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Case number 18S1202.

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Producers are renewables united for integrity, truth, and transparency for petitioner versus environmental protection agency.

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Mr. Hughes for the petitioner, Mr. Durkey for the respondent, and Mr. Horace for the interveners.

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Good morning, Your Honors.

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My name is Jerry Mize and I'm representing the petitioner in this case, Producers United.

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This case involves a challenge on behalf of Producers United to certain EPA actions in administering the Clean Air Act's renewable fuel standard.

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program, and more specifically, its decision to fundamentally alter how EPA manages the renewable fuel standards small refinery exemption.

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Recently, the public has become aware that EPA has dramatically changed the manner in which it grants

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these small refinery exemptions and greatly expanded the scope and applicability of that exemption.

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The consequence of that decision by EPA is that it has rendered significant adverse impacts on the biofuels industry as a whole, creating volatility in the market

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undermining certainty that Congress intended to create when it set in place this program, and generally rendering a state of reduced demand and uncertainty in the market.

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Commissioner makes three challenges.

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Are you in the right court to bring the challenge to the remand decisions?

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Why isn't this more properly heard in the Tenth Circuit?

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So, Your Honor, let me move on to venue if you would like.

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This case involves EPA's disposition of

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what are called RINs, which are credits under the renewable fuel standard.

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And they are the vehicle by which EPA manages the renewable fuel standard program, creates obligated parties,

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obligations, allocates their responsibilities, and ensures distribution on a national basis.

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And the circumstances of the RINS here were very particular, right?

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You have a very unusual set of facts where the RINS had been retired during the course

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the litigation and EPA faced with a novel challenge how to make the petitioners whole here, not the petitioners, the interveners, how to make them whole here in the face of a mistaken decision not to grant them the exemption.

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Why isn't this just about these refineries in their very particular circumstances?

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Why isn't this

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example of what's locally or regionally applicable and therefore doesn't belong in the D.C.

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Circuit.

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Your Honor, the circumstances surrounding the specific refineries at issue, the three Wyoming refineries, came to light in June of 1918.

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Not through EPA, because EPA treats

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all these renewable fuel exemptions as confidential, secret, subject to the CBI requirements of EPA's internal regulatory program.

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And accordingly, it was not until

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this particular instance involving the Wyoming refineries that the public, including our client, became aware that

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My question isn't about the timeliness of the challenge to the remand decisions.

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It's about the appropriate venue.

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And you'll agree, don't you, that you have to show that there's a national valence to this dispute to have it here in the DC Circuit.

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Otherwise, if it's local or regional, it belongs in the Tenth Circuit.

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And my question is, why isn't this the very example of a local or regional circuit?

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In our pleadings, Your Honor, the point we made was that our client was not challenging the actual granting of the exemption itself, but rather this broader policy that EPA had begun to employ to separate

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Have they done that elsewhere?

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I beg your pardon?

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Have they done that elsewhere?

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You said it's a broader policy.

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I mean, in this case, they had replacement RINs, right?

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Have they done that elsewhere?

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EPA has said over the course of the last

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seven or eight years that it reserves the right to issue replacement rents under certain circumstances, but the specific circumstances have never been revealed because EPA, up through this date, has always treated these as confidential business information and therefore a party wishing to challenge

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decisions had no basis on which to determine what the proper venue would be, where the case should be brought.

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Mr. Myers, you say that EPA has reserved the authority to issue replacement rents, and I just want to be more precise about it.

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There are really two different things, as I understand it, that EPA is doing.

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In some cases, it unretires

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in situations where the exemption is granted after a compliance deadline.

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Here it was a little bit different.

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It wasn't just unretiring RINs that still had some useful life on them, if you will, but replacing RINs that were long since expired.

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Are you aware of

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any statements that EPA has made reserving the right to do that and or any other situation in which EPA has done that, replaced RINs that were, corresponded to RINs that were retired.

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I'm sorry, that were expired.

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Understood.

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Because EPA treats these

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called transactions, these adjudications as confidential, one would never know whether expired RINs had been replaced, whether retired RINs had been replaced.

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That information is held close by the agency and accordingly one would not know based on the record.

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So I understand, I understand that that puts

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you and the public in a very difficult position in terms of getting the information.

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So your answer to whether you're aware of the agency having done this with a replacement rather than just on retirement is you're not aware, but you're not willing to say it hasn't happened.

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I will say that in a recent, I believe it was a preamble to a recent proposed rulemaking,

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EPA did go on record finally and affirmably state that it was its policy to retire, to replace retired RINS as part of its remedies in addressing these small refinery exemption adjudications.

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And what are you referring to there?

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And I'm referring to the E-15

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proposed rule slash preamble that just very recently was published in the last – I believe in the last several weeks.

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So you would petition for review of that policy?

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I beg your pardon?

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So you could then petition for review of that policy after participating in the rulemaking?

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That's correct.

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How are you, did they say they've been doing that in the past?

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So reaching back as far as 2010, which was when the first small refinery exemption rulemaking was promulgated, EPA in each and every preamble that followed that

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basically said, we reserve the right.

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We may, in appropriate circumstances, choose to replace expired or retired RINS.

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There was never any specificity revealed in terms of under what circumstances it would choose to do so.

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So you understood even back in 2010 that they were announcing that they had the authority to do exactly what they did in these five cases?

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Well, I would say they stated that they may

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exercise that authority.

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Of course, in our pleading, we contest that EPA ever, even reaching back in time, had the authority to exercise that ability.

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That's a different question.

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If they announced it in 2010, and you agree that that's what they announced in 2010.

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I hadn't realized that you had agreed all the way through the replacement of the RINS,

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If you agree that they said that in 2010, then isn't 2010 the time to appeal?

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Your Honor, to be clear, I believe in 2010 what the position that EPA articulated was that it reserved the right to receive and grant

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small refinery exemption petitions after the compliance date.

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So you're not saying that it's the same as reinvigorating rents?

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That's correct.

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So that means you don't have a statement of policy in the past.

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It seems like you're in between here.

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Either they announced a policy in 2010,

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in which case it's late or they didn't announce a policy and they never have except in these five cases as far as you know.

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I understand it to be the latter.

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The organization or the working group that you represent, is there any

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law that you can refer us to that gives it the capacity to sue.

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I gather this is an issue that would be, in this case, governed by D.C.

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law.

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And I'm just not – I didn't see anything about a working group having the authority to represent its members.

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Whether a quote-unquote working group has authority to sue, is that your question?

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Yeah.

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It's an unincorporated association in the sense that the parties have come together and formalized an arrangement pursuant which they have agreed to proceed jointly for purposes of challenging this particular set of decisions by EPA.

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And are the members voting members, or what's the organizational structure?

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There is a joint defense agreement which I cannot speak to the specificity of as I stand here today.

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Are there other activities that they engage in or is this suit the flagship activity of this group?

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The group has intervened in other

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similar proceedings raising these very same issues and has also filed comments before the agency and engaged in other collaborative efforts geared, focused on the specific issue posed by this case.

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You referred in your briefing to EPA publishing on its website relatively recently information about the actual number of small refineries and the volumes of the exemptions that were being granted on a case-by-case basis after the blanket exemptions expired.

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And I think you referred to a September

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2018.

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Is that the earliest or the first time that you're aware that that information was made public on the website?

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That's correct.

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This was part of EPA's initiative in response to efforts by our clients and others to try and introduce some level of transparency into EPA's process of

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receiving and granting small refinery exemption petitions.

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And are you, you're not disputing the EPA's position that extending an exemption can mean just making one available?

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You're not arguing that only small refiners that qualified for the exemption in the early days can qualify for an extension?

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You make several references in your brief that

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that sound like they're raising that issue, but I don't take you to be challenging that here.

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So, Your Honor, initially EPA's position was that, and this is revealed in the

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not only the small refinery exemption regulation, but also the associated preamble and other statements made by EPA that – that – I'm sorry.

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Would you mind – I just lost my – You were referring several times in your brief to – but it seemed more in passing – to the notion that an extension by its nature would extend something that's pre-existing.

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Oh, yes.

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I understand.

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So just to cut through it, EPA has

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over the years changed its policy, its interpretation, its construction of what extension means in this context three times.

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Initially, at the outset, the notion was that you had to already have been granted an extension.

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I mean, excuse me.

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an exemption and in order to be eligible for an extension, you already had to have qualified for an exemption.

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EPA later changed that position to say that the party could reach back all the way to, I believe it's 2011,

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which is when these exemptions were first granted and that even if there wasn't a continuity of a party holding an exemption during that entire period of time, it could reach all the way back to 2011 when those first set of

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exemptions were granted and that would constitute an extension of the exemption.

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So there did not have to be continuity.

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You could have satisfied the requirements in one year and then come back the following year.

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and as an extension reapply and perhaps be granted.

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Are you talking about the 2014 position and 2014 when the case by case exemption

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approach was first framed up after the blanket extension and the blanket extension.

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And the regulation was amended, yes.

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So when they first start doing it on a case-by-case basis, there was a question whether if you qualified under the blanket exemption at all, which didn't require a year-by-year showing of qualification, it just required a showing of qualification in 2006 at the outset, would you have to make greater showing to get an exemption?

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Would you have to show

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that you in fact met the independent criteria of a small refiner for every year under the blanket period, and they said, actually, comments showed us that we shouldn't need to do that, that as long as you were in that group, you didn't have to make the additional case by case.

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And then now the position, as you understand it, is?

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The language in the statute which refers to at any time EPA is now construing to mean forget extension, forget the niceties.

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No prior qualification needed whatsoever.

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That's my understanding.

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Okay.

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Thank you very much.

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We'll hear from the EPA.

[00:21:38] Speaker 01:
Good morning, and may it please the Court.

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My name is Dan Durkey from the U.S.

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Department of Justice, representing EPA, and with me at the Council table, I have Samara Spence, also from the U.S.

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Department of Justice, Susan Staley from the U.S.

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EPA's Office of General Counsel, and representing interviewers, Mr. Ryan Morris.

[00:21:55] Speaker 01:
Your Honor, there's basically two different cases going on in this petition.

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One tries to reopen several old rules, and one deals with a specific grant of replacement rents.

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And counsel for petitioner started out with the second part, so let me start with that.

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He said that there's been a dramatic increase in how these

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The exemptions have been granted and we got into what happened in the 2010 rule and whether they knew about what was going on and what he conceded and what he didn't concede.

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All those arguments we assert the court lacks jurisdiction on because the old rules, the case law is very clear that challenges must be based solely on grounds arising after

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the period for initial judicial review, and what counsel is describing both here and in this brief do not qualify.

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For instance, in 2010, EPA did say that these exemptions would be granted even after a standard had been set.

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And EPA repeated that in numerous subsequent rulemakings, and we have the JA sites in our brief.

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That is not new information.

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To the extent Council says that those numbers have increased over time, that is not the kind of new information that would justify reopening challenges to the rules.

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That is implementation of something that they knew about, they could have challenged at the time, they should have challenged at the time.

[00:23:26] Speaker 08:
They... Mr. Durkey, has EPA ever said in the Federal Register that it interprets extension to mean make available

[00:23:38] Speaker 01:
I am not sure about that, Your Honor.

[00:23:39] Speaker 01:
That argument that you were asking about with the Petitioner Council also, that argument I think is more clearly raised in the AFPM case, which I believe you're on the panel for.

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And I think that that is, I think your question was well put to counsel that's not clearly raised in this case.

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They do kind of mention it, but their argument is not that these exemptions were improperly granted because they were not an extension of a prior exemption, that they were a new exemption.

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And in fact, that's not the case.

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So that argument isn't presented here at all.

[00:24:14] Speaker 08:
He said, in fact, it's not the case that they're new.

[00:24:16] Speaker 01:
I believe that's right.

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These exemptions, the five exemptions that issue were, I believe they were extensions.

[00:24:26] Speaker 08:
Do we know that?

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I mean, there's a difficulty here of the lack of public access to the information.

[00:24:31] Speaker 08:
We don't actually know.

[00:24:32] Speaker 01:
There's nothing in the record that says that.

[00:24:34] Speaker 08:
Nothing in the record that says that.

[00:24:34] Speaker 01:
There's nothing in the record.

[00:24:35] Speaker 01:
The record, and part of the record is sealed, so that's a challenge about talking about it, but the record describes the timing.

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of granting these, which is another basis on which counsel says this is new information, that these exemptions are now being granted well after the compliance period has ended.

[00:24:57] Speaker 01:
These exemptions were not, and the chronology is in the record that these exemptions were sought timely, EPA acted on them timely in the sense that it was before the compliance period, deadline had been reached, and then the delay comes in when

[00:25:12] Speaker 01:
that denial was challenged in the 10th Circuit.

[00:25:16] Speaker 08:
I have a more general question, which is, you know, there's back and forth about whether if this is an after-rising challenge, it's timely.

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And going to the question of when the petitioners had notice of what they claim to be a change in the legal position of the agency, is a news article enough to give notice that would trigger

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the time for purposes, the running of the time for purposes of an after arising challenge?

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And if so, is there any authority that you can point us to to that effect?

[00:25:54] Speaker 01:
I'm not aware of any authority.

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I know that in veners raise the timeliness.

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We don't challenge the timeliness of the part of the case that deals with challenging the RIN replacement.

[00:26:05] Speaker 08:
Right.

[00:26:05] Speaker 08:
I'm talking about the other part where they're saying the volumes are being undermined by

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the EPA's policy about the circumstances under which it will grant an exemption, and there's a lot of uncertainty about the terrain, but I'm just curious about your position about what constitutes notice, just so we have some kind of a baseline.

[00:26:31] Speaker 01:
Your Honor, I don't think we've taken a position on what constitutes sufficient notice of an after-rising ground.

[00:26:38] Speaker 01:
What we've said in this case is to the extent the court can divine from petitioners brief and statements what they point to as those grounds, we're assuming that they knew about, we're not saying they didn't know about them in a timely way, we're saying that doesn't matter because they don't constitute after-rising at all.

[00:26:57] Speaker 08:
You're saying it doesn't change anything?

[00:26:58] Speaker 01:
It doesn't change anything, that's right.

[00:27:01] Speaker 01:
And also, by the way, to your prior question about whether these grants were an extension, whether there was a lapse, I actually should defer to Council Member Inouye.

[00:27:12] Speaker 01:
If he knows, he would probably know better than I, because as I think about it, like I said, it's not in the record.

[00:27:17] Speaker 01:
I really shouldn't say one way or the other.

[00:27:19] Speaker 01:
So to the extent that's relevant.

[00:27:20] Speaker 01:
You're talking about the five?

[00:27:21] Speaker 01:
The five.

[00:27:23] Speaker 01:
Yeah, whether those five were actually extensions of prior exemptions or whether that period elapsed and they were new.

[00:27:29] Speaker 04:
Is that not reflected in the sealed record?

[00:27:33] Speaker 01:
That is not reflected in the sealed record.

[00:27:34] Speaker 04:
I mean, the opinions don't state what their extensions are?

[00:27:38] Speaker 01:
I don't believe that.

[00:27:39] Speaker 01:
I believe the opinion says when the facility applied, when EPA denied, and then the subsequent litigation history.

[00:27:53] Speaker 01:
This is at, they're all basically the same.

[00:27:57] Speaker 01:
So the first one's at JA.

[00:27:59] Speaker 04:
I have JA 906.

[00:28:00] Speaker 04:
Yeah.

[00:28:02] Speaker 04:
Frankly, I don't see anything confidential about this.

[00:28:05] Speaker 04:
It says applying for a one-year extension.

[00:28:09] Speaker 01:
What does that mean?

[00:28:13] Speaker 01:
Well, I don't know if that meant that they were asserting that it was an extension or that it actually, in the sense that

[00:28:22] Speaker 01:
the statute uses this term, it's an extension.

[00:28:24] Speaker 01:
Does the Tenth Circuit's opinion describe it?

[00:28:28] Speaker 01:
I would have to look back at that.

[00:28:29] Speaker 01:
I don't know, Your Honor.

[00:28:31] Speaker 04:
Can I ask you about the RINS just for one second?

[00:28:35] Speaker 04:
I will say their argument about this isn't exactly clear, but to the extent they're making an argument that the reinstatement of the RINS is a national policy, is there a

[00:28:52] Speaker 04:
they were unable to describe any statement of a policy about reinstatement of the RINS.

[00:28:59] Speaker 04:
Is there any statement other than in these individual adjudications, to the extent that they're, that it's in the individual adjudications?

[00:29:07] Speaker 01:
Well, so let me try and narrow the question to make sure I'm answering it properly.

[00:29:12] Speaker 04:
I'm only talking about the response to the Tenth Circuit's, that is, reinstatement of RINS,

[00:29:22] Speaker 04:
after they've expired.

[00:29:25] Speaker 01:
The only time that's ever happened, to answer a question earlier, this is the only time that's ever happened.

[00:29:32] Speaker 01:
It has not happened before or since.

[00:29:34] Speaker 01:
Only in these five cases.

[00:29:37] Speaker 01:
Only in these five cases.

[00:29:39] Speaker 01:
Now the broader question that the court was asking about, has EPA ever retired when a small refinery

[00:29:47] Speaker 01:
has already retired them to comply, turns out they get the exemption.

[00:29:51] Speaker 01:
Yes, that's happened.

[00:29:52] Speaker 01:
And that is not new here.

[00:29:55] Speaker 01:
But the narrower question, has EPA ever actually taken the second step in saying, well, on these facts, we're going to give you replacement rents because there's a problem.

[00:30:03] Speaker 01:
This is the only time it had happened to date, and it has not happened since.

[00:30:07] Speaker 03:
And when did EPA first declare its authority to use replacement RINs in the fashion that they are doing so here?

[00:30:16] Speaker 01:
In these decisions.

[00:30:17] Speaker 01:
This is the first and only time that EPA has done it and EPA took pains to try to explain why it was fact specific to this case.

[00:30:26] Speaker 01:
It's not just that these RINs have been retired and now this small... And that doesn't represent a change in policy?

[00:30:35] Speaker 01:
That, by itself, is new.

[00:30:38] Speaker 01:
It had never happened before.

[00:30:40] Speaker 01:
And we're not disputing that they could challenge that in the right venue, which we think is not here, obviously, but we're not saying they can't challenge that.

[00:30:49] Speaker 03:
Why isn't the appropriate venue here if it's EPA announcing a new policy?

[00:30:56] Speaker 03:
They're enforcing it here in the 10th Circuit cases, but they've clearly allowed the possibility that they may enforce it elsewhere.

[00:31:04] Speaker 03:
Well, that's something new.

[00:31:06] Speaker 03:
It has a nationwide application.

[00:31:08] Speaker 03:
Why not bring it here?

[00:31:09] Speaker 01:
So I disagree with several of those parts of that response.

[00:31:14] Speaker 01:
It is new.

[00:31:16] Speaker 01:
And if that were the only thing they pointed to, they could say that's

[00:31:20] Speaker 01:
that's new grounds to try and reopen an old rule.

[00:31:24] Speaker 01:
The fact that it's new or not goes to jurisdiction over old rules.

[00:31:29] Speaker 01:
Now we say the fact that this one element is something that's new, this one element being we're going to give you replacement rents.

[00:31:39] Speaker 01:
That's new.

[00:31:40] Speaker 01:
That is not

[00:31:41] Speaker 01:
new grounds to reopen 2010, 2012, 2014.

[00:31:44] Speaker 03:
That's actually not my interest in that, but that's not what I was trying to get at.

[00:31:50] Speaker 03:
The venue question.

[00:31:51] Speaker 01:
The venue question, right.

[00:31:53] Speaker 01:
So they're distinct parts of the case.

[00:31:56] Speaker 01:
So the fact that it's new is relevant, let's say it's relevant to both parts.

[00:32:02] Speaker 01:
We say the fact that it's new

[00:32:04] Speaker 01:
if anything, should be considered in whether it's grounds arising solely after.

[00:32:09] Speaker 01:
Under venue, the test is different.

[00:32:11] Speaker 01:
Under venue, they did not announce a policy in the sense that they're saying this is... Not expressly, but by implication, haven't they?

[00:32:23] Speaker 01:
No, I disagree, because it's fact-specific.

[00:32:26] Speaker 01:
which is expected in an adjudication as opposed to a rulemaking.

[00:32:30] Speaker 03:
This was... But isn't the argument that they've said, in fact specific circumstances, we're going to do something that we've never done before, and that's use replacement rims.

[00:32:41] Speaker 03:
We've done it here.

[00:32:42] Speaker 03:
So are you saying that they're never going to do it again?

[00:32:44] Speaker 03:
I can't say they're never gonna do it again.

[00:32:46] Speaker 03:
No, because they've established that they can do it, and maybe this is the first instance of it, but that's now on the table for their, in terms of the tools that they use to create remedies.

[00:33:00] Speaker 03:
EPA has now announced this is a remedy that we can use.

[00:33:04] Speaker 03:
Why isn't that appropriately brought here?

[00:33:07] Speaker 03:
Because it has nationwide scope.

[00:33:10] Speaker 01:
Because that's not the test on the venue statute.

[00:33:12] Speaker 01:
What's the test?

[00:33:13] Speaker 01:
The venue statute is nationwide applicability.

[00:33:16] Speaker 01:
Right.

[00:33:16] Speaker 01:
Or if it's local or regional applicability, nationwide effects and EPA makes a finding and publishes it.

[00:33:25] Speaker 01:
And what they're trying to do is say there's nationwide effects and the court should make the decision that there's nationwide effect, not EPA.

[00:33:34] Speaker 08:
I thought they were saying nation nationally applicable and there is some

[00:33:39] Speaker 08:
logic to that because the market is a national market and if you had, let's say you had the 10th Circuit

[00:33:47] Speaker 08:
creating precedent that said replacement rims.

[00:33:52] Speaker 08:
And you had another circuit, the ninth, saying only if the small refiner had sought to stay its compliance obligation while it litigated whether it was wrongly denied an extension of its exemption.

[00:34:08] Speaker 08:
And that's the way to remedy this kind of situation.

[00:34:11] Speaker 08:
Or give it a break on its future compliance obligation, but don't

[00:34:18] Speaker 08:
don't unretire or don't revive RINS that have expired, you could end up with not only a circuit conflict, but with a sense that RINS coming out of different jurisdictions were at risk in different ways.

[00:34:36] Speaker 08:
Why doesn't the nature of the program make that a question of national applicability?

[00:34:41] Speaker 01:
Well, two responses.

[00:34:42] Speaker 01:
One, the nature of the program is an effect.

[00:34:46] Speaker 01:
It's not the applicability of the challenge decision.

[00:34:48] Speaker 01:
The challenge decision is that these five refineries get a certain type of relief.

[00:34:54] Speaker 01:
That is the applicability of the decision.

[00:34:57] Speaker 01:
It applies to these five refineries.

[00:34:59] Speaker 01:
That decision might have nationwide effects, but that's a different part of the statute.

[00:35:04] Speaker 01:
And the second answer is the court's case law from Dalton

[00:35:11] Speaker 01:
Dalton, in other cases, says that's the task, that you do not look at the effect of the action, you look at the face of the action, and that's exactly what Petitioner is trying to get around.

[00:35:22] Speaker 01:
You look at the face of the action, it's these five small refineries get replacement rims and the exemption.

[00:35:31] Speaker 01:
The effect of that, maybe it's got nationwide scope, maybe it's got broader scope.

[00:35:35] Speaker 01:
Effects, I mean, the practical effects.

[00:35:38] Speaker 01:
But that's a different part of the venue statute.

[00:35:41] Speaker 01:
And you can't conflate the two.

[00:35:42] Speaker 01:
And Dalton and the other cases say you can't.

[00:35:44] Speaker 01:
And in fact, we've seen the Seventh Circuit change its mind on that.

[00:35:47] Speaker 01:
The Seventh Circuit in Madison adopted, essentially, the test that petitioner is advocating.

[00:35:54] Speaker 01:
And then in Southern Illinois said, no, we're going to join this circuit and other circuits and say, that's not

[00:36:01] Speaker 01:
what the statute means.

[00:36:02] Speaker 01:
The statute means what's the face of the action applied to.

[00:36:05] Speaker 01:
And case after case from this court that's analyzed that has agreed that you only look to the face of the action on its practical effects.

[00:36:16] Speaker 08:
I have a question about, so it does seem like, just judging from what the EPA has put on its website, that the approach has somewhat changed.

[00:36:27] Speaker 08:
And maybe this isn't a fair question to ask of you, given that you represent the agency, but is that subject to challenge?

[00:36:35] Speaker 08:
Will it be subject to challenge?

[00:36:36] Speaker 08:
What's the closest, what's the right way for a participant in the industry to test the legality of the agency's treatment?

[00:36:46] Speaker 08:
And I'm not talking here about the RIN replacement or revival, but the extension, the treatment of extensions and the fact that it's a much bigger category now.

[00:36:56] Speaker 01:
Well, I can't give you a concise, clear answer because some things, they might be out of time to change.

[00:37:04] Speaker 01:
What they're really complaining about is just a dramatic expansion of how many of these exemptions are being granted, which is how counsel started his argument.

[00:37:14] Speaker 01:
That's implementation of a program that was announced years ago.

[00:37:19] Speaker 01:
And just because they didn't challenge it at the time doesn't mean that there has to be some remedy somewhere sometime.

[00:37:26] Speaker 04:
Well, they could challenge it and they have challenged it.

[00:37:29] Speaker 04:
recent rule-makings, right?

[00:37:31] Speaker 04:
They have challenged... And if you come out with the same rule that you had before, they can challenge that as now arbitrary and capricious in light of the changes.

[00:37:39] Speaker 01:
I'm not saying they'd win, but they can certainly challenge it then.

[00:37:43] Speaker 01:
Right, well there's multiple avenues depending on what EPA does, what EPA has done in past, more recent rules that are being challenged in this work, what EPA might do in another role.

[00:37:54] Speaker 01:
But depending on the nature of those rules and the nature of the challenge, I can't say, well, there's a guaranteed right of review that if they just did A, B, and C, they can challenge that decision.

[00:38:04] Speaker 01:
Because it might just be there on a time.

[00:38:05] Speaker 04:
It might be that yes.

[00:38:07] Speaker 04:
Maybe we're not following each other.

[00:38:09] Speaker 04:
The argument about the vast expansion, even of the thing that you announced in 2010,

[00:38:18] Speaker 04:
its application in a new rule for 2018 or a new rule for 2019 or a new rule for 2020 can be challenged.

[00:38:27] Speaker 04:
You do have to come up with a new rule.

[00:38:30] Speaker 04:
There can be a petition for review of that new rule.

[00:38:33] Speaker 04:
And a classic arbitrary and capricious challenge is circumstances have changed.

[00:38:38] Speaker 04:
In 2010, you thought there were only going to be three exemptions granted, and now there's 50.

[00:38:43] Speaker 04:
Times have changed, and it's arbitrary and capricious to continue the old rule.

[00:38:48] Speaker 04:
That's clearly a timely challenge for the future, not for the past.

[00:38:52] Speaker 04:
But it's a timely challenge for the future.

[00:38:54] Speaker 01:
But there's another side to that.

[00:38:56] Speaker 01:
And this has come up in this renewable fuel standards program and other contexts.

[00:39:00] Speaker 01:
And the other side of that is certainty and repose.

[00:39:04] Speaker 01:
For instance, the core.

[00:39:05] Speaker 04:
That would be your defense to the argument about arbitrary and capriciousness.

[00:39:09] Speaker 04:
But it wouldn't preclude the timeliness of an argument.

[00:39:17] Speaker 01:
I'm not sure.

[00:39:17] Speaker 01:
That would be a defense.

[00:39:19] Speaker 01:
I'm not sure that we wouldn't also have more of a jurisdictional argument that it's too late to bring that.

[00:39:27] Speaker 01:
Because if you could continually challenge the same thing over and over and over, just each time it's applied, then...

[00:39:37] Speaker 04:
He would only be able to do it if the facts have changed significantly enough to make it arbitrary and capricious.

[00:39:44] Speaker 04:
Right, so if they could plead a proper challenge, that could be a... And you said they've pleaded a timely challenge to the rim replacements if we send it to the 10th circuit.

[00:39:57] Speaker 04:
Yes, the 10th circuit... So it can be challenged there.

[00:40:01] Speaker 04:
These particular ones.

[00:40:02] Speaker 04:
Well, if the 10th Circuit were to rule that this remedy is unlawful under this statute, you would have a precedent making it unlawful.

[00:40:12] Speaker 04:
And maybe you could do it in another circuit, or maybe the Supreme Court would take the case and resolve the matter.

[00:40:19] Speaker 04:
Exactly.

[00:40:19] Speaker 04:
But that is yet another way in which that can be done.

[00:40:21] Speaker 04:
Exactly, yes.

[00:40:23] Speaker 08:
What's the significance of whether the producers of renewables

[00:40:27] Speaker 08:
timely challenge, the 20 – or included in their petition, the original notice, the challenge to the 2020 renewable fuel standard – I mean, 2012, I'm sorry, renewable fuel standard.

[00:40:40] Speaker 08:
It seems like the statements are the same as what EPA made, and you were in the brief struggling against that having been challenged.

[00:40:48] Speaker 01:
Well, I think part of it is we felt that in the motion practice, there was a bit of a moving target about what exactly are they challenging.

[00:40:59] Speaker 01:
It was important to be clear what exactly is at issue because, for instance, it does make a difference whether they challenge the actual exemptions or the replacement rents.

[00:41:10] Speaker 01:
And they have clarified that.

[00:41:12] Speaker 01:
So we wanted to be clear about which

[00:41:15] Speaker 01:
rules they say are reopened, because it matters what they point to as the alleged new grounds.

[00:41:23] Speaker 01:
If you need to know what's being reopened, allegedly, or what's being new grounds, you need to know what you're aiming at to evaluate it.

[00:41:31] Speaker 01:
So part of it was just being fastidious.

[00:41:34] Speaker 01:
Part of it was it was important to understand what the context of the case is.

[00:41:38] Speaker 08:
Let me ask you, zooming out a very much more big picture question.

[00:41:42] Speaker 08:
What is

[00:41:44] Speaker 08:
the need for and purpose of the small refinery exemption.

[00:41:50] Speaker 08:
Why is it, given that a lot of these small refineries are actually owned by larger companies and we're just talking about something that you have to do some bookkeeping about and pay some money on, what is it?

[00:42:03] Speaker 08:
What's going on on the ground?

[00:42:05] Speaker 01:
That's something that my colleague that represents small refiners could probably answer better, but I think that the broad brush answer is Congress made that determination that there could be hardship, there could be disproportionate impact on small refiners that makes it hard for them to comply with this program and gave them an off ramp.

[00:42:27] Speaker 08:
You can't add anything more representing the agency that administers the program.

[00:42:32] Speaker 08:
It seemed like it was maybe to get sort of bookkeeping and administrative approaches up to speed because there's a lot of statements both, well, in the record about small refineries having a waning need for this, and they would have to report when they'd be ready to not have the exemption, and it was this idea that this was a transition rule.

[00:42:59] Speaker 01:
The way it's applied now, EPA does ask for a body of information from refiners that are seeking the assumption, the first three quarters of the year, their financials to demonstrate the harm that they're alleging.

[00:43:16] Speaker 08:
And what is it that's so burdensome?

[00:43:22] Speaker 01:
to comply with, to buy the RINs?

[00:43:25] Speaker 01:
Well, again, I'm not well positioned to say that.

[00:43:28] Speaker 01:
My guess is it's probably a combination of transaction costs and actual economic costs of purchasing the RINs, but I would really defer to the actual small refiners to better articulate what both the purpose of the program and why it's important to them.

[00:43:48] Speaker 08:
And confidentiality, why, I mean presumably these are companies that have to make reports about their financials, I don't know.

[00:43:57] Speaker 08:
What's the need for such confidentiality about which small refiners are getting these and that there's not some basic information that the public could have to monitor or be aware of what's happening?

[00:44:11] Speaker 01:
The way that EPA has regulations on how to treat confidential business information and the way those regulations work is if somebody submits information that the submitter claims as CBI, confidential business information, EPA treats it as CBI until EPA can go through a process to determine whether it is or not.

[00:44:31] Speaker 01:
And so that's why when you look at the unsealed, the redacted portions, there's these big blocks of redacted information that maybe not all that's really CBI once EPA has a chance to look at it.

[00:44:46] Speaker 01:
But because the claim was made, EPA treats the whole thing as CBI and then at some future point would look at it and say, well, that's actually just this paragraph.

[00:44:57] Speaker 01:
But they didn't get to that point before this litigation got to this stage.

[00:45:00] Speaker 01:
So I think the answer to your question is it's CBI because the submitter claimed it.

[00:45:05] Speaker 01:
They're claiming it.

[00:45:06] Speaker 01:
They claimed it.

[00:45:07] Speaker 01:
Right.

[00:45:07] Speaker 01:
And we haven't gotten to the point where EPA would make an actual decision, yes, that is, or no, that's not.

[00:45:12] Speaker 01:
So we treat it all as CBI.

[00:45:14] Speaker 04:
OK.

[00:45:14] Speaker 04:
We'll hear from the intervener.

[00:45:16] Speaker 04:
Thank you.

[00:45:26] Speaker 00:
May it please the court?

[00:45:27] Speaker 00:
Ryan Morris for Interveners.

[00:45:30] Speaker 00:
As has happened thus far, I think it's critical in order to really understand what's going on in the case to really identify what the final agency action at issue is before you can take any further steps.

[00:45:40] Speaker 00:
If what they are challenging is a policy, some broader policy, as has been started thus far, they have an identified final agency action for a broader policy of an increased rent amount or anything along those lines.

[00:45:53] Speaker 00:
And as the court said in Fund for Animals, you don't identify or the court doesn't address policy changes in the abstract.

[00:46:00] Speaker 00:
You need something tangible in order to look at.

[00:46:02] Speaker 00:
With regard to that, they haven't identified it.

[00:46:04] Speaker 00:
It's not in their petition.

[00:46:05] Speaker 00:
It hasn't arisen anywhere in the briefs as to what that policy is in a final agency action.

[00:46:11] Speaker 00:
And I think on that basis alone, you can set the policy aside.

[00:46:15] Speaker 00:
There's no jurisdiction in order to review it.

[00:46:17] Speaker 00:
With regard to the individual exemption orders at issue, as you stated, there are other reasons why those don't belong in this court.

[00:46:25] Speaker 00:
First, we'd say there's no standing.

[00:46:27] Speaker 00:
They haven't shown or connected with evidence a concrete injury traceable to these orders for any of the members at issue.

[00:46:35] Speaker 04:
So I think you should put your time into the same arguments that were made by the DOJ with respect to jurisdiction and venue.

[00:46:44] Speaker 04:
Fair enough.

[00:46:45] Speaker 00:
With respect to venue,

[00:46:48] Speaker 00:
Dalton is very clear that there are only two ways in which venue is proper in this court.

[00:46:52] Speaker 00:
Either on the face of the final agency action, there is something that says it's nationally applicable.

[00:46:58] Speaker 00:
Nothing in these is nationally applicable.

[00:47:00] Speaker 00:
It is only between the parties at issue.

[00:47:02] Speaker 00:
The remedy is only for a particular party from EPA.

[00:47:06] Speaker 00:
So it's not within the nationally applicable on its face category.

[00:47:09] Speaker 00:
The second category is that there is an actual expressed finding from EPA that is published that says there are nationwide scope and effect.

[00:47:18] Speaker 00:
We don't have that either.

[00:47:20] Speaker 00:
So for venue purposes, these orders belong in the 10th Circuit, if anywhere.

[00:47:24] Speaker 08:
What about the treatment of exemptions?

[00:47:26] Speaker 08:
First of all, I'd like to hear from you.

[00:47:28] Speaker 08:
What is the animating concern for these exemptions and why the confidentiality?

[00:47:34] Speaker 08:
Why the full scope of confidentiality claim?

[00:47:37] Speaker 00:
The animating concern for these is

[00:47:39] Speaker 00:
In the fuel market, you've got a variety of different kinds of entities competing against each other for the same fuel.

[00:47:46] Speaker 00:
Some are rather integrated, and they can blend.

[00:47:49] Speaker 00:
So if you go down the process in terms of how you produce the fuel, but then the rims aren't separated, and compliance in the RFS doesn't happen until there's actually the blending of the renewable fuel with gasoline or the diesel, as it were.

[00:48:04] Speaker 00:
A lot of facilities, a lot of small refineries don't have that blending capability.

[00:48:08] Speaker 00:
They just can't blend as much fuel as they're producing.

[00:48:11] Speaker 08:
But that's a separate question, and it's been much mooted in other cases.

[00:48:16] Speaker 08:
The identification of the obligated parties, and the blenders aren't the obligated parties, right?

[00:48:19] Speaker 08:
The refiners and importers are the obligated parties.

[00:48:23] Speaker 08:
Correct.

[00:48:23] Speaker 08:
And so there are bigger refineries, smaller refineries.

[00:48:29] Speaker 08:
Both of them are in a position of having to

[00:48:34] Speaker 08:
account for having to have these credits for the fossil fuels that they're selling, and if it's just a matter of buying something, passing the cost onto the consumer, recouping it from someone who buys the rim back.

[00:48:50] Speaker 08:
I just don't see why the differential, small refiners versus medium refiners versus big refiners.

[00:48:56] Speaker 00:
Right, and that presupposes that the cost just passes straight on through.

[00:49:00] Speaker 00:
There's a lot of studies and other things, obviously, beyond this, that it's not passed straight on through.

[00:49:07] Speaker 00:
There's been fights with Congress, DOE, and others about what the actual economic harm is to the small refineries, and they are bearing a certain cost, and we think it's a considerable one.

[00:49:18] Speaker 00:
especially when they can only service certain markets.

[00:49:20] Speaker 00:
A lot of small refineries are far off.

[00:49:22] Speaker 00:
It takes a while to get the fuel out.

[00:49:24] Speaker 00:
And so they have a lot of things and they suffer from very tight margins.

[00:49:29] Speaker 00:
So it's hard for them to be profitable, but they do have markets that they need to service.

[00:49:34] Speaker 00:
Therefore, this type of exemption is really necessary for a lot of them in order to carry on, service their markets, and compete with the much larger and more integrated facilities that can easily blend, have excess rinse, and

[00:49:47] Speaker 00:
and carry on with really no impact whatsoever from the program.

[00:49:53] Speaker 08:
And why confidentiality?

[00:49:55] Speaker 08:
Would it be a problem for the participating refiners if their identity and the scope of the extension granted were public?

[00:50:07] Speaker 00:
Depending on the service.

[00:50:08] Speaker 00:
Because these really do matter for some small refineries and some of them are public, what gets published or not published maybe

[00:50:17] Speaker 00:
But a lot of the confidential information, a lot of the information that they have to submit to EPA as part of the DOE analysis and figure out whether or not is very sensitive.

[00:50:25] Speaker 08:
That has to do with economic hardship.

[00:50:26] Speaker 08:
I understand that, internal financial viability of the firm.

[00:50:32] Speaker 08:
But what about the results of these decisions, which have been not made public?

[00:50:39] Speaker 08:
I gather there is this one inventory on the EPA's site about the actual number and volume of the exemptions that was

[00:50:47] Speaker 08:
Am I right that that was a September 2018 list?

[00:50:50] Speaker 00:
That they put out?

[00:50:52] Speaker 00:
Yeah.

[00:50:52] Speaker 00:
And they had the similar information that went in the letters to Congress as well.

[00:50:57] Speaker 08:
And is that the earliest that we know it being on the website?

[00:51:00] Speaker 00:
That's the earliest I'm aware of.

[00:51:02] Speaker 08:
OK, and then the letter responding to Grassley's inquiry?

[00:51:05] Speaker 00:
My understanding is there is an ongoing rulemaking with regard to what information is public or not.

[00:51:11] Speaker 04:
Why can't they just file a FOIA request?

[00:51:14] Speaker 00:
My understanding is that FOIA would keep some of that information.

[00:51:16] Speaker 04:
Some, but it wouldn't.

[00:51:18] Speaker 04:
If the question is, do we know how many exemptions the agency is granting, a FOIA request for a sentence that says granted on every order

[00:51:39] Speaker 04:
over the last 10 years, can't imagine that that would, at least that element would have to be redacted from a FOIA request.

[00:51:47] Speaker 04:
Can you?

[00:51:48] Speaker 04:
No.

[00:51:50] Speaker 00:
Yeah.

[00:51:50] Speaker 00:
I see my time's up.

[00:51:51] Speaker 00:
Are there any further questions?

[00:51:52] Speaker 00:
No.

[00:51:53] Speaker 00:
Thank you.

[00:51:53] Speaker 04:
I assume there's no time.

[00:51:56] Speaker 04:
All right.

[00:51:56] Speaker 04:
We're about a little bit more than 10 minutes over.

[00:51:59] Speaker 04:
We'll give you another three minutes.

[00:52:01] Speaker 04:
Can I ask you one question?

[00:52:09] Speaker 04:
There's a petition for review in this court filed in the advanced biofuels case.

[00:52:16] Speaker 04:
That's 18-1115.

[00:52:18] Speaker 04:
It was filed May 1st, 2018.

[00:52:20] Speaker 04:
Are you familiar with that?

[00:52:22] Speaker 04:
I'm familiar with it, Your Honor.

[00:52:24] Speaker 04:
You are.

[00:52:25] Speaker 04:
So in that case,

[00:52:26] Speaker 04:
It refers to the complaining about the agency's retroactive grant of a historically unparalleled number of exemptions as destabilized the national renewable fuels market.

[00:52:38] Speaker 04:
It refers to Senator Grassley's letter.

[00:52:41] Speaker 04:
That's the same kind of argument you're making here.

[00:52:46] Speaker 02:
So in that proceeding, what is being challenged is

[00:52:55] Speaker 02:
the criteria by which EPA determines whether to receive and grant a small refinery exemption.

[00:53:09] Speaker 04:
Is the challenge to the kind of decision the 10th Circuit made?

[00:53:12] Speaker 04:
Is that what you're saying, the standards?

[00:53:15] Speaker 02:
That's correct.

[00:53:17] Speaker 02:
I'm sorry.

[00:53:19] Speaker 04:
It's the word retroactive in the sentence, so is not part of what you're arguing here also being argued there?

[00:53:26] Speaker 02:
What we are arguing is that the 10th Circuit never addressed in its decision anything about rinse, what the remedy should be.

[00:53:38] Speaker 04:
I understand you're not challenging the standard by which a decision is made about rinse.

[00:53:43] Speaker 04:
That's correct.

[00:53:43] Speaker 04:
I understand that.

[00:53:45] Speaker 04:
But you're challenging the retroactive application of that standard in an exemption today granted for the past.

[00:53:57] Speaker 04:
Is that wrong?

[00:53:59] Speaker 02:
The standard in the underlying proceeding?

[00:54:04] Speaker 04:
I thought you were challenging here the notion that at any time

[00:54:10] Speaker 04:
those quotes around the statutory phrase.

[00:54:12] Speaker 02:
Yes, Your Honor.

[00:54:12] Speaker 04:
Right?

[00:54:13] Speaker 04:
Yes.

[00:54:13] Speaker 04:
That it can be granted for the... That's correct.

[00:54:15] Speaker 04:
I understood the meaning of the word retroactive.

[00:54:18] Speaker 04:
That's correct.

[00:54:19] Speaker 04:
So doesn't this suggest that... I'm trying to get my head around this question of when you knew.

[00:54:26] Speaker 04:
So that's filed May 1st, 2018.

[00:54:30] Speaker 04:
So is it the case that by May 1st, 2018, it was already known?

[00:54:39] Speaker 04:
that they were granting historically unparalleled old numbers of exemptions retroactively.

[00:54:44] Speaker 02:
I believe it was May 31st.

[00:55:02] Speaker 04:
That case was filed May 1st, 2018.

[00:55:05] Speaker 04:
I beg your pardon?

[00:55:06] Speaker 04:
It was filed May 1st.

[00:55:07] Speaker 04:
I have it in front of me.

[00:55:09] Speaker 02:
My understanding is that in the ADFA proceeding, they are not challenging the timing.

[00:55:19] Speaker 04:
It's a different question.

[00:55:21] Speaker 04:
I understand what they're challenging, but they knew about the retroactivity by that stage.

[00:55:29] Speaker 04:
The question of whether it's a grounds arising after, right?

[00:55:33] Speaker 04:
So it has to be within 60 days of the grounds arising, right?

[00:55:37] Speaker 04:
Correct.

[00:55:39] Speaker 04:
It sounds like they knew by no later than May 1st that there was a ground arising.

[00:55:46] Speaker 02:
With respect to the RINS, the very first time that the public became aware that EPA was unretiring expired RINS,

[00:56:02] Speaker 02:
was in this article.

[00:56:05] Speaker 04:
I understand.

[00:56:06] Speaker 04:
I want to separate out the RIN part from your other arguments.

[00:56:11] Speaker 04:
You certainly have a set of RIN arguments.

[00:56:16] Speaker 04:
I want to separate that out just for the moment.

[00:56:19] Speaker 04:
All the other arguments in the case, the arguments about at any time, about the retroactive application, about not renewing volume that had been taken.

[00:56:32] Speaker 04:
That was all known, to the extent there was a sea change in that respect, that was known by May 1st, 2018, because the closely related party was bringing the same case.

[00:56:44] Speaker 02:
Because the language that was at issue essentially reserved EPA.

[00:56:55] Speaker 02:
EPA basically used the language, we may.

[00:56:59] Speaker 04:
No, no, I understand that's why you didn't think that what happened in 2010 is relevant.

[00:57:07] Speaker 04:
But here you're talking about the facts that you're concerned about, the huge number, the unparalleled number.

[00:57:15] Speaker 04:
And in this filing, it's responding to the agency's retroactive grant of historically unparalleled number of exemptions that have destabilized the national renewable fuels market.

[00:57:30] Speaker 02:
Yes.

[00:57:32] Speaker 02:
So what you're saying, I understand, Your Honor.

[00:57:35] Speaker 04:
I'm not saying, I'm just asking why this doesn't – Why they're not interrelated.

[00:57:42] Speaker 02:
Is that your question?

[00:57:43] Speaker 04:
Why this isn't an indication of that the grounds are rising.

[00:57:48] Speaker 04:
subsequent to the rulemaking had already arisen by May 1st.

[00:57:53] Speaker 04:
That's my question.

[00:57:54] Speaker 02:
Well, we've tried to focus the grounds arising on the specific issue of whether or not EPA was entertaining requests by regulated parties to

[00:58:14] Speaker 02:
regenerate rent.

[00:58:18] Speaker 02:
And that we did not know from anything that was here.

[00:58:21] Speaker 08:
And they basically conceded that.

[00:58:22] Speaker 08:
Do you have any broader challenge before us?

[00:58:26] Speaker 08:
It sounds like maybe you don't, that that is the gravamen of your challenge.

[00:58:30] Speaker 08:
You're not challenging.

[00:58:31] Speaker 02:
In terms of the grounds arising after?

[00:58:33] Speaker 08:
In terms of anything in your petition?

[00:58:37] Speaker 02:
Let me mention just a couple very quickly.

[00:58:42] Speaker 02:
Number one,

[00:58:45] Speaker 02:
Following the Holly Frontier and the Sinclair decisions in the 10th Circuit, there's now a proceeding pending in the 4th Circuit, Ergon, and one pending in the 9th Circuit, Kern Oil, where the same relief is being sought.

[00:59:06] Speaker 02:
So the very hypothetical that you posed, Judge Pollard, is indeed

[00:59:15] Speaker 02:
presenting itself.

[00:59:17] Speaker 02:
Number two, Your Honor, I believe you asked whether EPA had ever taken a position that it intended to, going forward, as a policy, unretire WINS as part of the

[00:59:38] Speaker 02:
part of its remedy in the small refinery exemption cases.

[00:59:45] Speaker 02:
And in its recent promulgation regarding the E-15 proposal, EPA flatly stated that it intended to un-retire

[01:00:07] Speaker 02:
But it declined to take comment on that particular investigation.

[01:00:13] Speaker 04:
Is that in the record, what you just cited?

[01:00:20] Speaker 02:
Your Honor, it was subsequent to the briefing.

[01:00:26] Speaker 02:
So we don't have that.

[01:00:28] Speaker 02:
That's correct.

[01:00:28] Speaker 02:
And I assume you could challenge that.

[01:00:32] Speaker 02:
That's correct.

[01:00:34] Speaker 02:
Your Honor, let me just say one more thing, which is that the issue also arose in the context of the challenge to the 2019 RFS standards.

[01:00:49] Speaker 02:
And in that particular proceeding, EPA took the position that this issue of whether it had authority to un-retire RINS was outside the scope

[01:01:03] Speaker 02:
of that particular proposal and it declined to accept comment on that specific issue.

[01:01:16] Speaker 02:
Lastly, Your Honor, you asked about the CBI issue and why couldn't a party simply file a FOIA request.

[01:01:28] Speaker 02:
FOIA requests have been filed

[01:01:32] Speaker 02:
over the years and uniformly on this issue been flatly declined.

[01:01:39] Speaker 02:
That's what we're here for.

[01:01:41] Speaker 04:
Thank you.

[01:01:42] Speaker 04:
Did you bring a, have you brought one in the, have you appealed?

[01:01:48] Speaker 04:
Have you filed a FOIA case?

[01:01:49] Speaker 04:
To a FOIA request.

[01:01:51] Speaker 04:
Have you filed a FOIA case in the district court?

[01:01:54] Speaker 04:
That would seem like the logical place to go if they deny your FOIA request.

[01:01:58] Speaker 04:
Understood.

[01:01:59] Speaker 04:
and least the intervener thinks you might have a good case, at least from the bottom line of every one of those decisions.

[01:02:06] Speaker 04:
We'll take the matter under submission.

[01:02:07] Speaker 04:
Thank you all.

[01:02:08] Speaker 04:
We'll all take a brief break.