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Hermes Consolidated, LLC v. Environmental Protection Agency

ELR Citation: 45 ELR 20102
Nos. 14-1016, (D.C. Cir., 06/02/2015)

The D.C. Circuit vacated and remanded an EPA decision denying an oil refinery's request to extend its exemption from the Agency's renewable fuels program. The program requires oil refineries to meet annual obligations concerning the production of renewable fuels. A small refinery located in Newcastle, Wyoming, obtained an exemption from the program through 2012 due to financial hardship. It then petitioned EPA for an extension of its exemption through 2014, but EPA denied the request. The refinery then appealed. The court rejected the refinery's argument that EPA's interpretation of the statutory term "disproportionate economic hardship" was unreasonable. DOE had determined that the best way to measure "hardship" was to look at the impact of compliance costs on a refinery's ability to maintain profitability and competitiveness in the long term. EPA adopted DOE's understanding, and that choice lies well within the Agency's discretion. The court also rejected arguments that EPA's decision should be vacated because DOE changed its scoring practice without adequate notice or explanation and that EPA failed to consider various economic factors when reviewing the refinery's petition. However, as EPA conceded, the Agency made two miscalculations during its independent analysis of the refinery's financial data. Because these errors were not harmless, the court vacated the decision and remanded it to EPA for further review.