High Court Hears Challenge Over Where EPA Small‑refinery Denials Belong — D.C. Circuit or Regional Courts?

The Supreme Court heard oral argument in EPA v. Calumet Shreveport Refining on whether denials of small‑refinery exemption petitions must be filed in the U.S. Court of Appeals for the D.C. Circuit or in regional circuits. Government counsel told the Court the April 2022 denials resolved 105 petitions across multiple states and circuits and were driven by a single, nationwide change in EPA's statutory interpretation and economic analysis.

Why it matters: the decision will determine where companies and challengers may sue over ephemeral but high‑stakes administrati ve determinations under the Clean Air Act, and whether a single court should resolve disputes that implicate agencywide methodology rather than site‑specific facts.

At argument, "This case provides a paradigmatic example of the result that the Clean Air Act's venue provision was intended to avoid," counsel Mister Stewart said, describing the agency's decision to publish a common methodology and deny many petitions together. Stewart argued the denials rested on a new statutory interpretation and an economic theory applied nationally and said the D.C. Circuit (or central review) was the efficient forum to avoid inconsistent rulings.

Several justices pushed back on how to draw a limiting principle. Justice Gorsuch asked whether there are "any limits to aggregating different claims, and thereby determining venue, in DC?" Stewart answered that courts should be able to scrutinize whether the agency's description of a single action is coherent and gave a hypothetical where unrelated items in one Federal Register notice would not sensibly be a single action.

A key dispute was how to read the Clean Air Act's third clause (often called the third prong): whether an otherwise local action may nonetheless be routed to the D.C. Circuit if it is "based on a determination of nationwide scope or effect." Stewart and other government advocates urged a meaning that captures actions that resolve unsettled, agencywide legal or economic questions and said courts should give some deference to EPA's view when it publishes that finding.

Opposing counsel argued for a narrower reading. Mister Houston, arguing for parties that said venue should be regional, emphasized the statutory text requiring denial decisions to be based on each refinery's local economic circumstances and stressed that EPA used adjudication authority rather than rulemaking. "These actions were locally applicable because each EPA action on a hardship petition affected only one refinery located in one place," Houston said, adding that Congress assigned such local inquiries to regional courts.

Justice Kagan framed a pragmatic test: if a common nationwide decision or two drove the individual outcomes so that state‑level facts play little role, centralization makes sense; if individual circumstances will vary and matter, regional review should govern. "If it did[n't] . . . you don't want 11 circuits dealing with the same question," she said.

Counsel for industry‑side respondents (Mister Waxman) pressed that the petitions' denials announced and applied a standard to refineries nationwide and that the Renewable Fuel Standard (RFS) program's structure makes each exemption legally consequential beyond a single plant. Waxman argued the denials were nationally applicable both because EPA announced a uniform standard and because each SRE adjudication affects national blending obligations.

Justices repeatedly sought a clear rule that would make venue "easy to determine at the outset of a case." The bench debated formulations for the test — whether the challenged determination must be the "but for" cause of the agency action, whether the determination must lie at the "core" of the decision, and what role timing or prior challenges (e.g., a prior DC Circuit ruling or a 60‑day challenge window) should play in determining whether a rule is "settled." Stewart suggested courts ask whether the agency announced a new principle of federal law or policy and whether that principle is likely to be the subject of repeated challenges.

Justices also questioned whether, and to what extent, judicial review should defer to the agency when the agency itself finds and publishes that an action is based on a nationwide determination. Counsel for regions argued the statute contemplates a legal question for courts and that the agency's published finding should not receive preclusive deference on the venue question.

Multiple observers at argument noted facts in the record: Stewart said the April and June 2022 denials were issued as part of a consolidated approach and that EPA gave refineries an opportunity to rebut a national "pass‑through" presumption (the agency's economic theory that compliance costs are passed along). Counsel disputed how high the rebuttal bar was and whether EPA's site‑by‑site analyses were substantial or largely precluded by the presumption.

The Court heard that lower courts are split: some panels have treated similar denials as locally adjudicatory and others have accepted D.C. Circuit centralization when agencywide methodology was at issue. Counsel for both sides agreed the issue is consequential because centralization affects speed and uniformity of nationwide rules and because the RFS regime directly alters market obligations for obligated parties throughout the country.

The argument concluded after extended questioning from the justices; the case was submitted.