United States Court of Appeals

for the Fifth Circuit

____________

No. 22-60266

____________

Calumet Shreveport Refining, L.L.C.; 

Placid Refining Company, L.L.C.;

Ergon Refining, Incorporated; 

Wynnewood Refining Company, L.L.C.,

Petitioners,

versus

United States Environmental Protection Agency, 

Respondent,

consolidated with

_____________

No. 22-60425

_____________

Wynnewood Refining Company, L.L.C.; 

Calumet Shreveport Refining, L.L.C.; 

San Antonio Refinery, L.L.C.;

Petitioners,

versus

United States Environmental Protection Agency,

Respondent,

United States Court of Appeals

Fifth Circuit

FILED

November 22, 2023

Lyle W. Cayce

Clerk

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2

consolidated with

_____________

No. 22-60433

_____________

Ergon Refining, Incorporated; 

Ergon-West Virginia, Incorporated,

Petitioners,

versus

United States Environmental Protection Agency,

Respondent,

consolidated with

_____________

No. 22-60434

_____________

Placid Refining Company, L.L.C.,

Petitioner,

versus

United States Environmental Protection Agency,

Respondent.

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3

______________________________

Petitions for Review of Actions of

the Environmental Protection Agency

Agency Nos. 87 Fed. Reg. 24300, 

87 Fed. Reg. 34873, EPA-420-R-22-011, 

87 Fed. Reg. 34873, 

87 Fed. Reg. 34873

______________________________

Before Higginbotham, Smith, and Elrod, Circuit Judges.

Jerry E. Smith, Circuit Judge:

Six small refineries1(“petitioners”) challenge the EPA’s decision to 

deny their requested exemptions from their obligations under the Renewable 

Fuel Standard (“RFS”) program of the Clean Air Act (“CAA”). The EPA 

denied petitioners’ years-old petitions using a novel CAA interpretation and 

economic theory that the agency published in December 2021. We conclude 

that the denial was (1) impermissibly retroactive; (2) contrary to law; and 

(3) counter to the record evidence. We grant the petitions for review, vacate 

the challenged adjudications, deny a change of venue, and remand.

I.

A. Statutory and Regulatory Background

In 2005 and 2007, Congress amended the CAA, 42 U.S.C. § 7401 

et seq., to establish the RFS.

2 That program mandates annual increases in 

“applicable volumes” of four categories3 of renewable fuel for the transpor-

_____________________

1

(1) Calumet Shreveport Refining, L.L.C. (“Calumet”); (2) Placid Refining Company, L.L.C. (“Placid”); (3) Ergon Refining, Incorporated (“Ergon”); (4) Wynnewood 

Refining Company, L.L.C. (“Wynnewood”); (5) The San Antonio Refinery, L.L.C. 

(“TSAR”); and (6) Ergon-West Virginia, Incorporated (“Ergon-WV”).

2 See Energy Policy Act of 2005, Pub. L. No. 109-58, 119 Stat. 594; Energy Independence and Security Act of 2007, Pub. L. No. 110-140, 121 Stat. 1492.

3

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tation sector. Id. § 7545(o)(2)(B)(i)(I)–(IV). 

To implement the RFS, Congress delegated to EPA the authority to 

(1) set annual renewable fuel percentage standards and (2) establish an RFS 

compliance program. See id. § 7545(o)(3), (7). EPA sets the annual percentage standards based on the amount of renewable fuel needed to meet the 

statutorily stipulated volume requirements in § 7545(o)(2). Obligated 

parties—refiners, blenders, and importers of transportation fuel—use that

annual-percentage standard to determine their volume obligations for the 

four categories of renewable fuel. See 40 C.F.R. § 80.1406. Obligated parties 

must satisfy their individual volume obligations by the RFS annual compliance date set by EPA. Id. § 80.1451(f)(1)(i)(A).

EPA tracks obligated parties’ RFS compliance with a credit-trading 

program. Credits are called Renewable Identification Numbers (“RINs”). 

There are two ways blenders may acquire RINs: First, they can generate 

RINs by blending renewable fuel into conventional fuel. See id. § 80.1429(b).

That’s because RINs are “attached” to the renewable fuel the obligated 

party buys for its blending operation. Once blending has occurred, the RIN 

“separates” and exists independently of any batch of fuel. See id.

§§ 80.1425–29. Second, obligated parties can meet their annual volume obligations by purchasing RINs from other obligated parties. See generally id. 

§§ 80.1425–29; 42 U.S.C. § 7545(o)(5)(B). 

RINs are generally fungible—with one catch. A RIN may be used for 

compliance only during the calendar year in which it was generated or the 

calendar year following. 40 C.F.R. § 80.1427(a)(6)(i); see also id.

§§ 80.1428(c), 80.1431(a)(iii). For example, a RIN that was created in 2018 

can be used only to meet an obligated party’s 2018 or 2019 RFS volume 

_____________________

based diesel. 42 U.S.C. § 7545(o)(2)(B)(i)(I)–(IV).

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obligations. See id. § 80.1427(a)(6).4 Obligated parties demonstrate they 

have met their volume obligations—thereby complying with RFS—by 

“retiring” their RINs at their annual compliance demonstration. Id. 

§ 80.1427(a)(1).

Congress, recognizing that RFS might impose disproportionate economic hardship on “small refineries”5

from RFS, created three exemptions 

from the compliance regime: 

• First is the blanket exemption, which automatically exempted all small 

refineries from RFS until 2011. 42 U.S.C. § 7545(o)(9)(A)(i).

• Second is the refinery-specific exemption initiated by the Secretary of 

Energy. If, after conducting the statutorily mandated Department of 

Energy study, the Secretary determined that a small refinery was subject 

to a disproportionate economic hardship, “the Administrator shall extend the exemption under clause (i) for the small refinery for a period of 

not less than 2 additional years.” Id. § 7545(o)(9)(A)(ii).

• Third, the subparagraph (B) exemption allows small refineries to “petition the Administrator for an extension under subparagraph (A) for the 

reason of disproportionate economic hardship.” Id. § 7545(o)(9)(B)(i). 

“In evaluating a petition . . . the Administrator, in consultation with the 

Secretary of Energy, shall consider the findings of the study under subparagraph (A)(ii) and other economic factors.” Id. § 7545(o)(9)(B)(ii). 

_____________________

4 That is not to say that a RIN generated in 2018 becomes valueless in 2020—RINs 

do not turn into pumpkins after their expiration date. An unretired 2018 RIN remains 

transactable in 2023 to the extent other obligated parties create demand for RINs that can 

be used to meet 2018 or 2019 compliance year requirements. See id. §§ 80.1427(a)(6), 

80.1428(c), 80.1431(a).

5 The CAA defines small refineries as those “for which the average aggregate daily 

crude oil throughput for a calendar year (as determined by dividing the aggregate throughput for the calendar year by the number of days in the calendar year) does not exceed 75,000 

barrels.” 42 U.S.C. § 7545(o)(1)(K).

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Further, “[t]he Administrator shall act on any petition . . . not later than 

90 days after the date of receipt.” Id. § 7545(o)(9)(B)(iii).

B. Procedural History

This matter involves the last of the three small refinery exceptions

enumerated in the CAA. Petitioners challenge two EPA actions—each of

which adjudicated and denied multiple exemption petitions (“Denial 

Actions”): The first is EPA’s April 7, 2022, action “denying 36 petitions 

from 36 small refineries seeking exemption from their [RFS] obligations for 

the 2018 compliance year” (“April Denial”).6 The second is EPA’s June 8, 

2022, action denying “denying 69 petitions from 33 small refinery petitioners 

seeking exemption from their [RFS] obligations for the 2016–2021 compliance years” (“June Denial”).7

 

1. The April Denial

On April 7, 2022, EPA published the April Denial—that is, the 

agency’s final adjudications rejecting a total of thirty-six small refinery 

exemption petitions for the 2018 compliance year. Among those were petitions submitted by Calumet, TSAR, Ergon, Placid, and Wynnewood.8

 EPA 

denied those petitions using its revised interpretation of the subparagraph (B) 

exemption provision and RIN-passthrough economic theory.

_____________________

6 EPA, EPA-420-R-22-005, April 2022 Denial of Petitions for RFS Small Refinery 

Exemptions, at 1 (2022); see also April 2022 Denial of Petitions for Small Refinery 

Exemptions Under the Renewable Fuel Standard Program, 87 Fed. Reg. 24,300 (April 25, 

2022).

7 EPA, EPA-420-R-22-011, June 2022 Denial of Petitions for RFS Small Refinery 

Exemptions, at 1 (2022); see also Notice of June 2022 Denial of Petitions for Small Refinery 

Exemptions Under the Renewable Fuel Standard Program, 87 Fed. Reg. 34,873 (June 8, 

2022).

8 Ergon-WV’s 2018 exemption petition was not adjudicated in the April Denial.

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Notably, the April Denial was not the first time EPA had evaluated 

these thirty-six petitions. Indeed, thirty-one of them had been granted by 

EPA in 2019.

9

 These August 2019 grants were subsequently ensnared in proceedings litigated in the D.C. Circuit unrelated to the dispute at hand. What 

is relevant, however, is that EPA moved for voluntary remand without vacatur to consider those petitions with regard to the Tenth Circuit’s “alternate 

holdings” in Renewable Fuels Ass’n v. EPA (“RFA”).10 The D.C. Circuit 

granted EPA’s motion on December 8, 2021.

11

 Shortly thereafter, EPA provided notice of its intent to include those previously decided petitions in the 

April Denial action.

12

 

2. The June Denial

EPA once again applied its new interpretation and approach in June 

2022 when it denied sixty-nine exemption petitions for the 2016 through 

2021 RFS compliance years. Among those were petitions from (1) Calumet 

for 2019 and 2020; (2) TSAR for 2019, 2020, and 2021; (3) Ergon for 2019

and 2020; (4) Ergon-WV for 2019 and 2020; (5) Placid for 2019 and 2020; 

and (6) Wynnewood for 2017, 2019, 2020, and 2021.

EPA’s new interpretation and approach—which it applied in the 

Denial Actions—displaced the adjudicative methodology the agency had 

_____________________

9 Memorandum Decision on 2018 Small Refinery Exemption Petitions from Anne 

Idsal, Acting Asst. Admin’r, Off. of Air and Rad. to Sarah Dunham, Dir., Off. of Transp. 

and Air Qual. (Aug. 9, 2019), at 2.

10 948 F.3d 1206 (10th Cir. 2020), rev’d on other grounds sub nom. HollyFrontier 

Cheyenne Ref., LLC v. RFA, 141 S. Ct. 2172 (2021) (“HollyFrontier”) and vacated, 

No. 18-9533, 2021 WL 8269239 (10th Cir. July 27, 2021).

11 RFA v. EPA, No. 19-1220, Doc. 1925942, at 3 (D.C. Cir. Dec. 12, 2021).

12 EPA, EPA-HQ-OAR-2021-0566, Scope of Action and Notifications (2022).

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relied on for over a decade. In that prior approach, EPA granted and denied 

petitions based on DOE’s findings through its application of the DOE scoring 

matrix. That scoring matrix—developed as part of the statutorily-mandated 

2011 DOE study—“was designed to evaluate the full impact of disproportionate economic hardship on small refiners and used to assess the individual 

degree of potential impairment.”13 But, starting with the April Denial, EPA 

has now completely abandoned the scoring matrix. 

Instead, EPA now adjudicates petitions using an approach it announced in a December 2021 publication.14

 That approach rests on two components. 

First is a revised interpretation of the statutory term “disproportionate economic hardship” as used in 42 U.S.C. § 7545(o)(9)(A)–(B). Under 

the agency’s new interpretation, a small refinery’s disproportionate economic hardship must be caused solely by RFS compliance costs.15

 

Second is a new economic theory. Called “RIN passthrough,” EPA 

now theorizes that (A) the “cost of RINs is the same for all obligated parties, 

whether the RINs are acquired by blending renewable fuel or by buying them 

on the market” and (B) the “costs of RFS compliance (i.e., RINs) are passed 

through in the prices of refined products.”16

Before us now are petitions for review of EPA’s Denial Actions. Peti-

_____________________

13 Off. of Pol’y & Int’l Affs., U.S. Dep’t of Energy, Small Refinery Exemption 

Study: An Investigation into Disproportionate Economic Hardship (2011), at 32 (“2011 

DOE Study”).

14 See Notice of Opportunity to Comment on Proposed Denial of Petitions for Small 

Refinery Exemptions, 86 Fed. Reg. 70,999 (Dec. 14, 2021).

15 See EPA, EPA-420-D-21-001, Proposed RFS Small Refinery Exemption Decision, at 23–26 (Dec. 2021) (“Proposed Denial”).

16 Id. at 62.

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tioners contend the Denial Actions are impermissibly retroactive, contrary to 

law, and arbitrary and capricious. For the reasons that follow, we agree. 

Accordingly, we vacate and remand petitioners’ exemption petitions adjudicated in the Denial Actions.

II.

Before we proceed to the merits of petitioners’ contentions, we must 

address EPA’s motion to transfer venue to the D.C. Circuit under 42 U.S.C. 

§ 7607(b)(1).

17

 

The CAA includes a statutory channeling provision delineating the 

appropriate venue in which a petitioner may seek judicial review of agency 

action: 

 A petition for review of . . . any . . . nationally applicable 

regulations promulgated, or final action taken, by the Administrator under this chapter may be filed only in the United 

States Court of Appeals for the District of Columbia. A petition for review of the Administrator’s action . . . under this 

chapter . . . which is locally or regionally applicable may be filed 

only in the United States Court of Appeals for the appropriate 

circuit. Notwithstanding the preceding sentence a petition for 

review of any action referred to in such sentence may be filed 

only in the United States Court of Appeals for the District of 

Columbia 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.

42 U.S.C. § 7607(b)(1).

Determining where proper venue lies under § 7607(b)(1) requires us 

_____________________

17 See Order, No. 22-60266 (5th Cir. Oct. 21, 2022) (motions panel ordering the 

threshold issue of venue to carry with the merits).

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to conduct a two-step analysis: At the first step, we determine whether the 

challenged agency action is “nationally applicable” as distinguished from

“locally or regionally applicable.” Id. If nationally applicable, our inquiry 

ends because proper venue exists only in the D.C. Circuit. But if the challenged action is “locally or regionally applicable,” we proceed to step two.

That second step begins with the default presumption that venue is 

proper in this circuit. See Texas v. EPA, 829 F.3d 405, 419 (5th Cir. 2016) 

(“Texas 2016”). To overcome that default presumption, a challenged action

must satisfy two necessary and independent sub-conditions. Namely, we 

must determine that (a) the challenged action “is based on a determination 

of nationwide scope or effect” and (b) the Administrator, in taking that challenged action, “finds and publishes that such action is based on such a determination.” Only if both sub-conditions are satisfied is venue proper solely in 

the D.C. Circuit.

A. Step One

EPA first avers the Denial Actions are “nationally applicable” agency 

actions because they “apply a consistent statutory interpretation and economic analysis to small refineries nationwide.” The agency analogizes the 

Denial Actions to the SIP Calls in Texas v. EPA, where this court reasoned 

that the agency’s disapproval of and call to correct thirteen states’ plans 

regarding air quality standards was a “nationally applicable regulation.” 

No. 10-60961, 2011 WL 710598, at *3 (5th Cir. Feb. 24, 2011) (“Texas 

2011”). The agency contends the Denial Actions, like the SIP Calls, rest on 

“a revised interpretation of the relevant CAA provisions and the RIN discount and RIN cost passthrough principles that are applicable to all small 

refineries no matter the location or market in which they operate.”

We disagree with EPA’s position. In-circuit precedent counsels that 

it is the legal effect—and not the practical effect—of an agency action that 

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determines whether that action is “nationally applicable.” See Texas 2016, 

829 F.3d at 419. That is the key distinction between the SIP Call in Texas 

2011 and the Denial Actions in this case. The SIP Call in Texas 2011 was 

sufficient—by itself—to change regulated entities’ legal obligations. It 

required all states to apply their “prevention-of-significant-deterioration” 

programs to “greenhouse-gas-emitting sources.” 2011 WL 710598, at *1–2. 

States whose plans already met that requirement were just as bound as states 

with violative plans. See id. at *4–5. 

Not so with the “new approach” EPA used in the Denial Actions.

EPA may swear that the new approach will apply in all future exemption 

petitions. But it cannot be said that EPA’s promise to apply its “new 

approach”—as described in the Denial Actions—affects the legal rights, 

duties, or obligations of any small refinery whose exemption petitions were 

not the subject of the April Denial or June Denial. The agency’s promise is 

naked—neither the new interpretation nor the RIN pass through theory 

binds EPA in any future adjudication.18 

The Denial Actions are not “nationally applicable.” They are, 

instead, “locally or regionally applicable.” We must therefore proceed to the 

second step.

B. Step Two

We begin step two with the presumption that venue is proper in this 

circuit. That’s because we have already determined, at step one, that the

agency action is “locally or regionally applicable.” See Texas 2016, 829 F.3d 

at 419. A challenged action overcomes that presumption if (1) it is based on 

a determination of nationwide scope or effect, and (2) the Administrator, in 

_____________________

18 EPA unsuccessfully asserts that its new interpretation and theory are imbued 

with the force of law and therefore binding on the agency. See infra part V.

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taking such action, “finds and publishes that such action is based on such a 

determination.” 42 U.S.C. § 7607(b)(1). EPA claims the Denial Actions 

meet both sub-conditions.

We begin with the second sub-condition—whether the Administrator 

found and published that such an action was based on a determination of 

nationwide scope or effect. That is easily met, as no party contests that the 

Administrator so found and published in each of the Denial Actions.19 

What the parties dispute is the accuracy of the Administrator’s finding. 

And that is addressed in the first sub-condition. 

The parties initially skirmish on the applicable standard of review for 

the first sub-condition. EPA asserts that we review its determination under 

a deferential standard, but petitioners contend that we owe no deference at 

all. Petitioners are correct. As explained in Texas 2016, we “independent[ly]

assess[]” whether the action is based on a determination of nationwide scope 

or effect. 829 F.3d at 420 (citation omitted). 

The agency’s assertion to the contrary finds little support: All EPA 

cites to buttress its position is a nineteen-year-old, non-precedential decision 

in which the D.C. Circuit rejected a motion to transfer after it noted that “the 

Administrator has unambiguously determined that the final action . . . has 

nationwide scope and effect.” Alcoa, Inc. v. EPA, No. 04-1189, 2004 WL 

2713116, at *1 (D.C. Cir. Nov. 24, 2004). That is not enough, especially given

that that same assertion was subsequently dismissed in Dalton Trucking, Inc. 

v. EPA, 808 F.3d 875 (D.C. Cir. 2015). There, the D.C. Circuit characterized 

_____________________

19 See 87 Fed. Reg. at 24,301 (“the Administrator is exercising the complete discretion afforded to him by the CAA and hereby finds that this final action is based on a determination of nationwide scope or effect for purposes of CAA section 307(b)(1) and is hereby 

publishing that finding in the Federal Register.”); id. at 34,874 (same).

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EPA’s assertion “that venue in this circuit is ‘compelled by [its] published 

determination that an action would have a nationwide scope or effect’” as 

nothing more than a “transparent sleight of hand that does not persuade.” 

Id. at 881 (citation omitted). Consequently, we do not accord deference to 

EPA’s determination.

EPA contends, in its motions-stage briefing, that the Denial Actions 

were based on a determination of nationwide scope or applicability” because 

it made “no unique or individualized findings as to the ability of any of the 

thirty-six petitioning refineries to recover the costs of RFS compliance” and 

“did not adjust its statutory interpretation and economic theory to the particulars of any specific small refinery, or the region in which a refinery operates.” We disagree. EPA’s motions-stage characterization of the Denial 

Actions is flatly contradicted by the agency’s position on the merits and the 

explanations it provided in the Denial Actions: 

First, when asked to defend the Denial Actions on the merits, EPA 

contends that it “considered each petition on the merits . . . and individual 

refinery information.” That mirrors the Denial Actions that state that EPA 

completed a thorough evaluation of the data and information 

provided in the SRE petitions, supplemental submissions, and 

comments to determine if any of the petitioners have demonstrated that the cost of compliance with the RFS is the cause of 

their alleged DEH and that such costs are not passed through 

by that small refinery to the wholesale purchasers under the 

RIN cost passthrough principle.20

Second, EPA admits that, even under its new approach, there is still a 

_____________________

20 EPA, EPA-420-R-22-005, April 2022 Denial of Petitions for RFS Small Refinery 

Exemptions(2022), at 23; EPA, EPA-420-R-22-011, June 2022 Denial of Petitions for RFS 

Small Refinery Exemptions (2022), at 24.

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non-zero chance it will grant small refinery petitions. According to the 

agency’s briefing, EPA will grant exemption petitions to small refineries that

provide data and evidence demonstrating that they faced disproportionate 

economic hardship contrary to the facts regarding other small refineries.

EPA’s representations in the Denial Actions and its position on the 

merits show that its new interpretation and RIN passthrough theory—

without more—fail to provide the agency with a sufficient basis to adjudicate 

exemption petitions. When EPA says it denied petitions “based on factors 

and facts common to each petition,” it also implicitly concedes that there 

were no refinery-specific facts that would justify the issuance of an exemption. The agency thus had to verify that each of the petitions implicated in 

the Denial Actions did not (1) present facts contrary to those of other nonexempt small refineries and (2) demonstrate disproportionate economic 

hardship consistent with the statutory criteria.21 Consequently, the Denial 

Actions rely on refinery-specific determinations and are not based on a 

determination of nationwide scope or effect.

Because the Denial Actions are neither nationally applicable nor based 

on a determination of nationwide scope or effect, venue is proper in the Fifth 

Circuit. EPA’s motion to transfer venue to the D.C. Circuit is denied. We 

turn to the merits.

III.

The Administrative Procedure Act (“APA”) requires us to “set 

aside” agency actions found to be “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.” 5 U.S.C. § 706(2)(A). 

Arbitrary-and-capricious review requires this court to scrutinize the record 

to determine whether the agency has “examine[d] the relevant data and artic-

_____________________

21 See id.

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ulate[d] a satisfactory explanation for its action including a rational connection between the facts found and the choice made.” Motor Vehicle Mfrs. 

Ass’n of U.S., Inc. v. State Farm Mut. Auto Ins. Co., 463 U.S. 29, 43 (1983) 

(cleaned up). We “may not supply a reasoned basis for the agency’s decision 

that the agency itself has not given.” Id. (quoting SEC v. Chenery Corp. 

(Chenery II), 332 U.S. 194, 196 (1947)). Instead, “we must set aside” agency 

action that is “premised on reasoning that that fails to account for relevant 

factors or evinces a clear error of judgment” as arbitrary and capricious. 

Univ. of Tex. M.D. Anderson Cancer Ctr. v. U.S. Dep’t of Health & Hum. 

Servs., 985 F.3d 472, 475 (5th Cir. 2021) (cleaned up).

Petitioners contend the Denial Actions are defective in three ways: 

First, they are impermissibly retroactive. Second, EPA’s interpretation of the 

CAA is contrary to law. And third, the agency acted arbitrarily and capriciously by failing to engage in reasoned decision-making.

A. Retroactivity

The 2011 DOE Study and the scoring matrix are the two factors EPA 

relied on for over a decade when deciding whether to grant subparagraph (B) 

exemption petitions. But starting with the April Denial, EPA threw those 

factors away: Now, the 2011 DOE Study and the scoring matrix have no 

bearing on the agency’s decision-making process. 

Petitioners cry foul—explaining that they had relied on those two 

factors when they submitted the exemption petitions implicated in the Denial 

Actions. EPA says petitioners have nothing to complain about. According 

to the agency, petitioners (1) have no protectable property right in subparagraph (B) exemptions and (2) should not have relied on the approach used in 

the agency’s prior adjudications. We disagree with EPA on both points. 

Petitioners have a protectable property interest because the smallrefinery exemption is “an entitlement expressly created by statute,” McDonCase: 22-60266 Document: 00516976800 Page: 15 Date Filed: 11/22/2023
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ald v. Watt, 653 F.2d 1035, 1045–46 (5th Cir. Unit A Aug. 1981), which EPA 

“shall” grant for any small refinery that shows “disproportionate economic 

hardship,” 42 U.S.C. § 7545(o)(9)(B)(ii). The CAA defines the factors EPA 

must consider in deciding whether to grant or deny an exemption, and, once 

those factors have been satisfied, the agency is legally obligated to grant such 

a petition. See id.

Because petitioners possess a protectable property interest, we must 

determine whether the regulation is impermissibly retroactive. There is no 

blanket prohibition against retroactive application of regulation through 

adjudication.22 But that power—to regulate retroactively—is limited to circumstances in which retroactive application would not result in “injury or 

prejudice.” Handley, 587 F.3d at 283 (quoting Pac. Molasses Co. v. FTC, 

356 F.2d 386, 390 n.10 (5th Cir. 1966)). 

Thus, we must “balance the ills of retroactivity against the disadvantages of prospectivity.” Microcomputer Tech. Inst. v. Riley, 139 F.3d 1044, 

1050 (5th Cir. 1998).23 And in conducting such balancing, we accord no deference to the agency’s determination that its approach should be applied 

retroactively, for that determination does not involve policy considerations 

delegated to the agency or require any agency expertise. Id. at 1050–51. “If 

that mischief [of prospectivity] is greater than the ill effect of the retroactive 

_____________________

22 See Chenery II, 332 U.S. at 203–04; Macy’s, Inc. v. NLRB, 824 F.3d 557, 566–67

(5th Cir. 2016); Handley v. Chapman, 587 F.3d 273, 283 (5th Cir. 2009) (Regulation is 

retroactive where its application “would impair rights a party possessed when he acted, 

increase a party’s liability for past conduct, or impose new duties with respect to transactions already completed.” (quoting Fernandez–Vargas v. Gonzales, 548 U.S. 30, 37 

(2006))).

23 Balancing occurs “case-by-case,” and this court has previously rejected the

multi-factor balancing tests adopted by other circuits, see id. (rejecting D.C. Circuit’s fivefactor test). 

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application of a new standard, it is not the type of retroactivity which is condemned by law.” Monteon-Camargo v. Barr, 918 F.3d 423, 430 (5th Cir. 

2019), as revised (Apr. 26, 2019) (quoting Chenery II, 332 U.S. at 203). Typically, “the ill effect of retroactivity is the frustration of the expectations of 

those who have justifiably relied on a prior rule; the ill effect of prospectivity 

is the partial frustration of the statutory purpose which the agency has perceived to be advanced by the new rule.” McDonald, 653 F.2d at 1044.

We start the balancing analysis with the ills of retroactivity. Petitioners justifiably relied on EPA’s past agency practice when applying for the 

exemptions at issue. EPA—for over a decade—consistently used the 2011 

DOE Study and scoring matrix to adjudicate small-refinery exemption petitions. That is exactly the kind of “well established” agency practice that

forms the basis for justifiable reliance. Id. at 1045 (citation omitted).

24

 EPA 

“cannot ‘surprise’ [petitioners] by penalizing [them] for ‘good-faith reliance’ on the agency’s prior positions.” R.J. Reynolds Vapor Co. v. FDA, 

65 F.4th 182, 189 (5th Cir. 2023) (quoting Christopher v. SmithKline Beecham 

Corp., 567 U.S. 142, 156–57 (2012)).

EPA nonetheless maintainsthat petitioners’ reliance was unjustifiable

because they were—or should have been—aware of impending changes to 

agency policy. The EPA first points to its publication requesting comment 

on its proposed interpretation and theory. But that request for comment was 

not published in the Federal Register until December 2021.

25

 The April 

_____________________

24 EPA insists petitioners couldn’t have justifiably relied on its prior approach 

because it wasn’t “announced in an interpretive rule” or “subjected . . . to notice and 

comment.” The agency’s position is cute but wrong. Longstanding and well-established 

agency practice need not be officially adopted to form the basis for reasonable reliance. 

See id. 

25 See 86 Fed. Reg. at 70,999–71,000.

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Denial adjudicated exemption petitions submitted in 2018.

26

 And all of 

petitioners’ exemption petitions that were adjudicated in the June Denial had 

been submitted before December 2021.27 Thus, all petitioners’ exemptions

were submitted before EPA provided notice in the Federal Register that it 

intended to change its adjudicative methodology.28 EPA’s December 2021 

notice and comment publication does not render petitioners’ reliance 

unjustifiable.

Next, EPA asserts that petitioners’ reliance was unjustifiable by June 

2021—the month litigation ended in RFA.

29

 We disagree with EPA’s assertion that RFA provided petitioners with notice by June 2021.30

 

For one, EPA’s expressly states its policy is only to “provide for 

exceptions to the general policy” in response to “decisions of the federal 

courts that arise from challenges to ‘locally or regionally applicable’ actions

. . . .” 40 C.F.R. § 56.3(d). A Tenth Circuit decision—no matter its 

holding—had no effect on petitioners’ operating outside that circuit’s boundaries. 

Moreover, the initial Tenth Circuit panel opinion—which held that 

_____________________

26 The April Denial included 2018 compliance-year petitions from Calumet, 

TSAR, Ergon, Placid, and Wynnewood.

27 The June Denial included Calumet, TSAR, Ergon, Ergon-WV, and Placid’s 2019 

and 2020 petitions; TSAR’s 2019, 2020, and 2021 petitions; and Wynnewood’s 2017,

2019, 2020, and 2021 petitions. TSAR’s 2021 petition was submitted on November 23, 

2021, and Wynnewood’s 2021 petition was submitted on September 23, 2021.

28 Petitioners, unlike Ant-Man and the Wasp, cannot time travel. See also Rick and 

Morty: The Vat of Acid Episode (Comedy Central May 17, 2020).

29 See supra note 10 and accompanying text.

30 Even if we assume arguendo that petitioners had notice by June 2021, that would 

affect only TSAR’s and Wynnewood’s 2021 petitions; the other seventeen petitions in this 

case were filed before June 2021.

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EPA’s prior approach of finding disproportionate economic hardship 

allowed the agency to act “outside the scope of [its] statutory authority” 

when “[g]ranting extensions of exemptions based in part on hardships not 

caused by RFS compliance”31—was vacated by a subsequent Tenth Circuit 

panel.

32

 That, in turn, “remove[s] both the res judicata and the stare decisis

effect” from the initial RFA panel opinion. City Ctr. W., LP v. Am. Mod. 

Home Ins. Co., 749 F.3d 912, 913–14 (10th Cir. 2014). 

Thus, it is EPA that is being unreasonable when it blames petitioners 

for disregarding a vacated holding that—per EPA’s own regulations—never 

had any effect outside the Tenth Circuit. Consequently, petitioners’ continued reliance on EPA’s longstanding and well-established practice of adjudicating exemption petitions based on the 2011 DOE study and scoring matrix 

was justifiable till the agency first published notice of its intent to change its 

adjudicative methodology in December 2021.33

_____________________

31 RFA, 948 F.3d at 1254.

32 Renewable Fuels Ass’n v. EPA, 854 F. App’x 983, 984 (10th Cir. 2021) (per curiam) (“RFA II”) (“In light of the United States Supreme Court’s decision in HollyFrontier 

. . . we previously recalled our mandate and vacated our judgment in this case.”).

33 In its brief, EPA asserts it “indicat[ed] that it would follow” the RFA holding on 

the agency’s approach of finding disproportionate economic hardship “on remand if the 

Tenth Circuit denied the motion or did not clarify otherwise.” See EPA’s Motion for Clarification of the Court’s July 29, 2021 Mandate, RFA II, No. 18-9533, Doc. 010110564301, 

at 6–7 (Aug. 19, 2021) (“RFA II Motion”). 

For three reasons, that does not change our analysis: First, EPA’s intent, as stated 

in its RFA II motion, was limited to the three exemption petitions in RFA. The only petition 

in this case that overlaps with RFA is Wynnewood’s 2017 exemption petition. Second, EPA

stated in its Tenth Circuit motion that it had not decided “what, if any, impact . . . the unaffected holdings . . . may have on EPA’s implementation of the RFS program.” Id. at 6; cf.

FTC v. Standard Oil Co., 449 U.S. 232, 240 (1980) (agency’s “threshold determination 

that further inquiry is warranted . . . is not ‘definitive’” agency action). Third, it is hardly 

reasonable to ask regulated entities to rely on EPA’s statements of future intent made in 

the course of litigation. Cf. BNSF Ry. Co. v. Fed. R.R. Admin., 62 F.4th 905, 911 & n.4 (5th 

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We now turn to the other side of the balancing equation and analyze 

the disadvantages of prospectivity. See Microcomputer Tech. Inst., 139 F.3d 

at 1050. In other words, we must determine what benefits are lost if EPA’s 

new interpretation and RIN passthrough theory are applied only to newly 

submitted exemption petitions.

EPA fails to identify a single benefit of retroactive application. Intervenors assert retroactive application is necessary because “withholding the 

Denials’ effect would harm the producers of renewable fuel” and “depress 

the demand for renewable fuel.” That is absurd. The exemption petitions

in this case concern compliance years 2017 to 2021. By the time EPA published the Denial Actions, no producer could have produced RINs applicable 

to these petitions, see 40 C.F.R. §§ 80.1427(a)(6), 80.1428(c), 80.1431(a), so 

the Denial Actions could not have affected the amount of renewable fuel 

blended in those past years.

The result of the balancing test could not be more obvious: There is 

no legitimate benefit EPA can gain from retroactive application. On the other 

hand, retroactive application of EPA’s new adjudicative methodology

harshly penalizes petitioners for their good-faith and justified reliance on the 

agency’s prior approach.

34

 EPA impermissibly applied its new CAA interpretation and RIN passthrough theory to petitioners’ years-old exemption 

petitions.

B. Contrary to Law

Petitioners contend the Denial Actions are contrary to law for four 

_____________________

Cir. 2023) (discounting post-hoc agency rationalizations).

34 See R.J. Reynolds, 65 F.4th at 189 (“Dealing with administrative agencies is all 

too often a complicated and expensive game, and players . . . ‘are entitled to know the 

rules.’” (citation omitted)).

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reasons.

1. Disproportionate Economic Hardship

Under EPA’s new interpretation, RFS compliance costs must be the 

sole cause of a small refinery’s disproportionate economic hardship. In other 

words, a small refinery will receive an exemption only if it can show that it 

has incurred disproportionate RFS compliance costs. Petitioners insist that

that is an unreasonable construction of the statute. We agree.

The CAA provides small refineries with the ability to submit a petition 

requesting an exemption from RFS “for the reason of disproportionate economic hardship.” 42 U.S.C. § 7545(o)(9)(B)(i). An exemption petition, once 

submitted, is evaluated by the Administrator “in consultation with the Secretary of Energy.” § 7545(o)(9)(B)(ii). In that evaluation, “the Administrator . . . shall consider the findings of the study under subparagraph (A)(ii)”—

that is, the 2011 DOE Study—“and other economic factors.” Id.

At dispute is what qualifies as “disproportionate economic hardship” 

for a subparagraph (B) exemption. See id. at § 7545(o)(9)(B)(i). Subparagraph (A) uses that same phrase twice.

35

 But neither subparagraph defines it. 

EPA theorizes that disproportionate economic hardship can only 

mean RFS compliance costs. It bases that conclusion on its observation that 

the phrase, as used in subparagraph (A), does not identify any cause of dis-

_____________________

35 First, in subparagraph (o)(9)(A)(ii)(I), the Secretary of Energy is instructed to 

“determine whether compliance with [RFS] would impose a disproportionate economic 

harm on small refineries,” the product of which is the 2011 DOE Study. Second, in subparagraph (II), which directs the Administrator to extend the initial subparagraph (A)(i) 

exemption—the blanket exemption for all small refineries “until calendar year 2011”—for 

any small refinery that “would be subject to a disproportionate economic hardship if 

required to comply with [RFS] . . . .”

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proportionate economic hardship other than RFS compliance costs.

36

 It thus 

posits that the statute should be read to say that RFS compliance costs are 

the sole cause of disproportionate economic hardship.37

Petitioners disagree: They instead contend that “disproportionate 

economic hardship” should be interpreted more broadly. In their view, a 

small refinery can experience disproportionate economic hardship for myriad 

causes; it qualifies for the exemption if RFS compliance cost is one such 

cause.

We agree with petitioners. EPA’s interpretation is foreclosed by the 

statute’s text in two ways:

First, to interpret “disproportionate economic hardship” as synony-

_____________________

36 The reasoning employed here is suspect as well. EPA interprets two phrases in 

subparagraph (A)—namely, “would impose” and “subject to . . . if required to comply”—

as creating an exclusive causal relationship between RFS compliance costs and disproportionate economic hardship. See § 7545(o)(9)(A)(ii). That is error because neither provision 

purports to rule out other causes of disproportionate economic harm.

37 EPA asks us to defer to its interpretation under Chevron U.S.A. Inc. v. Natural

Resources Defense Council, Inc., 467 U.S. 837 (1984). EPA claims Chevron applies because 

it “undertook notice and comment before taking the Denial Actions.” 

Not so fast. While the agency did subject its interpretation to notice-and-comment 

proceedings, it applied that interpretation in informal adjudication, not notice-andcomment rulemaking or formal adjudication. See United States v. Mead Corp., 533 U.S. 218, 

230 (2001). True, EPA’s decision to engage in informal adjudication “does not automatically deprive that interpretation of the judicial deference otherwise its due.” Texas v. 

United States, 809 F.3d 134, 178 n.160 (5th Cir. 2015) (quoting Barnhart v. Walton, 535 U.S. 

212, 221 (2002)), aff’d by an equally divided court, 579 U.S. 547 (2016). But to qualify for 

Chevron deference, EPA’s interpretation must satisfy the Barnhart test, which asks us to 

consider factors such as “the interstitial nature of the legal question, the related expertise 

of the Agency, the importance of the question to administration of the statute, the complexity of that administration, and the careful consideration the Agency has given the question over a long period of time . . . .” 535 U.S. at 222. We need not decide whether the 

Barnhart test is satisfied because EPA’s interpretation fails even under Chevron. See infra

note 43.

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mous with “RFS compliance cost” would render part of subparagraph (B)(ii) 

a nullity. That provision stipulates that the Administrator, in evaluating subparagraph (B) exemption petitions, shall consider (1) the 2011 DOE study 

and (2) “other economic factors.” § 7545(o)(9)(B)(ii). EPA’s interpretation 

of “disproportionate economic hardship” leaves no room for “other economic factors”—it makes the first factor outcome-determinative for every 

exemption petition. But those words “cannot be meaningless, else they 

would not have been used.”38 Thus, subparagraph (B)(ii) contemplates 

granting exemptions to small refineries that experience disproportionate 

economic hardship attributable to a combination of (1) RFS compliance costs 

and (2) economic factors other than RFS compliance costs.

Second, EPA’s approach to defining “disproportionate economic 

hardship” is misguided. The agency relies heavily on subparagraph (A) to 

define the phrase. It justifies its approach on the absence of a definition in 

subparagraph (B). EPA’s justification is incorrect. Though it is true that we 

presume—absent persuasive countervailing evidence—that identical words 

and phrases “bear the same meaning throughout a text,”39 subparagraph (A) 

does not define “disproportionate economic hardship” either. And 

“[w]here Congress does not furnish a definition of its own, we generally seek 

to afford a statutory term ‘its ordinary or natural meaning.’” HollyFrontier, 

141 S. Ct. at 2176 (quoting FDIC v. Meyer, 510 U.S. 471, 476 (1994)). 

“Disproportionate economic hardship,” as ordinarily understood, 

includes much more than just RFS compliance cost. “Disproportionate” 

modifies “economic hardship.” For economic harm to be disproportionate, 

_____________________

38 Antonin Scalia & Bryan A. Garner, Reading Law: The Interpretation of Legal Texts 174 (2012) (quoting United States v. Butler, 297 U.S. 1, 

65 (1936)).

39 Id. at 170.

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it must be “inadequately or excessively proportioned.”40 The relevant comparator—that to which the harm is “proportioned”—could be the amount 

other small refineries pay to comply with RFS. But it could also be factors 

unrelated to RFS, such as local economic conditions or refinery-specific circumstances. For example, “small refineries might apply for exemptions . . .

in light of market fluctuations and changing hardship conditions.” HollyFrontier, 141 S. Ct. at 2178. Congress could have—but did not—enumerate 

the particular ways in which economic harm might be “disproportionate.”41 

We therefore accord the phrase disproportionate economic harm its “full and 

fair scope,” for “the presumed point of using general words is to produce 

general coverage.”42

EPA’s interpretation 42 U.S.C. § 7545(o)(9)(B) is unreasonable.43 

The statute’s text cannot plausibly be read to say that RFS compliance costs 

must be the sole cause of disproportionate economic hardship.

_____________________

40 Disproportionate, Oxford English Dictionary, tinyurl.com/32spx2ve.

41 See, e.g., 26 U.S.C. § 302(b)(2)(C) (delineating in detail when a “distribution is 

substantially disproportionate”).

42 Scalia & Garner, supra note 38, at 101.

43

 Chevron deference applies “only if ‘the agency’s [interpretation] is based on a 

permissible construction of the statute.’” Huntington Ingalls, Inc. v. Dir., Off. Of Workers’ 

Comp. Programs, U.S. Dep’t of Lab., 70 F.4th 245, 252 (5th Cir. 2023) (quoting Mexican 

Gulf Fishing Co. v. U.S. Dep’t of Commerce, 60 F.4th 956, 963 (5th Cir. 2023)). EPA’s 

interpretation falls outside “the range of meanings that could be plausibly attributed to the 

relevant statutory language.” Sw. Elec. Power Co. v. EPA, 920 F.3d 999, 1024 (5th Cir. 

2019) (citation omitted). Consequently, EPA’s interpretation is not entitled to Chevron

deference.

Furthermore, EPA is not entitled to deference under Skidmore v. Swift & Co., 

323 U.S. 134 (1994), because an unreasonable interpretation of a statute’s text cannot be 

persuasive. See Texas, 809 F.3d at 178 n.160 (citing Gonzales v. Oregon, 546 U.S. 243, 256 

(2006)).

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2. Petitioners’ other reasons that the Denial Actions are contrary to law.

Petitioners urge that the Denial Actions are contrary to law for three 

other reasons. On those claims, we agree with EPA.

First, petitioners assert the EPA’s interpretation is unlawful because

it was adopted on the agency’s mistaken belief that it was bound by the alternate holdings in RFA—a now-vacated Tenth Circuit case interpreting the 

relevant statutory provisions. See RFA II, 854 F. App’x at 984. But the 

agency record shows that the EPA adopted RFA’s reasoning because it 

“determined that the RFA decision provides the best reading of the statutory 

provisions of CAA section 211(o)(9).” That is an independent basis for 

EPA’s interpretation, i.e., the agency did not base its interpretation on the 

idea it was bound by RFA’s alternate holdings. Thus, EPA’s interpretation 

did not violate the Chenery mistake-of-law doctrine. Cf. Teva Pharm. U.S.A. 

Inc. v. FDA, 441 F.3d 1, 5 (D.C. Cir. 2006).

Second, petitioners allege EPA impermissibly construed the statute’s

requirement that it consult with DOE in deciding an exemption petition. In 

their view, EPA’s consultation with DOE had to be “meaningful,” which

requires EPA and DOE to—at a minimum—consult on “whether EPA’s 

new RIN pass-through theory was actually correct and applicable to each 

small refinery.” Petitioners claim EPA fell short of that standard with the 

Denial Actions because EPA merely asked DOE to “assume the RIN passthrough theory was correct and an appropriate basis for denying the hardship 

petitions.” EPA counters by claiming that it, along with DOE, has “discretion to determine the shape of the procedural consultation requirement.”

We agree with EPA. Congress did not define the term “consultation” 

as used in the relevant statutory provision. See 42 U.S.C. § 7545(o)(9)(B)(ii). 

It only stipulates the subjects the agencies must cover. We decline to graft

extra-textual procedural requirements onto that consultation requirement. 

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See Vt. Yankee Nuclear Power Corp. v. Nat. Res. Def. Council, Inc., 435 U.S. 

519, 525 (1978).

Third, petitioners attest the Denial Actions are contrary to law because EPA evaluated multiple petitions simultaneously. Pointing to 

§ 7545(o)(9)(B)’s use of the terms “a small refinery” and “a petition,” petitioners claim that the petitions must be examined one at a time. True, using 

“a”—an indefinite article immediately followed with a singular noun— can 

refer to “one” of something. But it can also indicate “that there may be two 

or more substantial parts.” Comm’r v. Kelley, 293 F.2d 904, 912 (5th Cir. 

1961). Without more, petitioners fail to show that the relevant statutory provisions require EPA to consider exemption petitions individually. We are 

textualists, not literalists.

We conclude the Denial Actions are contrary to law only because 

EPA’s interpretation of the CAA subparagraph (B) exemption provision is 

unreasonable. Petitioners’ other claims fail.

C. Arbitrary and Capricious

Petitioners contend the Denial Actions are arbitrary and capricious 

because they rely on the RIN-passthrough theory, which ran counter to the 

evidence before the EPA.

The APA requires us to “set aside agency action if the agency . . .

‘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.’” Sw. Elec. Power Co., 

920 F.3d at 1013 (quoting State Farm, 463 U.S. at 43) (cleaned up). That 

includes agency action that is “premised on reasoning that fails to account 

for relevant factors or evinces a clear error of judgment.” Univ. of Tex. M.D. 

Anderson Cancer Ctr., 985 F.3d at 475 (internal quotation marks and citation 

omitted).

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Petitioners take issue with EPA’s RIN-passthrough economic 

theory—that is, the agency’s conclusion that the “market-based design of 

the RFS program and the RIN-based compliance system have equalized the 

cost of compliance among all market participants.” EPA made two findings

to support its RIN-passthrough theory: The first is that the price per RIN at

any given point in time is identical for all refineries nationwide. The second is

that market prices for fuel and RIN costs correspond, which means all 

refineries could offset 100% of their RIN costs by raising the price of their fuel 

products, thereby passing RIN costs along to their customers. Petitioners 

claim those two findings are contrary to the evidence before EPA.

We agree that EPA’s RIN-passthrough theory is contrary to the evidence. EPA’s second finding—that all refineries can completely pass on 

their RIN costs—is so implausible as applied to petitioners that it cannot be 

ascribed to a difference in view or agency expertise. See Sw. Elec. Power Co., 

920 F.3d at 1013 (quoting State Farm, 463 U.S. at 43). 

Petitioners have demonstrated that the local markets in which they 

operate are inefficient. Calumet’s exemption petition, for example, included

market price data from the local “micro-market” it operated in as compared 

to Pasadena, Texas. Pasadena is an example of an economically efficient 

market—that is, a market in which EPA’s general conclusion about RIN 

passthrough holds true—so the price premium for fuel there matches the 

market price of RINs. Not so with Calumet’s micro-market: Prices there are 

lower than in Pasadena, which means that fuel is discounted by more than the 

corresponding RIN market price.

EPA does not seriously engage with petitioners’ refinery-specific 

market data. The agency’s two responses are insufficient: 

First, EPA’s conclusions about fuel market efficiency in general do not 

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sion by “examin[ing] available market data, as well as studies by outside parties and numerous public comments.”44

 That allowed the agency to conclude that “the RIN costs and RIN discount were fully passed through to 

wholesale purchasers and reflected in the market prices of petroleum fuel and 

blended fuel . . . .”45 But EPA’s macro-level analysis about fuel markets only 

supports a conclusion that passthrough can occur in fuel markets generally—

it does not rule out the existence of inefficient fuel markets. And those are 

the markets in which petitioners operate. 

Second, EPA glosses over petitioners’ refinery-specific data proving

they operate in inefficient local markets that do not allow for RIN cost passthrough. In response to Calumet’s data, for example, all EPA said was that 

the Pasadena market demonstrated “the RIN price is fully passed through.” 

_____________________

44 EPA, EPA-420-R-22-011, June 2022 Denial of Petitions for RFS Small Refinery 

Exemptions (2022), at 32. Petitioners’ attempts to challenge EPA’s conclusions about 

these studies are not meritorious. EPA concluded that these studies “on balance . . . provide more evidence in support of the conclusion that RIN costs are passed through than 

evidence to suggest they do not.” Petitioners interpret those studies differently from how

EPA does. But that’s not enough for us to conclude that EPA’s conclusion is counter to 

the evidence. EPA provided a reasonable explanation as to why it questioned the studies 

petitioners identified when the agency pointed to potential methodological infirmities in 

each. Petitioners’ reply briefing does not explain why EPA’s critiques are irrelevant or 

incorrect. It cannot be said that petitioners’ studies made it unreasonable for EPA to reach 

a conclusion opposite to that held by petitioners.

Additionally, petitioners cite a GAO report that is not in the administrative record, 

U.S. Gov’t Accountability Off., GAO-23-104273, Renewable Fuel Standard: Actions 

Needed to Improve Decision-Making in the Small Refinery Exemption Program (2022). 

Generally, we do not review information that was outside the record when the agency made 

its decision. See Luminant Generation Co. v. EPA, 675 F.3d 917, 925 (5th Cir. 2012). Even 

though the GAO report is based on evidence available at the time the agency made its decision, petitioners cannot—and do not—contend that its conclusions and findings are based

solely on data in the record. We therefore exclude the GAO report from our analysis.

45 EPA, EPA-420-R-22-011, June 2022 Denial of Petitions for RFS Small Refinery 

Exemptions (2022), at 32.

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That’s not responsive—both petitioners and EPA agree Pasadena is efficient. 

The problem is that Calumet does not operate in Pasadena. EPA leaves 

unrebutted petitioners’ actual contention—that lower sale prices in the 

micro-market relative to the efficient Pasadena market prove that Calumet, 

like other petitioners, cannot pass through the costs of the RINs it purchases.

EPA’s second finding is also contrary to the evidence because petitioners are unable to purchase RINs ratably. Ratable purchasing is an underlying premise of EPA’s second finding—a refinery must be able to purchase 

RINs at the same time they sell fuel in order for the market price to correspond with the price of RINs. That’s not an option available to petitioners. 

Take TSAR for example: Given the amount of fuel it produces, it would need 

to buy 75,000 RINs per day. But a trade size of 75,000 RINs is “essentially 

unheard of” in the RIN market—most RINs are sold in “a clip of ‘1 million’ 

at a time.” Indeed, as TSAR explained to the EPA, it can’t even find a RIN 

broker willing to transact at such low RIN quantities. 

EPA brushes that evidence aside. In response to TSAR, the agency

merely restates its prior assertion that “small refineries can enter into contracts with various RIN brokers to purchase RINs on a ratable basis.” The 

agency supports its assertion by dreaming up a hypothetical contract—filled 

with unsubstantiated speculation about terms such RIN clip sale prices and 

broker service fees—that TSAR might be able to negotiate. But EPA never 

explains why it believes small refineries can get contract terms like those. 

Unsubstantiated agency speculation does not overcome petitioners’ proven 

inability to purchase market-rate RINs ratably.

IV.

Petitioners complain that EPA acted arbitrarily and capriciously by 

failing to provide sufficient guidance as to the information small refineries 

should submit as part of their exemption petitions under the agency’s new 

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interpretation and RIN passthrough theory. 

We disagree with petitioners. As a general matter, courts cannot compel agencies to act.46

 Petitioners do not allege that the CAA expressly 

requires EPA to issue such guidance. An agency’s control over its timetables 

is entitled to considerable deference.47 That EPA has yet to make good on its 

promise to provide further guidance does not render the agency’s current 

(lack of) guidance arbitrary and capricious.

* * * * *

In summary: The challenged Denial Actions are locally or regionally 

applicable. EPA’s motion to transfer venue to the District of Columbia

Circuit is DENIED. 

The EPA’s denials of petitioners’ small refinery exemption petitions 

are impermissibly retroactive. Furthermore, the agency’s interpretation of 

the small refinery exemption petition provisions of the CAA is contrary to 

law and arbitrary and capricious as applied to petitioners’ exemptions. The 

petitions for review are GRANTED. The challenged adjudications are

VACATED and REMANDED for further consideration.

_____________________

46 See Norton v. S. Utah Wilderness All., 542 U.S. 55, 64 (2004) (“[A] claim under 

§ 706(1) can proceed only where a plaintiff asserts that an agency failed to take a discrete 

agency action that it is required to take.” (emphases omitted)).

47 See Charles H. Koch, Jr. & Richard Murphy, 4 Admin. L. & 

Prac. § 11:50 (Westlaw).

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Patrick E. Higginbotham, Circuit Judge, dissenting:

Congress carefully crafted the Renewable Fuel Standard (“RFS”) 

program of the Clean Air Act to nudge the nation toward clean renewable 

fuel sources1 and Congress, in light of “the advantages of expeditious and 

authoritative review of all national standards in the D.C. Circuit,” also 

implemented a judicial review venue provision that “priorities efficiency” in 

the form of 42 U.S.C. § 7607(b)(1).

2 Today we impermissibly interfere with 

these Congressional mandates by finding that venue is proper in this Circuit, 

contrary to the text, structure, and purpose of § 7607(b)(1). I would find that 

venue is only proper in the D.C. Circuit, consistent with the actions of the

four other circuit courts that have addressed this very case, and dissent. 

I.

The majority correctly describes the overall mechanics of the CAA’s 

venue provision.

3 At step one, we determine whether a final agency action is 

“nationally applicable,” as distinguished from a “locally or regionally 

applicable” action. If “nationally applicable,” venue is only proper in the 

D.C. Circuit.4If we find that the challenged action is “locally or regionally” 

applicable, we proceed to step two. At this second step, a “locally or 

regionally applicable” action must be reviewed in the D.C. Circuit if (1) it is 

“based on a determination of nationwide scope or effect” and (2) the 

Administrator “finds and publishes that such action is based on such a 

_____________________

1 Pub. L. No. 110-140, 121 Stat. 1492.

2 41 Fed. Reg. 56767 (Dec. 30, 1976) (Comments of G. William Frick). 

3 See generally 42 U.S.C. § 7607(b)(1). “Had Congress wanted to prioritize 

efficiency, it could have authorized direct circuit-court review of all nationally applicable 

regulations, as it did under the Clean Air Act.” Nat’l Ass’n of Mfrs. v. Dep’t of Def., 583 

U.S. 109, 130 (2018).

4 42 U.S.C. § 7607(b)(1).

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determination”5 The majority opinion errs at both steps of the venue 

analysis, inappropriately finding that venue is proper in this Circuit. 

A.

According to the majority, “[i]n-circuit precedent” controls the 

outcome of the venue analysis at step one. As we are supposedly obliged to

look to the “legal effect—and not the practical effect—of an agency action” 

to determine whether the action is “nationally applicable,” the Denial 

Actions must be “locally or regionally applicable” because they do not 

“change regulated entities’ legal obligations” for “all states.” With due 

respect, this “legal effect” rule runs counter to the text, structure, and 

purpose of the CAA’s venue provision. 

As a starting matter, the majority’s description of the “legal effect” 

rule as in-circuit precedent relies on Texas 2016 to support its assertion. In 

Texas 2016, both “parties agree[d] that the [agency action] under review 

[was] a locally or regionally applicable action.”6 Whether the “legal” or 

“practical” effect of an agency action determines its scope was not before the 

Court.7 As a result, the panel’s statement in Texas 2016 that “[t]he question 

of applicability turns on the legal impact as a whole” is dicta.

Issues with “precedent” aside, this quest reads words into the statute 

that are not there. Section 7607(b)(1) refers only to agency actions that are

“nationally applicable.” Nowhere does the text of the statute reference or 

suggest that Congress intended to distinguish between “legal” and 

_____________________

5

Id.

6 Texas v. EPA, 829 F.3d 405, 419 (5th Cir. 2016) (“Texas 2016”).

7

Id.

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“practical” effects. Indeed, this part of the statute does not refer to “effects” 

at all. The question is one of “national applicability.”

Not only does the majority read new words into the statute, but in 

fashioning its new “legal effect” theory, they elide Texas 2016’s reference to 

the plain meaning of the term “nationwide” and ignore Texas 2011, which 

also defines the key terms of the statute by reference to the words’ plain 

meaning.8Instead, we should look to the plain meaning of “nationally” to 

understand what Congress set out to achieve with § 7607(b)(1). 

“Nationally” generally means “throughout the whole nation.”9 As 

commonly understood, a reasonable person would measure “nationally 

applicable” by looking to “the location of the persons or enterprises that the 

action regulates.”10 Applying this definition, the Denial Actions are here 

inescapably nationally applicable: they apply one consistent statutory 

interpretation and economic analysis to thirty-six small refineries, located in 

eighteen different states, in the geographical boundaries of eight different 

circuit courts. Without the siren song of the war against the administrative 

state, they are, for all intents and purposes, “applicable” across the 

“nation.”

_____________________

8 See Texas v. EPA., No. 10-60961, 2011 WL 710598, at *4 n.4 (5th Cir. Feb. 24, 

2011) (“Texas 2011”).

9 See Texas 2016, 829 F.3d at 420 n. 22, defining “nationwide” as “throughout the 

whole nation.” “National” means “of or relating to a nation.” Nation, Merriam Webster

Dictionary, https://www.merriam-webster.com/dictionary/national (last visited Nov. 19, 

2023); “Nationally” means “in a national manner; as a nation; with regard to the nation as 

a whole.” Nationally, Oxford English Dictionary, 

https://www.oed.com/dictionary/nationally_adv?tab=meaning_and_use#35387357 (last 

visited Nov. 19, 2023).

10 Texas 2011, 2011 WL 710598, at *3 (citing New York v. EPA, 133 F.3d 987, 990 

(7th Cir. 1998)). See also JOHN F. MANNING, WHAT DIVIDES TEXTUALISTS FROM 

PURPOSIVISTS?, 106 COLUM. L. REV. 70, 76 (2006).

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By applying the plain meaning of “nationally” along with this Court’s 

precedents, venue is proper only in the D.C. Circuit. In Texas 2011, we found 

an agency action to be nationally applicable when it applied to only thirteen

states and seven different circuit courts.11 Here, we have eighteen states 

within eight different circuits, all facing the same new statutory 

interpretation and economic analysis. In Texas 2020, this Court found that 

the agency action in question was “locally or regionally” applicable because 

it only applied to four counties within the State of Texas,12 and to Sierra Club 

v. EPA, in which we similarly found that the agency action was not 

“nationally applicable” because it dealt exclusively with a State 

Implementation Plan (“SIP”) for the State of Louisiana.13 Even American 

Road &Transportation Builders Association v. EPA, which Texas 2016 cites 

favorably to fashion its “legal effects” pronouncement, dealt with the denial 

of a SIP exclusively applicable to the State of California.14 Texas 2020, Sierra 

Club, and American Road, when compared to the facts of this case and when

the term “nationally applicable” is given its common sense reading, require 

transfer of this case to its proper venue in the D.C. Circuit. 

By the majority’s reading of § 7607(b)(1), if the EPA denied the 

petitions of small refineries located in every single U.S. state and territory in 

one single agency action, this denial action would still not be “nationally 

applicable” because it does not have any binding “legal effect” on future 

hardship petitions. That result simply defies common sense.

_____________________

11 Texas 2011, 2011 WL 710598, at *3.

12 Texas v. EPA, 983 F.3d 826, 833 (5th Cir. 2020) (“Texas 2020”).

13 Sierra Club v. EPA, 939 F.3d 649 (5th Cir. 2019).

14 Am. Road & Transp. Builders Ass'n v. EPA, 705 F.3d 453, 455–56 (D.C. Cir. 2013).

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The proffered new rule also “does violence . . . to the structure and 

language of the statute.”15 Section 7607(b)(1) refers to “final agency action,” 

and the Administrative Procedure Act defines “agency action” to include 

both rulemakings and adjudications.16 Section 7607(b)(1) then contemplates 

scenarios, such as this one, in which an agency may proceed through an 

“action,” such as an adjudication, that is of “national applicability.” But as

adjudications lack “legal effect” beyond the parties involved, they could 

never be “nationally applicable” as defined by the majority. Thus, the 

majority’s “legal effects” reading of the statute effectively removes all

“adjudications” from the ambit of § 7607(b)(1), contrary to the plain text of 

the statute. 

Additionally, this “legal effects” rule offers no meaningful guidance 

to litigants, particularly problematic when considering that venue provisions 

should “draw bright lines to minimize waste and expense of litigation over 

whether a case has been brought in the right court.”17 Its new rule begs the 

question: even if we were to require “legal effects,” why do those effects 

have to be “future” legal effects? And why are “present” legal effects, which 

in this case, are felt over a large swath of the country, insufficient? The 

majority’s now re-written § 7607(b)(1) then reads: 

[a] petition for review of . . . any . . . nationally applicable 

regulations[with futurelegal effects] promulgated, or final action 

taken [minus adjudications], by the Administrator under this 

chapter may be filed only in the United States Court of Appeals 

for the District of Columbia.

_____________________

15 Smith v. United States, 508 U.S. 223, 240 (1993).

16 See 5 U.S.C. 551(13). 

17 41 Fed. Reg. 56767 (Dec. 30, 1976) (Comments of G. William Frick).

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Contrary to the majority’s re-working of the statute, I would simply 

conduct the venue analysis by applying the plain meaning of § 7607(b)(1). 

The EPA’s Denial Actions, affecting eighteen states within the geographical 

boundaries of eight different circuit courts, are nationally applicable, as they

apply one consistent statutory interpretation and economic analysis to small 

refineries nationwide. This should have been the end of the Court’s venue 

analysis, and venue is only proper in the D.C. Circuit.

B.

Alternatively, I would find that the Denial Actions should be transferred to the D.C. Circuit at step two of the venue analysis. They were “based 

on a determination of nationwide scope or effect” and the Administrator 

made and published the required determination. The plain meaning of the 

statute’s key terms and this Circuit’s precedents command this result. 

“Determinations” are “the justifications the agency gives for the action and they can be found in the agency’s explanation of its action. They are 

the reason the agency takes the action that it does.”18 “[T]he agency should 

identify the core determinations in the action.”19 Here, “[b]ecause the statute speaks of the determinations the action ‘is based on,’ the relevant determinations are those that lie at the core of the agency action.”20 Section 

7607(b)(1), moreover, requires this Court look to the “scope” or “effect” of 

the relevant determination and determine whether it was “nationwide.” In 

this context, “[s]cope” means “[t]he area covered by a given activity or subject,” and “effect” means “[s]omething brought about by a cause or agent; 

_____________________

18 See Texas 2016, 829 F.3d at 419. 

19 Id.

20 Id.

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result.”21 Altogether, this Court must then look to the core determinations 

that the EPA has identified as the justifications for the Denial Actions, and it 

must independently determine if they have nationwide scope or effect. 

The EPA identified the two determinations at the core of the Denial 

Actions: (1) its new interpretation of the CAA’s disproportionate hardship 

provision; and (2) its economic analysis of the nationwide market for RINs.

The scope and effect of these core determinations are nationwide, as they are

applicable to all small refineries no matter the location or market in which 

they operate.

The majority, however, takes issue with the EPA’s identification of its 

core determinations. In their view, the EPA’s core determinations for the

Denial Actions are “flatly contradicted” by the agency’s position on the merits. The majority faults the EPA for “consider[ing] each petition on the merits . . . and individual refinery information.” But there is no contradiction in 

the EPA ensuring that its core determinations hold up when presented with 

potentially differing data in the individual petitions. While of course the 

agency considered and responded to the small refineries’ comments (else, 

the action would have surely been arbitrary and capricious), there can be multiple determinations that influence an agency’s actions. What the majority 

ignores is that for venue purposes, what matters are the EPA’s core determinations. In the case of the Denial Actions, these determinations were of nationwide scope and effect. And because the Administrator made and published the required determination, venue is only proper in the D.C. Circuit. 

II.

_____________________

21 Id. at 421 n. 20 & 21. 

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There remainsthe matter of what our sister circuits have already done 

with this exact same case. The Third, Seventh, and Tenth Circuits 

transferred the relevant petitions to the D.C. Circuit, and the Ninth Circuit 

dismissed the petitions. No Circuit has kept the case for itself—until today. 

Congress designed § 7607(b)(1) to “prioritize efficiency,”22 and with 

the majority’s decision today, this Court has impermissibly interfered with 

Congress’s stated preference for “centralized review of national issues” over 

“piecemeal review . . . in the regional circuits.”23 To these eyes, its decision

looks away from “general congressional direction in an attempt to do 

justice,” an unfortunate overreach this day by my colleagues.

24 I must 

respectfully dissent.

_____________________

22 Nat’l Ass’n of Mfrs., 583 U.S. at 130.

23 Texas 2011, 2011 WL 710598, at *4. 

24 41 Fed. Reg. 56767 (Dec. 30, 1976) (Comments of G. William Frick).

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