## Facts

- Congress created and expanded the Renewable Fuel Standard (RFS) program under the Clean Air Act, requiring specified annual volumes of renewable fuel, including separate biomass-based diesel volumes for 2009 and 2010.
- EPA must annually publish percentage standards that translate statutory volume mandates into compliance obligations for “obligated parties” (e.g., refiners and importers), with compliance tracked through tradable Renewable Identification Numbers (RINs).
- After the 2007 expansion of the RFS program, EPA determined it could not issue comprehensive implementing regulations in time to govern the 2009 calendar year.
- In February 2010, EPA issued a final rule implementing the revised program and setting 2010 renewable fuel and biomass-based diesel standards, effective July 1, 2010, but applicable to transportation fuel sold or imported throughout calendar year 2010.
- For the 2009 biomass-based diesel volume, EPA allowed the 2009 obligation to be satisfied through compliance in 2010, rather than imposing a freestanding 2009 standard after the year had passed.
- Petroleum industry associations petitioned for review, arguing EPA exceeded statutory authority, acted retroactively, and violated statutory lead-time requirements.

## Issues

1. Whether EPA’s treatment of the 2009 biomass-based diesel volume (satisfaction through 2010 compliance) violated statutory requirements for separate 2009 and 2010 biomass-based diesel volumes.
2. Whether applying 2010 percentage standards to fuel sold or imported earlier in 2010 (before the rule’s July 1 effective date) was impermissibly retroactive.
3. Whether EPA violated statutory lead-time and notice requirements governing when new fuel standards may apply.

## Decision

- The D.C. Circuit denied the petitions for review and upheld EPA’s final rule.
- The court held EPA reasonably implemented the statutory 2009 biomass-based diesel volume despite missing the implementation deadline, permissibly allowing compliance through the 2010 program.
- The court held the rule was not impermissibly retroactive because it did not attach prohibited new legal consequences to completed past events.
- The court held EPA did not violate lead-time and notice requirements in a manner requiring vacatur.

## Legal Principles

- Where statutory provisions are ambiguous on implementation consequences when agency deadlines are missed, a reasonable agency construction consistent with statutory objectives may be upheld under Chevron deference.
- A rule is impermissibly retroactive if it attaches new legal consequences to completed past events by impairing vested rights, increasing liability for past conduct, or imposing new duties for completed transactions.
- In an annually measured compliance regime using tradable credits (RINs), applying a standard to the full compliance year may be treated as regulating an ongoing annual obligation rather than retroactively penalizing earlier individual transactions, particularly when regulated parties had prior notice of likely obligations.

## Conclusion

The D.C. Circuit upheld EPA’s RFS implementation rule, concluding EPA permissibly addressed the 2009 biomass-based diesel mandate through 2010 compliance, lawfully applied 2010 standards to the full 2010 compliance year, and provided sufficient notice and lead time under the governing statutes.


Nat’l Petrochemical & Refiners Ass’n v. EPA, 630 F.3d 145 (D.C. Cir. 2010)