D.C. Circuit Opinion on Standing Leaves Fate of E15 Uncertain

In a two-to-one opinion in Grocery Mfrs. Ass’n v. EPA, the United States Court of Appeals for the D.C. Circuit recently refused to rule on the merits of a petition to invalidate EPA’s waiver permitting E15, gasoline blended with 15% ethanol, to be sold into domestic commerce.  Petitioning industry groups include trade associations representing engine-product manufacturers and petroleum suppliers, who assert an increase in ethanol content in blended gasoline from the current 10% to the proposed 15% will lead to deterioration of fuel delivery systems, and corn-based food sellers, who assert the increased demand for ethanol will drive up the price of corn.  Writing for the court, Chief Judge Sentelle concluded the engine and petroleum groups lacked Article III standing and the food sellers lacked prudential standing.  It proved difficult for the engine and petroleum groups to advance arguments that “imminent” injury in fact was forthcoming, and the food sellers’ plausible Article III standing argument was side-stepped with an assertion that they were not within the “zone of interests to be protected or regulated by the statute” and were thus without prudential standing.

The recent drive to increase the amount of ethanol in blended gasoline was proposed by ethanol producers as a means for satisfying the Renewable Fuel Standard (RFS) incorporated by Congress into the Clean Air Act (CAA) in 2005.  The RFS requires an increasing volume of renewable fuels to be introduced into domestic commerce each year, with 36 billion gallons required by 2022.  When determining the volume of renewable fuels that should be required for years after 2022, the RFS statute directs EPA to analyze “the impact of the use of renewable fuels on other factors, including job creation, the price and supply of agricultural commodities, rural economic development, and food prices.”  Such a direction indicates that these concerns would also have factored into the pre-2022 volume requirements, and should satisfy the “zone of interests” prudential standing requirement for the food sellers.  Even though the court determined that the statute did not “protect or regulate” the food industry, precedent from other circuits has held prudential standing is non-jurisdictional, and thus waiveable if not advanced by the parties.  A current split in the circuits over whether prudential standing is jurisdictional could propel this case to the Supreme Court to settle the issue; as Judge Kavanaugh indicated in his dissent, “[t]he majority opinion [asserting prudential standing to be jurisdictional] thus creates a deep and important circuit split on this important issue.”

If a court can surmount the standing issue, it will be able to address the merits of the present suit.  Petitioners claim that the waiver was impermissible in light of the statute because the CAA fuel provisions prohibit fuel to be introduced into domestic commerce if it is “not substantially similar to any fuel or fuel additive” certified for use in post-1974 model vehicles.  Since gasoline blended with 15% ethanol was not used during EPA certification of any vehicle emission control system, it does not meet this requirement.  Ethanol producers had to seek a waiver from this prohibition to introduce higher ethanol blends into the market, and such waivers are only granted under the CAA when the EPA determines that the fuel will not cause the emission system in any post-1974 vehicle to fail.

Despite the statutory language directing EPA to either “grant or deny an application” for a waiver, the ethanol industry’s application was granted in the form of two partial waivers, the first issued in November 2010 approving E15, but only for use in 2007 and newer model year vehicles, and the second in January 2011, again with the caveat that approval was for use of E15 in a limited range of model year vehicles, this time 2001-2006 models.  Industry groups challenging the waiver, as well as Judge Kavanaugh in his dissent, argue that both partial waivers were impermissible under the “grant or deny” statutory language and that the agency’s determination that “E15 likely will contribute to the failure of emissions control systems in some cars built before 2001” is directly at odds with the statute’s prohibition on the use of uncertified fuels in all vehicles manufactured after 1974 in the absence of a waiver.  Judge Kavanaugh also stated that the statutory text was unambiguous and EPA’s attempt to interpret it to authorize partial waivers was impermissible in light of the text.  In support of this argument, he noted that other CAA waiver language includes text to effectuate partial waivers where Congress has intended such a result, including another waiver provision in the same statute that permits the agency to “waive, in whole or in part” requirements on oxygenated gasoline. A petition for an en banc rehearing of the panel’s decision was filed on Oct. 10, 2012.

Written by Ashley Ailsworth, GIELR staff

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