Supreme Court Interprets the Clean Air Act's Venue Provision in Companion Cases
By: Mark I. Pinkert and Karyann Parkinson
Today, the Supreme Court interpreted the Clean Air Act’s venue framework for judicial review of EPA actions. Under 42 U. S. C. §7607(b)(1), “nationally applicable” EPA actions can be challenged only in the D. C. Circuit, while “locally or regionally applicable” actions go to the regional Circuits. However, there is an exception to the latter: when locally or regionally actions are “based on a determination of nationwide scope or effect” they must be reviewed in the D.C. Circuit.
Interpreting the plain meaning of the provision, the Court adopted and applied a new multistep test. First, courts must assess whether an EPA action is nationally applicable or only locally or regionally applicable. If the action is nationally applicable, the case belongs in the D.C. Circuit. Second, even if the action is locally or regionally applicable, an administrative challenge must be brought in the D.C. Circuit if a “determination of nationwide scope and effect” forms the primary explanation for the EPA’s action. Determinations are of nationwide “scope” if they apply throughout the country “as a legal matter (de jure)” and of nationwide “effect” if they so apply “as a practical matter (de facto).”
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In EPA v. Calumet Shreveport Refining, LLC, the Court held that small refineries were required to challenge certain EPA actions in the D.C. Circuit because the actions—although locally or regionally applicable—were based on EPA determinations that were national in scope and effect.
Specifically, the refineries sought but were denied exemptions from renewable fuel blend amounts mandated under the CAA. To obtain the exemption, the refineries needed to show “disproportionate economic hardship.” The EPA interpreted that statutory requirement as an economic hardship specifically caused by the fuel blend requirement, not any other external factors. Further, because refineries can get “credits” for blending fuel—and they can comply with the CAA using purchased credits and pass those purchase costs onto customers—the EPA determined that small refineries typically cannot suffer disproportionate economic hardship merely from blend requirements. Using that uniform determination, the EPA denied all pending requests for exemption.
In a decision written by Justice Thomas, the Court held that the actions—i.e., the individual denials—were locally applicable as they applied to local refineries and did not “facially” apply nationwide. But the EPA decision fell within the exception for when actions are “based on determinations of nationwide scope or effect.” Looking to the ordinary meaning of the statutory phrase, the Court held that, to trigger the exception, the EPA’s determination must “lie at the core of the agency action,” so as to form the most important of the agency’s reasoning. In this case, the Court explained, EPA’s interpretation of the statutory phrase “disproportionate economic hardship” and its credit passthrough economic theory were both determinations of nationwide import that formed the core basis for the denials.
Justice Gorusch, joined by Justice Roberts, dissented. In his view, EPA should not be able to make a threshold, nationwide determination unless it is required to do so by the statute’s substantive provisions. And, here, the CAA does not call on EPA to make a “determination of nationwide scope or effect” regarding the small refinery hardship petitions; instead, the CAA requires the EPA to evaluate only whether a particular small refinery seeking an exemption would suffer a hardship without one. Accordingly, the EPA should not be able to funnel challenges into the D.C. Circuit by deciding on its own to make uniform decisions and then apply them nationwide.
In the companion case, Oklahoma v. EPA, the Court applied the same tripartite analysis but reached the opposite conclusion. There, each state submitted implementation plans (SIPs) for how they would comply with the CAA’s “Good Neighbor” provision, requiring the states to limit in-state emissions that would interfere with other states’ ability to comply with national ambient air quality standards. Applying the framework it articulated in Calumet Shreveport Refining, the Court held that the SIPs determinations were local and regional, because a SIP is a state-specific plan, so an EPA disapproval on its face applies only to the State that proposed the SIP. But, in this case, the “nationwide scope or effect” exception did not apply because the denials were based on “intensely factual” considerations, and not primarily driven by any nationwide determination.
Based on his dissent in Calumet Shreveport Refining, Justice Gorsuch concurred in the judgment only but not in the majority opinion.
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Although highly technical decisions of statutory interpretation, the cases have important practical implications for parties seeking to challenge EPA actions under the CAA and, conversely, for the EPA to be able to control the venue for those challenges. For one, the decisions give the EPA more leeway to funnel cases to the D.C. Circuit by making uniform policy determination and applying them to local decisions nationwide. Second, as Justice Gorsuch explained in dissent, the decisions “could render simple venue questions unnecessarily difficult and expensive to resolve.”
