Growth Energy has previously submitted extensive comments demonstrating the vital role low carbon biofuels and higher biofuel blends can play in meeting Oregon’s ambitious climate goals. We appreciate the opportunity to provide further comments on the proposed rulemaking and how expanded E15 use can help the state achieve its objectives.

Consideration of Sustainability Certification

In response to the April 17th CFP’s Rulemaking Advisory Committee meeting, we request the Department not consider the proposal on sustainability certification for crop-based biofuels currently under consideration by the California Air Resources Board (CARB). We have a variety of concerns with the proposal, which we have detailed in comments to CARB. The proposal’s sustainability certification for crop-based fuels cites concerns regarding land use change (LUC) factors that are unfounded relative to corn starch bioethanol. In fact, the United States is planting grain corn on roughly the same number of acres as was planted in 1900. At the same time, the per acre yield has increased more than 600%.

Additionally, the LUC concern is already addressed in the 2024 Clean Fuels Program and its carbon intensity (CI) modeling. Corn starch bioethanol is given an automatic 7.6 gCO2e/MJ penalty for indirect land use change (ILUC). Adding the proposed sustainability criteria to the current ILUC score amounts to an unfair double penalty for corn starch bioethanol. We also believe the 7.6 gCO2e/MJ penalty is outdated and not based on the most up to date research. A review of more recent science indicates a decreasing trend in land use values with the newer data indicating values closer to 4 gCO2e/MJ.

Further, the proposed sustainability certification will add onerous and costly requirements on biofuel producers and farmers. Yet CARB’s economic analysis of the proposal does not discuss the sustainability requirement’s financial burden of implementation. Nor will the requirement allow bioethanol producers to use important tools like climate-smart agricultural practices for CI reduction. Some of these practices include precision application of fertilizer, use of low CI fertilizer, no or low-till farming practices, and the use of cover crops.

Finally, with respect to CARB’s proposed sustainability audit, the proposal’s audit requirements address issues, while important to environmental and social justice, fall outside the scope of the LCFS. The proposed sustainability audit process would require auditors to conduct: “review of management systems”, “review of social practices”, and an assessment of the “economic sustainability of the applicant.” These items have no bearing on GHG reduction. Furthermore, if the proposal is adopted, crop-based biofuels would be the only feedstock for which these criteria would be audited.

Carbon Capture and Sequestration

New innovations at biorefineries throughout the United States allow pure, biogenic carbon dioxide (CO2) to be captured at a massive scale, and multiple projects are already underway that repurpose, reuse, or provide a permanent storage solution for the majority of that CO2. We appreciate DEQ’s leadership on the issue of carbon capture utilization and sequestration (CCUS) and the approval of Red Trail Energy LLC’s Tier 2 application including CCUS last year. We encourage DEQ to continue broad allowance for credit generation from CCUS.

We applaud DEQ’s efforts to recognize the value of carbon emissions reduction via CCUS. We also understand and appreciate that DEQ will accept pathways with non-onsite CCUS approved or recertified by the California Air Resources Board, we request DEQ works to ensure all CCUS operations remain eligible for CI crediting by maintaining current eligibility provisions. Restricting CI crediting only to on-site sequestration prevents the vast majority of biorefineries from benefiting as most plants’ locations do not have the geology necessary for Class VI CO2 injection wells. Many of these bioethanol facilities will eventually be utilizing CCUS via a CO2 pipeline.

Whether on-site or transported safely via pipeline to be sequestered elsewhere, carbon dioxide is removed from the atmosphere and contributes to the emissions reduction benefits of bioethanol. Those facilities should not effectively incur a penalty due to the geology of their location when other CCUS opportunities remain.

Expanded Use of E15 and Higher Blends

We applaud Oregon allowing the sale of E15, gasoline containing up to fifteen percent ethanol, in 2021. We encourage the state to adopt policies that encourage the expanded use of E15 as well as higher blends such as E85. More than 96% of all vehicles on the road today can take advantage of E15, which if replaced E10 statewide, would result in more than 190,000 tons in GHG reductions. This is the equivalent of removing more than 41,000 vehicles off Oregon’s roads without impacting a single driver.

Additionally, E85 is currently available at only five sites in the state. With an existing fleet of more than 186,000 Flex Fuel vehicles (FFVs), Oregon can utilize E85, which will promote even greater reductions in GHG emissions in addition to reductions in air toxics.

We encourage Oregon to incentivize the use of FFVs and invest in infrastructure expanding access to E85 in the state. Doing so would achieve multiple goals: improve air quality and GHG emissions, reduce the state’s dependence on fossil fuels, and provide consumers with an affordable choice to power their vehicles.

Thank you for the opportunity to provide input on the 2024 Clean Fuels Program rulemaking. The 2024 Clean Fuels Program is a critical tool to addressing climate change, and we look forward to working with DEQ to ensure the role of biofuels in making Oregon’s fuel mix more sustainable and help the state achieve its progressive climate goals through the expanded use of bioethanol. Additionally, we are happy to make ourselves available for any questions DEQ may have.

The post Growth Energy Comment to Oregon DEQ on 2024 Clean Fuels Program (CFP) Rulemaking appeared first on Growth Energy.

On November 14, Skor joined lawmakers and industry leaders, including Argonne National Laboratory Director Paul Kearns, at Tech for Climate Action’s U.S. Clean Energy Transition Conference, where she discussed the role biofuels play in our nation’s climate strategy, particularly when it comes to Sustainable Aviation Fuel (SAF).

“We’re working very hard to make sure that biofuels play the important role that they should play in our national quest to get to a net-zero economy in 2050,” said Skor. “Last year, the U.S. produced 16 million gallons of Sustainable Aviation Fuel. Many of you are hopefully familiar – the Biden administration has the SAF Grand Challenge, which commits the U.S. to producing three billion gallons by 2030. So yes, you did the arithmetic correctly. We’ve got to go from 16 million to three billion in seven short years, so that of course requires some pretty exponential growth.”

New markets for SAF and carbon reduction were also a hot topic at POLITICO’s energy forum titled “The Sustainable Future: Driving Toward Clean Fuel,” where she was joined by other clean energy advocates from Citizens for Responsible Energy Solutions (CRES) and American Council on Renewable Energy (ACORE). The panel, sponsored by Consumer Reports, also featured Rep. Paul Tonko (D-NY) and Department of Energy Deputy Assistant Secretary for Sustainable Transportation & Fuels Michael Berube.

During the event, Skor emphasized the importance of certainty in the administration’s implementation of the tax code, especially when it comes to achieving U.S. goals for decarbonizing aviation. Since passage of the Inflation Reduction Act, Growth Energy has worked alongside airlines and other stakeholders to push the U.S. Internal Revenue Service (IRS) to adopt the best available science – Argonne National Lab’s Greenhouse Gases, Regulated Emissions, and Energy Use in Transportation (GREET) Model – for calculating tax incentives on SAF and other fuels.

“Sustainable Aviation Fuel – this is a whole new frontier for us, as a country and really as a world,” she said. “The tax credits only take us through 2027, so the investments required – it’s hundreds of millions of dollars in investment. And so, if you’re going to do that, the tax credit helps a little bit, but you’ve got to have that business certainty.”

###

The post Growth Energy CEO Takes Center Stage on SAF and Clean Energy appeared first on Growth Energy.

In an open letter to Treasury Secretary Janet Yellen, the authors explain that “our ability to attract investment and build out U.S. SAF capacity will depend on how the program determines credit eligibility and valuation.” The default model for evaluating SAF misses key aspects of de-carbonization, including “climate smart and regenerative feedstock practices” supported by the IRA.

Fortunately, the IRA explicitly allows for the use of “any similar methodology” for determining SAF credit eligibility and valuation. As the letter explains, the Argonne GREET model “incorporates the latest biorefining and feedstock production efficiencies.” It accounts for “every aspect of the ‘full fuel lifecycle’” — from “land use changes” to “all stages of fuel and feedstock production and distribution.” Argonne GREET clearly meets statutory requirements, and unlike any new approach that would invite further delay, it is well-settled, durable, and updated regularly.

The authors note: “With the right market signals, we can de-carbonize aviation and spur a new wave of U.S. innovation and clean energy jobs. However, modeling uncertainty today is a multiyear development problem due to the buildout schedules of SAF production facilities.” Section 40B of the IRA cannot be implemented or used effectively if bio-innovators do not urgently receive clarity and certainty on this issue.

The administration should immediately recognize Argonne GREET and provide the certainty that will support long-term planning and investment in a more sustainable future for aviation.

The full letter and list of signatories is available here.

The post Sustainable Aviation Fuel Industry Leaders Call on Biden Administration to Immediately Recognize Argonne GREET Model appeared first on Growth Energy.

Growth Energy CEO Emily Skor kicked off the three-day event with a speech that emphasized the hard-won progress made last year and ongoing innovation by Growth Energy’s members. “Where some see only a field of corn, we see clean energy, nutrient-rich animal feed, green chemicals, and an ever-growing array of value-added bioproducts,” said Skor. “We see an economy that can grow in sync with nature, rather than at her expense. Realizing the full potential of these endeavors is not easy. It requires policies that reward innovation, competition, and entrepreneurship.

“Last year, we made huge strides toward that goal. We secured critical tax incentives for clean energy, a summer waiver for E15 sales, a stronger Renewable Fuel Standard (RFS), and new, unprecedented funding for blending infrastructure.

“We also delivered record-breaking savings at the pump during a global fuel shortage, cementing the role of low-carbon bioethanol as a proven solution to our climate and energy challenges.

“We’re off to a great start. We’re positioned for success like never before, and we have new momentum propelling us forward. Let’s seize this moment to fuel beyond where we’ve ever been before,” concluded Skor.

Prior to the official event kick off, dozens of participants attended the fourth annual Technical Forum on Wednesday, where panelists spoke on issues that affect plant and facility performance, such as carbon management, infrastructure, and fuel markets.

During the ELC general session, industry experts will dive into the Inflation Reduction Act and its impact on the ethanol industry’s efforts to decarbonize the transportation sector, including opportunities like sustainable aviation fuel and carbon capture.

Speakers include Ambassador Doug McKalip, Chief Agricultural Negotiator in the Office of the United States Trade Representative. McKalip will discuss his goals for the expansion of American agricultural exports and address issues and opportunities in international markets.

Attendees also will hear from gold medal Olympian and best-selling author Shawn Johnson East, who will share an update on her family’s partnership with Get Biofuel’s Green American Road Trip. Additionally, this year’s keynote speaker will be Jon Dorenbos, a former NFL athlete and best-selling author.

The post Fuel Beyond: Growth Energy Kicks Off 2023 Executive Leadership Conference appeared first on Growth Energy.

“Nearly 70% of U.S. ethanol production is moved by rail – more than 400,000 carloads annually. No one wants to see American motorists cut off from a vital supply of lower-cost, lower-carbon fuels so we’re glad to see Congress take the threat of a rail strike seriously and urge the Senate to work quickly to adopt this legislation. The sooner the bill is passed, the sooner our industry can confidently get back to work for American consumers without having to worry about a deeply disruptive, and wholly avoidable rail strike.”

Background

Growth Energy has signed on to numerous coalitions and comment letters urging all parties involved in the negotiations to come to a voluntary agreement. In the absence of such an agreement, Growth Energy and its membership have vocally supported a legislative fix that prevents a destructive rail strike. The ethanol industry ships more than 400,000 ethanol carloads per year (USDA data: Annual U.S Rail Carloads of Ethanol | Open Ag Transport Data (usda.gov)), an estimated 200,000 carloads of distillers dried grains (DDGS), and more than 10,000 cars of corn oil. The ethanol fleet is now more than 36,000 cars (RSI data: Progress – Tank Car Resource Center).

The post Growth Energy Statement on House Approval of Legislation to Avert a Potential Rail Stoppage appeared first on Growth Energy.

Growth Energy CEO Emily Skor kicked off the event with a speech that highlighted how Growth Energy has reimagined the role the biofuels industry plays in the global transition to clean energy. From sustainable aviation fuel to carbon capture, Growth Energy’s members have made investments in fighting climate change and giving consumers access to choices that are better for the planet. This innovation, as well as updated data on ethanol’s impact on the environment, opened up doors for biofuels to have a seat at the table with the Biden Administration.

“Biofuels are the solution, and the work we are doing now will ensure that America’s ethanol industry is poised for success in a lower-carbon economy, delivering on a new wave of demand for clean energy – on the ground and in the sky, at home, and abroad, in today’s vehicles and tomorrow’s,” Skor said in her opening remarks.

“We offer what no one else can: immediate carbon reduction, with today’s infrastructure, today’s vehicles, and a sustainable supply chain that starts and stops on U.S. soil.”

The post Re:imagine: Growth Energy Kicks Off 2022 Executive Leadership Conference appeared first on Growth Energy.

Growth Energy is the world’s largest association of biofuel producers, representing 89 biorefineries that produce nearly 9
billion gallons annually of low-carbon renewable fuel and 95 businesses associated with the biofuel production process.

EPA’s Proposed Decision will strengthen the RFS program, reduce the nation’s emission of greenhouse gases, and support renewable, American-grown biofuels. Congress intended the RFS program as a market-forcing policy to increase the nation’s consumption of renewable fuel and move the United States toward greater energy independence and security. However, EPA’s
previous policies regarding extensions of exemptions for small refiners and refineries (together, “small refineries”) undermines Congress’s intent and jeopardizes the RFS program as a whole.

EPA’s Proposed Decision is a step forward in righting EPA’s previous wrongs. Not only will
denying the 65 pending petitions for small refinery exemptions (“SREs”) increase access to
renewable fuel, but such action also is necessary to bring EPA’s policies in line with federal law
and EPA’s own long-held findings that RFS program compliance does not disproportionally
harm small refineries. EPA should also deny all other pending SRE petitions (and all future
petitions) that fail to meet the criteria set forth in the Proposed Decision, including the 36 2018
SRE petitions that the U.S. Court of Appeals for the D.C. Circuit remanded to the EPA on
December 8, 2021.
Since at least 2015, EPA has consistently found that obligated parties—big and small—
do not face disproportionate hardships from compliance with the RFS. Obligated parties recover
the cost of RINs they purchase by passing those costs downstream. EPA’s findings were based
on extensive and careful analysis of empirical evidence and industry comments. At the same
time, and counter to this clear finding, EPA radically increased the number of SRE extensions it
granted to small refineries for purported “disproportionate economic hardship.” SREs increased
to nineteen for 2016, thirty-five for 2017, and thirty-one for 2018. The SREs represented more
than 4 billion gallons of renewable fuel that were exempted from the RFS program.2

The Proposed Decision is necessary to bring EPA’s SRE policy and decisionmaking into
line with EPA’s longstanding assessment of the empirical realities that obligated parties face in
complying with the RFS program. As the Proposed Decision explains, EPA’s proposal is well
supported by sound economic principles and all available market data, including data provided
by the small refineries to EPA.
Moreover, the Proposed Decision is necessary for EPA to comply with federal law. In
Renewable Fuels Ass’n v. EPA, 948 F.3d 1206 (10th Cir. 2020) (“RFA”), the Tenth Circuit held
1 Proposed RFS Small Refinery Exemption Decision (“Proposed Decision”), EPA-420-D-21-001,
December 2021.
2
Prior to the 2020 RFS Annual Rule, volume lost due to SREs was not replaced by additional
production from non-exempted parties and resulted in net reduction of the total renewable fuel
volume produced. See 85 Fed. Reg. 7016 (Feb. 6, 2020).
2
that EPA’s policies on SREs were unlawful in multiple ways. The Tenth Circuit held that EPA
had impermissibly expanded the plain language of the RFS statute by extending exemptions for
small refineries based on factors other than hardship caused by compliance with the RFS
program.3
The Tenth Circuit also held that EPA’s SRE decisions were arbitrary and capricious
because the EPA had failed to consider its long-standing finding that obligated parties pass
through their compliance costs.4
Those portions of the court’s ruling were untouched by the
Supreme Court’s later rejection of a different part of the Tenth Circuit’s decision in
HollyFrontier Cheyenne Ref., LLC v. Renewable Fuels Ass’n (“HollyFrontier”).5
The surviving
portions of the Tenth Circuit’s decision are persuasive, and EPA should adopt them nationally
for all SRE decisions, as EPA proposes to do. Under those standards, EPA’s Proposed Decision
to deny all pending and remanded SRE petitions is sound and should be adopted. In fact, EPA
cannot do otherwise.
Additionally, EPA proposes to revert to its prior position that only refineries that received
the initial blanket statutory exemption are eligible for an SRE extension. This proposal accords
with—indeed, is compelled by—the plain statutory text and binding judicial precedent.
In short, Growth Energy supports the adoption of the Proposed Decision for the following
reasons: First, EPA’s statutory authority is limited, and EPA cannot grant SRE extensions for
reasons other than economic hardships directly caused by compliance with the RFS. Second,
EPA also cannot grant SRE extensions unless the economic hardship is disproportionate. Third,
EPA’s conclusion that small refineries do not face disproportionate economic hardships because
of compliance with the RFS is well-supported and sound decisionmaking. In fact, EPA has longheld this conclusion, and EPA’s failure to consider this important fact when evaluating SRE
petitions would be arbitrary and capricious. And fourth, EPA cannot grant an SRE extension to a
refinery that did not receive the initial blanket exemption.
Finally, as Growth Energy explained recently in its comment on EPA’s proposed annual
standards for 2020-2022, EPA should retain its 2020 revision of the standard equation to account
for projected SREs, even if it denies all pending and remanded SRE petition. That would enable
EPA to set future standards that are rationally and reasonably calculated to fulfill its statutory
duty to ensure that the applicable volume requirements are met.6
DISCUSSION
I. EPA CANNOT GRANT SRE EXTENSIONS BASED ON HARDSHIPS NOT DIRECTLY
CAUSED BY COMPLIANCE WITH THE RFS PROGRAM
EPA should adopt the Proposed Decision and a clear policy that petitions seeking SRE
extensions will not be granted if they do not demonstrate disproportionate economic hardship
3 RFA, 948 F.3d at 1253.
4 RFA, 948 F.3d at 1257.
5
141 S. Ct. 2172 (2021).
6 See Growth Energy, Comments on EPA’s Renewable Fuel Standard (RFS) Program: RFS
Annual Rules at 81-84 (Feb. 4, 2022), EPA-HQ-OAR-2021-0324.
3
(“DEH”) directly caused by compliance with the RFS program. EPA should deny all 65 pending
SRE petitions and any other remanded or submitted petitions that do not meet this standard.
EPA’s obligations here are clear. EPA must adopt the Proposed Decision because it
comports with Congress’s clearly expressed intent, as shown by the language and purpose of the
statute and the compelling reasoning of the Tenth Circuit in RFA. An SRE can be granted only
due to DEH costs incurred because of the RFS program. Granting SREs based in part on any
alternative basis—such as general economic considerations or diverse factors that impact
profitability—violates federal law and exceeds EPA’s statutory authority under the RFS
program. Small refineries have had nearly two decades to adapt to the goals of the RFS and to
enhance their blending of renewable fuel. Because, among other things, EPA has found the
renewable fuel market is competitive and a small refinery can purchase RIN credits to meet its
compliance obligations, no small refinery can demonstrate it suffers DEH compared to other
obligated parties. Therefore, not only is EPA correct in its conclusion that DEH must be directly
caused by compliance with the RFS program, but also that conclusion is compulsory under the
RFS program’s plain language.
And if there were any doubt about Congress’s intent, certainly EPA’s proposed
interpretation would be a reasonable and therefore valid resolution of statutory ambiguity for all
the same reasons.
A. The RFS Program’s Plain Language Requires Small Refineries to
Demonstrate DEH Is Directly Caused by RFS Compliance
EPA cannot grant SREs that are inconsistent with the plain language of the RFS program.
The Proposed Decision is correct that the “best reading of the statutory language is that
compliance with the RFS program must be the impetus for DEH warranting an SRE.”7
This
interpretation of the statute accords with the Tenth Circuit’s decision in RFA that Congress
indicated “that renewable fuels compliance must be the direct cause of any disproportionate
hardship.”8
Because the intent of Congress is clear from the text of the RFS program, there is no
statutory gap for EPA to fill; EPA “must give effect to the unambiguously expressed intent of
Congress.”9
There is no dispute that EPA’s power under the statute is limited to granting small
refineries an extension of an exemption that was previously granted pursuant to 42 U.S.C.
§ 7545(o)(9)(A).10 Thus, EPA’s authority to grant an extension should be read in a “consistent
sense” with the language that authorizes the exemption in the first place.11
7 Proposed Decision at 24 (emphasis added).
8 RFA, 948 F.3d at 1253.
9 Chevron, U.S.A., Inc. v. Nat. Res. Def. Council, Inc., 467 U.S. 837, 843 (1984).
10 HollyFrontier, 141 S. Ct. at 2177.
11 See id.
4
Subparagraph “(A) Temporary Exemption” makes clear that Congress intended SREs
only for DEH directly caused by compliance with the program. Subparagraph A initially
exempted small refineries from “[t]he requirements of paragraph [§ 7545(o)(2)] … until calendar
year 2011.”12 The “requirements of paragraph [§ 7545(o)(2)]” are, among other things, the
applicable annual volume targets for the required categories of renewable fuel.13 In other words,
the statute initially exempted small refineries from compliance with the applicable annual
volume targets. Subparagraph A also instructed the Department of Energy (“DOE”) to “conduct
… a study to determine whether compliance with the requirements of paragraph [§ 7545(o)(2)]
would impose [DEH] on small refineries.”14 EPA was then authorized to extend the initial
exemption for two years under Subparagraph A if DOE found that a small refinery “would be
subject to [DEH] if required to comply with paragraph [§ 7545(o)(2)].”15 Subparagraph A
created a direct link between DEH and the otherwise-required compliance with annual volume
targets. DOE was instructed to study—and EPA was empowered only to extend exemptions
for—DEH caused by compliance with the RFS program’s annual volume targets.
EPA’s authority under Subparagraph “(B) Petitions based on disproportionate economic
hardship” is likewise limited by a causation requirement. Under Subparagraph B, EPA considers
petitions “for an extension of the exemption under subparagraph (A) for the reason of
disproportionate economic hardship.”16 Congress carried over the direct causal link between
DEH and compliance by limiting EPA’s authority only to extension of an extension that was
previously granted due to DEH caused by compliance with the RFS program. As the Tenth
Circuit noted, any argument that EPA may authorize extensions based on factors other than
compliance with the program is simply a failure to read the two provisions in context.17
Furthermore, in HollyFrontier, the Supreme Court held that the word “extension” in
Subparagraph A and Subparagraph B should be read in “one consistent sense” because there was
no “persuasive countervailing evidence that Congress meant to adopt one meaning of the term in
subparagraph (A)(ii) and a different one next door in subparagraph (B)(i).”18 EPA should expect
that the Supreme Court would apply the same logic here and hold that any “extension” under
Subparagraph A or Subparagraph B requires the same showing—DEH directly caused by
compliance with the RFS program.
Other provisions reinforce that EPA must evaluate an SRE petition based on whether
DEH is caused by compliance with the program. Subparagraph B first instructs EPA to evaluate
petitions based on findings from DOE’s study conducted pursuant to Subparagraph A.19 DOE’s
12 42 U.S.C. § 7545(o)(9)(A)(i).
13 Id. § 7545(o)(2).
14 Id. § 7545(o)(9)(A)(ii)(I).
15 Id. § 7545(o)(9)(A)(ii)(II).
16 Id. § 7545(o)(9)(B)(i).
17 RFA, 948 F.3d at 1253.
18 HollyFrontier, 141 S. Ct. at 2177.
19 42 U.S.C. § 7545(o)(9)(B)(ii).
5
study is confined by statute to determining “whether compliance with the requirements of
paragraph [§ 7545(o)(2)] would impose [DEH] on small refineries.”20 Thus, EPA’s evaluation
of SRE petitions is also confined to whether a small refinery suffers DEH as a result of
compliance with annual renewable fuel volume targets. Subparagraph B also instructs EPA to
evaluate SRE petitions based on “other economic factors” than those disclosed in DOE’s study.21
However, this language merely allows EPA to look at other evidence of DEH beyond the factors
identified in DOE’s study. Nothing in the statute suggests EPA’s review of “other economic
factors” may consider economic factors caused by something other than compliance with the
RFS program. To read the statute otherwise would in effect permit EPA to grant extensions of
an exemption based on factors that could never justify the exemption in the first place, contrary
to the clear statutory structure.
In sum, EPA is correct that it cannot grant extensions of SREs unless the small refinery
has demonstrated DEH directly caused by compliance with the RFS program. Congress’s intent
is clear from the plain language of the statute. EPA’s reading is also consistent with RFA and
HollyFrontier. EPA cannot interpret § 7545(o)(9) in a way that would permit extensions of
SREs based on something other than DEH directly caused by compliance. Such an interpretation
would violate federal law and be “in excess of statutory jurisdiction, authority, or limitations.”22
B. The RFS Program’s Purpose Requires Small Refineries to Demonstrate DEH
Is Directly Caused by RFS Compliance
The Proposed Decision’s conclusion that “compliance with the RFS program must be the
impetus for DEH warranting an SRE” is also consistent with the purpose of the RFS program.23
The goal of the RFS program is to “move the United States toward greater energy independence
and security” and “increase the production of clean renewable fuels.”24 The RFS program
achieves this market-forcing policy through annually increasing mandatory volume
requirements. Wholesale exemptions from the market-forcing policy would not encourage
increases in the production of clean renewable fuels.
The Proposed Decision is correct that Subparagraph B’s purpose is not to be a broad
curative tool to correct any underlying hardships that may already exist in the market and that are
unrelated to compliance.25 There is nothing in the language, the legislative history, or recent
judicial decisions to support such an illogical expansion of the meaning of Subparagraph B.
Congress did not intend to give EPA broad police power to correct any inequality or hardship
that may stem from preexisting or independent market conditions. For example, small refineries
may have been noncompetitive even before they were obligated to produce renewable fuel due
20 Id. at § 7545(o)(9)(A)(ii)(I).
21 Id. at § 7545(o)(9)(B)(ii).
22 5 U.S.C. § 706(2)(c).
23 Proposed Decision at 24.
24 Pub. L. No. 110-140, preamble, 121 Stat. 1492 (2007).
25 Proposed Decision at 25.
6
to, for example, unique geographical issues, poor economic performance, unique financial
limitations, or limitations resulting from individual business decisions. EPA also does not have
the power to exempt small refineries due to general economic considerations, such as the
COVID-19 pandemic, which impacts not only all obligated parties, but renewable fuel producers
as well. EPA does not have power to use SREs to prop these refineries up. In implementing the
statute, EPA is limited to addressing new hardships that are directly caused by RFS compliance.
Indeed, granting SRE extensions based on previous hardships likely causes more harm than
good, by creating a windfall for small refineries and a distortion of the marketplace for
renewable fuel.26
EPA’s Proposed Decision is also consistent with HollyFrontier, where the Supreme
Court considered two “competing narratives and metaphors” for the purpose of Subparagraph
B.27 The HollyFrontier petitioners argued that Subparagraph B served as a “safety valve” from
compliance with the RFS program obligations.28 The respondents argued that the purpose was as
a “funnel” for phasing out the initial SREs over time.29 Ultimately, the Supreme Court held it
lacked “sufficient guidance to be able to choose with confidence” between these two narratives
concerning the purposes of the statute.30
EPA is well-positioned to resolve the question about the purpose of the statute, as EPA
plans to do in the Proposed Decision. EPA intends to interpret Subparagraph B as a “phase-out
provision[]” that provides some “initial time for small refineries to come into compliance, with
the expectation that they would do so, and would only be eligible for an extension of the
exemption if they suffered hardship specifically due to the RFS program itself.”31 EPA’s
interpretation is based on EPA’s expertise with other hardship provisions for other fuel programs
that “provide particular parties additional time to come into compliance with new regulations.”32
EPA’s interpretation is also consistent with the Tenth Circuit’s persuasive reasoning in RFA that
Subparagraph B’s purpose is to provide temporary relief that will be “tapered down” moving
forward as small refineries adjusted to the new requirements,33 and the D.C. Circuit’s recognition
that Congress provided the “temporary exemption” “with an eye toward eventual compliance.”34
However, EPA’s Proposed Decision is also fully consistent with the “safety valve” purpose
advanced by Petitioners in HollyFrontier.
35 Even if, as the Petitioners argued, “compliance
26 Id.
27 HollyFrontier., 141 S. Ct. at 2182-2183.
28 Id.
29 Id.
30 Id. at 2183.
31 Proposed Decision at 25.
32 Id.
33 RFA, 948 F.3d at 1246.
34 Hermes Consol., LLC v. EPA, 787 F.3d 568, 578 (D.C. Cir. 2015).
35 HollyFrontier, 141 S. Ct. at 2182.
7
depends on numerous factors unique to each year and circumstances,” EPA is still limited to
using the “safety valve” only for small refineries that demonstrate DEH directly caused by
compliance.36
C. The RFS Program’s Plain Language Requires Compliance Hardship to Be
“Disproportionate” When Compared to Other Obligated Parties
EPA should also adopt the Proposed Decision’s recognition that small refineries must
demonstrate that any economic hardship they suffer due to RFS compliance would be
“disproportionate” compared to the RFS-caused hardship suffered by other obligated parties.
The statute is clear: EPA may grant extensions of SREs based only on “disproportionate
economic hardship.”37 In other words, it is not enough for a small refinery to show a hardship
stemming from RFS compliance. It must also show that that hardship is more serious than the
RFS compliance burdens faced by other obligated parties.
In RFA, the Tenth Circuit accepted that EPA “did not dispense with a comparative
analysis” when evaluating SRE petitions.38 Although the Tenth Circuit acknowledged that the
record before it was limited, the Court declined to remand the SRE petitions at issue based on a
failure by EPA to consider whether economic hardships were disproportionate to other obligated
parties.39
The Proposed Decision, however, now discloses for the first time that “in none of these
years [post-2013] did EPA require small refineries to demonstrate that they faced RFS
compliance costs that were higher than for other obligated parties (i.e., disproportionate).”40 It is
troubling that EPA concealed this defect in its prior SRE decisions. This new disclosure
demands that EPA carefully evaluate, for all pending and remanded SREs, whether the applicant
refinery has demonstrated that any hardship it would suffer due to RFS compliance is actually
disproportionate to other obligated parties’ compliance burdens. EPA exceeds its statutory
authority and violates federal law when it grants SRE extensions that are not based on
“disproportionate” economic hardships when compared to other obligated parties.
II. EPA’S PROPOSED FINDING THAT RFS COMPLIANCE WOULD NOT CAUSE SMALL
REFINERIES DISPROPORTIONATE ECONOMIC HARDSHIP IS SOUND
EPA should also adopt the Proposed Decision’s analysis that small refineries do not in
fact face any DEH from complying with their RFS program obligations. Because EPA may
extend SREs only for DEH caused by compliance, EPA cannot grant any of the pending,
remanded or other SRE petitions.
36 Id. (emphasis added).
37 42 U.S.C. § 7545(o)(9)(B)(i) (emphasis added).
38 RFA, 948 F.3d at 1252.
39 Id. at 1252-1253.
40 Proposed Decision at 14.
8
EPA’s proposed conclusions concerning the cost of RFS program compliance are correct
and well supported by economic theory and relevant market data, and therefore should be
adopted.41 The structure of the RFS program places a proportional burden on all obligated
parties. All obligated parties can meet their RFS compliance obligations through the purchase of
RIN credits in the liquid RIN market. The RIN market enables less-efficient obligated parties to
comply at approximately the marginal cost of more-efficient obligated parties. Further, obligated
parties that purchase RINs to meet their obligations do not ultimately have higher compliance
costs because they can and do pass on their RIN cost by selling their fuel at a premium that
reflects the RIN value (i.e., RIN Cost Passthrough”).42 Parties that blend renewable fuel do not
acquire RINs below market price because they must discount the price of blended fuel they sell
to match market prices (i.e., RIN Discount).43 The Proposed Decision also fully responds to and
rejects responses presented by small refineries following the Tenth Circuit’s decision in RFA.
44
EPA has clearly met its obligation to “examine the relevant data and articulate a satisfactory
explanation for its action including a rational connection between the facts found and the choice
made.”45
Not only are EPA’s conclusions about the RFS program correct, but they also are
conclusions that EPA has long and consistently held since at least 2015. EPA must adopt the
Proposed Decision because it cannot “entirely fail[] to consider an important aspect of the
problem” or “offer[] an explanation for its decision that runs counter to the evidence before” it.46
As the Tenth Circuit held in RFA, EPA’s SRE decisions are arbitrary and capricious when it fails
to consider its longstanding and consistent views, fails to explain why those views should no
longer control, or renders a decision that contradicts its own empirical evidence.47 EPA’s
findings regarding RIN Cost Passthrough and RIN Discount are based on a thorough review of
market data and demonstrates that small refineries do not suffer any disproportionate economic
hardship by compliance with the RFS program. Accordingly, EPA cannot go back to a world
where it ignores its own findings on RIN Cost Passthrough and RIN Discount without violating
the basic principles of reasoned decisionmaking recognized in the Tenth Circuit’s decision in
RFA.
A. The Structure of the RFS Program Places a Proportional Cost on All
Obligated Parties
Small refineries cannot demonstrate DEH caused by compliance because their costs
under the program are proportional by definition. As Congress directed, EPA has implemented
41 Id. at 29-51.
42 Id. at 3, 33-34.
43 Id. at 3, 34-36.
44 Id. at 52-62.
45 Motor Vehicle Mfrs. Ass’n of the U.S. v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43
(1983) (quotations omitted).
46 Id.
47 RFA, 948 F.3d at 1255.
9
the RFS program in a proportional manner. An obligated party’s individual renewable volume
obligation is defined as a percentage of the obligated party’s individual annual use of gasoline
and diesel fuel.48 In other words, the RFS program imposes the same obligation on all parties in
proportion to their volume of transportation fuel. Therefore, each party’s compliance cost is
proportionally equivalent. Obligated parties meet their obligations by acquiring RINs, either by
purchasing RINs or by blending their own renewable fuel. Obligated parties do not need to
create a new line of business to blend fuel but may meet their obligations by purchasing RIN
credits. And the RIN market is liquid, with more than 300 companies generating RINs and
approximately 5 billon RINs trading hands each month.49
The Proposed Decision discloses that EPA had historically granted SRE petitions solely
in reliance on DOE findings that a small refinery could receive at least 50% relief based on
DOE’s matrix score.50 This meant that EPA may have granted SRE extensions simply because a
small refinery demonstrated some burden caused by compliance. EPA did not require “small
refineries to demonstrate that they faced RFS compliance costs that were higher than for other
obligated parties (i.e., disproportionate).”51 Applicant small refineries must do more than point
to costs; some cost or impact alone will never be enough to justify an SRE extension. They must
demonstrate that their costs are disproportionate compared to other obligated parties. Given that
the RFS program is proportional by nature, disproportionate impacts from compliance should be
rare or non-existent.
The Proposed Decision, therefore, correctly concludes after careful analysis that all
obligated parties have proportionally the same cost of compliance.52
B. EPA’s Proposed Findings Regarding RIN Cost Passthrough and RIN
Discount Are Based on Sound Economic Principles
EPA has clearly met its obligation to provide a satisfactory explanation for its adoption of
RIN Cost Passthrough and RIN Discount. Not only does the Proposed Decision provide a
thorough examination of the economic principles at play, but it also takes care to analyze these
issues under the various ways by which different obligated parties may participate in the fuels
market (i.e., merchant refiners, blenders, and integrated refiners) and evaluate any differences
between different types of renewable fuels (i.e., ethanol vs. biodiesel).53 EPA also discloses the
assumptions in its models and why these assumptions do not materially affect EPA’s
48 Proposed Decision at 9.
49 Id. at 29.
50 Id. at 14.
51 Id.
52 Id. at 37-43.
53 Id. at 31-33, 37-44.
10
conclusions.54 EPA clearly has applied its expertise to reach a compelling explanation of the
market forces on small refineries.
As the Proposed Decision details, the fuel market—and the market for renewable fuel in
particular—is highly competitive in the United States.55 Gasoline and diesel fuel are fungible
products with high price transparency.56 Fuel markets across the United States are linked, and
obligated parties must sell their products at competitive prices.57 Economic theory suggests that
all obligated parties are “price takers” in a competitive market for a fungible product, and they
must pass on their compliance costs.58
RIN Cost Passthrough prevents disproportionate hardships on those obligated parties that
meet their obligations by purchasing RIN credits. Parties that purchase RIN credits fully recover
their costs of buying these credits by passing those costs downstream in the form of increased
prices for their fuel in the competitive market.59 This is further demonstrated by the fact that
gasoline and diesel fuel prices increase and decrease in conjunction with prices for petroleum
fuel subject to an RFS obligation.60 A small refinery that purchases RIN credits is able to
recover its compliance costs even if it is not a “price setter” in the fuel market.61 This is because
the market prices for these fuels rise and fall on a daily basis to reflect changes in RIN prices.62
RIN Discount prevents market participants that blend renewable fuels from obtaining
RIN credits at a discount from the market price. A party that blends renewable fuel and
separates the RIN obtains a separate revenue stream from selling the RIN credit. However, in
the competitive market, the party must use the revenue they receive from selling the RIN credit
to discount the price at which it sells the blended fuel.63 Otherwise, the party will lose market
share and be undercut by their competitors that use their RIN credit revenue to discount the fuel
price.64
54 Id. at 43-44.
55 Id. at 29.
56 Id.
57 Id. at 29-30.
58 Id. at 30.
59 Id. at 33.
60 Id.
61 Id. at 34.
62 Id.
63 Id. at 34-35.
64 Id. at 35.
11
C. EPA Has Verified Its Economic Theories Through the Use of All Available
Evidence, Including Evidence from the Small Refineries
EPA has also met its obligation to examine the relevant data and demonstrate a
connection between the data and its conclusions. The data confirm EPA’s economic principles
and confirm that small refineries do not suffer any hardship (disproportionate or otherwise) from
compliance due to RIN Cost Passthrough and RIN Discount.
EPA considered a broad set of data. EPA’s analysis considered market pricing data for
petroleum fuel, renewable fuel, and pricing data of similar fuels that do not have an RFS
obligation.65 EPA also considered publicly available financial data from obligated parties, data
submitted directly by small refineries, and fuel pricing contracts submitted by small refineries.66
EPA also reviewed past data and analyses from previous assessments of the renewable fuel
market and more recent data.67 The data and analyses confirmed that compliance costs are
passed through regardless of whether an obligated party purchased or created RIN credits.68 As
EPA notes, individual business decisions made by obligated parties in an attempt to “time” or
speculate on the RIN market may result in different passthrough rates.69 However, those
individual business decisions do not demonstrate DEH caused by compliance.70
EPA has used the relevant data at its disposal to conclude that obligated parties pass on
their cost of purchasing RIN credits. Specifically, EPA’s evaluation of two similar fuels, where
one fuel is subject to an RFS obligation and one is not, strongly demonstrates the phenomenon of
RIN Cost Passthrough.71 The nearly identical fuel that is subject to an RFS obligation
consistently was priced higher in the market equivalent to the market cost of the RIN credit.72
Moreover, EPA collected significant data that demonstrated the highly connected and
competitive fuel market in the United States. All the data EPA has reviewed to date, including
data submitted directly by small refineries, indicates that the sale prices for fuel in all fuel
markets reflect pricing based on RIN cost.73
EPA has also reviewed the relevant data and concluded that RIN credit sales by obligated
parties are passed on in the form of discounts on the price of the blended fuel. Using recent data
submitted by the small refineries regarding daily pricing, EPA was able show a strong
correlation between the market price and RIN discount. In one example, the data demonstrated
65 Id. at 44, 49.
66 Id.
67 Id. at 44.
68 Id.
69 Id. at 49.
70 Id.
71 Id. at 44-45.
72 Id. at 45-46.
73 Id. at 48.
12
that RIN credit value had been passed on consistently from 2010 to present.74 Another small
refinery provided data that indicated that RIN Discount had occurred in a separate market based
on daily prices from January 2019 to June 2021.75
D. EPA Must Consider Its Long-Held Conclusions on the Impact of RIN Cost
Passthrough and RIN Discount When Evaluating SRE Petitions
EPA is also not working on a blank slate. Although the Proposed Decision provides
compelling reasons why small refineries do not face DEH from compliance with the RFS
program, EPA’s proposal simply reaffirms what EPA has long understood. In RFA, the Tenth
Circuit held that EPA’s grant of SREs was arbitrary and capricious because EPA failed to
consider its own past finding that obligated parties pass through their compliance costs.76 Were
EPA to again disregard its past or current evidence regarding compliance costs, EPA would
again act arbitrarily and capriciously.
Based on its extensive and careful review of market data, EPA has maintained a
longstanding and consistent view that obligated parties recover their costs of purchasing RIN
credits by passing those costs on:
 Starting in at least 2015, and based on EPA’s review of 2013 data, EPA had concluded in
a published study that “[m]erchant refiners, who largely purchase separated RINs to meet
their RFS obligations,” are “recovering these costs in the sale price of their products.”77
 In 2017, EPA reached the same conclusion when it denied petitions seeking to change the
RFS point of obligation. EPA stated that, “[a]fter careful review of the information
submitted, … [a]ll obligated parties, including merchant refiners, are generally able to
recover the cost of the RINs they need for compliance with the RFS obligations through
the cost of the gasoline and diesel fuel they produce.”78 In the course of reaching that
conclusion, EPA considered but found “not convincing” studies purporting to show “an
inability to ‘pass-through’ the cost of the RFS program.”79 The D.C. Circuit
subsequently upheld EPA’s 2017 analysis and conclusion, finding that EPA had
“reasonably[] analyz[ed] the data and explain[ed] its decision.”80
74 Id. at 50.
75 Id.
76 RFA, 948 F.3d at 1257.
77 Dallas Burkholder, EPA Office of Transportation and Air Quality, A Preliminary Assessment
of RIN Market Dynamics, RIN Prices, and Their Effects 3 (May 14, 2015), EPA-HQ-OAR-2015-
0111-0062.
78 EPA, Denial of Petitions for Rulemaking to Change the RFS Point of Obligation at 23-24
(Nov. 22, 2017), EPA-HQ-OAR-2016-0544-0525.
79 Id. at 23.
80 Alon Ref. Krotz Springs, Inc. v. EPA, 936 F.3d 628, 653 (D.C. Cir. 2019).
13
 Later in 2017, in the context of setting the 2018 RFS standards, EPA rejected the
contention that RFS compliance would cause “severe economic harm” because, again,
obligated parties can “recoup the cost of RINs through higher prices of their products.”81
EPA observed that those challenging EPA’s position “did not provide sufficient
evidence” to the contrary.82 Again, the D.C. Circuit affirmed EPA’s conclusion, stating
that EPA “consider an important aspect of the problem” and “offered an explanation for
its decision” that accorded with “the evidence before the agency” and that was
“[]plausible.”83
 In EPA’s final rule setting the 2020 RFS standards, EPA stated: “We have reviewed and
assessed the available information, which shows that obligated parties, including small
entities, are generally able to recover the cost of acquiring the RINs necessary for
compliance with the RFS standards.”84
EPA’s past history demonstrates why the Proposed Decision must be adopted. EPA has
long held that obligated parties pass on their compliance costs, and there is no basis in the record
to overturn that view. To ignore EPA’s findings on RIN Cost Passthrough when evaluating SRE
petitions would be arbitrary and capricious.85 An “unexplained inconsistency in agency policy”
is “a reason for holding an interpretation to be an arbitrary and capricious change from agency
practice.”86
Indeed, if EPA were to consider not adopting the Proposed Decision, EPA would first
need to explain why it is deviating from its past evidence and conclusions on RIN Cost
Passthrough. EPA must “display awareness that it is changing position” and “show that there are
good reasons for the new policy.”87 EPA cannot “depart from a prior policy sub silentio” by
merely ignoring its RIN Cost Passthrough findings in private SRE petition decisions.88 The
record, of course, contains no evidence that would justify such an about face.
E. EPA Must Adopt Its Own Conclusions on DEH, and Cannot Rely Blindly on
Recommendations That Also Failed to Consider RIN Cost Passthrough
The Proposed Decision is also necessary for EPA to evaluate SRE petitions based on
EPA’s own expertise. EPA must evaluate SRE petitions “in consultation with the Secretary of
81 82 Fed. Reg. at 58,486, 58,517 (Dec. 12, 2017).
82 Id.
83 American Fuel & Petrochemical Manufacturers v. EPA, 937 F.3d 559, 581 (D.C. Cir. 2019).
84 85 Fed. Reg. at 7,067-68.
85 RFA, 948 F.3d at 1257.
86 Encino Motorcars, LLC v. Navarro, 579 U.S. 211, 222 (2016) (quotations omitted).
87 FCC v. Fox Television Stations, Inc., 556 U.S. 502, 515 (2009).
88 See id.
14
Energy” and shall “consider the findings of the study” created by DOE.89 However, the Clean
Air Act clearly vests the ultimate decision to extend an SRE, or not, with the Administrator of
the EPA.90 EPA’s actions violate its statutory duty and are arbitrary and capricious when EPA
does not provide and rely on its own reasoned explanation for its SRE decisions. Thus, EPA
should adopt the Proposed Decision as a means of ensuring that EPA’s SRE decisions are based
on its own analysis.
EPA cannot “blindly adopt” DOE’s recommendations with respect to SRE extensions.91
The Proposed Decision discloses how EPA had historically abdicated its own statutory duty by
relying “solely” on the recommendation of DOE.92 EPA “began granting a full exemption
whenever DOE findings indicated that the small refinery could receive at least 50% relief, based
on [DOE’s] matrix score.”93 EPA’s past practice of adopting DOE’s recommendations is clearly
inconsistent with EPA’s legal duty to make its own decisions on SRE extension petitions.
The Proposed Decision meets EPA’s obligation to “consider the findings of the study”
and consult with DOE.94 In the absence of further instructions from Congress, EPA has
substantial discretion in the form its consultation must take.95 Here, EPA has considered DOE’s
study—both the 2009 and 2011 DOE studies with contradictory conclusions.96 However, both of
DOE’s studies failed to consider the important fact that obligated parties pass on the costs of
purchasing RIN credits.97 EPA also reviewed DOE’s predictions from the 2011 study, and
concluded DOE’s concerns about the marketplace have not come to pass.98 EPA’s proposal,
therefore, shows that it has “considered” DOE’s analysis but also correctly downplayed the
importance of that analysis in light of EPA’s own analysis.
Likewise, EPA is not bound by dicta in HollyFrontier that small refineries face
disproportionate compliance costs because they must purchase RIN credits in a volatile market.99
89 42 U.S.C. § 7545(o)(9)(B)(ii).
90 Id.
91 See Ergon-West Virginia, Inc. v. EPA, 896 F.3d 600, 610 (4th Cir. 2018) (quoting City of
Tacoma v. FERC, 460 F.3d 53, 76 (D.C. Cir. 2006)).
92 Proposed Decision at 14.
93 Id.
94 42 U.S.C. § 7545(o)(9)(B)(ii). EPA has also met its statutory obligation to consult with DOE
by participating in “meetings and phone conversations regarding the pending SRE petitions, the
supplemental supporting information the small refineries provided, and the analysis and
proposed determinations in” the Proposed Decision. Proposed Decision at 21.
95 Hermes Consol., 787 F.3d at 575.
96 Proposed Decision at 21.
97 Id. at 22
98 Id.
99 141 S. Ct. at 2182.
15
First, the Supreme Court was merely reciting the petitioner’s argument, not agreeing with or
adopting it.100 Indeed, the Supreme Court had no occasion to opine on the issue because it was
not relevant to the case. Second, the Court was not presented with, and did not consider, the
potential for RIN Cost Passthrough and how even small refineries can pass and historically have
passed on their compliance costs—and have done so to the same degree as larger refineries. In
no way does this passing remark from HollyFrontier, therefore, constrain EPA’s authority to
adopt its own reasoned explanation concerning any DEH to small refineries.101
III. EPA’S PROPOSED REVERSION TO ITS PRIOR POSITION THAT ONLY REFINERIES THAT
RECEIVED THE INITIAL BLANKET EXEMPTION ARE ELIGIBLE FOR FUTURE SRES IS
SOUND
EPA should also revert to its prior policy that a small refinery must have received the
initial blanket exemption under Subparagraph A to be eligible for an extension of that
exemption.102 EPA previously had adopted this eligibility requirement, but starting in 2017,
EPA changed course without explanation and granted extensions to small refineries that had
never received the original exemption.103 EPA should deny the four pending SRE petitions and
any other SRE petitions where the small refinery did not receive the original statutory
exemption.
The plain language of the statute requires EPA to revert to its old policy. EPA does not
have the authority to grant new exemptions. Subparagraph A permits EPA only to “extend” the
temporary blanket exemption for two years based on DOE’s findings.104 Subparagraph B
likewise permits EPA only to grant an “extension of the exemption under subparagraph A.”105
This means that a small refinery is not eligible for an extension if it did not receive the original
exemption. The Supreme Court confirmed this interpretation of the statute in HollyFrontier.
The plain language, the Court said, “permit[s] hardship relief only to small refineries in existence
in 2008 and not to new ones” and there is nothing “odd about the fact that Congress chose only
to protect existing small refineries rather than new entrants.”106
100 Id.
101 See Fox Television Stations, 556 U.S. at 515 (Agency “need not demonstrate to a court’s
satisfaction that the reasons for the new policy are better than the reasons for the old one; it
suffices that the new policy is permissible under the statute, that there are good reasons for it,
and that the agency believes it to be better”).
102 Proposed Decision at 18.
103 Id.
104 42 U.S.C. § 7545(o)(9)(A)(ii)(II).
105 Id. at § 7545(o)(9)(B)(i).
106 HollyFrontier, 141 S. Ct. at 2181-2182.
16
CONCLUSION
EPA should adopt the Proposed Decision and deny the 65 pending SRE applications,
along with all remanded SRE applications and any other SRE applications it receives. The plain
language and purpose of the RFS program make clear that EPA may grant SRE extensions only
if it finds that RFS compliance itself will directly cause the refinery disproportionate economic
hardship.
Based on EPA’s well-supported and detailed analysis of all the available data and
information, EPA has correctly concluded that small refineries do not experience DEH caused by
compliance because all obligated parties, big and small, can and do pass on their compliance
costs for purchasing RIN credits. Moreover, this conclusion is necessary to bring EPA back in
line with its longstanding recognition of RIN Cost Passthrough in the market. Failing to adopt
the Proposed Decision would amount to a departure from EPA’s past findings without reasoned
explanation.
EPA’s Proposed Decision does not eliminate the SRE provision created in the RFS
program. Instead, the proportionality of the renewable fuel obligations, combined with the
realities of the RIN market and the long-proven ability to pass on RIN costs, ensures that small
refineries do not face a disproportionate cost of compliance when compared to other refineries.
EPA has a long way to go in correcting its past actions that resulted in billions of gallons
of renewable fuel use being lost from the RFS program. Nonetheless, the Proposed Decision is a
step in the right direction of implementing the RFS program as Congress intended and expanding
the domestic production and use of clean renewable fuels.

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