US Supreme Court Clarifies Venue Rules Under the Clean Air Act

The US Supreme Court in EPA v. Calumet Shreveport clarified where challenges to certain US Environmental Protection Agency actions under the Clean Air Act must be filed. The Court split the difference between competing interpretations of the act’s venue provision, holding that EPA’s decision denying small-refinery exemptions under the renewable fuel standard program must be reviewed in the DC Circuit, rather than in regional courts such as the Fifth Circuit, because the action was “nationwide in scope or effect.”

At the same time, the Court rejected broader readings that would have sent any decision related to the renewable fuel standard (RFS) to the DC Circuit. And, in a decision issued simultaneously in another case before the Court, the Court reaffirmed that EPA’s approval of state implementation plans (SIPs) is a regional issue properly reviewed in local circuits.

The decision resolves a split among the circuits and provides some guidance regarding the Clean Air Act’s (CAA’s) venue rules, but significant questions remain about how lower courts will apply the decision under different circumstances.

CAA VENUE FRAMEWORK

The CAA contains a provision governing judicial review of EPA actions under the act. Challenges must be brought in the DC Circuit if the EPA action is “nationally applicable.” Challenges generally must be brought in the appropriate regional court if the action is “locally or regionally applicable.” But there is a third clause that often creates confusion: even if an action is not nationally applicable, it must still be reviewed in the DC Circuit if it is “based on a determination of nationwide scope or effect.”

EPA V. CALUMET SHREVEPORT

Calumet involved consolidated challenges to EPA’s decision denying a large set of small-refinery exemptions under 42 USC § 7545(o)(9), which allows certain eligible refiners to avoid complying with the RFS program’s requirements to blend volumes of renewable fuel into refined petroleum fuels.

Those small-refinery exemptions would have applied to individual refineries, which are located across the country, including in states within the jurisdiction of the US Court of Appeals for the Fifth Circuit. Yet, EPA issued one decision document for all refineries collectively, basing its reasoning on nationwide considerations including macroeconomic factors that affect the ability of refiners to pass on their costs.

The refiners challenged the EPA’s small-refinery exemption decision in various regional circuit courts. After the US government argued that the DC Circuit was the appropriate venue, most of the regional circuits agreed and transferred, but the Fifth Circuit kept the petitions filed there and ruled in favor of the refiners on the merits. The government and biofuels intervenors petitioned the Supreme Court for certiorari.

SUPREME COURT’S REASONING

In an opinion written by Justice Thomas, the 7-2 majority of the Court held that EPA’s denial of the small-refinery exemptions must be reviewed in the DC Circuit due to the decision being “based on a determination of nationwide scope or effect.”

The Court first held that for an EPA action to be “based on” a determination of nationwide scope and effect, such an issue must “lie[] at the core of the agency action” and “form[] the primary explanation for and driver of EPA’s action.”

Applying that standard, the Court closely examined EPA’s rationale for its decision. EPA explained it had denied the small-refinery exemption petitions largely based on its understanding of national market dynamics—namely how renewable identification numbers, the compliance credits under the RFS, function in a national fuel marketplace. The Court found that decision was fundamentally based on broad economic assumptions with nationwide consequences and as such held that venue was proper in the DC Circuit.

However, the Court rejected that more aggressive interpretations would have effectively routed any decision related to the RFS program to the DC Circuit. For example, the Court was not persuaded that the fact that the RFS program establishes a nationwide standard for blending renewable fuel into gasoline and diesel fuel was enough to make all decisions regarding small-refinery exemptions or other aspects of the program “nationwide” in “scope or effect.”

In a separate case argued the same day, Oklahoma v. EPA, the Court unanimously held that challenges to approval of a SIP under the CAA belonged in the Tenth Circuit. The Court noted that SIPs involve state-level environmental planning and are implemented locally.

THE DISSENT

Justice Gorsuch, joined by Justice Roberts, argued in dissent that the majority’s “reasoning-based” test could prove unworkable in practice. The dissenters expressed concern that agencies often advance multiple or ambiguous justifications for their decisions and contended that it would be difficult and inefficient for litigants to divine not just what the EPA did, but why it did it to determine where they can sue.

IMPLICATIONS

The ruling in Calumet offers a middle-ground reading of the CAA’s venue rules, interpreting “nationwide scope and effect” in such a way that will send some challenges to EPA actions to the DC Circuit even if those decisions are not “nationally applicable,” while preserving regional courts’ authority over more locally focused EPA decisions.

The ruling leaves significant wiggle room for lower courts to interpret whether a certain agency action is nationwide in scope. In particular, lower courts will need to closely parse EPA’s justifications for its actions to determine whether an issue of nationwide scope or effect is “at the core of the agency action.” That standard could prove difficult to apply and result in variance among district courts, particularly where both EPA and petitioners challenging EPA rules will seek to characterize EPA actions in a manner consistent with their preferred venue.

Notably, the decision does not necessarily resolve even the question of the appropriate venue for challenges to small-refinery exemption decisions under the RFS program going forward. As the Court majority acknowledged, the proper venue could be different for another small-refinery exemption decision—for example, an EPA decision that relied heavily on refinery-specific factors or local economic conditions might be properly challenged in a regional circuit.