Justices Hold Biofuel Waiver Fights Belong in DC Circuit

WASHINGTON — The Supreme Court held Wednesday that the D.C. Circuit is the proper venue for challenges to “nationally applicable” actions by the Environmental Protection Agency, dealing a blow to a group of small refiners seeking waivers to the nation’s biofuel standards.

At issue in EPA v. Calumet Shreveport Refining, LLC is the tripartite system established by Congress under the Clean Air Act to channel litigation over nationally significant EPA actions to the D.C. Circuit, while keeping most locally or regionally focused matters in the local circuits.

Lawmakers’ intent at the time was to ensure the proper distribution of cases among federal courts.

The third prong of the system mandates that local or regional actions that are “based on a determination of nationwide scope or effect” must also be reviewed in the D.C. Circuit whenever the EPA finds and publishes that such basis exists.

Under the Clean Air Act’s renewable fuel program, most domestic refineries must blend specified amounts of ethanol and other renewable fuels into transportation fuels they produce. 

The act provides a phased exemption scheme for small refineries — those processing no more than 75,000 barrels of crude oil daily — allowing them to petition the EPA for exemptions based on “disproportionate economic hardship.”

The six small refineries who filed the lawsuit each petitioned the EPA for a hardship exemption from the so-called renewable fuel mandates, and each saw its request denied.        

Despite each of the denials containing a provision spelling out the circumstances under which challenges to agency determinations must be heard in the D.C. Circuit, the refineries went ahead and filed their challenges in multiple regional circuits.

Most of the circuits involved either dismissed the challenges for improper venue or transferred them to the D.C. Circuit. However, the 5th U.S. Circuit Court of Appeals retained jurisdiction, rejecting the EPA’s venue arguments and ruling for the refineries on the merits.  

The 5th Circuit reasoned that the EPA’s actions were merely locally applicable because their “legal effect” was limited to the petitioning refineries, and that the actions were not based on determinations of nationwide scope or effect because the EPA examined refinery-specific facts before issuing denials.                  

On Wednesday, in a ruling written by Justice Clarence Thomas, the Supreme Court held the 5th Circuit had erred.

Thomas was joined in the majority by Justices Samuel Alito Jr., Sonia Sotomayor, Elena Kagan, Brett Kavanaugh, Amy Coney Barrrett and Ketanji Brown Jackson.

Justice Neil Gorsuch wrote a dissent from the decision, in which he was joined by Chief Justice John Roberts.

In the opinion, Thomas acknowledges the EPA looked at refinery-specific facts before issuing its denials. However, he wrote, “so long as a determination of nationwide scope or effect served as the primary driver of EPA’s action, other, more ‘peripheral’ determinations ‘are not relevant’ for venue purposes. 

“We agree with the 5th Circuit that EPA’s actions here are only locally or regionally applicable, … but under a proper understanding of [applicable statutory provision] the ‘nationwide scope or effect’ exception applies, and the case belongs in the D.C. Circuit,” Thomas said. “The 5th Circuit therefore erred in denying EPA’s request to transfer. The judgment of the Court of Appeals is vacated, and the case is remanded for further proceedings consistent with this opinion.”

In his dissent, Gorsuch wrote that when it comes to the arguments in the case, he and his colleagues in the majority “travel much of the way together.”

About two-thirds of the way through its opinion, Gorsuch said, the majority appears to conclude that the framework established by Congress should “presumptively route the dispute before us to a regional circuit because EPA’s decision to deny an individual refinery’s petition for a hardship exemption is a ‘locally or regionally applicable’ action.”

“With all that, I agree,” Gorsuch said.

But then, he wrote, “the court pivots.”

“Even when a case challenges only a ‘locally or regionally applicable’ action, the court observes, the act routes it to the D.C. Circuit if EPA’s action ‘is based on a determination of nationwide scope or effect.’

“In my view, that pivot is a mistake,” Gorsuch wrote. “The Clean Air Act’s venue provision works in harmony with its substantive provisions. Throughout, those substantive provisions direct EPA to make certain ‘determinations’ before it may take certain ‘actions.’

“When it comes to acting on a small refinery’s hardship petition, nothing in the act’s substantive provisions calls on EPA to make a ‘determination of nationwide scope or effect,’” he continued. “Instead, the act requires the agency to evaluate only whether a particular small refinery seeking an exemption would suffer a hardship without one.  

“Accordingly, the act’s venue provision routes this dispute to a regional circuit, just as the 5th Circuit recognized below. The court’s new and reticulated test for assessing venue disputes under the act strikes me as both mistaken and likely to render simple venue questions unnecessarily difficult and expensive to resolve,” Gorsuch said. 

“At the end of the day, venue rules are like traffic laws. They simply tell litigants where to go, and they should be easy to follow. As I read it, the Clean Air Act provides a clear rule for cases like this one. Applying that rule here, I would direct the parties to the appropriate regional circuit. The court doing otherwise, I respectfully dissent,” he wrote.

Dan can be reached at [email protected] and @DanMcCue