United States Court of Appeals

For the Eighth Circuit

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No. 14-3405

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Lion Oil Company

lllllllllllllllllllllPetitioner

v.

Environmental Protection Agency

lllllllllllllllllllllRespondent

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Petition for Review of an Order of the

 Environmental Protection Agency

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 Submitted: June 11, 2015

 Filed: July 8, 2015

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Before GRUENDER, BEAM, and BENTON, Circuit Judges.

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BENTON, Circuit Judge.

Lion Oil Company petitioned the Environmental Protection Agency for an

exemption from the Renewable Fuel Standard program for 2013. EPA denied the

petition. Lion Oil appeals. Having jurisdiction under 42 U.S.C. § 7607(b)(1), this

court affirms.
I.

The RFS program sets annual renewable-fuel targets for refineries. See 42

U.S.C. § 7545(o). Refineries must blend their share of renewable fuel or buy credits

from those who exceed blending requirements. Congress exempted “small”

refineries—75,000 barrels of crude oil or less per day—from RFS obligations until

2011. §§ 7545(o)(1)(K), 7545(o)(9)(A)(i). The exemption can be extended. The

Department of the Energy “shall conduct for [EPA] a study to determine whether

compliance with [RFS requirements] would impose a disproportionate economic

hardship on small refineries.” § 7545(o)(9)(A)(ii)(I). If DOE determines a small

refinery “would be subject to a disproportionate economic hardship if required to

comply,” EPA “shall extend the exemption . . . for a period of not less than 2

additional years.” § 7545(o)(9)(A)(ii)(II). Also, “A small refinery may at any time

petition [EPA] for an extension of the exemption . . . for the reason of

disproportionate economic hardship.” § 7545(o)(9)(B)(i). When evaluating such

petitions, EPA, “in consultation with the Secretary of Energy, shall consider the

findings of [DOE’s] study . . . and other economic factors.” § 7545(o)(9)(B)(ii).

DOE completed its study in 2011. It concluded, “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.” To implement these components, DOE created a dual-index

scoring matrix. One index measures disproportionate structural and economic

impact; the other, RFS compliance on refiner viability. The viability index has three

metrics—3a (“Compliance cost eliminates efficiency gains”), 3b (“Individualspecial

events”), and 3c (“Compliance costs likely to lead to shut down”). DOE defines

“individual special events” as “Refinery specific events (such as a shutdown due to

an accident, and subsequent loss of revenue) in the recent past that have a temporary

negative impact on the ability of the refinery to comply with the RFS.” Originally,

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DOE scored all three metrics as 0 or 10. In a May 2014 addendum to the study, DOE

added 5 as a possible score for metrics 3a and 3b (but not metric 3c).

Lion Oil, a small refinery in El Dorado,Arkansas, received exemptionsthrough

2012. It petitioned EPA for an exemption for 2013. Citing disruption to a key supply

pipeline and noting its “financial position has not improved,” Lion Oil argued that

RFS compliance would cause disproportionate economic hardship. 

Before EPA considered the petition, DOE first scored Lion Oil on DOE’s

matrix, as amended by the addendum. DOE determined that Lion Oil did not score

high enough on the viability index to show disproportionate economic hardship. 

Specifically, on metric 3b, DOE concluded the pipeline disruption was not an

“individual special event” because “several refineries . . . were impacted by the

reduced flow.” (Lion Oil agrees that the pipeline disruption affected four other

refineries.) 

EPA’s 23-page decision summarized DOE’s analysis, a “primary factor” in its

decision. EPA also said it “evaluate[d] viability . . . in the same manner that DOE

considers viability in its own methodology.” EPA did not re-score Lion Oil on

DOE’s matrix. Instead, EPA “independently” analyzed the pipeline disruption and

Lion Oil’s blending capacity, projected RFS-compliance costs, and financial position. 

Lion Oilrequested protection of “confidential businessinformation.” EPA sent

its decision to Lion Oil only. At oral argument, Lion Oil’s counsel said, “It’s really

just the specific numbers, the dollar amounts, the numbers of [credits] that are

confidential.” 

Lion Oil appealed to this court under 42 U.S.C. § 7607(b)(1). The statute

“lodges jurisdiction over challenges to ‘any . . . final [EPA] action’ in the Courts of

Appeals.” Alaska Dep’t of Envtl. Conservation v. E.P.A., 540 U.S. 461, 481 (2004),

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quoting § 7607(b)(1). See also Whitman v. Am. Trucking Ass’ns, 531 U.S. 457, 477

(2001) (stating § 7607(b)(1) “gives the court jurisdiction”).

Section 7607(b)(1) has three parts. First, “A petition for review of . . . any

other nationally applicable regulations promulgated, or final action taken, by the

Administrator under this chapter may be filed only in the” D.C. Circuit. 42 U.S.C.

§ 7607(b)(1). Second, “A petition for review of the Administrator’s action . . . which

is locally or regionally applicable may be filed only in the United States Court of

Appeals for the appropriate circuit.” Id. Third, “Notwithstanding the preceding

sentence a petition for review of any action [that is locally or regionally applicable]

may be filed only in the [D.C. Circuit] if such action is based on a determination of

nationwide scope or effect and if in taking such action the Administrator finds and

publishes that such action is based on such a determination.” Id.

Lion Oil also appealed to the D.C. Circuit, which is holding that appeal in

abeyance pending this court’s decision. EPA then moved to dismiss this appeal,

arguing the D.C. Circuit has exclusive authority to hear Lion Oil’s appeal. This court

took EPA’s motion with the case. This court also granted Lion Oil’s unopposed

motion to seal EPA’s decision and the parties’ joint motion to file their briefs and

appendix under seal. 

II.

The parties agree that EPA’s petition-denial islocally orregionally applicable,

not nationally applicable. This court may hear a petition unless the denial “is based

on a determination of nationwide scope or effect and if in taking such action the

Administrator finds and publishes thatsuch action is based on such a determination.”

See id.

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In its decision, EPA stated, “This decision is a final agency action of

nationwide scope and effect for purposes of [§ 7607(b)(1)].” EPA sent the decision

to Lion Oil only. EPA made no announcement in any public record, including its

website.

EPA argues, “Lion Oil’s petition may only be heard in the D.C. Circuit because

EPA has made an express and unambiguous determination of nationwide scope or

effect.” Lion Oil counters that EPA did not publish the necessary finding. Even if 

EPA published a finding, Lion Oil argues this court must independently conclude that

EPA’s action “is based on a determination of nationwide scope or effect.” 

Section 7607(b)(1) does not define “publishes.” The parties do not cite cases

or legislative history interpreting the term. “When a term is undefined, we give it its

ordinary meaning.” United States v. Santos, 553 U.S. 507, 511 (2008) (analyzing

dictionary definitions of “proceeds” for purposes of money-laundering statute). The

ordinary meaning of “publish” requires some public distribution. See Webster’s

International Dictionary 1837 (3d ed. 1961) (defining “publish” as “to declare

publicly: make generally known”); Black’s Law Dictionary 1428 (10th ed. 2014)

(defining “publish” as “[t]o distribute copies (of a work) to the public”). See also

Webster’s International Dictionary 1836 (3d ed. 1961) (defining “public” as “of,

relating to, or affecting the people as an organized community”). 

EPA does not assert a different meaning of “publish.” Instead, EPA argues for

an exception because it honored Lion Oil’s request to protect certain confidential

business information. But the plain language of § 7607(b)(1) permits no exception,

and EPA cites no evidence of congressional intent to provide one. 

At oral argument, EPA requested a remand “to allow the agency to follow the

required procedure.” Section § 7607(b)(1) is plain: An appeal of EPA action “which

is locally or regionally applicable may be filed only in” the regional circuit unless, at

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least, “the Administrator finds and publishes that such action is based on” a

determination of nationwide scope or effect. See 42 U.S.C. § 7607(b)(1). Under the

ordinarymeaning of “publish,”EPA must make public distribution ofits decision, not

just to the petitioner. 

This court may hear Lion Oil’s appeal because EPA did not publish the

necessary finding. 

1

III.

This court “shall . . . hold unlawful and set aside agency action, findings, and

conclusions found to be . . . arbitrary, capricious, an abuse of discretion, or otherwise

not in accordance with law.” 5 U.S.C. § 706(2)(A). “[D]ue account shall be taken

of the rule of prejudicial error.” § 706. This court “shall decide all relevant questions

of law, interpret constitutional and statutory provisions, and determine the meaning

or applicability of the terms of an agency action.” Id.

While § 7607(b)(1) “gives the court jurisdiction,” Whitman, 531 U.S. at 477, 1

the parties treat § 7607(b)(1) as a venue provision. See Texas Mun. Power Agency

v. E.P.A., 89 F.3d 858, 867 (D.C. Cir. 1996) (“Given the lessthan clear language, the

structure of the section—dividing cases among the circuits—and the legislative

history indicate that [§ 7607(b)(1)] is framed more as a venue provision.”). Because

EPA failed to publish a finding, this court need not reach whether § 7607(b)(1),

particularly its third sentence, is also a venue provision—just as this court need not

decide whether EPA’s action “is based on a determination of nationwide scope or

effect.” 

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A.

Lion Oil argues that DOE’s “scoring decision [on metric 3b] was flawed, and

EPA acted arbitrarily and capriciously in using it is as a basis for its rejection of Lion

Oil’s petition.” 

“An agency decision is arbitrary or capricious if: the agency has relied on

factors which Congress has not intended it to consider, entirely failed to consider an

important aspect of the problem, offered an explanation for its decision that runs

counter to the evidence before the agency, or is so implausible that it could not be

ascribed to a difference in view or the product of agency expertise.” El Dorado

Chem. Co. v. E.P.A., 763 F.3d 950, 955-56 (8th Cir. 2014). “The scope of our review

is narrow and we are not to substitute our judgment for that of the agency.” Id. at

956, citing Motor Vehicle Mfrs. Ass’n of U.S., Inc. v. State Farm Mut. Auto. Ins.

Co., 463 U.S. 29, 43 (1983).

EPA did not arbitrarily use DOE’s scoring decision. Rather, EPA did as

Congress directed—“in consultation with the Secretary of Energy, [EPA]

consider[ed] the findings of[DOE’s] study.” See 42 U.S.C. § 7545(o)(9)(B)(ii). EPA

said DOE’s analysis was a “primary factor” in EPA’s decision. EPA “evaluate[d]

viability . . . in the same manner that DOE considers viability in its own

methodology.” EPA then “independently” analyzed the pipeline disruption, noting

it “affected several other refineries, and thus was not a ‘special event’ specific to

Lion.” EPA also contextualized the disruption’s impact on Lion Oil’s financial

position.

Lion Oil claims DOE’s scoring “was flawed.” To the extent Lion Oil can

challenge DOE’s scoring on metric 3b, it was proper. The study defined “individual

special events” as “Refinery specific events (such as a shutdown due to an accident,

and subsequent loss of revenue) in the recent past that have a temporary negative

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impact on the ability of the refinery to comply with the RFS.” Lion Oil agrees that

the disruption affected four other refineries. By the study’s definition, the disruption

was not “refinery specific.”

B.

Lion Oil’s other arguments focus on DOE’s addendum. Because EPA, not

DOE, is the respondent, Lion Oil’s theme is that DOE’s scoring was “outcomedeterminative.” Even if DOE’s scoring was “outcome-determinative,” Lion Oil fails

to show how the availability of an intermediate score prejudiced Lion Oil. See 5

U.S.C. § 706. 

 1. 

Lion Oil argues that the addendumwas unlawful because it was not adequately

explained. An agency must “provide reasoned explanation for its action” and “show

that there are good reasons for the new policy.” F.C.C. v. Fox Television Stations,

Inc., 556 U.S. 502, 515 (2009). “But it need not demonstrate to a court’s satisfaction

that the reasons for the new policy are better than the reasons for the old one; it

suffices that the new policy is permissible under the statute, that there are good

reasons for it, and that the agency believesit to be better, which the conscious change

of course adequately indicates.” Id.

In the addendum, DOE said metrics 3a and 3b measure “impacts that may occur

across a continuum, and providing for the possibility of an intermediate score allows

DOE to more accurately assess an individual refinery’s economic situation.” In its

decision denying Lion Oil’s petition, EPA noted, “DOE added a 5 as a possible

intermediate score . . . to more accurately characterize the impacts of compliance

costs (3a) or individual special events (3b) on a refinery.” 

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Lion Oil argues that DOE and EPA offered “not an explanation for the change

but merely a description of it.” To the contrary, DOE and EPA provided a “reasoned

explanation” and “good reasons.” See id. The intermediate score “allows for more

nuanced and accurate characterization of the” refinery’s situation. See Hermes

Consol., LLC v. E.P.A., 2015 WL 3461360, at *5, *10 (D.C. Cir. June 2, 2015)

(vacating EPA’s denial ofsmall refinery’s exemption petition becauseEPA conceded

it made two miscalculations about petitioner’s financial data). 

 2.

Lion Oil argues that the addendum required notice-and-comment rulemaking. 

“Agencies must conduct ‘rule making’ in accord with the [Administrative Procedure

Act’s] notice and comment procedures.” Iowa League of Cities v. E.P.A., 711 F.3d

844, 855 (8th Cir. 2013). See 5 U.S.C. § 553 (“Rule making”). “However, only new

‘legislative’ rules are required to be created pursuant to notice and comment

rulemaking,” not “interpretative rules” or “general statements of policy.” Iowa

League of Cities, 711 F.3d at 855. 

According to Lion Oil, the addendumis “a legislative rule” because EPA “gave

[the addendum] conclusive effect.” Lion Oil cites General Electric Company v.

E.P.A., 290 F.3d 377, 383 (D.C. Cir. 2002): “[A]n agency pronouncement will be

considered binding as a practical matter if it either appears on its face to be binding,

or is applied by the agency in a way that indicates it is binding.”

Lion Oil’s factual premise fails. EPA did not give the addendum “conclusive

effect,” nor could it, as EPA does not score petitions on DOE’s matrix. Rather, EPA

did as Congress directed—“in consultation with the Secretary of Energy, [EPA]

consider[ed] the findings of [DOE’s] study . . . and other economic factors.” See 42

U.S.C. § 7545(o)(9)(B)(ii). EPA said DOE’s analysis was a “primary factor” in

EPA’s decision, and EPA “evaluate[d] viability . . . in the same manner that DOE

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considers viability in its own methodology.” EPA also “independently” analyzed the

pipeline disruption and Lion Oil’s blending capacity, projected RFS-compliance

costs, and financial position. See Hermes, 2015 WL 3461360, at *6 (rejecting

argument that addendumrequired notice-and-comment rulemaking because petitioner

“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” and finding “no basis for creating such a rule”).

 3.

LionOil arguesthatEPA unreasonably interpreted “disproportionate economic

hardship” to mean long-term viability, particularly as credits became more costly. 

“Where a statute does not define a term, and Congress has delegated authority to an

agency to implement an ambiguous statute, we are required to accept the agency’s

statutory interpretation, so long as it is reasonable.” Fast v. Applebee’s Int’l, Inc.,

638 F.3d 872, 876 (8th Cir. 2011), citing Chevron, U.S.A., Inc. v. Natural Res. Def.

Council, Inc., 467 U.S. 837, 844-45 (1984). 

EPA’s interpretation of “disproportionate economic hardship” is reasonable. 

“[T]he 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 presents a different question.” 

Hermes, 2015 WL 3461360, at *5. EPA adopted DOE’s determination “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.” Id. “[T]hat choice lies well within the agency’s discretion.” Id.

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 4.

Lion Oil argues the addendum’s “arbitrariness . . . is heightened by EPA’s

failure to apply the revised scoring methodology consistently.” Lion Oil cites a letter

from EPA to the D.C. Circuit in the Hermes case. There, EPA acknowledged that

DOE gave some pre-addendum petitioners a 5 for metrics 3a and 3c—when a 5 was

not yet an option (and still is not for metric 3c).

 Again, EPA, not DOE, is the respondent here. Lion Oil does not show that

EPA relied on DOE’s scoring decisions in those petitions. Even if EPA did, Lion Oil

was not prejudiced. See 5 U.S.C. § 706. 

* * * * * * *

EPA’s denial of Lion Oil’s petition is affirmed.

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