Sinclair Wyo. Ref. Co. v. U.S. Envtl. Prot. Agency
887 F.3d 986
| 10th Cir. | 2017Background
- Congress amended the Clean Air Act to create the Renewable Fuel Standard (RFS) program and allowed small refineries to petition EPA for exemption from RFS requirements if compliance would cause "disproportionate economic hardship." 42 U.S.C. § 7545(o)(9)(B).
- DOE conducted a 2011 Small Refinery Exemption Study with a two-part scoring matrix (structural impacts and three "viability" metrics) and recommended exemptions for certain refineries; EPA must "consult" with DOE and "consider" the study when evaluating petitions.
- Sinclair petitioned EPA for extensions for two Wyoming refineries; DOE recommended 50% waivers for both under its matrix, but EPA denied both petitions.
- EPA’s denials emphasized a long-term "viability" requirement—i.e., an exemption is warranted only if compliance threatens the refinery’s continued operation—effectively making risk of closure a necessary condition.
- Sinclair challenged EPA’s denials in the Tenth Circuit. The court applied Skidmore (not Chevron) deference to EPA’s informal adjudications and concluded EPA exceeded its statutory authority by importing a required viability/closure test that reads "disproportionate" out of the statute.
- Court vacated EPA’s decisions for both Sinclair refineries and remanded for further proceedings consistent with the opinion.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Standard of review for EPA’s informal adjudication | EPA decisions are informal and entitled only to Skidmore; Chevron does not apply. | EPA argues Chevron applies and its interpretation is entitled to deference. | Skidmore deference applies because EPA’s decisions arose from informal adjudication and lack rulemaking force. |
| Meaning of "disproportionate economic hardship" | "Hardship" includes severe burdens short of threatening continued existence; Congress required a comparative (disproportionate) analysis. | EPA contends viability (long-term ability to remain competitive) is an appropriate, controlling measure of hardship. | "Disproportionate economic hardship" is broader than an existential-closure test; EPA’s required-viability reading is inconsistent with the statute. |
| Whether EPA lawfully required a threat to long-term viability/closure as necessary for relief | Sinclair: EPA improperly read a closure/viability requirement into the statute, ignoring comparative/disproportionate analysis and other DOE metrics. | EPA: viability metrics (including risk of closure) are legitimate factors drawn from DOE study; EPA may weigh DOE recommendations and other economic factors. | EPA exceeded its statutory authority by making a threat to long-term viability a necessary condition; that interpretation is neither the plain meaning nor persuasive under Skidmore. |
| Remedy | Sinclair sought vacatur/remand. | EPA argued for deference and upholding denials. | Court vacated EPA’s denials of Sinclair’s petitions and remanded for further proceedings consistent with opinion. |
Key Cases Cited
- Chevron U.S.A., Inc. v. Natural Resources Defense Council, 467 U.S. 837 (1984) (two-step framework for judicial review of agency statutory interpretation)
- United States v. Mead Corp., 533 U.S. 218 (2001) (Chevron applies only when agency action has force of law; otherwise apply Skidmore)
- Barnhart v. Walton, 535 U.S. 212 (2002) (informal agency interpretations may warrant deference depending on persuasiveness)
- Skidmore v. Swift & Co., 323 U.S. 134 (1944) (weight of agency interpretation depends on persuasiveness factors)
- Hermes Consolidated, LLC v. EPA, 787 F.3d 568 (D.C. Cir. 2015) (upheld EPA’s consideration of viability metrics under Chevron analysis)
- Lion Oil Co. v. EPA, 792 F.3d 978 (8th Cir. 2015) (upheld EPA’s use of a long-term viability-focused measure of hardship under deferential review)
- City of Arlington v. FCC, 569 U.S. 290 (2013) (addresses step-zero and scope of Chevron deference)