SCOTUS Sides With Ethanol on SRE Case

LINCOLN, Neb. (DTN) -- The Supreme Court on Wednesday sided with ethanol groups in a 7-2 ruling that the U.S. Court of Appeals for the District of Columbia Circuit is the proper venue for legal challenges to small-refinery exemption decisions, a decision ethanol groups hailed.

"Today's decision is a victory for the American biofuels industry and for the rural communities that depend on a strong Renewable Fuels Standard," the Renewable Fuels Association and Growth Energy said in a joint statement.

"The court agreed with our argument that the D.C. Circuit is the only appropriate venue for litigation on EPA's small-refinery exemption decisions. Because the Renewable Fuel Standard is a national program and SREs have nationwide impacts, any challenges to SRE decisions belong squarely in the D.C. Circuit. Allowing 12 different circuit courts to adjudicate SREs would result in a fractured and inconsistent body of law, causing chaos and confusion in the marketplace. The court's opinion today gives farmers and ethanol producers much greater certainty about SRE litigation under the Renewable Fuel Standard, which continues to be one of the nation's most successful clean energy programs."

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 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.

The Fifth Circuit ruled in November 2023 that it was the proper venue to hear a challenge brought by six small refineries that had their exemption petitions denied by the EPA.

In January 2024, the RFA and Growth Energy asked for a rehearing in the U.S. Court of Appeals for the Fifth Circuit on a previous court decision to overturn the U.S. Environmental Protection Agency's rejection of 100 SRE requests.

"An EPA action is 'based on' a determination of nationwide scope or effect only if that determination 'lies at the core of the agency action,' so as to form the most important part of the agency's reasoning," Justice Clarence Thomas said in writing the majority opinion in EPA v Calumet Shreveport Refining LLC.

"Put more concretely, an EPA action is based on a determination of nationwide scope or effect only if a justification of nationwide breadth is the primary explanation for and driver of EPA's action."

The Supreme Court's two-part test is that an EPA action must be based on a determination of nationwide scope or effect and that the agency must find and publish that the action is based on that determination.

The court's ruling essentially centralizes more Clean Air Act challenges to the D.C. court, rather than allowing such litigation to be dispersed across regional circuits. The ruling basically gives EPA more influence on where such cases are heard, essentially requiring small-refinery companies to file SRE challenges in the D.C. circuit.

Justice Neil Gorsuch was joined by Chief Justice John Roberts in dissenting.

Gorsuch wrote in the dissent that small-refinery exemptions are inherently refinery-specific and that nothing in SRE provisions requires the EPA to make determinations of national scope.

Gorsuch said venue rules should be "clear and easy to apply" because "litigation over whether the case is in the right court is essentially a waste of time" and resources.

"Venue rules are like traffic laws," Gorsuch writes, "they simply tell litigants where to go and they should be easy to follow."

Gorsuch said the court reached the opposite conclusion in the companion case to EPA v Calumet, which was Oklahoma v EPA, despite what he says are similar circumstances where EPA also applied common statutory interpretations and methodologies. Gorsuch argues that it demonstrates ambiguity in the majority's test.

Read more on DTN:

"Ethanol Groups Petition Supreme Court," https://www.dtnpf.com/…

Todd Neeley can be reached at todd.neeley@dtn.com

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