Supreme Court, in Twin Opinions, Clarifies Venue for Challenges to EPA Actions

The U.S. Supreme Court issued two simultaneous opinions on June 18, 2025, that, between them, offer additional guidance as to the appropriate federal appellate court into which parties must bring challenges to Environmental Protection Agency (EPA) actions under the Clean Air Act (CAA or "the Act"). The Court established a two-part test in Environmental Protection Agency v. Calumet Shreveport Refining, LLC, et al., 605 U.S. ____ (No. 23-1229) as part of determining a group of small refineries must bring their challenge to EPA’s denial of their renewable fuel program exemption petitions before the D.C. Circuit Court of Appeals. It then used that same two-part test in Oklahoma, et al., v. Environmental Protection Agency, et al., 605 U.S. ___ (No. 23-1067), to conclude the Tenth Circuit, i.e., the “local or regional” appellate court, was the appropriate forum in which to hear Oklahoma and Utah’s challenges to their treatment under EPA’s “Good Neighbor Plan.”

Environmental Protection Agency v. Calumet Shreveport Refining, LLC, et al. (Calumet)

Background

The Clean Air Act’s Renewable Fuels Program (RFP) requires most domestic refineries to blend a certain level of renewable fuels into the fuels they produce. Refineries demonstrate compliance with this requirement either through Renewable Identification Number (RIN) credits they generate via blending or by buying or selling RIN credits. The Act currently allows refineries whose average aggregate daily crude oil throughput for a calendar year is no more than 75,000 barrels to petition for an exemption from the RFP because of “disproportionate economic hardship.” EPA denied a total of 105 small refineries’ exemption petitions in two omnibus notices, for two reasons: (1) EPA interpreted the phrase “disproportionate economic hardship” to apply only to hardship caused by RFP compliance; and (2) none of the petitioners suffered such hardship because RIN costs are passed fully onto consumers.

Review of EPA Actions

CAA section 307(b)(1) (42 U.S.C. § 7607(b)(1)) establishes three venue categories governing where petitioners should file challenges to EPA actions. Challenges to a “nationally applicable" final action taken by EPA are reviewed by the D.C. Circuit Court of Appeals. A final action that is “locally or regionally applicable” is to be reviewed in the relevant regional Circuit. Finally, an action that otherwise would fall in this latter category must be reviewed by the D.C. Circuit “if [it] is based on a determination of nationwide scope or effect” and “if in taking such action [EPA] finds and publishes that such action is based on such a determination.”

Refineries whose RFP exemption petitions were denied filed challenges to those denials in numerous regional Circuits, despite EPA’s assertion in the two notices that its denials were reviewable only in the D.C. Circuit. Most Circuits agreed with EPA and either dismissed the challenges before them or transferred them to the D.C. Circuit.

The Fifth Circuit, however, determined it had jurisdiction to hear the challenges by six petitioners because the legal effect of EPA’s notices was limited to the petitioning refineries and because EPA considered refinery-specific facts as part of its denials. This, the court determined, made EPA’s actions “locally or regionally applicable.” Having confirmed jurisdiction, the Fifth Circuit went on to rule against EPA on the merits and vacated and remanded the six denials for further consideration. EPA appealed and the Supreme Court granted certiorari to clarify where venue properly lies.

New Two-Step Venue Test

Justice Clarence Thomas, writing for the seven-member majority, established a two-step test for determining venue under CAA section 307(b)(1). Under the first step, if the action is nationally applicable, the inquiry is complete because the D.C. Circuit is the appropriate venue. If the action is locally or regionally applicable, however, the reviewing court must undertake the second step to determine if the “nationwide scope and effect” exception applies such that the D.C. Circuit, not the regional Circuit, is the proper forum.

Under the first step, the “action” is determined by the substantive authority EPA acts under, not (necessarily) the way EPA couches the activity. The “action” in this case was EPA’s denial of each individual exemption petition. The Court determined each denial was “locally or regionally applicable” because the denial of a refinery’s petition applies only to that refinery.

With that, the Court moved onto the second step to determine if the “nationwide scope and effect” exception applied to override the default to the regional Circuits. An EPA determination is of “nationwide” scope and effect if it applies legally and practically throughout the entire country and its “justification of nationwide breadth is the primary explanation for and driver of EPA’s action.” The Court determined EPA’s interpretation of the phrase “disproportionate economic hardship” under the Act and its RIN passthrough theory were determinations of nationwide scope or effect because they applied to all refineries everywhere. It further found those determinations formed the core basis for EPA’s denials. The fact that EPA applied refinery-specific considerations to confirm each denial did not obviate the national “core” rationales for each denial. And, because EPA noted these nationwide rationales in its notices, it satisfied the second prong of the “nationwide scope and effect” exception. The Court vacated the Fifth Circuit’s decision and remanded the case back to it for further proceedings consistent with the Supreme Court’s opinion.

Oklahoma, et al., v. Environmental Protection Agency, et al. (Oklahoma)

Background

Oklahoma marks the second time in as many years the Supreme Court has issued a ruling related to EPA’s 2023 “Good Neighbor Plan” (GNP), which was EPA’s rejection of all or parts of 23 State Implementation Plans (SIPs) implementing the 2015 Ozone National Ambient Air Quality Standard (NAAQS) and its issuance of a Federal Implementation Plan in their place. See Fredrikson’s summary of the GNP and the Court’s 2024 decision related to it, Ohio v. EPA. In this round, the Court considered whether the Tenth Circuit Court of Appeals properly transferred Oklahoma and Utah’s challenges to the rejection of their SIPs under the GNP to the D.C. Circuit. Although it employed the two-step analysis it created in Calumet to EPA’s challenged GNP actions, the Court came to different conclusion, i.e., that EPA’s rejections of the two SIPs were “locally or regionally applicable actions” to which the “nationwide scope and effect” exception did not apply.

Application of the Calumet Test

Under step one of its newly established venue test, the Court found the disputed “action” to be EPA’s rejection of each state’s SIP. It was not, as EPA argued, the aggregation of all the denials into a single new rule. Categorization of the “action,” once established, was then easy because EPA action implementation plans is the first among the enumerated “locally or regionally applicable” actions listed under section 307(b)(1), with each SIP (dis)approval being its own action.

As for the second step, the Court noted EPA, in its aggregated Federal Register notice on the SIP disapprovals, did claim its determinations were based on a determination of nationwide scope and effect. The Court nevertheless rejected the validity of that assertion. An EPA action cannot have “nationwide scope and effect” if its justification is based primarily on “intensely factual,” non-nationwide considerations or if the key driver is debatable. EPA rejected each SIP based on a set of facts and considerations that were specific to that SIP, as opposed to the generally applicable, nationwide justifications given for its actions in Calumet. The Court therefore reversed the Tenth Circuit’s decision to transfer the matter to the D.C. Circuit and remanded the case to the former for further proceedings.

Justice Thomas again wrote the majority opinion (8-0 this time, with Justice Alito taking no part in the decision).

Observations

• These decisions will likely force a reconsideration of other challenges to EPA actions currently before various Circuits. For instance, last year, the Eighth Circuit Court of Appeals granted EPA’s motion to transfer to the D.C. Circuit a series of challenges to the latter’s 2024 amendments to the National Emissions Standard for Hazardous Air Pollutants for Taconite Iron Ore Processing, even though affected mines only exist in Minnesota and Michigan. Those challenges are currently on hold but will likely face a venue reconsideration, if they continue.
• Notably, although the Supreme Court has issued two rulings related to challenges to EPA’s Good Neighbor Plan, no court—including the Supreme Court—has yet to make any determination on the merits of those challenges.
• The EPA has suggested it intends to rescind the GNP. Doing so will not alleviate challenges surrounding the Clean Air Act’s “good neighbor” provision regarding the disputed ozone NAAQS, however. Downwind states who would have benefited from implementation of the GNP will still expect EPA and the relevant states to satisfy their “good neighbor” obligations and will likely bring their own actions if EPA and the upwind states fail to do so. The 2015 Ozone NAAQS’s requirements will therefore continue to reverberate and be litigated for years to come.

Fredrikson’s Environmental Law Group will continue to monitor and participate in developments such as these. Please contact us if we may ever be of assistance to you.