By Deborah Quick

Obtaining final agency action subject to judicial review can sometimes feel like the culmination of a mythic odyssey to applicants for administrative agency approvals. A refinery applicant for registration to generate valuable tradeable renewable fuel credits thought it had obtained final agency action and filed a petition. It did so comforted by having already obtained an ongoing registration permitting it to generate less-valuable tradeable credits. Alas, when it needed to update its less-valuable registration it ran straight into the Scylla and Charybdis of the U.S. Environmental Protection Agency’s (EPA) electronic system, which will only recognize one registration at a time. In order to protect its less-valuable registration, it had to withdraw its application. Doing so mooted its pending petition. [POET Biorefining – Hudson, LLC v. U.S. Environmental Protection Agency, 971 F.3d 802 (8th Cir. 2020).]

Background

Congress’ 2005 and 2007 amendments to the federal Clean Air Act established the Renewable Fuel Standards Program (RFS), requiring that specified annual volumes of certain renewable fuels must be “introduced” each year into the United States by gasoline refiners and importers. 42 U.S.C. § 7545(o). Renewable fuels are divided into four categories—“cellulosic biofuel, biomass-based diesel, advanced biofuel, and total renewable fuel”—and “EPA issues [Renewable Identification Numbers, ‘RINs’) for each gallon of renewable fuel that is produced or imported for use in the United States.” 40 C.F.R. § 80.1426(a). RINs are traded on a secondary market, so that refineries and importers can satisfy their RFS annual quotas either by produced or importing renewable fuel, or purchasing RINs.

However, not all RINs are created equal. Each RIN is assigned a “D code” corresponding to one or more of the four EPA-recognized categories of renewable fuel.

RINs assigned a “D6” code can only be used to satisfy the total renewable-fuel obligation, whereas RINs assigned a “D3” code can also be used to satisfy the advanced and cellulosic-biofuel obligations. [40 C.F.R.] § 80.1426(f). As a result, EPA estimates that D3 RINs “are typically 3 to 4 times more valuable” than D6 RINs.

Petitioner POET’s Hudson refining facility has since 2013 produced “conventional ethanol from the inner starch of corn kernels,” which are issued D6-category RINs. In 2014, EPA issued a final rule recognizing a new pathway for producers to generate D3 RINs by producing cellulosic ethanol from the outer fiber of corn kernels. Thereafter, in 2018, POET applied to be registered for production of cellulosic ethanol from corn-kernel fiber and generation of the more valuable D3 RINs.

EPA and POET did not see eye-to-eye regarding the technical details of POET’s application, “engag[ing] in a back-and-forth discussion over the course of the next year” and culminating in the EPA Administrator issuing a May 6, 2019 letter providing “an explanation of [its] interpretation and application of [its] regulatory requirements to this matter.” The letter states that POET’s application “has not resolved EPA’s overall technical concerns” and articulates “criteria for the type of analysis and demonstrations that EPA believes would be an appropriate basis for registration under the program.” The letter notes that EPA intends to “continue evaluating” POET’s application when new materials become available to facilitate EPA’s review. EPA did not reject POET’s application in its electronic system like it ordinarily does when denying a registration request.

POET petitioned for review of the EPA May 6, 2019 letter, arguing it was the agency’s final action on POET’s 2018 application and asserting various substantive defects. EPA argued the letter was not its final action but rather “one part of an ongoing conversation about EPA’s technical concerns,” and in the alternative defended the letter’s merits.

Then, on July 8, 2019, POET withdrew the 2018 application from EPA’s “electronic system” in order, it later argued, to file an “update” related to its registration to produce D6 RINs. It sent EPA a letter characterizing the withdrawal as an “administrative step” and asserting its action “‘should not be considered a voluntary withdrawal of the Hudson Registration Application.’”

In a final twist, POET submitted a “new application to generate D3 RINs” on April 10, 2020. The 2020 application “contains a revised method for measuring cellulosic content as well as ‘additional data to address technical concerns expressed by EPA’”; nonetheless, POET asserts that the 2020 application is “‘identical in all relevant respects’ to its 2018 application.”

The Eighth Circuit’s Decision

The Eighth Circuit, sua sponte, dismissed POET’s petition as moot for failure to meet Article III’s “case or controversy” requirement. By withdrawing its 2018 application, POET deprived itself of ‘“of a personal stake in the outcome of the lawsuit” and made it ‘“impossible for a court to grant any effectual relief.’” Campbell-Ewald Co. v. Gomez, 136 S. Ct. 663, 669 (2016).

Article III of the Constitution only allows federal courts to adjudicate actual, ongoing “cases or controversies.” Potter v. Norwest Mortg., Inc., 329 F.3d 608, 611 (8th Cir. 2003). This requirement:

. . .denies federal courts the power to decide questions that cannot affect the rights of litigants in the case before them, and confines them to resolving real and substantial controversies admitting of specific relief through a decree of a conclusive character. Lewis v. Cont’l Bank Corp., 494 U.S. 472, 477, 110 S.Ct. 1249, 108 L.Ed.2d 400 (1990).

Mootness from Withdrawal of the Application

The Court of Appeals felt it was bound to address the mootness issue as mootness is a jurisdictional issue, so that ““[i]t is of no significance that the parties may desire a resolution of the issues a moot case presents. . .”

The court went on to state that: “The parties may not by stipulation invoke the judicial power of the United States to decide questions over which this Court has no jurisdiction.” Quoting South Dakota v. Hazen, 914 F.2d 147, 149 (8th Cir. 1990).

Because POET withdrew its 2018 application, the Court of Appeals could not order EPA to grant that application, or to review it “in a particular manner.” Further, the court declined POET’s invitation to vacate:

. . .EPA’s alleged denial of the withdrawn application and including language in our opinion that ‘will force EPA to evaluate Hudson’s pending registration application under the appropriate standard.’

The court was unwilling to address:

. . .the standards EPA should apply to POET’s pending [2020] application [which] would amount to an advisory opinion, which we have jurisdiction to issue. Citing Preiser v. Newkirk, 422 U.S. 395, 401, (1975).

Conclusion and Implications

For whatever reason, EPA appears to have not objected to judicial review of POET’s petition on mootness grounds. But even if POET had obtained assurances from the agency that POET’s petition would not be jeopardized by withdrawal of the 2018 application, the agency had no authority to expand the jurisdiction of the federal courts. The court’s Aug. 21, 2020 opinion is available online at: https://www.ca8.uscourts.gov/sites/ca8/files/opinions/192429P_0.pdf