United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued November 12, 2014 Decided June 2, 2015

No. 14-1016

HERMES CONSOLIDATED, LLC, DOING BUSINESS AS WYOMING 

REFINING COMPANY,

PETITIONER

v.

ENVIRONMENTAL PROTECTION AGENCY,

RESPONDENT

On Petition for Review of Final Agency Action

of the United States Environmental Protection Agency

Eric D. Miller argued the cause for petitioner. With him 

on the briefs were LeAnn Johnson Koch and William 

Pedersen.

Justin D. Heminger, Attorney, U.S. Department of 

Justice, argued the cause for respondent. With him on the 

brief was Sam Hirsch, Acting Assistant Attorney General.

Before: GARLAND, Chief Judge, and TATEL and 

SRINIVASAN, Circuit Judges.

Opinion for the Court filed by Circuit Judge SRINIVASAN.
2

SRINIVASAN, Circuit Judge: The Environmental 

Protection Agency administers a renewable fuels program 

under which oil refineries must satisfy annual obligations 

concerning production of renewable fuels. Petitioner

Wyoming Refining Company operates an oil refinery located 

in Newcastle, Wyoming. WRC is subject to EPA’s renewable 

fuels program, but obtained an exemption through 2012. 

WRC unsuccessfully petitioned EPA for an extension of its 

exemption through 2014. The company now seeks review of 

EPA’s denial.

We reject WRC’s various challenges other than those 

identifying two mathematical errors in EPA’s independent 

analysis of WRC’s financial data. EPA concedes those errors, 

and we are unable to conclude that EPA would have reached 

the same decision absent its mistakes. We therefore vacate 

EPA’s decision and remand to allow the agency to reevaluate 

WRC’s petition using the correct figures.

I.

A.

In 2005, Congress amended the Clean Air Act to 

encourage increased use of renewable fuels in the United 

States. As part of that statutory scheme, Congress prescribed 

target volumes of renewable fuels for use in each year through 

2022. In 2015, for example, the statute calls for consumption 

of 20.5 billion gallons of renewable fuels. 42 U.S.C. 

§ 7545(o)(2)(B)(i)(I). The statute vests EPA with authority to 

develop a renewable fuels program to secure satisfaction of 

the annual benchmarks. Id. § 7545(o)(2)(A)(i).

The statute calls for the Energy Information 

Administration (a component of the Department of Energy) 
3

annually to estimate the total amount of transportation fuel 

expected to be sold in the United States in the upcoming year. 

Id. § 7545(o)(3)(A). EPA then divides the renewable-fuels

benchmark set out in the statute by the overall fuel estimate 

provided by DOE, yielding a “volume percentage” 

requirement for the year. For example, if DOE projects the 

use of 100 billion gallons of fuel in a year for which the 

statute requires the use of 20 billion gallons of renewable 

fuels, the “volume percentage” for that year would be 20%. 

Obligated parties under the regulations—namely, refineries 

and importers of fuel—must demonstrate that they meet a 

pro-rata share of the overarching renewable fuels volume 

obligations based on that “volume percentage.” See 40 C.F.R. 

§ 80.1406(a). Under a volume percentage of 20%, for 

example, an obligated party producing 100,000 gallons of fuel 

in a year would have a renewable fuels volume obligation of 

20,000 gallons.

Obligated parties, however, are not necessarily required 

to produce and blend renewable fuels themselves. Instead, 

they demonstrate compliance through a system of Renewable 

Identification Numbers (RINs). Each gallon of renewable 

fuel produced for use in the United States generates its own 

RIN. Id. § 80.1426(a). RINs attach to the physical volume of 

the renewable fuel, but become “separated” from renewable 

fuel batches upon blending of the renewable fuel into 

conventional fuel. Id. §§ 80.1426(e), 80.1429(b). After 

blending, RINs may either be retained by the blending party 

or sold to other obligated parties. Id. §§ 80.1427(a)(6), 

80.1451. As a result, parties who purchase an adequate 

number of RINs can comply with their renewable fuels

obligations without producing or blending renewable fuels 

themselves. Each year, obligated parties must to submit to 

EPA a list of RINs in fulfillment of their renewable fuels
4

obligations. A RIN is retired upon submission to EPA. See 

id. § 80.1427(a)(1).

The mechanics of the RIN system mean that obligated 

parties incapable of blending must rely disproportionately on 

the RIN market. Because small refineries generally have 

more limited blending capacity than larger refineries, they 

often need to acquire a large number of RINs from the market 

in order to meet their annual obligations. Congress, aware 

that small refineries would face greater difficulty complying 

with the renewable fuels requirements, created a three-tiered 

system of exemptions to afford small refineries a bridge to 

compliance. 

First, the statute granted all small refineries (defined as 

refineries with crude oil throughput averaging 75,000 barrels 

or less per day) an exemption from the renewable fuels

program through 2011. 42 U.S.C § 7545(o)(9)(A)(i),

(o)(1)(K). That blanket exemption gave small refineries time

to develop compliance strategies and increase blending 

capacity. Second, the statute directed DOE to conduct a study 

“to determine whether compliance . . . would impose a 

disproportionate economic hardship on small refineries.” Id.

§ 7545(o)(9)(A)(ii)(I). If DOE determined that any small 

refinery “would be subject to a disproportionate economic 

hardship if required to comply with” the renewable fuels

program, EPA was required to extend the exemption for that 

refinery “for a period of not less than 2 additional years.” Id. 

§ 7545(o)(9)(A)(ii)(II). Third, the statute enables a small 

refinery to initiate an inquiry into disproportionate economic 

hardship at any time by “petition[ing] the [EPA]

Administrator for an extension of the exemption . . . for the 

reason of disproportionate economic hardship.” Id. 

§ 7545(o)(9)(B)(i). When evaluating a petition for an 

extension, EPA must consult with DOE and consider the DOE 
5

study required by § 7545(o)(9)(A)(ii)(I), as well as “other 

economic factors.” Id. § 7545(o)(9)(B)(ii).

In 2011, DOE completed the 2011 Small Refinery 

Exemption Study (the 2011 Study) required by 

§ 7545(o)(9)(A)(ii)(I). DOE concluded that a showing of 

disproportionate economic hardship “must encompass two 

broad components: a high cost of compliance relative to the 

industry average, and an effect sufficient to cause a significant 

impairment of the refinery operations.” J.A. 26. The 2011 

Study also developed a scoring methodology to determine 

whether a small refinery satisfies those standards. That 

methodology assigns a score to twelve metrics, which are then 

used to produce two index scores: a disproportionate impacts

index and a viability index. The disproportionate impacts

index measures the structural impacts a small refinery would

likely face in achieving compliance, while the viability index 

assesses how compliance would affect the refinery’s ability to 

remain competitive and profitable. If a small refinery

receives a score greater than 1 on both indices, it faces 

disproportionate economic hardship under DOE’s standard. 

Applying that methodology in 2011, DOE concluded that 

fourteen small refineries—including WRC—faced 

disproportionate economic hardship. DOE directed EPA to 

extend the exemption for two additional years (from 2010 to 

2012) for those fourteen refineries pursuant to 

§ 7545(o)(9)(A)(II). 

Up through 2012, RINs sold at low prices reflecting the 

cost of corn ethanol (the most widely used renewable fuel) 

relative to that of conventional fuel. But beginning in 2013, 

the nature of the ethanol RIN market changed due to a socalled “ethanol blendwall” or “E10 blendwall.” Conventional 

engines can handle only a certain percentage (about 10%) of 
6

ethanol in fuel. In 2013, the statutory renewable fuels volume 

requirements exceeded the amount of ethanol that the 

transportation market could absorb. Because of the ethanol

blendwall, RIN prices increased in 2013 and began to 

fluctuate widely.

B.

WRC is a small refinery that processes about 14,000 

barrels of crude oil per day. Its output places it 117th in size 

out of the 132 refineries in the United States. In 2013, 

WRC’s blending capacity enabled it to satisfy about one-third

of its RIN requirements through in-house blending. The 

company thus primarily relies on the RIN market to achieve 

compliance. Before 2011, WRC qualified for the blanket 

small refinery exemption and was not required to comply with 

the renewable fuels program. WRC then qualified for a two 

year extension of its exemption pursuant to the 2011 DOE 

Study, deferring its compliance obligations to 2013.

In August 2013, WRC filed an economic hardship

petition under 42 U.S.C. § 7545(o)(9)(B), requesting that EPA 

extend WRC’s hardship exemption for another two years 

(2013 and 2014). WRC emphasized the financial stress 

caused by the skyrocketing price of RINs. Pursuant to the 

statutory directive requiring EPA to “consult” with DOE in 

evaluating hardship petitions, id. § 7545(o)(9)(B)(ii), EPA 

submitted WRC’s data to DOE and asked DOE to evaluate 

whether WRC should receive an extension. Applying the 

methodology established in the 2011 Study, DOE concluded 

that WRC scored higher than 1 on the disproportionate 

impacts index but less than 1 on the viability index. Because 

the viability index fell below the threshold of 1, DOE 

declined to recommend that EPA extend WRC’s exemption. 
7

On January 31, 2013, EPA issued a decision denying 

WRC’s request for extension of its hardship exemption. After 

setting forth DOE’s method for reviewing hardship petitions, 

EPA explained that it would “consider all information 

submitted by a petitioner” but that “DOE’s evaluation of 

[WRC’s] survey[] [would be] the primary factor in EPA’s 

determination.” J.A. 322. “DOE has expertise in evaluating 

economic conditions at U.S. refineries,” EPA observed, “and 

DOE used its expertise to develop a survey form and 

assessment process to identify when disproportionate 

economic hardship exists in the context of the renewable fuel

standard program.” Id. EPA therefore would “accord 

considerable deference to DOE’s analysis of disproportionate 

economic hardship in deciding whether or not to grant a 

petition for extension.” Id. After summarizing the data 

submitted by WRC, EPA incorporated DOE’s 

recommendation into its decision, observing that “DOE’s 

evaluation indicates that the disproportionate impacts

index . . . exceeds the hardship threshold, but the viability 

index . . . does not.” J.A. 329-31. EPA then performed a 

“qualitative[]” review to “ascertain if the information 

[submitted by WRC] is consistent with the finding of no 

disproportionate economic hardship.” J.A. 331. Concluding

that WRC’s financial data was “indeed consistent with that 

finding,” EPA denied the petition. Id. WRC now petitions 

this court for review of EPA’s decision.

II.

We first address WRC’s challenge to EPA’s 

interpretation of the statutory term “disproportionate 

economic hardship.” 42 U.S.C. § 7545(o)(9)(B). EPA 

construed that term in conformity with DOE’s scoring 

indices, and it therefore required WRC to show that 

compliance both would impose disproportionate economic 
8

effects and would pose some threat to the viability of the 

refinery. WRC contends that the statute requires EPA “to 

grant exemptions when a small refinery faces disproportionate 

economic hardship—that is, a hardship that is out of 

proportion to that faced by larger refineries.” Pet’r’s Br. 24. 

Consideration of a viability index, WRC argues, is 

inconsistent with that statutory mandate. We disagree.

We consider WRC’s statutory argument under the twostep Chevron framework. Under the first step, if “Congress 

has directly spoken to the precise question at issue,” the 

agency “must give effect to the unambiguously expressed 

intent of Congress.” Chevron, U.S.A., Inc. v. Natural Res.

Def. Council, Inc., 467 U.S. 837, 842-43 (1984). WRC 

contends that EPA’s reliance on a viability index is invalid at 

Chevron step one because it contradicts the plain language of 

§ 7545(o)(9)(B). 

The statute, however, contains no definition of the term 

“disproportionate economic hardship.” See 42 U.S.C. 

§ 7545(o)(1). Congress instead gave EPA general guidance 

on the evaluation of economic hardship petitions under

§ 7545(o)(9)(B). In particular, Congress required EPA to

consult with DOE and to “consider the findings of the [2011

Study] and other economic factors” when evaluating petitions. 

Id. § 7545(o)(9)(B)(ii). The statute gives no further 

instruction and identifies no particular economic factors or 

metrics to be considered. That sort of statutory silence about 

the particular factors that an agency must consider conveys 

“nothing more than a refusal to tie the agency’s hands.” 

Monroe Energy, LLC v. EPA, 750 F.3d 909, 915 (D.C. Cir. 

2014). As long as EPA consults with DOE and considers the 

2011 Study and “other economic factors,” EPA retains

substantial discretion to decide how to evaluate hardship 
9

petitions. We therefore reject WRC’s Chevron step-one 

challenge.

Alternatively, WRC contends that EPA’s reliance on a

viability index should be rejected at the second step of the

Chevron framework. At Chevron step two, we must satisfy 

ourselves that EPA’s method of evaluating “disproportionate 

economic hardship” is “based on a permissible construction of 

the statute.” Chevron, 467 U.S. at 843. We conclude that it 

is. 

EPA’s decision to incorporate the 2011 Study’s 

methodology into its evaluation—including the viability 

index—is entirely reasonable. The statute, as noted, requires 

EPA to consult with DOE and “consider the findings of the 

[2011 Study] and other economic factors” in evaluating an 

economic hardship petition. 42 U.S.C. § 7545(o)(9)(B)(ii). 

EPA interpreted the term “disproportionate economic 

hardship” in conformity with the 2011 Study because “[t]he 

basis for any grant of an exemption extension by EPA in 

response to an individual petition is the same as the basis of 

evaluation in the [2011 Study]—disproportionate economic 

hardship.” J.A. 322. EPA’s rationale accords with the wellestablished presumption that “a given term is used to mean 

the same thing throughout a statute.” Mohamad v. 

Palestinian Auth., 132 S. Ct. 1702, 1708 (2012).

Even considered on its own terms, EPA’s interpretation 

of the phrase “disproportionate economic hardship” is wholly

reasonable. DOE concluded, and EPA agreed, that the 

relative costs of compliance alone cannot demonstrate

economic hardship because all refineries face a direct cost 

associated with participation in the program. Of course, some 

refineries will face higher costs than others, but whether those 

costs impose disproportionate hardship on a given refinery 
10

presents a different question. DOE determined that the best 

way to measure “hardship” entailed examining the impact of 

compliance costs on a refinery’s ability to maintain 

profitability and competitiveness—i.e., viability—in the long 

term. EPA adopted DOE’s understanding, and that choice 

lies well within the agency’s discretion.

III.

WRC next contends that we should vacate EPA’s 

decision because DOE changed its scoring practice without 

adequate notice or explanation. We are unpersuaded.

Under DOE’s methodology for evaluating economic 

hardship petitions, a refinery must score above 1 on both the

viability index and the disproportionate impacts index in order 

to demonstrate “disproportionate economic hardship.” The 

viability index in turn reflects three component scores. Those 

scores measure: (i) whether compliance costs would 

eliminate efficiency gains to the refinery; (ii) whether 

individual special events would adversely affect the refinery; 

and (iii) whether compliance costs would likely lead to 

shutdown of the refinery. The three scores are added together 

and divided by 6 to produce a final viability index value. 

Thus, a score of 10 on any one component would secure a 

score exceeding 1 on the viability index.

In 2011, DOE awarded one of only two scores—0 (no 

impact) or 10 (impact)—on the first component metric (the

one concerning efficiency gains). For that year, DOE gave 

WRC a score of 10 on that metric, guaranteeing a viability 

score of greater than 1 and ultimately leading to WRC’s 

receipt of a hardship exemption. When evaluating WRC’s 

2013 petition, however, DOE assigned WRC a score of 5

(moderate impact) for the efficiency-gains metric and a 0 on 
11

the other two metrics, resulting in a viability index value of 

less than 1. In a footnote, EPA explained that DOE “already 

used intermediate scores of 5 in some . . . metrics, and 

believes it is also appropriate to use intermediate scores [for 

the efficiency-gains metric] to more accurately characterize 

the impacts of compliance costs.” J.A. 321. WRC raises both 

substantive and procedural challenges to EPA’s reliance in 

2013 on an intermediate score for the efficiency-gains metric.

As to substance, WRC contends that the addition of an 

intermediate score was arbitrary and capricious because there 

was no explanation for the change in scoring practice. We 

disagree. Judicial review of a “change in agency policy is no 

stricter than our review of an initial agency action.” White 

Stallion Energy Ctr. LLC v. EPA, 748 F.3d 1222, 1235 (D.C. 

Cir. 2014) (citing FCC v. Fox Television Stations, Inc., 556 

U.S. 502, 514-16 (2009)). An agency must “provide reasoned 

explanation for its action,” which normally requires “that it 

display awareness that it is changing position.” Fox 

Television, 556 U.S. at 515 (emphasis omitted). Here, EPA 

acknowledged the change and explained that DOE added an 

“intermediate score[]” in order to “more accurately 

characterize the impacts of compliance costs . . . on a 

refinery.” J.A. 321 n.4. WRC contends that EPA provided a 

description of the change rather than an explanation of it. But 

a change is not invalid merely because it is readily explained. 

The change at issue here fits in that category: as EPA 

explained, the addition of an intermediate score to the 

efficiency-gains metric allows for more nuanced and accurate 

characterization of the impact of compliance costs. That is a 

reasonable explanation for the change.

WRC’s procedural challenge asserts that DOE’s decision 

to use an intermediate score (and EPA’s adoption of that 

decision) required notice and comment rulemaking. That 
12

argument turns on WRC’s contention that the addition of an 

intermediate score for the efficiency-gains metric

fundamentally altered the operation of the scoring matrix. 

According to WRC, under the preexisting system, any impact 

on efficiency, no matter how insubstantial, would produce a 

score of 10 on the efficiency-gains metric (which, in turn, 

would result in a viability index exceeding 1). Whereas any 

impact on efficiency once qualified WRC for a hardship 

exemption, WRC claims, it must now demonstrate significant 

hardship. Consequently, WRC asserts that the addition of the 

intermediate score did not merely round out the existing 

scoring method, but instead worked a substantive change of a 

kind requiring notice and comment. 

The 2011 Study belies WRC’s understanding of the old 

system. The efficiency-gains metric was never understood to 

require a score of 10 in the event of any impact on efficiency, 

regardless of its magnitude. According to the 2011 Study, the 

efficiency-gains metric assesses whether “the totality of 

factors . . . would reduce the profitability of the firm enough

to impair future efficiency improvements.” J.A. 59 (emphasis 

added). If a refinery were to face “significant constraints on 

efficiency improvements,” it might be placed “at risk” even 

though reductions in profitability would not lead to 

“immediate shutdown.” Id. The 2011 Study thus indicates 

that the efficiency-gains metric aimed to protect against 

“significant” effects on efficiency, a position entirely 

consistent with DOE’s decision to use an intermediate score 

to denote “moderate impact” in its 2013 evaluation. The 2011 

Study also recognized that “[r]efineries that receive a[n]

extension of their exemption” could take steps to “reduc[e] 

the impact” of future compliance costs. Id. As a result, 

“refineries that currently score high” on the efficiency-gains

metric would “likely see a reduction in the scoring of this 

category in the future.” Id. DOE’s award of an intermediate 
13

score when evaluating 2013 petitions therefore was fully 

consistent with the 2011 Study. It follows that DOE did not

substantively change the efficiency-gains metric in the way 

WRC suggests.

Even assuming that DOE’s addition of an intermediate 

score amounted to a substantive modification, WRC points us 

to no authority suggesting that the decision to make available 

a more refined score within an already-existing metric 

requires notice-and-comment procedures. We see no basis for 

creating such a rule here. Nothing in § 7545(o)(9)(B) 

compelled DOE to apply the exact same methodology—in 

every particular—that it had used in 2011. Instead, the statute 

merely called for EPA to consult with DOE and to “consider” 

the results of the 2011 Study when evaluating individual 

hardship petitions. 42 U.S.C. § 7545(o)(9)(B)(ii). EPA asked 

DOE to examine WRC’s petition, and both EPA and DOE 

certainly “considered” the 2011 Study in doing so. Congress 

placed no limits on how DOE should provide its consultation

to EPA under § 7545(o)(9)(B)(ii), and DOE’s consultation did 

not purport to establish rights or obligations of WRC. As a 

result, we find no reason to conclude that DOE was obligated 

to engage in notice-and-comment procedures before adding a 

finer gradation within a preexisting scoring range.

IV.

We next consider WRC’s contention that EPA 

erroneously considered (or failed to consider) various 

economic factors when reviewing WRC’s petition. While 

§ 7545(o)(9)(B) calls for EPA to consider “other economic 

factors” in evaluating hardship petitions, the statute contains 

no requirement to consider any particular factors. “In the 

absence of any express or implied statutory directive to 

consider particular factors,” EPA retains broad discretion to 
14

choose which “economic factors” it will (and will not) 

consider. Monroe Energy, 750 F.3d at 915. EPA acted 

within its discretion here. 

A.

WRC first asserts that EPA failed adequately to consider

the high cost of purchasing RINs relative to producing them 

by blending. WRC’s argument amounts to a substantive 

disagreement with the manner in which EPA chose to account 

for RIN costs in its review. In particular, WRC disagrees 

with the RIN price estimates EPA used in evaluating WRC’s 

petition. We see no inadequacy in EPA’s consideration of the 

cost of purchasing RINs. To be sure, EPA declined to rely on

WRC’s initial RIN estimates; but that was because WRC 

averaged only two months of RIN prices to produce an 

“average” substantially exceeding normal RIN prices. EPA 

instead reasonably relied on an updated estimate submitted by 

WRC in October, 2013. In reaching its final decision, 

moreover, EPA noted that “RIN prices have declined 

significantly” since WRC submitted its initial hardship 

petition and projected that RIN prices would continue to 

decrease. J.A. 328 n.13. EPA therefore adequately

considered the cost of purchasing RINs in its decision.

B.

In EPA’s independent evaluation of WRC’s financial 

data, the agency observed that “WRC perceived that sufficient 

funds were available in 2012 for it to make a substantial 

discretionary dividend payment.” J.A. 332. The funds used 

to pay those discretionary dividends, EPA reasoned, “could 

have been used to pay for [compliance] projects.” J.A. 331. 

WRC argues that discretionary dividends paid in 2012 have 

“little relevance to whether [WRC] would face a 
15

disproportionate economic hardship from regulatory 

compliance in 2013.” Pet’r’s Br. 43. And even if those 

dividend payments were relevant, WRC contends it should 

not have been faulted for failing to prepare for unforeseeable

increases in RIN prices. We disagree. 

Although it was exempt from the renewable fuels

program in 2012, WRC remained an obligated party covered 

by the statute. See 40 C.F.R. § 80.1406(a). And EPA 

reasonably expected WRC to make preparations to comply 

with its 2013 obligations during the company’s five-year 

exemption period. The discretionary dividend payment 

indicated that WRC elected to distribute profits to its owners 

rather than use profits to prepare for approaching compliance 

obligations. Allowing small refineries to perpetuate that 

manner of self-inflicted hardship would conflict with the 

terms of the statute, which contemplate a “[t]emporary

exemption” for small refineries with an eye toward eventual 

compliance with the renewable fuels program for all 

refineries. 42 U.S.C. § 7545(o)(9)(A) (emphasis added). 

EPA reasonably considered the compliance efforts made (and 

not made) during WRC’s five-year exemption in evaluating 

WRC’s petition for a further extension of its exemption.

C.

WRC next claims that EPA erred in assessing the 

refinery’s cash flow by looking to WRC’s net income rather 

than its adjusted Earnings Before Interest, Taxes, 

Depreciation, and Amortization (EBITDA). WRC further 

contends that “EPA should have adjusted EBITDA to account 

for the unavoidable cash outlays of capital expenditures, loan 

principal repayments, and interest payments.” Pet’r’s Br. 51-

52. But EPA did consider EBITDA (in addition to net 

income) in evaluating WRC’s finances. For instance, the 
16

agency noted that WRC “will again be profitable in 2013,”

citing both net income and EBITDA. J.A. 332. And while 

WRC may believe that an adjusted EBITDA would provide a 

better measure of cash flow, it cannot succeed in its challenge 

unless it demonstrates that EPA’s measure was unreasonable. 

As WRC itself acknowledged in correspondence with EPA, 

however, “EBITDA . . . is the standard basis for evaluating 

the economic health of a refining company.” J.A. 138; see 

Pet’r’s Br. 51. EPA therefore acted reasonably when it chose 

to consider unadjusted EBITDA in evaluating WRC’s 

petition.

D.

While most refineries are corporations, WRC is an LLC 

and is therefore a pass-through entity for tax purposes. WRC 

contends that EPA should have accounted for income taxes 

paid by the unit holders of WRC’s holding company. Failure 

to account for income taxes paid by unit holders, WRC 

argues, caused EPA to overstate WRC’s net income relative 

to other refineries. But the pertinent statutory text requires 

EPA to consider whether the small refinery itself faces 

disproportionate economic hardship. See 42 U.S.C. 

§ 7545(o)(9)(A)-(B). In that light, it was reasonable for EPA 

to confine its evaluation to the finances of the refinery without 

considering taxes paid by third parties.

V.

WRC finally challenges EPA’s decision based on two 

miscalculations in EPA’s independent analysis of WRC’s 

financial data. EPA concedes the two errors, but argues that 

we should nevertheless deny WRC’s petition because the 

errors were harmless. This court will affirm an agency’s 

decision despite errors when “it is clear that . . . the agency 
17

would have reached the same ultimate result” had the errors 

not been made. Salt River Project Agric. Improvement & 

Power Dist. v. United States, 762 F.2d 1053, 1061 n.8 (D.C. 

Cir. 1985). Although WRC bears the burden of establishing 

that the errors were prejudicial, that is not “a particularly 

onerous requirement.” Jicarilla Apache Nation v. U.S. Dep’t 

of Interior, 613 F.3d 1112, 1121 (D.C. Cir. 2010). “Often the 

circumstances of the case will make clear to the appellate 

judge” that an error was prejudicial, “and nothing further need 

be said.” Shinseki v. Sanders, 556 U.S. 396, 410 (2009). 

Here, because the conceded errors significantly alter 

important figures in EPA’s independent analysis of WRC’s 

financial data, we cannot conclude with sufficient certainty

that the agency would have made the same decision absent its 

errors.

While DOE’s recommendation serves as the “primary” 

factor in EPA’s determination, J.A. 322, EPA also conducted 

an independent, “qualitative” review of WRC’s financial data,

J.A. 331. That independent review aimed to determine 

whether WRC’s financial data supported a finding of no 

disproportionate economic hardship. EPA concluded that the 

information submitted by WRC was “consistent” with such a 

finding. J.A. 331. Two key factors EPA considered in 

reaching that conclusion were (i) that WRC’s projected 2013 

net income was “significantly greater” than its projected RIN 

costs, and (ii) that WRC’s net refining margins compared 

favorably to those of other refineries that petitioned for a 

hardship exemption. J.A. 331-32. EPA now concedes it 

made substantial mathematical errors in calculating both 

WRC’s projected 2013 net income and its net refining 

margins. 

With regard to the first error, EPA sought to exclude 

“hedge impacts” (here, gains and losses realized from 
18

investment positions in crude oil) from the company’s net 

income. As WRC points out, however, EPA made a 

computational error when it added, rather than subtracted, 

WRC’s hedge impacts in calculating net income excluding 

hedges. EPA concluded that compliance would not 

“significantly impact” WRC’s viability because “WRC 

projected . . . that they will have a [2013] net income . . . 

significantly greater than [the] projected 2013 purchased RIN 

cost.” J.A. 331 (emphasis added). EPA now concedes that it 

accidentally overstated WRC’s projected 2013 net income, 

and that the correct net income figure was less than half of the 

figure EPA relied on in its decision. EPA contends that we 

can nonetheless sustain its decision because, even using the 

correct figure, the projections indicated that WRC would be 

profitable in 2013. But given that EPA’s error resulted in a 

substantial overstatement of net income, we are unable to 

conclude with adequate certainty that EPA still would have 

regarded WRC’s net income as “significantly greater” than 

projected RIN costs. 

EPA also urges us to deem its error harmless because the 

error did not infect DOE’s recommendation to EPA. We 

cannot accept that argument. It is uncontested that EPA 

retained ultimate and independent authority to grant or deny 

economic hardship petitions under § 7545(o)(9)(B). 

According to EPA’s decision, its independent analysis aimed 

to determine whether “the information submitted by WRC” 

was “consistent with the finding of no disproportionate 

economic impact.” J.A. 331. Had EPA concluded that 

WRC’s financial information was inconsistent with that 

finding, it presumably would have granted WRC’s petition 

notwithstanding DOE’s recommendation. Although EPA 

considered several factors in the course of concluding that 

WRC’s information was “indeed consistent” with DOE’s 

recommendation, id., “[w]hat weight [EPA] gave to those 
19

[factors] is impossible to discern.” PDK Labs. Inc. v. DEA, 

362 F.3d 786, 799 (D.C. Cir. 2004). Accordingly, we cannot 

conclude that EPA “would have reached the same ultimate 

result” had it correctly calculated WRC’s projected 2013 net 

income. Salt River Project, 762 F.2d at 1061 n.8. 

EPA also acknowledges a second error in its analysis. As 

EPA explains, it “should have accounted for realized hedge 

impacts in determining [WRC’s] net refining margins and in 

comparing its average refining margin[s] to those of other 

small refineries.” Resp't Br. at 68. As a result of that second 

error, EPA significantly overstated WRC’s average net 

refining margin per barrel for 2012 and 2013. In light of our 

conclusion that EPA’s first error cannot be considered 

harmless, we have no occasion to apply harmless-error 

analysis to EPA’s second error: the agency must redo its 

analysis in any event based on the first error. In doing so, 

EPA presumably would also correct the second error by 

incorporating correct net refining margins.

* * * * *

For the foregoing reasons, we vacate EPA’s decision and 

remand for further consideration consistent with this opinion.

So ordered.