The U.S. Supreme Court yesterday ruled that the U.S. Court of Appeals for the D.C. Circuit is the proper venue for legal challenges to the U.S. EPA’s Small Refinery Exemption (SRE) decisions.

SREs are requests by refiners to avoid complying with the legal requirements of the federal Renewable Fuel Standard (RFS). Absent an exemption, the RFS generally obligates refiners to either blend a certain volume of renewable fuels (products like ethanol and biodiesel) into the motor fuel supply, or purchase credits (Renewable Identification Numbers, or RINs) to compensate for that volume. Granting an SRE can distort the market for RINs, either by reducing the overall amount of renewable fuels blended into the fuel supply or by requiring larger refiners to absorb those requirements.

“This ruling is an important victory for NACS members and will encourage clarity, certainty and finality in the administration of the RFS,” said NACS Deputy General Counsel Matt Durand. “Requiring all SRE cases to be heard in one venue, the D.C. Circuit, removes the possibility of conflicting decisions from different regional Circuits around the country.”

Under the Renewable Fuel Standard, “small refineries are able to petition the EPA for waivers to relieve their RFS blending obligations for a given compliance year. The EPA may approve the SRE petition if the agency determines that the small refinery has demonstrated disproportionate economic hardship, as determined under RFS regulations,” reported Ethanol Producer Magazine.

According to the lawsuit, numerous refineries challenged SRE denials in the Third, Fifth, Seventh, Ninth, Tenth, Eleventh and D.C. Circuit Courts. All regional circuits except the Fifth Circuit concluded that only the D.C. Circuit was the proper venue to hear the challenges and either dismissed or transferred the challenges to the D.C. Circuit. 

The Fifth Circuit Court, however, “denied EPA’s request to transfer the challenges to the D.C. Circuit court, holding that the SRE denials were ‘locally or regionally applicable’ rather than ‘national applicable.’ The Fifth Circuit Court proceeded with the challenges and in November 2023 ruled in favor of the small refineries, remanding six SRE petitions to the EPA for reconsideration. Biofuel groups submitted requests for rehearings with the court, which were ultimately denied,” wrote the outlet.

Upon appeal to the Supreme Court, NACS submitted an amicus brief, urging that the cases should all be heard in the DC Circuit because the RFS is a national program that needed consistency, and would be undermined by different decisions from different courts around the nation.