Amicus Curiae Brief — Environmental Protection Agency, Petitioner v. Calumet Shreveport Refining, L.L.C., et al.

Supreme Court briefDec 20, 2024

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No. 23-1229

In The

ENVIRONMENTAL PROTECTION AGENCY,

Petitioner,

CALUMET SHREVEPORT REFINING, L.L.C., ET AL.,

Respondents.

On Writ of Certiorari to the

United States Court of Appeals for the Fifth Circuit

BRIEF OF NATSO, SIGMA, AND NACS AS

AMICI CURIAE IN SUPPORT OF

PETITIONER

Hyland Hunt

Counsel of Record

Ruthanne M. Deutsch

DEUTSCH HUNT PLLC

300 New Jersey Ave. NW

Suite 300

Washington, DC 20001

(202) 868-6915

hhunt@deutschhunt.com

TABLE OF CONTENTS

INTEREST OF AMICI CURIAE ................................ 1

INTRODUCTION

AND

SUMMARY

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

ARGUMENT ............................................................... 4

I. Compliance Costs For The Renewable Fuel

Standard Program Are Set By, And Passed Through

In, A Nationwide Market, Without Regional

Variation. ..................................................................... 4

A. The Renewable Fuels Credit Market Operates

Within a Competitive National Fuel Market. 5

B. A National Market Is Best Served by National

Rules. ............................................................. 11

C. The Question Whether Small Refineries Are

Equally Able to Pass Through RIN Costs Is

Not Presented. ............................................... 14

II. The Fifth Circuit’s Rejection Of RIN Passthrough

Was Wrong. ............................................................... 16

CONCLUSION .......................................................... 20

(i)

TABLE OF AUTHORITIES

CASES

Alon Refin. Krotz Springs, Inc. v. EPA, 936 F.3d

628 (D.C. Cir. 2019) ...............................................10

HollyFrontier Cheyenne Refin., LLC v.

Renewable Fuels Ass’n, 594 U.S. 382 (2021) ..........9

Izumi Seimitsu Kogyo Kabushiki Kaisha v. U.S.

Philips Corp., 510 U.S. 27 (1993) ..........................14

Macquarie Infrastructure Corp. v. Moab

Partners, L.P., 601 U.S. 257 (2024) .......................16

S. Ill. Power Coop. v. EPA, 863 F.3d 666 (7th

Cir. 2017).......................................................... 12, 13

Sinclair Wyo. Refin. Co. v. EPA, 114 F.4th 693

(D.C. Cir. 2024) ................................................ 12, 17

Yee v. City of Escondido, 503 U.S. 519 (1992) ..........14

STATUTES

42 U.S.C. § 7607(b)(1) ........................................... 1, 11

REGULATIONS

40 C.F.R. § 80.1415(a)-(b) ...........................................9

40 C.F.R. § 80.1425(g) ...............................................10

85 Fed. Reg. 7016 (Feb. 6, 2020) ...............................12

89 Fed. Reg. 14760 (Feb. 29, 2024) .............................8

iii

OTHER AUTHORITIES

Advanced Biofuels Under the Renewable Fuel

Standard: Current Status and Future

Prospects: Hearing Before the H. Subcomm.

on Env’t, 115th Cong. (2018) (statement of

Robin Puthusseril on behalf of NATSO) .................6

Gasoline explained, U.S. Energy Info. Admin. ...........5

Gasoline explained: Regional gasoline price

differences, U.S. Energy Info. Admin. .....................7

Kristi Moriarty, Nat’l Renewable Energy Lab’y,

High Octane Fuel: Terminal Backgrounder

(2016) ....................................................................5, 6

Pricing 101: Spot Fuel Markets Made Simple,

OPIS (Mar. 10, 2023) ...............................................7

Rack Pricing Coverage by City, OPIS ..........................8

Recommendations of the Administrative

Conference of the United States, 41 Fed. Reg.

56767 (Dec. 30, 1976) (statement of G.

William Frick) ........................................................12

RIN Trades and Price Information, EPA .................10

RINs and Carbon Credit Pricing, OPIS ...................10

INTEREST OF AMICI CURIAE1

Amici

NATSO

(formerly

the

National

Association of Truck Stop Operators), SIGMA:

America’s Leading Fuel Marketers (formerly the

Society of Independent Gasoline Marketers of

America), and NACS (the National Association of

Convenience Stores) are the leading trade

associations representing distributors and retailers of

motor fuel. Together, they represent more than 90

percent of retail motor fuel sales in the United States,

as well as terminal operators, wholesalers, and

distributors.

Amici organizations and their members have

significant experience with EPA’s Renewable Fuel

Standard (RFS) program, as well as direct insight into

all segments of the motor fuel value chain. That

experience makes them uniquely well-positioned to

weigh in on what is ultimately a very narrow question

presented here—whether EPA’s across-the-board

denial of RFS program exemptions to small refineries

was “nationally applicable” or “based on a

determination of nationwide scope or effect.” 42

U.S.C. § 7607(b)(1).

Whatever the scope of the Clean Air Act’s venue

provision in the abstract—a question on which amici

take no view—the precise venue question here can be

answered by recognizing that there is no regional

variation in the essential market dynamics for RFS

1 No counsel for any party authored this brief in whole or

in part, and no person or entity other than amici curiae, their

members, or their counsel made a monetary contribution

intended to fund the brief’s preparation or submission.

(1)

compliance costs. Amici’s experience as market

participants aligns with EPA’s judgment that the

question of whether small refineries qualify for RFS

program exemptions can and should be answered on a

nationwide basis, as EPA did here.

INTRODUCTION

AND SUMMARY OF ARGUMENT

As daily participants in wholesale and retail fuel

markets, amici’s members are deeply familiar with

pricing dynamics in those markets, as well as the

effects of the RFS program. With respect to what

matters here—the cost of renewable fuel credits

(called Renewable Identification Numbers or RINs)

and the ability of refineries to pass those costs on to

customers—market dynamics do not vary across the

country. Fuel prices in general, and RIN prices in

particular, are set in the context of a national market.

Reflecting this national-market reality, EPA’s denial

actions here are both nationally applicable and based

on a determination of nationwide scope and effect.

Judge-made variation across regional circuits

would necessarily be premised on a misunderstanding

of how the RIN market operates and interacts with

the nationwide motor fuel distribution system.

Regional circuit review risks geographically disparate

exemption standards. And because exempt refineries’

RFS compliance obligations can be re-allocated to

other refineries, such disparate standards could cause

regionally lopsided shifts in RFS compliance

obligations. This would introduce inefficiencygenerating incoherency into what has thus far been a

well-functioning national market.

The lack of regional variation in how the RIN

market operates—including the degree to which

refineries can pass on their RIN costs—confirms that

D.C. Circuit venue is appropriate. That is so

regardless of whether the Court agrees with EPA that

all refineries can, in fact, pass along their RIN costs.

The question whether small and large refineries are

equally able to pass on their RIN costs is not

presented here. The Court need not—and therefore

should not—address whether EPA’s technical answer

on that merits question was correct. It need only

decide the cleanly presented procedural question of

whether EPA answered that question on a nationwide

basis. Amici therefore urge the Court to steer clear of

endorsing any attempt to smuggle the Fifth Circuit’s

flawed merits analysis into the venue question

presented.

Though the Court should not reach it,

highlighting but one point of error—among many

where the Fifth Circuit went astray—shows why

carefully separating the straightforward venue

question from the merits analysis matters. Here, the

Fifth Circuit reasoned, based on nonpublic data, that

small refineries cannot pass through their RFS

compliance costs in “micro-markets” because prices in

those markets are lower. But amici’s experience

(consistent with basic economic principles) shows the

opposite: prices in small, local markets generally are

higher than prices in large, central markets.

Regardless, even if small refiners cannot pass on some

non-RIN costs, there is no evidence they cannot pass

on RIN costs, and the record evidence is otherwise.

But the relevant point here—for the venue

question presented—is even if (counterfactually)

smaller refineries faced different RIN costs than

larger ones, those costs would still be demonstrably

tethered to national market dynamics and principles

that do not vary geographically. This national market

should not be subject to eleven conflicting rulesets

about when EPA can grant RFS program exemptions

to small refineries. Only a nationally applicable rule,

subject to review in the D.C. Circuit alone, can

properly supervise this aspect of the RFS program as

Congress intended.

ARGUMENT

Compliance Costs For The Renewable

Fuel Standard Program Are Set By, And

Passed Through In, A Nationwide Market,

Without Regional Variation.

Local U.S. fuel markets do not function in

isolation. Rather, they are connected by extensive

transportation networks, and buyers and sellers in

one place inevitably influence prices elsewhere. The

EPA rule here hinged on a determination that the

same national market forces shape fuel prices across

the country, including refineries’ ability to pass on

RIN costs as part of those fuel prices.

Amici’s real-world experience amply supports

EPA’s assessment that small-refinery exemptions

should be, and were, decided in a nationally applicable

action based on an economic analysis that was

national in scope. Regardless of whether EPA was

correct about whether small refineries are equally

able to pass on their RIN costs as large refineries—a

merits question the Court need not address—the lack

of regional variation in how RIN passthrough works

confirms that venue is proper in the D.C. Circuit.

The Renewable Fuels Credit Market

Operates Within a Competitive

National Fuel Market.

1. The U.S. motor fuel market is extremely

competitive throughout the distribution chain.

Generally, the market has three levels. At the refining

level, crude oil is refined into “blendstocks,” which

require blending with other liquids to make the

finished motor fuel that American motorists buy at

filling stations across the country. See Gasoline

explained,

U.S.

Energy

Info.

Admin.

https://tinyurl.com/4mtxsjd2. There are about 130

refineries in the United States, and they compete with

one another, as well as with refineries outside the

United States and importers. All these actors vie to

deliver blendstocks to fuel terminals around the

country, often via pipelines and other low-cost

transportation methods. Pet. App. 115a.

Fuel terminals—more than 1,300 of them across

the United States—represent the next stage in the

distribution chain: the wholesale stage where

blendstocks are stored, blended into finished motor

fuels, and loaded onto trucks. Pet. App. 114a. At this

stage, ethanol or other renewable fuels are typically

blended into finished motor fuels. See id. at 120a;

Kristi Moriarty, Nat’l Renewable Energy Lab’y, High

Octane Fuel: Terminal Backgrounder 1-2 (2016),

https://tinyurl.com/twc94d77. You can think of a fuel

terminal as having several distinct tanks holding

different components of finished fuel—e.g., different

gasoline blendstocks, diesel, ethanol, and additives.

When a truck arrives at the terminal and selects a

particular blend, “products are pulled from various

tanks to dispense a finished transportation fuel into

the truck.” Moriarty, supra, at 1.

The truck then delivers that finished fuel to the

final retail stage, where it is sold to consumers. At the

retail level, there are about 145,000 retail fueling

stations in the United States. Pet. App. 114a. At those

stations, operated by amici’s members, retail prices

are highly transparent and competitive. Id. at 115a.

Price signs are visible from consumers’ vehicles, and

consumers often can see multiple signs for the same

fungible commodity from a single vantage point.

Consumers also can compare prices through mobile

applications that list prices from retail fueling

stations anywhere in the country.

These competitive dynamics, fueled by price

transparency, are particularly pronounced in retail

diesel markets. Truck drivers and trucking fleets,

which make the lion’s share of diesel purchases, are

price sensitive and often compare prices over long

distances, with fleet managers directing truck drivers

to specific retail locations for the lowest prices.

Advanced Biofuels Under the Renewable Fuel

Standard: Current Status and Future Prospects:

Hearing Before the H. Subcomm. on Env’t, 115th

Cong. 34 (2018) (statement of Robin Puthusseril on

behalf of NATSO).

2. Blendstocks, as key inputs for this highly

competitive market, can move long distances

relatively quickly and cheaply. This means that prices

for the same product tend to converge, differing only

by transportation costs. Pet. App. 116a-17a. In fact,

many fuel supply contracts set prices by indexing the

price to the price of fuel in a major market, plus or

minus transportation costs to or from the local market

(depending on the direction the fuel is flowing). Id. at

116a. 2 This efficient and transparent pricing is

facilitated by an information provider that gathers

price data from the major markets and then factors in

transportation costs (truck, rail, or pipeline tariffs,

terminal fees, product shrinkage in transit, etc.) to

arrive at a “Spot Replacement Index” or “spot” price

for hundreds of smaller markets. Id. at 150a.

These pricing fundamentals do not vary by

region, even if retail prices sometimes do. A consumer

taking a road trip from New York to Florida may

experience regional variation in retail gas prices for a

variety of reasons: differing state taxes, different

gasoline formulations, or varying distances from

sources of supply. See Gasoline explained: Regional

gasoline price differences, U.S. Energy Info. Admin.,

https://tinyurl.com/dyy9dn6s. For example, some

parts of the United States must “use special,

reformulated gasoline that includes additives to help

reduce carbon monoxide, smog, and toxic air

pollutants.”

Id.

California’s

reformulation

requirements are uniquely stringent, id., and EPA

2 There are seven major markets in the U.S.: New York

Harbor, Houston/Gulf Coast, Chicago, Pacific Northwest, San

Francisco, Los Angeles, and Group 3 (Midwest). Pricing 101:

Spot Fuel Markets Made Simple, OPIS (Mar. 10, 2023),

https://tinyurl.com/2jvkntvf.

recently authorized several Midwestern states to

impose more stringent blendstock requirements in the

summer, 89 Fed. Reg. 14760 (Feb. 29, 2024).

But these regional variations have nothing to do

with market pricing fundamentals, which are

nationally uniform in operation, given the overall

efficiency and transparency of the market.

Transportation costs may be lower or higher,

depending on where a terminal is located and how

blendstocks are transported to it (e.g., by pipeline or

not), but whether you are in New York City or

Shreveport, Louisiana, wholesale “rack” prices for a

particular product at a particular fuel terminal are set

by the same market forces for all market participants,

Pet. App. 117a, and in many cases are published, Rack

Pricing

Coverage

City,

OPIS,

https://tinyurl.com/3c8c56af.

That there are aspects of the national fuel

market that do vary by region, such as required

gasoline formulations, only underscores the

narrowness of the question presented here. In amici’s

experience, some aspects of the fuel market and fuel

operations do vary across the country, such that

governing rules are or should be locally or regionally

applicable, rather than nationally applicable. But not

so for the uniform market fundamentals regarding

RIN prices and RIN cost passthrough, where

regionally fragmented rules would only introduce

artificial uncertainty and inefficiency.

3. As renewable fuels are just one component

among many that must be priced into the cost of

finished motor fuel, it is unsurprising that RFS

compliance costs operate in a national market, too.

As the Court explained in HollyFrontier

Cheyenne Refining, LLC v. Renewable Fuels Ass’n, 594

U.S. 382 (2021), the RFS program requires certain

volumes of renewable fuels to be blended into

transportation fuel each year, with the applicable

volumes now set annually by EPA. Id. at 385-86. The

annual volume is apportioned among refineries (and

importers) in proportion to each refiner’s volume of

motor fuel production (or importation). Id. at 386; Pet.

App. 60a-61a. EPA “polices these mandates with a

system of credits,” with each “credit represent[ing] the

blending of a certain quantity of renewable fuel” into

finished motor fuel. HollyFrontier, 594 U.S. at 386.

The credits—called RINs—are tradable nationwide,

so that a refinery can “comply with the law thanks to

its own blending efforts, the purchase of credits from

someone else, or a combination of both.” Id.

RINs are generated by a renewable fuel producer

(e.g., an ethanol producer) and assigned to a batch of

renewable fuel. Pet. App. 62a. 3 When, at the

wholesale stage, the renewable fuel is blended into

gasoline or diesel, the RIN is “separated” from the

fuel. Id. at 62a-63a. It may thereafter be sold or used

by the blender to satisfy its own RFS program

compliance obligations (if the blender is a refiner, as

some are, id. at 119a-20a). Id. at 63a.4

3 Each RIN generally represents a gallon of ethanol or its

energy equivalent. See 40 C.F.R. § 80.1415(a)-(b).

4 Many

of amici’s members are blenders that sell the

separated RINs to market participants with RFS obligations.

Pet. App. 122a. But such blenders cannot keep the receipts from

RINs are traded in a national market that is

“open, competitive, liquid, and functioning as

intended.” Id. at 96a. Like fuel prices, RIN prices are

reported and transparent. See RINs and Carbon

Credit Pricing, OPIS, https://tinyurl.com/muhejs46.

For example, the average nationwide price for a “D6”

RIN during the last week of October 2024 was 62

cents. RIN Trades and Price Information, EPA,

https://tinyurl.com/bdceptsh (last updated Nov. 10,

2024).5

Because both RINs and fuel are sold in

competitive markets, in the denial actions at issue

EPA identified key market fundamentals that govern

RFS compliance costs across the country. First, every

refiner or importer incurs a cost to acquire RINs,

whether they buy RINs directly or buy renewable

fuels with RINs attached, blend those fuels into

finished fuels, and keep the separated RINs to satisfy

their own RFS obligations. See Pet. App. 119a-22a;

Alon Refin. Krotz Springs, Inc. v. EPA, 936 F.3d 628,

650 (D.C. Cir. 2019) (“In a competitive market there’s

no such thing as a free lunch, and blenders and

integrated refiners pay their [RIN] tab just as others

do; they just do so indirectly.”).

RIN sales. Id. at 125a. Because of competitive market dynamics,

the amount received from RIN sales must be used to cover an

equivalent discount in the price of the blender’s finished fuel,

such that the finished fuel price reflects only one RIN cost (the

RIN cost passed through from the refiner in the price of the

petroleum blendstocks). Id. at 122a, 125a.

5 “D” codes identify the type of renewable fuel that the RIN

represents. 40 C.F.R. § 80.1425(g).

Second, those RIN costs are passed on in the

price of finished fuel to wholesale purchasers like

amici’s members—and ultimately to retail consumers

at the pump. See Pet. App. 114a-30a. This principle,

called “RIN cost passthrough,” has been consistently

recognized and applied by EPA for a decade. Id. at

110a-14a. Much like a nationwide tax, the market

price of gasoline and diesel increases and decreases in

concert with RIN cost increases and decreases. Id. at

67a, 122a. Of fundamental importance here, this

relationship does not vary by geography or region;

EPA has examined pricing data from markets across

the country and confirmed the RIN passthrough

result time and again. See id. at 143a-49a, 168a.

Amici can attest to the accuracy of EPA’s

conclusion that location is immaterial to RIN cost

passthrough. Amici’s members account for over 90%

of retail fuel sales nationwide. If there were a region

or market in the country subject to the nationwide

RFS program where finished fuel nonetheless could be

purchased without passthrough of RIN costs, they

would quickly take advantage of that difference and

skew fuel purchasing accordingly. There is no such

market, because RIN cost passthrough is a

fundamental principle of the national fuel market,

affecting refineries—and the purchasers of their

products—in structurally similar ways, no matter

where they are located.

A National Market Is Best Served by

National Rules.

In enacting Section 7607(b)(1), “Congress

intended review in the D.C. Circuit of ‘matters on

which

national

uniformity

desirable.’”

Recommendations of the Administrative Conference of

the United States, 41 Fed. Reg. 56767, 56769 (Dec. 30,

1976) (statement of G. William Frick).

National uniformity is desirable here, where the

RIN national market operates in the same manner

across the country. Condoning venue in the regional

circuits would only generate “[o]verlapping,

piecemeal, multicircuit review,” S. Ill. Power Coop. v.

EPA, 863 F.3d 666, 674 (7th Cir. 2017), that has

already resulted in rulings that subject EPA to

conflicting guidance on remand. Compare Pet. App.

16a-23a (retroactivity holding restricting EPA to

evaluating exemptions under a pre-2021 analytical

approach), with Sinclair Wyo. Refin. Co. v. EPA, 114

F.4th 693, 714 n.12 (D.C. Cir. 2024) (declining to reach

retroactivity issue). Multi-circuit review thus risks

creating regional market variation where none now

exists, substituting unpredictable litigation-driven

RFS program inconsistency for the current coherent,

consistent market fundamentals.

On a forward-looking basis, when small-refinery

exemptions are anticipated, that refiner’s share of the

total renewable fuel volume will be re-allocated to

other refiners. 85 Fed. Reg. 7016, 7050-51 (Feb. 6,

2020). This re-allocation reinforces the inherently

national scope of small-refinery exemption decisions.

When EPA grants or projects it will grant a smallrefinery exemption such that re-allocation takes

place, that action affects refiners nationwide by

increasing their RFS obligations. See Br. for Resp’ts

Supporting Pet’r 36-37.

Re-allocation also heightens the potential

negative impacts of inter-circuit conflicts. As a

practical matter, if regional circuits can set different

standards for small-refinery exemptions, this could

shift RFS obligations to circuits with proportionately

fewer small refiners and circuits with relatively

stringent exemption standards. Such a shift could be

large, because exemption-eligible small refiners are

responsible for about 10% of the nation’s refining

capacity (and thus also for about 10% of the annual

RFS obligations). U.S. Cert. Reply 9.

Because RFS compliance costs are passed

through in fuel prices, this could artificially raise fuel

prices across the board if exempt refiners, despite

being exempt from RIN costs, sell fuel at prevailing

prices that reflect the now-higher RIN costs

experienced by refiners with higher (re-allocated) RFS

obligations. Some refineries could be afforded a

substantial competitive advantage, see Pet. App.

167a, based largely on the happenstance of being

located in a circuit that applies more lenient

exemption rules.

However the market reacts, the inability to

obtain a “coherent and consistent interpretation and

application” of RFS standards is “potentially

destabilizing.” S. Ill. Power Coop., 863 F.3d at 674.

The RFS program and RIN market have functioned

well under uniform national standards for smallrefinery exemptions. It falls in the heartland of the

desired uniformity in implementation that Congress

was trying to protect through the Clean Air Act’s

venue provision.

The

Question

Whether

Small

Refineries Are Equally Able to Pass

Through

RIN

Costs

Not

Presented.

The lack of regional variation in how the RIN

market and RIN passthrough operate confirms that

EPA was right to set nationally applicable standards

for small-refinery exemptions based on nationwide

determinations. That should end the Court’s inquiry

on the venue question presented. Whether RIN

passthrough works the same for small and large

refineries is a distinct merits question that the Court

need not—and should not—reach.

The procedural question presented—about

which court should review EPA’s actions—does not

include the substantive question of whether EPA’s

actions were valid. See U.S. Pet. i, 8 n.2. Nor is validity

“fairly included” within the question presented. Izumi

Seimitsu Kogyo Kabushiki Kaisha v. U.S. Philips

Corp., 510 U.S. 27, 31 (1993). A question “which is

merely ‘complementary’ or ‘related’ to the question

presented” is not “fairly included.” Id. (quoting Yee v.

City of Escondido, 503 U.S. 519, 537 (1992)). And, as

the Fifth Circuit’s opinion makes clear, the venue

question and the merits of the EPA’s denial actions

are analytically distinct. Nonetheless, in their Brief in

Opposition, Respondents leaned on the Fifth Circuit’s

merits holding about purported “local market

conditions” to support their contention that regional

circuit court review is necessary. Br. in Opp’n 21. The

Court should reject any attempt to smuggle the dense

and technically complicated merits question into the

straightforward venue question presented here.

To explain, among its merits holdings, the Fifth

Circuit rejected EPA’s conclusion that RIN cost

passthrough applies equally to small and large

refineries. Pet. App. 30a. That holding is wrong, but it

is also not at issue here. Whether or not EPA got it

right about RIN passthrough being the same for small

and large refineries, EPA correctly gave that question

a national answer, applicable to every petitioning

small refinery in 18 states within 8 different circuits.

Pet. App. 187a. EPA did so based on its analysis of

market “principles that are applicable to all small

refineries no matter the location or market in which

they operate.” Pet. App. 187a-88a. The Fifth Circuit’s

venue decision did not turn on its rejection of EPA’s

analysis of those market principles. It did not once

mention its critique of “RIN-passthrough theory” or

the substance of EPA’s economic analysis when

rejecting D.C. Circuit venue. Id. at 9a-15a.

Rather, for venue purposes, the Fifth Circuit

wrongly held that EPA based its exemption denials on

local or regional determinations—despite EPA’s

undisputably

national-in-scope

statutory

interpretation and its analysis of national market

principles like RIN passthrough. The Fifth Circuit

concluded that EPA’s denials were based on local

determinations simply because EPA acknowledged

the relevance of considering each refinery’s individual

information and contemplated a “non-zero chance” of

granting a future exemption. Id. at 14a-15a.

That reasoning is faulty for several reasons, not

least because the refinery-specific data only confirmed

that the relevant national market principles operate

the same everywhere. See Pet. App. 113a, 168a. But it

also means the Court has no reason to delve into the

correctness of the EPA’s national economic analysis

regarding RIN cost passthrough. To decide the venue

question presented, the Court need only decide

whether EPA’s action was, in fact, based on

nationwide analysis.

There is, therefore, no reason for this Court to

delve into the details of whether and how small

refineries can pass on their RIN costs like large

refineries can. And there is every reason not to. The

“Court does not opine on issues that are … tangential

to the question presented,” Macquarie Infrastructure

Corp. v. Moab Partners, L.P., 601 U.S. 257, 266 n.2

(2024), with good reason. Given the lack of complete

briefing, the Court should avoid inadvertent

endorsement of the Fifth Circuit’s questionable

economic analysis. The need for caution is especially

strong here, because EPA must chart a course on

small-refinery exemptions on remand from the D.C.

Circuit. See U.S. Br. 44 & n.7. Any merits comment in

the Court’s opinion—especially on unbriefed issues

where the Fifth and D.C. Circuits differ—could

inadvertently alter not just that remand, but the

overall trajectory of the program.

II.

The Fifth Circuit’s Rejection Of RIN

Passthrough Was Wrong.

Although irrelevant to the venue question

presented, if the Court nonetheless opts to consider

the Fifth Circuit’s economic analysis, it should reject

it. Among other errors, the gravamen of the Fifth

Circuit’s reasoning was that in their “micro-markets,”

Respondents had to sell their fuel at lower prices than

they would command in “efficient” markets, and

therefore they were unable to pass on their RIN costs.

Pet. App. 31a-33a. That analysis is wrong from top to

bottom.6

First, the premise: Smaller markets have higher

wholesale prices, not lower ones, contrary to the Fifth

Circuit’s conclusion. As EPA explained, “[i]f a small

refinery is facing competition in its local market from

a larger remote market, the local price will typically

be higher than the price in the major market,

reflecting the cost of shipping the fuel to the local

market from the larger remote market.” Pet. App.

116a.

Amici agree. Amici’s members purchase billions

of gallons of fuel annually—including from

Respondents.

Amici’s

retailers

are

located

nationwide, and they purchase and sell fuel in large

6 This was far from the only error, and the fact that the

errors also diverged from the D.C. Circuit’s reasoning only

underscores how the Fifth Circuit’s wrong turn on venue risks

conflicting guidance. For example, the Fifth Circuit wrongly

concluded that small refineries cannot purchase RINs “at the

same time they sell fuel”—which is known as “ratable

purchasing”—because they need RINs in small quantities, and

RINs are only sold in larger “clips.” Pet. App. 33a. But that is not

the case. Amici’s members work with RIN brokers all the time;

many of them are blenders that sell RINs. The D.C. Circuit did

not find any similar quantity obstacle to ratable purchasing

(though it questioned EPA’s ratable-purchasing analysis on

other grounds). See Sinclair Wyo. Refin. Co., 114 F.4th at 712-14.

Amici’s experience confirms EPA’s judgment: RIN brokers offer

ratable purchasing contracts to small refineries with at most a

de minimis premium that does not affect refiners’ ability to pass

through RIN costs when they purchase RINs on a regular,

systemic basis. Pet. App. 153a-54a.

urban markets, small rural markets, and everything

in between. Generally, the price of refined petroleum

in a small market equals the price in the large market

plus the transportation cost from the large market to

the small one. As discussed above, sales contracts

often make this connection explicit by indexing smallmarket prices to large markets.

Although amici cannot respond directly to

Respondents’ nonpublic data, they are unaware of any

pockets of the country where refiners have no choice

but to sell their fuel at prices below the cost of

transporting fuel from the nearest major market

(where prices are undisputedly set efficiently and

include RIN cost passthrough, as even the Fifth

Circuit did not question, Pet. App. 32a). Such a

market would be nonsensically inefficient in the

context of a highly competitive national fuel market

and interlocking transportation system.

The Fifth Circuit’s conclusion does not follow

from its premise in any event. Even if “micro-market”

prices somehow were lower than the efficient level,

those lower prices do not result from any inability to

pass through RIN costs. Where prices in two markets

sustainably differ, it reflects a different balance of

supply and demand in those two locations. It has

nothing to do with RIN costs, which are the same

whether a refiner sells its fuel in a “micro-market” or

not. Pet. App. 124a.

Small refineries may have higher non-RIN costs

than their larger competitors, like higher

transportation costs, fewer economies of scale, or more

restricted access to crude oil. See Pet. App. 166a-67a.

Those higher costs may compress small refineries’

margins. But such variations in costs between smaller

and larger refineries do not stem from the national

economic operation of the RFS program (much less

whether they are participating in the program in New

York or New Mexico). The Fifth Circuit thus wrongly

sidestepped a much more complex analysis in

assuming that anytime a small refinery cannot cover

its full cost of production (assuming this ever occurs),

it is the RIN costs—which are the same everywhere—

that it is unable to passthrough, rather than its nonRIN costs—which undisputedly differ across different

refineries.

In short, even if some small refineries do have to

sell their fuel at lower-than-prevailing prices, it is due

to market forces that are separate from the

nationwide RFS program. If the Court is going to pass

judgment on whether small refineries are able to pass

on RIN costs, it should not take the Fifth Circuit’s

flawed economic judgments at face value, and instead

await a case in which that question is actually

presented.

*****

Ultimately, this case presents a straightforward

and narrow procedural question. EPA based its

decision on a nationwide economic analysis in

furtherance of a uniform national rule for a national

RIN market. That makes D.C. Circuit venue

appropriate. But no matter how the Court resolves

that venue question, it need not—and should not—

endorse any attempt to muddy those procedural

issues with technical and complex questions about the

substance of EPA’s national economic analysis, on

which the Fifth Circuit’s conclusion runs counter to

economic common sense and amici’s nationwide realworld experience.

CONCLUSION

The judgment should be reversed.

Respectfully submitted.