Biofuel Groups Welcome Supreme Court Decision on SRE Litigation

October 22, 2024

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(Renewable Fuels Association and Growth Energy) Two prominent biofuel groups—the Renewable Fuels Association and Growth Energy—commented on the U.S. Supreme Court’s decision to grant certiorari on petitions pertaining to the administration of small refinery exemptions under the Renewable Fuel Standard, issuing the following joint statement:

"The Fifth Circuit was clearly an improper venue to hear challenges on small refinery exemptions. Because the Fifth Circuit opinion set up a clear split with several other Circuit courts on the question of venue, this is precisely the sort of issue that the Supreme Court is meant to resolve. The Court has agreed, and we look forward to participating in the case and having this issue settled once and for all.

“The refining community's abuse of small refinery exemptions destroys demand for biofuels nationwide, which negatively impacts farmers and bioethanol producers regardless of where they operate. The economic and environmental impact of this abuse does not recognize state lines. The decision in this case should strengthen the RFS by giving biofuel producers and their farm partners the certainty they deserve.” READ MORE

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Excerpt from Ethanol Producer Magazine: The U.S. EPA in April 2022 denied 36 SREs that had been filed under the RFS. The agency in June 2022 denied an additional 69 additional SRE petitions. Those SRE petitions had been filed by 36 small refineries located in 18 states.

Numerous refineries challenged the denials in the Third, Fifth, Seventh, Ninth, Tenth, Eleventh, and D.C. Circuit Courts. All regional circuits except the Fifth Circuit concluded that only the D.C. Circuit was the proper venue to hear the challenges and either dismissed or transferred the challenges to the D.C. Circuit. The Fifth Circuit Court, however, denied EPA’s request to transfer the challenges to the D.C. Circuit court, holding that the SRE denials were “locally or regionally applicable” rather than “national applicable.” The Fifth Circuit Court proceeded with the challenges and in November 2023 ruled in favor of the small refineries, remanding six SRE petitions to the EPA for reconsideration. Biofuel groups submitted requests for rehearings with the court, which were ultimately denied.

Growth Energy and the Renewable Fuels Association in May 2024 jointly petitioned the Supreme Court to overturn the Fifth Circuit’s decision. In their petition, Growth Energy and RFA argued that challenges to those denials should be adjudicated solely in the U.S. Court of Appeals for the D.C. Circuit, not in regional circuits like the Fifth, which only covers Louisiana, Mississippi, and Texas. In contrast to all other U.S. Courts of Appeals that evaluated this venue issue, the Fifth Circuit concluded that it was the proper venue to hear and rule on these challenges, despite the fact that EPA’s SRE policy is “nationally applicable” and “based on a determination of nationwide scope or effect.”

The Supreme Court on Oct. 21 announced it will take up the case. READ MORE

Excerpt from The Hill: The cases stem from two seemingly separate issues: whether Oklahoma and Utah need to come up with better plans to fight smog, and whether some oil refineries can be exempt from requirements that their gasoline contain a percentage of ethanol.

However, they share an underlying question: which courts can hear objections to a rejection from the EPA.

The states, whose plans were rejected, want their case to be heard in the 10th Circuit Court of Appeals, while the refineries, whose exemption petitions were rejected, want their case to be heard in the 5th Circuit.

By taking up the cases, the Supreme Court could be barreling toward a judgment about where challenges to a wide array of EPA actions can be heard.

And some circuits have reputations for different ideologies: The 5th Circuit in particular is regarded as the nation’s most conservative.

The ruling will only pertain to cases heard under the Clean Air Act, which has a provision that says challenges to “nationally applicable” clean air actions need to be heard in the District of Columbia Circuit.

The states and refineries argue that the questions at issue are “locally” rather than “nationally” applicable and should therefore be heard in regional courts.

In the oil refineries case, the EPA argued that the action is actually nationally applicable because it applies “a uniform methodology to 105 petitions for exemptions” for ethanol-blending requirements.

Justice Samuel Alito sat out of consideration of whether to take the smog cases. READ MORE

Excerpt from Reuters: The cases before the U.S. Supreme Court are Oklahoma v. EPA, No. 23-1067, and EPA v. Calumet Shreveport Refining, No. 23-1229.

For Oklahoma and Utah: Mithun Mansinghani of Lehotsky Keller Cohn

For the refineries: Shelby Dyl of Pillsbury Winthrop Shaw Pittman

For the EPA: Solicitor General Elizabeth Prelogar READ MORE

Excerpt from E&E News: In the last few years, the Supreme Court has struck down significant EPA air and water protections and eliminated one of the agency’s most powerful tools of legal defense.

On Monday, the justices took up another set of cases that could undercut the nation’s top environmental regulator by opening the door to industry groups and Republican-led states seeking to challenge certain EPA rules in more favorable courts.

“I suspect so many cases are granted involving the EPA because that agency in particular likes to push the boundaries,” said Trent McCotter, a partner at the law firm Boyden Gray representing GOP lawmakers who urged the high court to move some EPA lawsuits out of Washington and into the nation’s regional federal appeals courts.

EPA has also called on the justices to provide clarity on the matter.

At issue in the cases the Supreme Court granted Monday is the nationwide applicability of certain EPA rules. Under the Clean Air Act, lawsuits over agency rules that are national in scope must be filed in the U.S. Court of Appeals for the District of Columbia Circuit.

EPA challengers have argued that some matters — namely, state implementation plans for the federal “good neighbor” smog pollution rule and small refinery exemptions under the renewable fuel standard — are best handled by federal appellate judges who are closer to the geographic areas where those issues are playing out.

Those regional courts may also be more sympathetic to challengers’ claims.

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EPA did not respond to a request for comment on this story, but in briefs to the Supreme Court, the agency has said that handing litigation to the D.C. Circuit is valid and has been backed by some of the nation’s federal appeals courts — including the 10th Circuit in the good neighbor cases, Oklahoma v. EPA and PacifiCorp v. EPA.

The agency pointed the justices to the biofuels case — EPA v. Calumet Shreveport — as a more appropriate vehicle than the good neighbor litigation for the high court to settle the venue dispute. In the 5th Circuit, EPA lost its bid to transfer the biofuels litigation to the D.C. Circuit.

That decision, EPA wrote in its Supreme Court petition in the case, runs afoul of the Clean Air Act’s goal of creating national uniformity.

“That outcome creates precisely the risk of duplicative litigation and inconsistent rulings that Congress sought to avoid,” wrote Solicitor General Elizabeth Prelogar, “and it interposes substantial obstacles to the orderly operation of EPA programs.”

In the biofuels case, the court was asked to decide whether a dispute about biofuel-blending exemptions was national in scope and not confined to the 5th Circuit, which had sided with petroleum refiners whose exemptions were turned away by EPA.

Cases with a handful of other small refinery exemptions had been heard in other circuits, which ruled differently from the 5th Circuit, setting up a conflict that biofuel groups and EPA asked the Supreme Court to settle.

The biofuel industry groups Growth Energy and the Renewable Fuels Association welcomed news that the high court would hear their argument for moving the case to the D.C. Circuit.

“Because the 5th Circuit opinion set up a clear split with several other circuit courts on the question of venue, this is precisely the sort of issue that the Supreme Court is meant to resolve,” the groups said in a statement. “The court has agreed, and we look forward to participating in the case and having this issue settled once and for all.”

The biofuel groups said that exemptions for refineries, wherever they are, affect the renewable fuels program nationally, since EPA sets national blending-volume requirements.

Refineries say that without the opportunity for exemptions, the biofuel mandates pose a serious economic harm to them and could put the refineries out of business.

In the biofuel industry groups’ view, allowing refineries to sidestep the requirements in large numbers is an abuse of the system.

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The court is expected to decide the cases by next summer. If Donald Trump wins a second term as president this fall, it is possible that his administration could reverse some of the EPA decisions that are in dispute in the cases. READ MORE

Excerpt from Inside EPA: EPA is asking a federal appeals court for a voluntary remand of its decision denying multiple requests from small refiners for waivers from renewable fuel standard (RFS) biofuel blending mandates in 2023, in order to reconsider the denials in the light of a landmark ruling overturning its similar denial of waiver requests for 2022. In an Oct. 21 motion filed with the U.S. Court of Appeals for the District of Columbia Circuit in Calumet Montana v. EPA , the agency... READ MORE