News
24/03/25
US venue case crucial for future clean air fights
New York, 24 March (Argus) — The US Supreme Court on Tuesday will hear arguments
about the proper court venue for Clean Air Act lawsuits, which could be pivotal
for future enforcement of federal air pollution rules. The court is considering
both a case involving the Environmental Protection Agency's (EPA) rejections of
small refiners' requests for hardship exemptions from a biofuel blend mandate
and the agency's separate denials of state plans for addressing ozone-forming
NOx emissions. Judges are not expected to decide the legality of EPA's
decisions, just the proper courts for settling the disputes. But the cases are
still significant: legal uncertainty to date has affected both EPA programs
implicated by the Supreme Court's review and could upend enforcement of future
rules if the court does not provide sufficient clarity. Federal ozone season NOx
allowance prices essentially flatlined last year as participants were hesitant
to trade due to risks from so many court cases. And small refinery exemptions
are crucial for biofuel demand, so biofuel producers are wary of empowering more
lower courts to reconsider denied exemption requests. The Clean Air Act says
that EPA actions that are "nationally applicable" or otherwise based on
"nationwide scope or effect" should proceed before the US Court of Appeals for
the District of Columbia Circuit, while "locally or regionally applicable"
actions head to regional circuit courts instead. But judges have disagreed about
how to apply those criteria, since many EPA rules have far-reaching effects but
on their face target individual states or facilities. Regulated industry fears
that EPA could say a broad set of regulations have nationwide scope,
centralizing review in the DC Circuit, which is seen as friendlier to federal
regulators and where a majority of judges are Democratic appointees. Local
conditions — such as a small refinery in Indiana serving local farmers that
cannot handle higher biodiesel blends — get short-changed when various
companies' concerns are assembled together, they argue. But EPA under the prior
administration and Democratic-led states argue that sending these cases to the
DC Circuit, which is more experienced with the complexities of federal
rulemaking, makes more sense than letting industry seek out favorable
jurisdictions. And they highlight the possibility of courts leaving emitters in
one part of the country with laxer rules. "The fundamental risk is that you'll
end up with decisions on the same point of law coming out differently in
different places — and not an expedient way to resolve that," said Brian Bunger,
a Holland & Knight partner and the former chief counsel at the Bay Area Air
Quality Management District. For instance, both the DC Circuit and the
conservative-leaning 5th Circuit agreed that EPA erred when it denied some
refiners exemptions from biofuel blend mandates — but they said so for slightly
distinct reasons. The 5th Circuit, for instance, went further by saying refiners
reasonably relied on past EPA practice and thus the agency incorporating new
analysis into its review of waiver requests was unfair. As a result, EPA
recently used different criteria when weighing a waiver request from one refiner
in the 5th Circuit's jurisdiction than it used for another refiner, according to
partially redacted decisions obtained by Argus through a Freedom of Information
Act request. The agency said it could not consider at all whether CVR Energy's
75,000 b/d refinery in Wynnewood, Oklahoma, is able to pass on the costs of
program compliance to consumers because of the 5th Circuit decision but could
weigh such information when deciding a similar petition from Calumet's 15,000
b/d refinery in Great Falls, Montana. The agency issued those decisions in the
waning days of former-president Joe Biden's term. While President Donald Trump
has pledged a vastly different approach to environmental regulation, his
administration for now has not signaled a different stance than the Biden
administration on whether these types of disputes should proceed before the DC
Circuit. Schrodinger's case It is still unclear whether the judges view the
cases as a tricky technical dispute or part of a broader trend of federal
agencies overstepping their authority. Tuesday's hearing could provide clues. Of
the court's nine justices, four previously served on the DC Circuit and could
see value in sending more complex regulatory cases to the expert court, Bunger
said. But the court's conservative majority could also be wary of giving EPA too
much authority to set venue. Refiners argue that the agency repackaged dozens of
individual exemption denials into two larger regulatory actions as a strategy to
get the cases before a friendlier court. The Supreme Court has looked
skeptically at other EPA rulings and last year overturned a decades-old legal
principle that gave agencies leeway when interpreting ambiguous laws. Final
Supreme Court decisions usually arrive by late June. However the court rules,
businesses say that it should provide a clear enough explanation to prevent
similar venue disputes from reemerging. The US Chamber of Commerce told the
court it takes no position beyond urging the court to "adopt an interpretation
that provides clarity and predictability to all stakeholders." By Cole Martin
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