Justices and litigants spar over whether renewable-fuel law creates a “funnel” or a “safety valve”

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Justices and litigants spar over whether renewable-fuel law creates a “funnel” or a “safety valve”

Argument analysis

By Emily Hammond


at 2:55 p.m.

Matthew Morrison advocates the Renewable Fuels Association (Art Lien)

The Supreme Court held a hearing on Tuesday in the HollyFrontier Cheyenne Refining, LLC v Renewable Fuels Association case examining whether small refineries could benefit from a compliance exception in the Renewable Fuel Standard program if they do not have that exception continuously have received. (The full legal system is worked out here.) The petitioners are three small refineries who argue that the word “extension” in the exceptional language of the law is a metaphorical safety valve for small refineries that, if necessary, have disproportionate economic difficulties in a given year would adhere to the program. Respondents, several renewable fuel associations, claim the provision is more like a funnel designed by Congress to achieve full compliance with the standard over time, so an extension would only be available to those who are continuous had received an exception. In another fold, the federal government was originally geared towards the refineries’ point of view, but changed its position before the court after the change in the presidential administration.

In Tuesday’s argument, the main issues in the parties’ pleadings focused on approaches to legal interpretation. However, the parties had also debated whether the environmental protection agency’s respect under the doctrine of Chevron USA, Inc. versus Natural Resources Defense Council, Inc. in the face of a 2014 EPA regulation that interpreted the importance of small refineries in some way appropriate would be consistent with a general safety valve approach. At the beginning of his interview with Peter Keisler, who represented the refineries, Attorney General John Roberts tried to have this option – not because the 2014 ordinance did not interpret the “extension”, as the renewable fuel associations argued, but because the EPA itself had changed its view of the question posed.

Peter Keisler advocates HollyFrontier Refining (Art Lien)

Roberts and Justice Neil Gorsuch later investigated the Chevron issue with Assistant Attorney General Christopher Michel, who argued on behalf of the federal government. Michel replied that Chevron did not apply in these circumstances because the EPA had not interpreted the word in question and the EPA no longer believed that “extension” did not require continuity. Gorsuch investigated the matter further and urged Michel to argue that Chevron’s deference was inappropriate when an agency changed its position.

Although important insights into the two judges’ views on Chevron were given, most of the argument centered on legal interpretation. For example, Justice urged Clarence Thomas Keisler to explain why “enlargement” should not be read “more normally”; Justice Elena Kagan also stressed this issue. Initially, Keisler noted that in order to prevail, the refineries did not need the first interpretation put forward in their pleadings (to gain an advantage), and instead emphasized that “extension” could receive a temporal, but not a continuous, interpretation . In addition, Keisler advised the judges of other aspects of legal language that did not suggest a continuity requirement, including the ability of small refineries to apply for an exemption “at any time”. Justice Samuel Alito and Justice Brett Kavanaugh seemed receptive to this point, although Justice Elena Kagan suggested that the language “anytime” could have a narrower meaning.

The function and context of the statute were also strongly represented in the arguments. For example, Kavanaugh embroiled Keisler in a discussion about the extent of the EPA’s discretion and its relevance to legal significance. Keisler emphasized that over the years the EPA has changed its approach to what constitutes an emergency. As a result, a small refiner may sometimes qualify for an exemption (or not) based solely on the EPA’s approach in a given year. So, as he explained, it would make sense not to ask for continuity in the liberation of a small refinery.

Judge Stephen Breyer asked Keisler about the intentions of Congress, emphasizing that it appears to be a system designed to ensure a higher level of compliance over time. Here, Keisler argued that a safety valve would better meet legal goals as it could keep more small refineries in business and blend renewable fuels even if they might not be compliant in a few years.

Michel brought the discussion back to the legal text itself, emphasizing that the simple meaning of “extension” has both a temporal and a continuous connotation. Roberts examined this argument and asked why – following Kavanaugh’s earlier investigation – “extension” may not be read in an admissible manner in order to allow the EPA to make a hardship decision. Michel responded that the structure of the Statute suggests that the thing that is being expanded is the temporary exemption from the Statute – which supports both a continuity meaning and the conclusion that Congress intends to increase compliance over time.

However, Breyer and Alito asked about the compliance approach of the Renewable Fuel Standard program, which Breyer described as the introduction of a classic marketable pollution right that is traded through a market mechanism. Given that the value of this right would fluctuate from year to year, Alito wondered why Congress would find it useful to require the continuity of exemptions. Michel replied that the law ultimately “aims to change the fuel supply”; If continuity is required to extend the exemption, the program will be fully complied with over time.

Kavanaugh and Justice Amy Coney Barrett examined the practical implications of the associations’ interpretation and examined whether Congress really intended small refiners to cease business if they could not adhere to the program. Kagan’s dialogue with Michel seemed to try to determine that the real risk of widespread closure was small.

The practical implications were also in focus when attorney Matthew Morrison stepped onto the virtual podium on behalf of the renewable fuel associations interviewed. Thomas inquired, “just to satisfy my curiosity,” about the interest that Morrison’s customers have in the refineries that are not being renewed. Morrison stated that nearly 4 billion gallons of ethanol had been lost to small refineries in the past few years. Next, Breyer returned to his question of marketable rights, wondering why the possibility of fluctuating conditions each year wouldn’t indicate a discontinuous exception. He asked for something else and even said, “I’ll look at the legislative history if you have any.” Morrison’s response pointed to a Senate report and other links and experiences with the program, including the fact that compliance costs are recoverable on sales.

In his counter-argument, Keisler denied the factual claim that refineries could pass on their compliance costs through prices before underlining the argument that the EPA should have the opportunity to make factual findings. That is, “Enlargement” should be read permissibly to give refiners a chance to show the Agency trouble.

The outcome of the case will most likely depend on the judges’ views, which is most important for legal interpretation. Referring to the safety valve / funnel debate, Kagan summed up the two competing views of the parties for the purpose of Congress and asked, “How do we vote?” By the end of the argument on Tuesday, the judges had not given a clear answer to Kagan’s question . You have two months before the end of the semester to try and find one.