in this case whether or how an

ongoing pattern of genuinely secrete law

might be challenged because the EPA’s

changed rules of decisions have been

disclosed both through the numerous

information

adjudication

decisions

recently releases to the Association and, of

particular import, the August 2019 formal

and public memorandum announcing the

EPA’s new decisional framework and

applying it to forty-two refineries. During

oral argument, the EPA acknowledged

that the August 2019 Memorandum is

‘final agency action’ to which a challenge

Advanced Biofuels Ass’n v. EPA, 792 Fed. Appx. 1, 5 (D.C. Cir.

2019)(While the [ABFA’s] petition’s identification of a pattern

across myriad circumstances may be evidence of a final agency

action, it is not itself a final agency action that, without more,

can support a petition for review.”)

30

24

could be brought if filed within the

required limitations period.31

By ruling that the plain language of 42 U.S.C.

§ 7545(o)(9)(B)(i) provides that a small refinery may

only receive an extension of its prior temporary

exemption if they have continuously received

exemptions for all previous compliance years, this

Court can restore the use of small refinery exemptions

to the approximately seven small refineries for which

it remains appropriate fourteen years after the

requirements of the RFS began to take effect and this

Court can simultaneously prevent EPA from ever

again using this system of secretive agency law to

issue an estimated $7 billion dollars of windfalls to

small refineries without any judicial or Congressional

oversight.

CONCLUSION

For the reasons set forth above, ABFA

respectfully requests that this Court affirm the Tenth

Circuit’s decision that a small refinery that did not

seek or receive an exemption under 42 U.S.C. §

7545(o)(9)(B)(i) in prior years is ineligible to receive a

further extension of exemption because at that point

there is nothing to be added to or prolonged.

31

Id.

25

Respectfully submitted,

Rafe Petersen

Counsel of Record

Holland & Knight LLP

800 17th Street, N.W., Suite 1100

Washington, D.C. 20006

(202) 419-2481

rafe.petersen@hklaw.com

Counsel for Amicus Curiae

Advanced Biofuels Association

March 31, 2021