Environmental Protection Agency v. Calumet Shreveport Refining, LLC

LII note: The U.S Supreme Court has now decided Environmental Protection Agency v. Calumet Shreveport Refining, LLC

    Issues

    Does the U.S. Court of Appeals for the District of Columbia Circuit have exclusive venue over litigation involving the Clean Air Act’s Renewable Fuel Standard program because the Environmental Protection Agency’s determinations are “nationally applicable” or, alternatively, “based on a determination of nationwide scope or effect?”

    Oral argument:
    March 25, 2025
    Court below:
    United States Court of Appeals for the Fifth Circuit

    This case concerns the proper venue for litigating the Clean Air Act’s Renewable Fuel Standards. The EPA argues that its actions pursuant to these standards must go to the D.C. Appeals circuit. This is because the EPA contends that its actions were either nationally applicable, since they affect refineries in multiple circuits, or based on a determination of nationwide scope, since they stem from agency determinations about the Renewable Fuel Standard’s scope. Calumet Shreveport Refinery counters that the actions should not exclusively be litigated in the D.C. Circuit but rather in the applicable appeals circuits across the country, since the EPA’s determinations are not nationally applicable, but rather individualized adjudications on the petitions of hundreds of small, local refineries based on particular local circumstances. This case has important implications for the direction of the Supreme Court’s statutory interpretation, as well as shaping the direction of administrative law and the power allotted to executive agencies.

    Questions as Framed for the Court by the Parties

    Whether venue for challenges by small oil refineries seeking exemptions from the requirements of the Clean Air Act’s Renewable Fuel Standard program lies exclusively in the U.S. Court of Appeals for the District of Columbia Circuit because the agency’s denial actions are “nationally applicable” or, alternatively, are “based on a determination of nationwide scope or effect.”

    Facts

    The Clean Air Act contains a provision regarding Renewable Fuel Standards ("RFS"), which requires that each year, producers across the energy sector must blend certain volumes of renewable fuel with nonrenewable fuel.  Obligated parties must obtain Renewable Identification Numbers ("RINs") to remain in compliance with the Clean Air Act, either by blending renewable fuel into nonrenewable fuel batches or by purchasing RINs from other parties. Small refineries  initially exempt from compliance with the act may gain extended exemptions if they demonstrate that they are "subject to a disproportionate economic hardship" which makes it more difficult to comply with the act’s provisions.

    The Environmental Protection Agency ("EPA"), the federal agency responsible for enforcing the Clean Air Act and its RFS, evaluates small refineries' economic hardship petitions. In August 2019, the EPA granted 31 small refineries' hardship petitions for exemptions for 2018; but, in April 2022 the EPA denied those same petitions in a batch denial of 36 petitions and a month later denied 33 small refineries' petitions for exemptions for 2016-2021.In its 2022 denials, the EPA used a new interpretation of the Clean Air Act, first defining "disproportionate economic hardship" as hardship solely caused by RFS compliance costs, and second, positing that RIN cost is equal for all refiners and priced into their sale price to consumers.

    Under the Clean Air Act, parties must request review of the EPA's actions in different courts depending on the scope of the action. When the EPA's action is locally or regionally applicable, parties must request review by the applicable circuit court; when the EPA's action is nationally applicable, parties must request review by the U.S. Court of Appeals for the D.C. Circuit. Calumet Shreveport Refining, joined by six other refineries, requested review of the EPA's 2022 decisions in the U.S. Court of Appeals for the Fifth Circuit.  

    The EPA requested a transfer of venue to the D.C. Circuit, arguing that the action was nationally applicable. The Fifth Circuit denied the request, ruling that the legal effect of the EPA's action was regional rather than national in scope, and that the determination was not nationally applicable, so venue was proper in the Fifth Circuit. On November 22, 2023, the Fifth Circuit ruled impermissible the EPA's retroactive denials of Calumet's exemption application, holding that the EPA would gain no benefit, and that Calumet would be harmed if the denials remained in place. The Fifth Circuit also ruled as implausible the EPA’s theory that refiners can fully pass on the costs of the RINs to consumers.  The EPA submitted a petition for a writ of certiorari for the jurisdictional questions alone on May 20, 2024, and the United States Supreme Court granted certiorari on October 21, 2024. 

    Analysis

    NATIONAL APPLICABILITY OF BUNDLED ACTIONS

    The EPA argues that the Clean Air Act’s (“CAA”) venue provision (42 U.S.C. § 7607) makes clear that a challenge to a nationally applicable final determination, such as the one made against Calumet Shreveport Refining, must be heard in the D.C. Circuit.The EPA contends that the Clean Air Act allows for an action to be either nationally applicable, or locally or regionally applicable, but not both. The EPA notes that the CAA uses the word “the” when referring to the applicable circuit in which a locally or regionally applicable an action can be heard, indicating that there is just one appropriate regional court of appeals in which to seek review for such an action. Thus, the EPA argues, any action taking place in more than one judicial circuit must be viewed as nationally applicable and subject to review only in the D.C. Circuit. The EPA further argues that agencies have discretion in how they dispose of adjudicatory matters, and that it is within their rights to classify the action against Calumet Shreveport as a single nationwide adjudication rather than 105 individual local adjudications.The EPA contends that the Fifth Circuit erred when it ruled that none of the EPA’s final actions were binding on future decisions. The EPA asserts that this interpretation is not based in the statutory law of the Clean Air Act. Additionally, the EPA argues that the Fifth Circuit’s interpretation of the venue provision as requiring binding effect effectively adds words to the statute, contrary to what Congress intended. The EPA continues that even Calumet Shreveport does not defend the Fifth Circuit’s interpretation, and that nothing in the CAA prohibits the EPA from consolidating petitions together and resolving them in a single action.

    Calumet Shreveport argues that the nature and scope of the EPA’s action fits into the CAA’s definition of a locally or regionally applicable action rather than a nationally applicable one.Calumet Shreveport asserts that the EPA’s action was not a single national action affecting 105 refineries, but rather 105 individual final actions, each affecting a single, local refinery. Calumet Shreveport contends that the language of the CAA in 42 U.S.C. § 7545(o)(9)(B) supports this conclusion, by mentioning that “a” refinery may petition, and that the EPA must evaluate “a” petition, implying that petitions must be considered individually. Calumet Shreveport argues that the EPA was only able to bundle several individual decisions together by ignoring the deadlines required by the CAA. Similarly, Calumet Shreveport asserts that the CAA requires individual petitions from individual refineries to get the exemption from EPA regulation; Congress previously allowed for blanket exemptions but deliberately chose not to do so here. Calumet Shreveport argues that this is evidence of Congress’s desire to have the EPA address refineries in individual exemption actions. Calumet Shreveport asserts that two canons of statutory interpretation support their argument that the actions were local in applicability. Firstly, asserts Calumet Shreveport, the principle of ejusdem generis requires the court to examine whether the EPA’s action resembles the nationally applicable actions specifically enumerated in the Clean Air Act. Unlike those enumerated actions, Calumet Shreveport argues, the EPA’s actions involve individual regulated entities or States. Secondly, Calumet Shreveport argues that in jurisdictional statutes, the court should interpret the statute as having clear boundaries to avoid wasteful litigation over venue, which would be satisfied here by giving “nationally applicable” its plain meaning—when an action governs the entire nation as opposed to when it governs some lesser subset of related parties, States, or regions.

    DETERMINATIONS OF NATIONWIDE SCOPE

    Even if the Court concludes that the EPA’s denial actions are “locally or regionally applicable,” the EPA argues that its actions should still be evaluated solely in the D.C. Circuit since they are based in a determination of nationwide scope or effect. The EPA contends that, even if an agency action is local, if the “but-for” cause for its promulgation was a nationwide determination, it must be appealed to the D.C. Circuit. In this case, the EPA asserts, the agency made two determinations about statutory interpretation of the Clean Air Act: limiting the way refineries can claim hardship exemptions to hardships caused by compliance with the RFS program only, and determining that every refinery recovers the cost of the RIN at the time it sells a gallon of fuel. By applying these two generally applicable rules to the specific refineries in question, the EPA argues, it took actions based on determinations of nationwide scope. The EPA further contends that the legislative intent of the “nationwide scope” provision weighs in its favor. The EPA argues that, prior to the provision, litigants were confused about which circuit was appropriate to challenge a determination that affected multiple circuits. Thus, when Congress added the “nationwide scope” provision, it intended to provide the D.C. Circuit with authority when an EPA action spawned litigation in multiple circuits. The EPA further asserts that Calumet Shreveport’s interpretation of the “nationwide scope” prong would render the statute ineffective. The EPA argues that this is because Calumet Shreveport believes that the EPA’s actions are not based in nationwide scope since they take into consideration particular local circumstances for individual refineries. Under Calumet Shreveport’s interpretation, contends the EPA, its actions would only meet the “nationwide scope” prong if they solely rely on nationwide determinations. However, argues the EPA, the provision by its own definition only applies to local or regional actions, which necessarily must use particularized local facts: thus, Calumet Shreveport’s interpretation defeats the purpose of the prong.

    Calumet Shreveport argues that the EPA’s actions were not based on a “determination” within the meaning of the CAA, but even if they were, the EPA is still wrong about the basis for the hardship-petition denial actions. Firstly, Calumet Shreveport asserts that the “determinations” made by the EPA do not fit the statutory definition for a determination found in the CAA. Calumet Shreveport argues that the CAA specifically references and instructs the EPA to make “determinations” in two separate sections but not in the individual petitions section. Thus, argues Calumet Shreveport, a “determination” is only something that the statute explicitly labels as a determination and allots to the EPA: something it has not done for individual petitions. Calumet Shreveport continues that every EPA determination is based on applying agency-wide interpretations, and thus the EPA’s argument that statutory interpretation is a nationally applicable determination would place every EPA action under the D.C. Circuit. In order to be a determination, Calumet Shreveport contends, a decision must at least be made through the rule making process and be promulgated as a final rule: something the EPA did not do in this case. Calumet Shreveport also counters the EPA’s argument about legislative intent behind the nationwide scope provision. Calumet Shreveport disputes that the provision demonstrates Congress’s intent to allow nationwide determinations to go to the D.C. Circuit. Instead, Calumet Shreveport argues that the provision is a small exception, atypical of the rest of the CAA, which originally still required the EPA to make a nationwide determination about the availability of technology. However, argues Calumet Shreveport, the EPA’s actions in this case were not based on a generalized evaluation about a nationwide industry, but instead were individualized determinations based on particular local factors. This type of action, Calumet Shreveport contends, does not fall within any of the CAA’s contemplated uses for the “nationwide determination” provision.

    Discussion

    REGIONAL VERSUS LOCAL ADJUDICATION

    In support of the EPA, the NATSO, SIGMA, and the National Association of Convenience Stores (collectively, "NATSO") trade associations, representing those involved in the distribution of motor fuel, argue that the fuel market is national, and that national decisions are better suited to guide such an industry.  NATSO insists that because distributors can transport fuel efficiently, pricing fundamentals tend to be consistent across the country, with variations based only on transportation costs and local regulations, not on unique characteristics of the region. Furthermore, NATSO suggests that, because the market for compliance credits is national, when small refiners are granted exceptions, the credits that the small refiners would have purchased are reallocated nationally, not regionally, so a national rules system is the most practical.NATSO further contends that allowing for a decentralized regulation system could allow small refiners to gain an unfair competitive advantage in more lenient circuits by gaining an exemption from their compliance obligations which would be passed on to the rest of the market. If this occurred, NATSO warns that the small refiners would continue to sell their fuel at market price and other refiners would need to raise their prices to cover the increased cost of compliance, resulting in higher prices for consumers.

    CountryMark Refining and Logistics (“CountryMark”), a midwestern energy company, asserts in support of Calumet Shreveport that regional circuit courts are best situated to rule effectively on whether to grant SREs because of their ability to provide individualized review.CountryMark argues that, when its case was consolidated with 24 other small refineries’ cases, it could not explain the particularities of its circumstances due to space limitations in the consolidated briefs, denying it the opportunity to receive an accurate, considered decision. Senators Lee, Cassidy, and Budd (collectively, “the Senators”), also in support of Calumet Shreveport, argue that circuit courts can rule more accurately on SREs because of their familiarity with local circumstances which affect the local fuel market.  Furthermore, Senators argue that the EPA could use its interpretation to forum shop, by issuing standalone hardship decisions or bundling decisions based on which better suits the agency’s interests. The Senators argue that Congress has authority over the jurisdiction of lower federal courts and adopting the EPA’s interpretation would undermine the separation of powers by granting outsized power to the EPA.

    JUDICIAL EFFICIENCY

    The State of New York, joined by 19 other localities, (collectively, "New York"), writing in support of the EPA, claims that not consolidating cases such as Calumet's would in fact lead to more confusion, inefficiency, and delay. New York explains that when a single EPA action is challenged in multiple circuit courts, in New York's experience, each case requires all parties and the courts to litigate the same issues in parallel and takes more time than a consolidated action would.  Furthermore, New York argues that such delays burden states which continue to receive pollution from other states while the litigation is pending. New York also argues that the EPA often issues single actions which divide the country into large geographical areas, often spanning multiple judicial districts and states based on environmental factors.New York warns that allowing individual organizations to challenge these rulings in their local circuit courts would interfere with public and private entities' abilities to plan ahead to ensure that they comply with the EPA's regulations.

    CountryMark, in support of Calumet Shreveport, argues that the EPA’s interpretation would lead to less timely adjudication which could result in small refineries suffering serious financial harm while waiting for a decision.  For example, CountryMark argues, in the Calumet Shreveport case, the Fifth Circuit resolved the dispute eight months before the D.C. circuit resolved its disputes. CountryMark insists that if a refiner is truly facing a disproportionate hardship, as contemplated by the Clean Air Act, long delays may curtail refiners’ ability to effectively plan for the future if they must wait for the D.C. circuit’s decision on a consolidated case. CountryMark emphasizes that distributing the workload across many circuits, instead of assigning it solely to the D.C. circuit will facilitate more timely rulings and ensure that small refineries can adjust their strategies to remain economically, rather than waiting months or years.  

    Conclusion


        Sasha Prakir and Samantha Wood

         Tedrick Au

    Additional Resources