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Oil refiners were denied biofuel mandate exemptions

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Oklahoma and Utah challenged EPA smog control plan

By Nate Raymond

June 18 (Reuters) - The U.S. Supreme Court established

rules of the road on Wednesday to determine when lawsuits

challenging actions by the U.S. Environmental Protection Agency

related to air pollution and greenhouse gas emissions should be

heard by regional appeals courts or an appeals court in

Washington that often hears regulatory cases.

The 7-2 ruling held that the U.S. Court of Appeals for the

District of Columbia Circuit, and not the New Orleans-based 5th

U.S. Circuit Court of Appeals, is the proper court to hear a

lawsuit by small oil refiners challenging the EPA's denial of

waivers exempting them from national biofuel mandates.

That meant that the 5th Circuit had no business ruling in 2023

that the EPA during President Joe Biden's administration had

unlawfully denied the oil refineries waivers from a renewable

fuels requirement that they blend ethanol and other biofuels

into their fuel.

Yet under the same test to assess venue that the justices

announced in the refineries cases, they ruled 8-0 that a

different set of lawsuits by the Republican-led states of

Oklahoma and Utah and several energy companies including

PacifiCorp challenging the EPA's "Good Neighbor" smog

control plan were wrongly transferred to the D.C. Circuit.

Both sets of cases turned on a provision of the Clean Air

Act anti-pollution law that designates the D.C. Circuit as the

exclusive venue for cases over "nationally applicable" EPA

actions and rules but leaves cases concerning only local agency

actions to regional federal appeals courts.

Conservative Justice Clarence Thomas, writing for the

Supreme Court's majority in the refineries' case, used his

opinion to map out a test for how to interpret that provision

and determine the proper venue for lawsuits challenging EPA

actions.

Thomas said that while the law presumptively routes cases

concerning local agency actions to a regional appeals court,

they still must be heard by the D.C. Circuit "if a justification

of nationwide breadth is the primary explanation for and driver

of EPA's action."

That justification must supply a "core justification" for

the EPA's action, Thomas said, as it did in the case of the six

refineries, whose requests for biofuel mandate exemptions were

denied based on an interpretation of the Clean Air Act that the

agency applied to all refineries regardless of their geographic

location.

The ruling reversed a 5th Circuit decision in favor of the

refineries on the merits after concluding that the EPA's actions

were local or regional in nature, not national.

"Allowing 12 different circuit courts to adjudicate SREs

(small refinery exemptions) would result in a fractured and

inconsistent body of law, causing chaos and confusion in the

marketplace," biofuel groups Growth Energy and the Renewable

Fuels Association wrote in a joint statement.

Conservative Justice Neil Gorsuch, in a dissenting opinion

joined by conservative Chief Justice John Roberts, said the test

that the majority laid out was "both mistaken and likely to

render simple venue questions unnecessarily difficult and

expensive to resolve."

They nonetheless concurred with the court's decision to

reverse the conclusion by the Denver-based 10th U.S. Circuit

Court of Appeals that the case by Oklahoma and Utah should be

transferred to the D.C. Circuit.

That case concerned a rule the EPA issued in March 2023

intended to target gases that form ozone, a key component of

smog, from power plants and other industrial sources in 23

upwind states whose own plans did not satisfy the the Clean Air

Act's "Good Neighbor" provision.

Oklahoma and Utah were among 21 states whose air quality

plans were rejected by the EPA under that policy. Numerous

lawsuits followed, including by Oklahoma and Utah, who sought to

challenge the decision in the Denver-based 10th U.S. Circuit

Court of Appeals.

While the 10th Circuit held the case belonged in the D.C.

Circuit because it concerned a national policy, Thomas wrote

that the 10th Circuit could hear the case because the EPA's

action turned on state-specific factors.

The Supreme Court last year blocked the Biden-era "Good

Neighbor" rule from being enforced while litigation in the lower

courts moved forward. The Trump administration has said it plans

to repeal the rule.