RFA, Growth Energy Petition Supreme Court to Review Fifth Circuit SRE Decision

May 21, 2024

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(Renewable Fuels Association) The Renewable Fuels Association today, along with Growth Energy, filed a petition in the Supreme Court of the United States requesting review of the Fifth Circuit Court’s recent opinion that it is a proper venue to consider challenges to the Environmental Protection Agency’s adjudication of small refinery exemption (SRE) petitions under the Renewable Fuel Standard.

In a 2-1 decision, the Fifth Circuit concluded in November 2023 that it was an appropriate venue to hear a challenge brought by oil refiners whose SRE petitions had been denied by EPA. RFA, which intervened in the Fifth Circuit case on behalf of EPA, argued that the Fifth Circuit was not an appropriate venue for the challenge, because SREs are nationally applicable and have nationwide scope or effect. Thus, RFA argued, the only proper venue for SRE challenges is the D.C. Circuit Court. Similar challenges brought by refiners were transferred or dismissed in the Third, Seventh, Ninth, Tenth, and Eleventh Circuit Courts, as those courts all affirmed they were not the proper venue to review a nationwide policy issue. In addition, the dissenting opinion in the Fifth Circuit case, written by Judge Patrick E. Higginbotham, agreed that the Fifth Circuit was an inappropriate venue and that the challenge should have instead been heard in the D.C. Circuit.

“As our petition makes clear, the Fifth Circuit never should have heard this challenge brought by refiners,” said RFA President and CEO Geoff Cooper. “EPA decisions on small refinery exemption petitions are inherently national in scope because the RFS establishes proportional renewable fuel volume requirements for every obligated party in the nation. When an exemption is granted, regardless of where the refinery is located, a nationwide shortfall of renewable fuel blending is created. As underscored by five other Circuit Courts and the dissenting opinion in the Fifth Circuit, the D.C. Circuit is obviously the only proper venue for reviewing EPA’s denial of small refinery exemption petitions. The Supreme Court should overturn the Fifth Circuit’s flawed opinion and ensure that any SRE challenges are considered by the singular D.C. Circuit venue.” READ MORE

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Excerpt from Inside EPA: Biofuels groups are urging the Supreme Court to review a regional court’s ruling that scrapped EPA’s denial of renewable fuel standard (RFS) refinery waivers, joining the broader debate over the venue for litigation challenging “national” rules that is already before the justices in the context of litigation over EPA’s denial of states’ Good Neighbor ozone plans. Growth Energy and the Renewable Fuels Association (RFA) filed their joint petition for certiorari May 20, seeking to overturn the split Nov. 22... READ MORE

Excerpt from Ethanol Producer Magazine: “There’s a simple reason why the Third, Seventh, Ninth, Tenth, and Eleventh Circuits have all found that EPA’s SRE decisions should be litigated in the D.C. Circuit. SREs have nationwide impacts on the entire U.S. renewable fuels market, and EPA has developed and applied a nationwide SRE policy to assess them,” said Emily Skor, CEO of Growth Energy. “The Supreme Court should take up our petition and overturn the Fifth Circuit’s opinion to ensure that SRE review is governed by a single court whose decisions apply nationwide. Furthermore, the Court should not allow oil industry interests to take advantage of a fragmented system of judicial review and forum shop for more favorable courts at the expense of a coherent SRE program. Only by funneling SRE challenges to the D.C. Circuit can we ensure consistent, nationwide SRE policy and avoid regulatory and market uncertainty for the nation’s transportation fuel supply.”

A full copy of the May 20 petition is available on Growth Energy’s website. READ MORE

Excerpt from DTN Progressive Farmer: In 2022, the Biden administration rejected 105 exemptions previously granted to small refineries. Refining companies filed numerous appeals to the Third, Seventh, Ninth, 10th and 11th circuits. All of the courts concluded the D.C. Circuit was the proper venue except for the Fifth Circuit. The Fifth Circuit then issued a ruling overturning EPA's action on six exemptions.

"There's a simple reason why the Third, Seventh, Ninth, 10th, and 11th circuits have all found that EPA's SRE decisions should be litigated in the D.C. Circuit," Growth Energy CEO Emily Skor said in a statement.

"SREs have nationwide impacts on the entire U.S. renewable fuels market, and EPA has developed and applied a nationwide SRE policy to assess them. Furthermore, the court should not allow oil industry interests to take advantage of a fragmented system of judicial review and forum shop for more favorable courts at the expense of a coherent SRE program. Only by funneling SRE challenges to the D.C. Circuit can we ensure consistent, nationwide SRE policy and avoid regulatory and market uncertainty for the nation's transportation fuel supply."

When the Fifth Circuit denied a motion by ethanol interests to change the venue to the D.C. Circuit, the Fifth Circuit ruled it was the proper venue and said the decision would not be nationally applicable.

The Supreme Court receives about 8,000 petitions for review annually but grants hearings to only about 80 cases.

When EPA assessed the SRE petitions in 2022, the agency applied a single, nationwide legal requirement that to be eligible for an SRE petitioning refineries are required to demonstrate a direct causal relationship between RFS compliance and their claimed economic hardship.

RFA'S COOPER

Geoff Cooper, president and CEO of the Renewable Fuels Association, said it was clear the Fifth Circuit erred in its 2023 decision.

"EPA decisions on small-refinery exemption petitions are inherently national in scope because the RFS establishes proportional renewable fuel volume requirements for every obligated party in the nation," he said in a statement.

"When an exemption is granted, regardless of where the refinery is located, a nationwide shortfall of renewable fuel blending is created. As underscored by five other circuit courts and the dissenting opinion in the Fifth Circuit, the D.C. Circuit is obviously the only proper venue for reviewing EPA's denial of small-refinery exemption petitions. The Supreme Court should overturn the Fifth Circuit's flawed opinion and ensure that any SRE challenges are considered by the singular D.C. Circuit venue."

In their petition, the ethanol groups said the Supreme Court should grant a review solely based on the split in opinion among federal appeals courts.

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2023 COURT RULING

In its 2023 ruling, the Fifth Circuit had called out the EPA for changing its interpretation of the SRE regulations.

"EPA's new interpretation and approach -- which it applied in the denial actions -- displaced the adjudicative methodology the agency had relied on for over a decade," the court said in its ruling.

"In that prior approach, EPA granted and denied petitions based on DOE's findings through its application of the DOE scoring matrix. That scoring matrix -- developed as part of the statutorily mandated 2011 DOE study -- 'was designed to evaluate the full impact of disproportionate economic hardship on small refiners and used to assess the individual degree of potential impairment.'"

The court said starting with the April 2022 denial of the exemption requests, "EPA has now completely abandoned" the scoring matrix.

"Instead, EPA now adjudicates petitions using an approach it announced in a December 2021 publication," the court said, which includes determining whether refiners experience disproportionate economic hardship and on the idea that refiners are able to recover the costs of renewable identification numbers by passing those costs on to consumers at the pump. READ MORE

Excerpt from Inside EPA: EPA is urging the Supreme Court to deny states’ and industry groups’ petitions to decide whether litigation over its Good Neighbor Plan (GNP) can be heard in regional courts of appeals, and instead grant its own just-filed petition for review of suits over renewable fuel standard (RFS) waivers that it says is a “better vehicle” to decide the same issue. In a May 21 response to the petitions for a writ of certiorari filed by Oklahoma and utility PacifiCorp over... READ MORE