United States Court of Appeals, District of Columbia Circuit
Petitions for Review of Agency Action of the United States
Environmental Protection Agency
L. Kline argued the cause for petitioners. With her on the
briefs were Evan A. Young, Megan H. Berge, Lisa M. Jaeger,
Brittany M. Pemberton, Clara Poffenberger, Richard S.
Moskowitz, Robert J. Meyers, Thomas A. Lorenzen, Elizabeth B.
Dawson, Warren R. Neufeld, LeAnn M. Johnson, and Jonathan G.
Hardin. Albert M. Ferlo Jr. and Krista Hughes entered
MeghanE. Greenfield, Trial Attorney, U.S. Department of
Justice, argued the cause for respondent. With her on the
brief was Jeffrey H. Wood, Acting Assistant Attorney General.
Daniel R. Dertke, Attorney, entered an appearance.
A. Long Jr. argued the cause for intervenors American
Petroleum Institute and Growth Energy. With him on the brief
were Kevin King, Seth P. Waxman, DavidM. Lehn, Saurabh
Sanghvi, and Claire Chung. Stacy R. Linden entered an
Shannen W. Coffin and Linda C Bailey were on the brief for
amid curiae NACS, et al. in support of respondent EPA.
Killian argued the cause for petitioner The National
Biodiesel Board. With him on the briefs was Douglas A.
L. Kline and Thomas Allen Lorenzen, argued the causes for
Obligated Party Petitioners. With them on the briefs were
Evan A. Young, Lisa M. Jaeger, Brittany M. Pemberton, Clara
Poffenberger, Richard S. Moskowtiz, Robert J. Meyers,
Elizabeth B. Dawson, David W. DeBruin, Thomas J. Perrelli,
Matthew E. Price, LeAnn M. Johnson, and Jonathan G. Hardin.
David Y. Chung, Eric D. Miller, and Albert M. Ferlo Jr.
PatrickR. Jacobi and SamaraM. Spence, Attorneys, U.S.
Department of Justice, argued the causes for respondent. With
them on the brief was Jeffrey H. Wood, Acting Assistant
Allen Lorenzen argued the cause for intervenors American Fuel
& Petrochemical Manufacturers and American Petroleum
Institute in support of respondent regarding Biomass-Based
Diesel Issues. With him on the brief were Robert J. Meyers,
Elizabeth B. Dawson, Richard S. Moskowitz, Robert A. Long,
Jr., and Kevin King. Stacy R Linden entered an appearance.
A. Long, Jr., Kevin King, Bryan M. Killian, Douglas A.
Hastings, Seth P. Waxman, David M. Lehn, Saurabh Sanghvi, and
Claire H Chung were on the brief for intervenors Growth
Energy, et al. in support of respondent. Eric D. Miller
entered an appearance.
Before: Pillard and Katsas, Circuit Judges, and Williams,
Senior Circuit Judge.
2007, 2010, and 2017 Point of Obligation
Annual Volumetric Proceedings...................15
2010 Point of Obligation
Final Agency Action Under Section 7607(b)(1).... 19
After-Arising Grounds Under Section
Mandatory Reconsideration Under Section
Merits of Challenges to EPA's Refusal to Revise the 2010
Point of Obligation Rule.............................32
2018 Volume for Biomass-Based Diesel...................62
Merits of NBB's
Clean Air Act requires EPA to publish "renewable fuel
standards," ultimately expressed as "applicable
percentages," each year to ensure that the total supply
of transportation fuel sold or imported into the United
States contains specified proportions of each of four
categories of renewable fuels. Congress intended the
Renewable Fuel Standards (RFS) program to "move the
United States toward greater energy independence and
security" and "increase the production of clean
renewable fuels." See Energy Independence and
Security Act of 2007 (EISA), Pub. L. No. 110-140, preamble,
121 Stat. 1492 (2007) (codified at 42 U.S.C. §7545(o)).
these related cases, Alon Refining Krotz Springs, together
with other petroleum refineries and their trade
associations-the "Alon Petitioners"-seek review of
EPA's decision not to revise its 2010 point of obligation
regulation requiring refineries and importers, but not
blenders, to bear the direct compliance obligation of
ensuring that transportation fuels sold or introduced into
the U.S. market include the requisite percentages of
renewables. Coffeyville Resources Refining & Marketing
and another group of refineries and trade associations-the
"Coffeyville Petitioners"-challenge EPA's
refusal to reassess the appropriateness of the point of
obligation in the context of its 2017 annual volumetric rule,
which set the 2017 applicable percentages for all four
categories of renewable fuel and the 2018 applicable volume
for one subset of such fuel, biomass-based diesel.
See 81 Fed. Reg. 89, 746 (Dec. 12, 2016) (2017
Rule). The Coffeyville Petitioners also contend that EPA
arbitrarily set the 2017 percentage standards too high. The
National Biodiesel Board (NBB)-a biomass-based diesel
industry trade association-separately contends that EPA set
the 2018 applicable volume for biomass-based diesel too low.
Various trade associations representing refineries and
producers of renewable fuels have intervened in support of
EPA. For the reasons that follow, we deny each of the
petitions for review, many of which recycle arguments raised
and rejected in prior challenges.
established the RFS program in 2005 as part of the Energy
Policy Act, Pub. L. No. 109-58, 119 Stat. 594 (2005) (as
amended at 42 U.S.C. § 7545(o)). The statute mandates
the gradual introduction of four nested categories of
renewable fuels into the United States' supply of
gasoline, diesel, and other transportation fuels.
See 42 U.S.C. § 7545(o)(2)(B). These categories
include: (1) total renewable fuel; (2) advanced biofuel; (3)
cellulosic biofuel; and (4) biomass-based diesel.
Id. § 7545(o)(2)(A)(i), (B). The umbrella
category, total renewable fuel, covers the three other
categories plus any conventional renewable fuels, such as
corn-based ethanol. See id. § 7545(o)(1)(F),
(J), (2)(A)(i). The advanced biofuel subset includes any
renewable fuel (except ethanol from cornstarch) that has at
least 50% lower lifecycle greenhouse gas emissions than
fossil fuels. Id. § 7545(o)(1)(B). The statute
further specifies two nonexclusive subsets of advanced
biofuels: cellulosic biofuel (a renewable fuel derived from
cellulose materials such as corn stalks and husks) and
biomass-based diesel (a diesel fuel substitute made from
feedstocks such as animal fats). Id. §
7545(o)(1)(B), (D), (E); EPA Coffeyville Br. 4-5. The
following figure depicts the nested nature of the four fuel
Coffeyville Br. 11.
tables in the statute set forth gradually increasing annual
"applicable volume" requirements for each category
of renewable fuel. See 42 U.S.C. §
7545(o)(2)(B)(i). The statute sets applicable volumes for
biomass-based diesel through 2012, id. §
7545(o)(2)(B)(i)(IV), and applicable volumes for the other
three categories through 2022, id. §
7545(o)(2)(B)(i)(I)-(III). Under those tables, as the total
quantities of renewable fuel rise over time, the ratio of
advanced biofuels relative to conventional renewable fuel
gradually increases. Id. For compliance years (which
match calendar years) after those specified in the tables,
the statute requires EPA, in coordination with the
Secretaries of Energy and Agriculture, to set the annual
applicable volumes based on a review of the implementation of
the program plus an analysis of six listed factors.
Id. § 7545(o)(2)(B)(ii). For years not
specified in the table, EPA must publish the applicable
volumes fourteen months before the year in which they will
apply- volumes that, shortly before the start of the
compliance year, EPA translates into percentage standards.
"waiver" provisions require or permit EPA to lower
the annual applicable volumes. Two are relevant for the
purposes of this case. First, under the "cellulosic
waiver provision," EPA must make its own projection of
the volume of cellulosic biofuel that will be produced in the
following year. Id. § 7545(o)(7)(D)(i). If that
projection is less than the statutory figure, the agency must
use its own projection as the applicable volume of cellulosic
biofuel. Id.; see Am. Petroleum Inst. v. EPA, 706
F.3d 474, 477-80 (D.C. Cir. 2013) (API). The same
cellulosic waiver provision authorizes (but does not require)
EPA to also reduce the advanced biofuel and total renewable
biofuel volume requirements "by the same or a lesser
volume" as the cellulosic biofuel reduction, 42 U.S.C.
§ 7545(o)(7)(D)(i), and EPA has "broad
discretion" regarding whether and how to do that,
Monroe Energy, LLC v. EPA, 750 F.3d 909, 915 (D.C.
Cir. 2014). Separately, under the "general waiver
provision," EPA may reduce any of the statutory
applicable volumes if it determines "that implementation
. . . would severely harm the economy or environment,"
or "that there is an inadequate domestic supply."
42 U.S.C. § 7545(o)(7)(A); see Ams. for Clean Energy
v. EPA, 864 F.3d 691, 707-13 (D.C. Cir. 2017)
EPA determines the waiver-adjusted applicable volumes, it
must translate those volumes into "renewable volume
obligation[s]" for each category of renewable fuel for
the upcoming compliance year. 42 U.S.C. §
7545(o)(3)(B)(i). The volume obligation for each category of
renewable fuel is expressed as an "applicable
percentage," also known as a "percentage
standard," calculated by dividing the adjusted
applicable volume for that category of fuel by the total
anticipated volume of non-renewable transportation fuel that
will be introduced into commerce (which EPA derives based on
an estimate provided by the Energy Information
Administration) in the coming compliance year. Id.
§ 7545(o)(3)(A), (B)(ii)(II); 40 C.F.R. §
80.1405(c). The statute calls on EPA to publish the
percentage standards not later than November 30-a month
before the start of the compliance year. 42 U.S.C. §
must place the renewable volume obligations on
"refineries, blenders, and importers, as
appropriate." 42 U.S.C. § 7545(o)(3)(B)(ii)(I);
see also id. § 7545(o)(2)(A) (requiring EPA to
promulgate implementing regulations, including
"compliance provisions applicable to refineries,
blenders, distributors, and importers, as appropriate,"
designed to ensure that transportation fuel sold or
introduced into the United States "contains at
least" the required annual applicable volumes). The
entities that EPA designates to meet the volume obligations
are known as "obligated parties." Monroe
Energy, 750 F.3d at 912. Each obligated party must
ensure that the volume of non-renewable fuel it sells or
introduces into U.S. commerce is matched by selling or
introducing a corresponding volume of each category of
renewable fuel at the level EPA's percentage standard
requires for that category. See ACE, 864 F.3d at
699. The percentage standards are set in the anticipation
that, if each obligated party meets them and EPA's
projection regarding the country's total transportation
fuel supply bears out, the amount of each category of
renewable fuel introduced into the economy in the upcoming
compliance year will equal the applicable volumes for that
year. Id. Obligated parties bear no direct
responsibility for any shortfalls in the applicable volumes
so long as they comply with the percentage standards.
assigns a set of "renewable identification numbers"
(RINs) to each batch of renewable fuel that is produced or
imported for use in the United States. 40 C.F.R. §
80.1426; see 42 U.S.C. § 7545(o)(5); Monroe
Energy, 75OF.3d at 913. The number of RINs assigned to
each batch corresponds to the amount of ethanol-equivalent
energy per gallon in that batch. See 40 C.F.R.
§ 80.1415; Monroe Energy, 750 F.3d at 913. RINs
remain attached to the renewable fuel until that fuel is
purchased by an obligated party or blended into fossil fuels
to be used for transportation fuel. See ACE, 864
F.3d at 699 (citing 40 C.F.R. § 80.1429(b)(1)-(2)). At
that point the RINs become "separated," meaning
they are, in effect, a form of compliance credit.
Id. Obligated parties demonstrate their compliance
with their renewable fuel obligations by "retiring"
RINs in annual compliance demonstrations to EPA. 40 C.F.R.
§§ 80.1427(a), 80.1451(a)(1).
the four categories of renewable fuel are nested, obligated
parties can comply with their obligations for a type of fuel
by retiring any combination of RINs corresponding to that
category of fuels or any subset thereof. See 40
C.F.R. § 8O.l427(a)(3)(i). For instance, retiring a
cellulosic biofuel or biomass-based diesel RIN counts not
only toward the volume obligation for that fuel, but also
toward both the advanced biofuel and total renewable fuel
obligations. Thus, "if one million gallons of cellulosic
biofuel are blended into the fuel supply, the statute allows
those one million gallons to be credited toward the advanced
biofuel and total renewable fuel obligations in addition to
the cellulosic biofuel obligation." ACE, 864
F.3d at 698.
parties who have more RINs than they need may sell or trade
their excess, 40 C.F.R. § 80.1428(b), or they may
"bank" those RINs for use to meet up to 20 percent
of their obligations for the following compliance year,
Monroe Energy, 750 F.3d at 913; see 40
C.F.R. § 80.1427(a)(1), (5); Regulation of Fuels and
Fuel Additives: Changes to Renewable Fuel Standard Program,
75 Fed. Reg. 14, 670, 14, 734-35 (Mar. 26, 2010). Obligated
parties without enough RINs to meet their compliance
obligations may purchase RINs, use banked RINs from the prior
year, or carry a deficit forward to the following year to be
satisfied together with the following year's obligations.
See ACE, 864 F.3d at 699-700; see also 42
U.S.C. § 7545(o)(5)(D); 40 C.F.R. § 80.1427(b).
procedural history of these cases follows two paths: first,
the proceedings relevant to the challenge that EPA
arbitrarily declined to initiate a rulemaking to modify the
2010 regulation designating refineries and importers, but not
blenders, as obligated parties; and second, the proceedings
challenging the 2017 Rule.
2007, 2010, and 2017 Point of Obligation Proceedings
2007 regulations implementing the RFS program, EPA designated
refiners and importers, but not blenders, as the
"appropriate" parties to meet the renewable fuel
obligation. 72 Fed. Reg. 23, 900, 23, 923-24 (May 1, 2007).
At the time, those designations were not challenged in court.
EPA reaffirmed its designations in a 2010 regulation now
commonly known as the "point of obligation rule."
75 Fed. Reg. at 14, 721-22 (codified at 40 C.F.R. §
80.1406(a)(1)). During the 2010 rulemaking, several
refiners-including petitioner Valero Energy
Corporation-argued that failing to obligate blenders, who
combine renewable fuel with fossil fuels, would make the RFS
program unworkable. EPA concluded that the program was
functioning adequately and that the burdens and disruption
from changing the point of obligation would outweigh any
benefits. See Summary and Analysis of Comments
3.9.2, Alon J.A. 287-90. Although other aspects of the 2010
regulations were challenged in court, see, e.g.,
Nat'l Chicken Council v. EPA, 687 F.3d 393 (D.C.
Cir. 2012); Nat'l Petrochemical & Refiners Ass
'n v. EPA, 630 F.3d 145 (D.C. Cir. 2010), the point
of obligation rule was not.
December 14, 2015, EPA promulgated the volume requirements
for 2014, 2015, and 2016. Renewable Fuel Standard Program, 80
Fed. Reg. 77, 420 (Dec. 14, 2015). In so doing, EPA exercised
its general waiver authority to lower the total renewable
fuel volumes based on a finding of inadequate domestic supply
due to market factors "affecting the ability to
distribute, blend, dispense, and consume . . . renewable
fuels" at the levels required by statute. Mat 77, 43
5/2. Among those factors was "the slower than expected
development of the cellulosic biofuel industry." Mat 77,
422. The agency thought an additional "real world
constraint" was the "E10 blendwall"-the
difficulty for most American vehicle engines to run on blends
containing more than 10% ethanol. Id. at 77, 423.
EPA explained that those factors made the statutory
requirements "impossible to achieve." Id.
at 77, 422/2. This Court later vacated the general waiver on
the ground that EPA had misinterpreted the statutory term
"inadequate domestic supply" to include demand-side
constraints such as the E10 blendwall. See ACE, 864
F.3d at 704-13.
February 12, 2016, sixty days after EPA promulgated the
volume requirements for 2014-16, the Alon Petitioners
petitioned this Court for review of the 2010 point of
obligation rule. These petitions contend that the rule was
arbitrary and capricious insofar as it failed to impose the
obligation on downstream blenders-the parties petitioners
think are best able to comply with it. The petitions assert
jurisdiction under the after-arising provision in 42 U.S.C.
§ 7607(b)(1), which permits otherwise-untimely
challenges to a rule if the challenges are "based solely
on grounds arising after" the sixty-day deadline for
seeking judicial review. The petitioners assert that
EPA's exercise of its general waiver authority in the
2014-16 volume regulations, and its acknowledgment of the RFS
program's shortcomings as of that time, provided such an
Alon Petitioners simultaneously petitioned EPA to revise the
point of obligation rule. Some of their requests were styled
as petitions for a rulemaking. Others were styled as
petitions for mandatory reconsideration under 42 U.S.C.
§ 7607(d)(7)(B), which requires EPA to reconsider a rule
if centrally important objections were impracticable to raise
during the comment period or "arose after" that
period "but within the time specified for judicial
review." The petitions cited the waiver in the 2014-16
volume regulations and EPA's acknowledgment of program
difficulties as grounds supporting mandatory reconsideration.
This Court held in abeyance the petitions for review of the
point of obligation rule pending resolution of the petitions
to revise it.
November 10, 2016, EPA published a proposed denial of the
petitions to revise the point of obligation rule. On November
22, 2017, after reviewing more than 18, 000 comments on the
proposal, EPA denied the petitions. It concluded that the
statutory requirements for mandatory reconsideration were not
met, so it treated all the filings as petitions for a
rulemaking. Denial of Petitions for Rulemaking to Change the
RFS Point of Obligation, EPA-HQ-OAR-2016-0544-0525, at 7
(Nov. 22, 2017) (EPA Denial), Alon J.A. 61. EPA then denied
the petitions on the ground that "changing the point of
obligation would . . . likely result in a decrease in the
production, distribution, and use of [renewable] fuels"
and would "do nothing to incentivize the research,
development, and commercialization of cellulosic biofuel
technologies critical for the growth of the RFS program in
future years." EPA Denial at 8-9, Alon J. A. 62-63.
sixty days (in December 2017 and January 2018), the Alon
Petitioners sought judicial review of that denial, which it
cast as a final agency action under section 7607(b)(1). The
two sets of petitions-the February 2016 petitions for review
of the 2010 point of obligation rule and the 2017-18
petitions for review of EPA's refusal to reconsider the
rule- were consolidated and are now before us.
2017 Annual Volumetric Proceedings
issued its 2017 annual volumetric rule on December 12, 2016.
The 2017 Rule establishes: (1) the applicable volume for
biomass-based diesel for 2018, 81 Fed. Reg. at 89, 751/2; (2)
the waiver-adjusted applicable volumes for cellulosic
biofuel, advanced biofuel, and total renewable fuel for 2017,
id. at 89, 747 tbl. 1-1; and (3) percentage
standards for all four fuel types for 2017, id. at
89, 751, tbl. LB.6-1.
exercised its mandatory cellulosic waiver authority to
decrease the 2017 applicable volume for cellulosic biofuel by
more than 94 percent, dropping 5.189 billion gallons from the
statutory target of 5.5 billion gallons, to 311 million
gallons. Id. at 89, 750/2; 42 U.S.C. §
7545(o)(2)(B)(i)(III). EPA then had discretion under that
same waiver authority to cut as much as 5.189 billion gallons
off the statutory volumes for advanced biofuel and total
renewable fuel. See 42 U.S.C. §
7545(o)(7)(D)(i); 81 Fed. Reg. at 89, 762 & tbl. IV.A-1.
EPA partially exercised that authority, reducing the
9-billion-gallon statutory target for advanced biofuel by
4.72 billion gallons, resulting in an adjusted applicable
volume of 4.28 billion gallons-a greater than 50% decrease.
81 Fed. Reg. at 89, 750-51; 42 U.S.C. §
7545(o)(2)(B)(i)(II). EPA reduced the total renewable fuel
volume requirements by the same amount, lowering the
statutory target of 24 billion gallons to 19.28 billion
gallons. 81 Fed. Reg. at 89, 751/1; 42 U.S.C. §
7545(o)(2)(B)(i)(I). EPA considered but decided against also
using its general waiver authority to further lower the
applicable volume of total renewable fuel. 81 Fed. Reg. at
the waiver-adjusted applicable volumes, EPA set the 2017
percentage standards for each of the four renewable fuel
categories. See id. at 89, 751, 89, 799-801.
Finally, EPA set the biomass-based diesel applicable volume
for 2018 at 2.1 billion gallons. Id. at 89, 751/2.
EPA received comments urging it to reassess the point of
obligation in the 2017 Rule, but declined to address them on
the grounds that the comments were "beyond the
scope" of the 2017 rulemaking. Response to Comments at
542, Coffeyville J.A. 761.
EPA published the 2017 Rule, various parties petitioned for
judicial review. The Coffeyville Petitioners contend that EPA
erred by refusing to reconsider which types of parties would
bear the direct compliance obligation under the 2017 Rule.
They also argue that EPA arbitrarily calculated the 2017
production of cellulosic biofuel and arbitrarily exercised
its discretionary cellulosic waiver authority, resulting in
percentage standards that are too high. NBB argues that EPA
set the 2018 applicable volume for biomass-based diesel too
low by considering factors it should not have and omitting or
incorrectly assessing others. Two trade associations
representing refineries have intervened in defense of
EPA's biomass-based diesel decision, and a coalition of
trade associations representing renewable fuel producers and
refineries have intervened to oppose the Coffeyville
Petitioners' claims. None of the petitioners'
Standard of Review
court applies the familiar, deferential standard announced in
Chevron, U.S.A., Inc. v. Natural Resources Defense
Council, Inc., to sustain any reasonable agency
interpretation of ambiguity in the Clean Air Act."
Nat 'l Ass'n for Surface Finishing v. EPA,
795 F.3d 1, 7 (D.C. Cir. 2015). "We employ the
deferential State Farm standard of review when
reviewing arguments based on allegedly arbitrary or
unreasoned agency action." ACE, 864 F.3d at 726
(citing Motor Vehicle Mfrs. Ass'n of U.S., Inc. v.
State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43 (1983)).
Under that rubric, EPA's actions are "presumptively
valid provided [they] meet a minimum rationality
standard." Nat. Res. Def Council, Inc. v. EPA,
194 F.3d 130, 136 (D.C. Cir. 1999). We uphold EPA's
actions so long as they are "reasonable and reasonably
explained." Jackson v. Mabus, 808 F.3d 933, 936
(D.C. Cir. 2015).
2010 Point of Obligation Rule
start with the Alon Petitioners and their challenges to the
2010 point of obligation rule.
begin, as we must, with our jurisdiction. In general terms,
the question presented involves our review of rules
promulgated under the Clean Air Act, or EPA's failure to
amend them, after the initial window for seeking judicial
review has passed. Various statutory provisions frame this
7607(b)(1) of Title 42 provides for judicial review of
regulations promulgated by the Administrator of EPA under the
Clean Air Act. The first sentence of section 7607(b)(1) vests
this Court with exclusive jurisdiction to review
"nationally applicable regulations promulgated, or final
action taken, by the Administrator" under the Act. The
fourth sentence of section 7607(b)(1) specifies the time for
seeking judicial review. It imposes a sixty-day time limit,
but provides an exception for petitions based on grounds
arising after the limit: "Any petition for review under
this subsection shall be filed within sixty days from the
date notice of such promulgation, approval, or action appears
in the Federal Register, except that if such petition is
based solely on grounds arising after such sixtieth day, then
any petition for review under this subsection shall be filed
within sixty days after such grounds arise."
7607(d) of Title 42 sets forth provisions for various
rulemakings under the Clean Air Act, including for the
"promulgation or revision of any regulation"
involving the RFS program. Id. § 7607(d)(1)(E).
Section 7607(d)(7)(B) addresses various issues regarding
exhaustion, agency reconsideration, and judicial review. The
first sentence of that provision imposes a conventional
exhaustion requirement, limiting judicial review to
objections "raised with reasonable specificity during
the period for public comment." The second sentence
requires EPA to reconsider regulations in certain narrow
circumstances: "If the person raising an objection can
demonstrate to the Administrator that it was impracticable to
raise such objection within such time or if the grounds for
such objection arose after the period for public comment (but
within the time specified for judicial review) and if such
objection is of central relevance to the outcome of the rule,
the Administrator shall convene a proceeding for
reconsideration of the rule and provide the same ...