Reply Brief — Growth Energy, Petitioner v. American Fuel & Petrochemical Manufacturers, et al.

Supreme Court briefDec 21, 2021

Ask Donna

What actually matters in this document.

Text

No. 21-519

IN THE

Supreme Court of the United States

GROWTH ENERGY,

Petitioner,

AMERICAN FUEL & PETROCHEMICAL

MANUFACTURERS, et al.,

Respondents.

ON PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE DISTRICT OF COLUMBIA CIRCUIT

REPLY BRIEF FOR PETITIONERS

ETHAN G. SHENKMAN

JONATHAN S. MARTEL

WILLIAM C. PERDUE

ARNOLD & PORTER KAYE

SCHOLER LLP

601 Massachusetts Ave., NW

Washington, DC 20001

(202) 942-5000

SETH P. WAXMAN

Counsel of Record

DAVID M. LEHN

CARY A. GLYNN

WILMER CUTLER PICKERING

HALE AND DORR LLP

1875 Pennsylvania Ave., NW

Washington, DC 20006

(202) 663-6000

seth.waxman@wilmerhale.com

TABLE OF CONTENTS

Page

TABLE OF AUTHORITIES ........................................... ii

INTRODUCTION .............................................................. 1

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

THE GOVERNMENT ACKNOWLEDGES THE

STRENGTH OF GROWTH ENERGY’S MERITS

ARGUMENTS........................................................................2

II. THE GOVERNMENT’S EFFORTS TO MINIMIZE

THE STAKES FAIL..............................................................5

III. THE GOVERNMENT ERRS IN SUGGESTING

THAT THIS CASE IS NOT ESSENTIAL FOR

ENABLING NATIONWIDE SUMMER SALE OF

E15......................................................................................10

CONCLUSION ................................................................. 12

(i)

TABLE OF AUTHORITIES

CASES

Page(s)

HollyFrontier Cheyenne Refining, LLC v.

Renewable Fuels Ass’n,

141 S. Ct. 2172 (2021) ................................................... 4

King v. Burwell, 576 U.S. 473 (2015) .............................3-4

Kisor v. Wilkie, 139 S. Ct. 2400 (2019).............................. 4

Nixon v. Missouri Municipal League,

541 U.S. 125 (2004) ....................................................... 3

STATUTES

42 U.S.C. § 7545(f)(1) ......................................................... 10

42 U.S.C. § 7545(h)(5) ........................................................ 11

AGENCY MATERIALS

EPA, Modifications to Fuel Regulations to

Provide Flexibility for E15;

Modifications to RFS RIN Market

Regulations: Response to Comments

(May 2019), https://nepis.epa

.gov/Exe/ZyPDF.cgi?Dockey=P100WR

63.pdf .............................................................................. 8

EPA, Renewable Fuel Standard (RFS)

Program: RFS Annual Rules (Dec. 7,

2021), https://www.epa.gov/sites/

default/files/2021-12/documents/rfs2020-2021-2022-rvo-standards-nprm2021-12-07.pdf ........................................................... 5, 7

iii

U.S. Department of Energy, National

Renewable Energy Lab, E15 and

Infrastructure (May 2015),

https://afdc.energy.gov/files/u/publicati

on/e15_infrastructure.pdf............................................ 8

DOCKETING CASES

Commissioner of Internal Revenue v.

Banks, No. 03-892 (U.S.).......................................11-12

Fitzgerald v. Barnstable School

Committee, No. 07-1125 (U.S.) ................................... 9

Gonzales v. Duenas-Alvarez,

No. 05-1629 (U.S.) ....................................................... 11

Limelight Networks, Inc. v. Akamai

Technologies, Inc., No. 12-786 (U.S.) ......................... 9

OTHER AUTHORITIES

Air Improvement Resources, Inc., Analysis

of Ethanol-Compatible Fleet for

Calendar Year 2022 (Nov. 16, 2021),

https://growthenergy.org/wpcontent/uploads/2021/12/Analysis-ofEthanol-Compatible-Fleet-forCalendar-Year-2022-16Nov21.pdf ............................. 8

Growth Energy, Retailer Hub,

https://growthenergy.org/resources/ret

ailer-hub/.....................................................................8-9

Stillwater Associates LLC, Infrastructure

Changes and Cost to Increase RFS

Ethanol Volumes through Increased

E15 and E85 Sales in 2017 (July 11,

2016), https://www.regulations.gov/

comment/EPA-HQ-OAR-2016-00043499 ................................................................................. 9

INTRODUCTION

The court of appeals’ incorrect conclusion that

Congress intended the Clean Air Act’s waiver of the

RVP limit for ethanol to apply only to E10 will have serious negative consequences. The RVP limit prevents

the sale of E15 for more than one-third of the year, depriving the country of the economic, health, environmental, and security benefits that would come with increasing the amount of ethanol in the nation’s gasoline.

The government agrees that the court of appeals

erred, but opposes certiorari because, in its view (Opp.

9), the court below applied settled principles of statutory interpretation to an issue that is “open to debate.”

As Growth Energy’s petition explained, however, the

court’s interpretation ascribes to Congress an irrational

purpose in creating the ethanol waiver: to allow ethanol

into the fuel supply but to exclude blends with more

ethanol even if they meet the waiver’s RVP limit. Applying controlling and well-established rules of statutory interpretation yields the conclusion that Congress

intended the ethanol waiver to cover higher-ethanol

blends, but at a minimum the lower court’s conclusion

that Congress intended to exclude such blends from the

ethanol waiver cannot be squared with those rules.

The government also opposes certiorari because, it

says, the question presented has little practical importance, noting several supposed economic and logistical impediments to increased E15 use. But some of the

government’s concerns contradict EPA’s own findings,

and the government vastly overstates the significance

of the rest. Tellingly, and contrary to the government’s

assertion, the number of miles driven on E15 were

markedly higher while the Final Rule was in effect—

even though that period covered only one complete

summer season and fragments of two more, and even

though fuel demand was dramatically lower for most of

that period because of the Covid pandemic. And even

under the government’s conception of the size of the

market, the Final Rule still affects about one quarter of

all gallons of gasoline used in the United States.

Finally, the government speculates about the possibility of vacatur of the Final Rule on an alternative

ground on remand, or an alternative regulatory or legislative mechanism to enable E15 to be sold subject to

the same RVP limit as E10 year-round. But this Court

routinely grants certiorari in the face of such possibilities.

The Court should grant the petition.

ARGUMENT

THE GOVERNMENT ACKNOWLEDGES THE STRENGTH

OF GROWTH ENERGY’S MERITS ARGUMENTS

Growth Energy’s petition explained (at 13-21) that

the court of appeals’ interpretation of 42 U.S.C.

§ 7545(h)(4) defies fundamental principles of statutory

interpretation as established by this Court’s precedents. Ordinary meaning, statutory structure, and

purpose make clear that Congress intended the phrase

“fuel blends containing gasoline and 10 percent denatured anhydrous ethanol” to include blends that have

more than 10 percent ethanol, or at least that the statute reasonably permits that interpretation. In concluding instead that that phrase must be interpreted to include blends with precisely 10 percent ethanol and no

more, the lower court violated the “fundamental canon

of statutory construction that the words of a statute

must be read in their context and with a view to their

place in the overall statutory scheme,” and the related

principles that courts “cannot interpret federal statutes

to negate their own stated purposes,” King v. Burwell,

576 U.S. 473, 492-493 (2015) (quotation marks omitted),

or to “lead[] to absurd … results,” Nixon v. Missouri

Mun. League, 541 U.S. 125, 138 (2004).

The government agrees with Growth Energy that

the court of appeals’ rejection of EPA’s interpretation

at Chevron step 1 was erroneous, and largely agrees

with Growth Energy’s reasoning. The government

says (Opp. 8) that EPA “reasonably understood ordinary meaning and dictionary definitions to show ambiguity about the scope of the challenged statutory

phrase,” and that there are many “reasonable arguments weigh[ing] against the court of appeals’ conclusion.” See also Opp. 8-9 (cataloguing such arguments).

Ultimately, the government’s position is that EPA’s

interpretation should be upheld at Chevron step 2—a

position with which Growth Energy agrees, in the alternative. See Pet.20-21.

Where the government parts ways with Growth

Energy on the merits is only in how badly the court of

appeals’ analysis went off the rails. In the government’s view (Opp. 8-9), the meaning of the ethanol

waiver is “open to debate,” and the court of appeals

“appl[ied] … accepted methods” of statutory interpretation to resolve that ambiguity. The government is

wrong about both the clarity of the statute and the

soundness of the court of appeals’ analysis.

First, the government contends (Opp. 8) that the

statute is not “unambiguous” because “[n]either ordinary meaning nor dictionary definitions suggest that

references to substances ‘containing’ a specified amount

of a particular component always encompass substances that contain more than the specified amount.”

Growth Energy, however, does not take that absolutist

position; it merely argues (Pet.13-14) that “containing”

a specified amount of a substance sometimes means

“having at least” that amount of the substance, and that

context shows this statute is such a time. Moreover,

the government’s argument disregards the wellestablished principle that a statute may be unambiguous even if its plain text is ambiguous. “[B]efore concluding that a [statute] is genuinely ambiguous, a court

must exhaust all the traditional tools of construction,”

including not only the statute’s “text” but also its

“structure, history, and purpose.” Kisor v. Wilkie, 139

S. Ct. 2400, 2415 (2019) (quotation cleaned). Thus, as

the petition noted (at 13), a “provision that may seem

ambiguous in isolation is often clarified by the remainder of the statutory scheme because only one of the

permissible meanings produces a substantive effect

that is compatible with the rest of the law.” King, 576

U.S. at 492 (quotation cleaned). Indeed, this Court recently held in HollyFrontier Cheyenne Refining, LLC

v. Renewable Fuels Ass’n, 141 S. Ct. 2172, 2178-2179

(2021), that another provision of the Clean Air Act was

unambiguous even though the relevant text was susceptible of multiple possible meanings. The same is

true here.

Second, the government contends (Opp. 9) that the

court below did eventually “assess the statutory context, history, and purpose,” pointing to the court’s consideration of other statutory provisions and drafts of

the provision at issue. But as the petition explained (at

13-20), the court disregarded, misapprehended, or contradicted an overwhelming supply of statutory evidence of Congress’s intent. In the end, the court identified no compelling evidence supporting its conclusion

that Congress clearly intended to accomplish the bi-

zarre aim of providing a 1-psi waiver for E10 but not

for higher-ethanol blends. The court’s analysis, therefore, cannot fairly be deemed faithful to applicable principles of statutory interpretation.

II. THE GOVERNMENT’S EFFORTS TO MINIMIZE THE

STAKES FAIL

Growth Energy’s petition explained (at 21-23) that

the practical effect of the decision below is to bar the

sale of E15 in the summer, which will result in significant harm to the nation’s economy, health, environment, and security. The government attempts to minimize these harms, but its arguments are specious and

even contradict EPA’s own statements.

1. According to the government (Opp. 11), the

question presented has “limited practical significance”

because it affects the sale of gasoline only during the

summer and only outside the roughly 30% of the market that can use reformulated gasoline. That is still a

lot. Assuming conservatively that driving is constant

throughout the year—in fact, driving is heavier in the

four-and-a-half-month summer season, when the ethanol waiver would apply—the ethanol waiver affects approximately 26% of the gasoline sold annually (70% of

4.5/12). In 2020, when driving was historically low because of the Covid pandemic, that amounted to approximately 32 billion gallons of gasoline. See EPA, Renewable Fuel Standard (RFS) Program: RFS Annual

Rules (“2020-2022 Proposed Standards”) 63 (Dec. 7,

2021).1 And that substantially understates the Final

Rule’s potential impact because, as Growth Energy has

https://www.epa.gov/sites/default/files/202112/documents/rfs-2020-2021-2022-rvo-standards-nprm-2021-1207.pdf.

explained (Pet.22), clearing the regulatory hurdles to

summer E15 sales unlocks greater investment in E15

overall.

2. The government grossly understates (Opp. 11)

that extending the ethanol waiver to E15 would merely

“make it more affordable to sell E15” in the summer.

As the petition noted (at 11 n.3) and as EPA and the

court below themselves acknowledged, producing E15

that could meet the 9.0 psi RVP limit in the summer—

and thus that could be sold without the ethanol waiver—is “cost-prohibitive.”

Pet.App.6a; accord CAJA014. Therefore, denying E15 the ethanol waiver

“would likely result in the termination of the availability of [E15] in the marketplace” during the summer.

CAJA014 (emphasis added). Thus, as the court of appeals found, “[b]y removing the otherwise applicable 9psi volatility limit, the E15 Rule is substantially likely

to increase demand for E15.” Pet.App.9a. Indeed, the

court noted EPA’s estimate that extending the ethanol

waiver to E15 would raise “annual per-station sales of

E15” by “about 16%.” Pet.App.10a.2

The government, however, maintains (Opp. 12) that

there was “no rapid expansion of E15 usage” while the

Final Rule was in force. That contention is unfair and

incorrect. First, consider the period when the Final

Rule was in force: The Rule was issued in June 2019,

Because the transportation-fuels market is so competitive, even a price increase of a few cents per gallon can have a significant effect on consumer demand. And the decision of whether

to use the more-expensive lower-volatility blendstock needed to

create E15 with a 9.0 psi RVP is up to petroleum refiners—the

competitors of ethanol producers that challenged the Final Rule in

hopes of keeping E15 out of the summer market. Pet.App.9a-10a

(holding that refiner petitioners had “competitor standing” to challenge Final Rule).

midway through the summer season. And retailers

could not turn instantly begin selling E15; they needed

time to arrange to buy E15, phase out the E10 that was

in their tanks and pumps, and change hose configurations and pump labeling (non-trivial tasks given the

number of tanks and pumps). Next, the summer of

2020 came amid the pandemic, which caused a “drastic

fall in transportation fuel demand generally.” 20202022 Proposed Standards 28. And then the court of appeals vacated the ethanol waiver in July 2021, during

the summer season. On top of all that, the pendency of

this lawsuit, and the attendant risk that the ethanol

waiver would be invalidated, discouraged market participants from making E15-related investments, lest

their investments be stranded. See Pet.6, 22-23. Yet,

as Growth Energy has shown (Pet.11-12), drivers still

logged as many miles on E15 while the Final Rule was

in effect as they had in the previous 10 years combined.

3. Somehow, despite these facts, the government

insists (Opp. 6, 11-12) that upholding EPA’s interpretation of the ethanol waiver “would not lead to widespread use of E15 … because of independent economic,

administrative, and logistical barriers” to E15 expansion. The government is wrong.

a. The government points (Opp. 11-12) to various

supposed economic and logistical barriers: consumer

reluctance; the cost of upgrading retail stations to E15compatible pumps and tanks; and the challenges of distributing E15 to areas outside the Midwest, where

most ethanol is produced. Those certainly are not barriers to increased summer sale of E15; the consumers

buying E15 outside the summer and the stations selling

E15 outside the summer are already unaffected by any

such barriers.

Nor would those supposed barriers prevent meaningful expansion of E15 beyond extending summer E15

to drivers already buying E15 outside the summer.

The government says (Opp. 11-12) some unquantified

number of consumers will not use E15 because vehicles

made before 2001 are not permitted to use E15 and

some later-model vehicles’ manuals “warn against using

E15.” But E15-compatible vehicles will account for

about 98% of vehicle miles travelled in 2022. See Air

Improvement Resources, Inc., Analysis of EthanolCompatible Fleet for Calendar Year 2022, at 2 (Nov.

16, 2021).3 Moreover, EPA itself already rejected the

concern about vehicle warranties, noting that “manufacturers may not deny a warranty claim based on use

of a different fuel if that fuel did not cause the problem

for which the warranty claim is made.” EPA, Modifications to Fuel Regulations to Provide Flexibility for

E15; Modifications to RFS RIN Market Regulations:

Response to Comments 69 (May 2019).4

The government’s concerns about incompatible infrastructure are similarly infirm. Nearly all tanks

made in the past 30 years are compatible with E15.

Growth Energy, Retailer Hub5; U.S. Department of

Energy, National Renewable Energy Lab, E15 and Infrastructure vi (May 2015).6 Further, a typical station

https://growthenergy.org/wp-content/uploads/2021/12/

Analysis-of-Ethanol-Compatible-Fleet-for-Calendar-Year-202216Nov21.pdf.

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

=P100WR63.pdf.

https://growthenergy.org/resources/retailer-hub/.

https://afdc.energy.gov/files/u/publication/e15

_infrastructure.pdf.

could upgrade its tanks, dispensers, and associated infrastructure to be compatible with E15 for a modest

sum (about $5,000 to $15,000). Stillwater Associates

LLC, Infrastructure Changes and Cost to Increase

Consumption of E85 and E15 in 2017, at 20-22 (July 11,

2016), attached as Ex. D to Growth Energy, Comments

on EPA’s Proposed Renewable Fuel Standard Program: Standards for 2017 and Biomass-Based Diesel

Volume for 2018 (EPA docket ID EPA-HQ-OAR-20160004-3499).7

Finally, there is no problem distributing E15 outside the Midwest. Today there are terminals distributing E15 throughout the Mid-Atlantic, Southeast, and

South-Central regions, see Growth Energy, Retailer

Hub.

b. As for the supposed administrative impediment, the government says (Opp. 12-13) that reversal

of the decision below might not enable E15 to be sold

during the summer because on remand, the court of appeals could vacate the Final Rule’s determination that

E15 is “substantially similar” to E10 under 42 U.S.C.

§ 7545(f)(1). There are several flaws in the government’s argument. First, this Court routinely grants

certiorari in the face of potential alternative grounds

for affirmance, leaving it to the lower courts to address

them in the first instance on remand. See, e.g., Opp. 3538, Limelight Networks, Inc. v. Akamai Techs., Inc.,

No. 12-786 (U.S. Apr. 3, 2013); Opp. 11-22, Fitzgerald v.

Barnstable Sch. Comm., No. 07-1125 (U.S. May 5,

2008). Notably, the government offers neither authority nor rationale for its notion that the possibility of an

https://www.regulations.gov/comment/EPA-HQ-OAR2016-0004-3499.

affirmance on other grounds on remand is a basis to deny certiorari.

Second, EPA’s “substantially similar” determination affects a vanishingly small segment of the E15

market. That determination enables “fuel manufacturers” to introduce E15 into commerce without a waiver

under 42 U.S.C. § 7545(f)(4). See Pet.11; § 7545(f)(1).

But in the Final Rule, EPA also determined that oxygenate blenders are not fuel manufacturers and therefore may sell E15 regardless of § 7545(f), CAJA3, 30,

that portion of the Final Rule was not challenged, and

oxygenate blenders account for at least 90% of the E15

introduced into commerce. Moreover, EPA could render the “substantially similar” determination irrelevant

by amending the waivers that EPA previously granted

E15 under § 7545(f)(4) to permit the sale of E15 at 10

psi. See Pet.10; Pet.App.2a-3a, 7a.

III. THE GOVERNMENT ERRS IN SUGGESTING THAT THIS

CASE IS NOT ESSENTIAL FOR ENABLING NATIONWIDE

SUMMER SALE OF E15

Growth Energy has explained (Pet.23-24) that its

petition presents the sole opportunity for this Court to

correct the lower court’s error and allow a 1-psi waiver

for the summer sale of E15. The government disagrees, for speculative and insubstantial reasons.

The government contends (Opp. 10 n.2) that “[t]his

Court … does not grant certiorari simply because a

single circuit has exclusive jurisdiction over a particular category of cases.” That misses the point. The certiorari petition explained (at 23-24) that because the

D.C. Circuit has exclusive jurisdiction, there will never

be an opportunity for the issue to percolate in the lower

courts, let alone a circuit conflict on the issue. This is

undisputedly the only case that will ever present this

question.

The government also speculates about the possibility of other regulatory or legislative solutions to the

RVP problem for E15. The government notes (Opp. 13)

that a state may “request” that EPA remove the 1-psi

waiver for ethanol entirely if certain conditions are

met, which would then subject both E10 and E15 to the

9-psi RVP limit (rather than the 10-psi limit under the

ethanol waiver). See 42 U.S.C. § 7545(h)(5). That supposed solution is far-fetched. Requests must be made

by individual states, so it is not a path to widespread

relief, the government does not say whether applicant

states could make the requisite showing, and governors

face a strong disincentive to make such a request,

namely, blame for raising the price of gasoline in their

state.

The government also posits (Opp. 13-14) that Congress could amend § 7545 to “make clear” that the ethanol waiver applies to E15. Although some bills have

been introduced to do so, no further action has been

taken on them. Moreover, the potential for a legislative

solution is far too sweeping a basis to deny certiorari,

since amendment is always a possibility in a statutoryinterpretation case. Indeed, this Court has routinely

granted certiorari—often at the government’s behest—

in the face of a pending legislative solution, even where

the bill was further along in the legislative process.

See, e.g., Cert. Reply 10 n.8, Gonzales v. DuenasAlvarez, No. 05-1629 (U.S. Sept. 6, 2006) (“it remains

uncertain whether legislation addressing the question

presented in this case will be passed”), cert. granted,

127 S. Ct. 35 (Sept. 26, 2006); see also Cert. Reply 9,

Commissioner of Internal Revenue v. Banks, No. 03892 (U.S. Mar. 11, 2004) (arguing that “pending legisla-

tion … does not remove the need for this Court’s review” because “the legislation has merely been proposed, and it is far from clear that it will ever be enacted into law, much less enacted soon enough to reduce

the need for this Court’s review”), cert. granted, 124 S.

Ct. 1712 (Mar. 29, 2004).

CONCLUSION

The petition for a writ of certiorari should be granted.

Respectfully submitted.