American Petroleum Institute v. Roy Cooper, III
718 F.3d 347
4th Cir.2013Background
- API and AFPMA challenged NC's Ethanol Blending Statute in district court as preempted by PMPA, the federal renewable fuel program, and the Lanham Act.
- Statute requires importers to offer unblended gasoline and prohibits contracts restricting splash blending by retailers.
- Two blending methods exist: inline blending at terminals and splash (below-the-rack) blending by retailers; plaintiffs claim splash blending risks poorer quality and trademark control.
- District court granted facial and as-applied summary judgments for Defendants, holding statute consistent with federal program and PMPA/MAPA goals.
- Fourth Circuit vacated in part and remanded for further factual development on Lanham Act preemption; affirmed on PMPA and federal program preemption.
- Key issue is whether splash blending, by retailers, unduly impairs trademark quality control and may be preempted under Lanham Act.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Lanham Act preemption as applied | Plaintiffs (APIs) argue splash blending harms trademark quality control. | Defendants contend Blending Statute does not significantly hinder quality controls and may be accommodated post hoc. | Vacate and remand for further factual development on effect of splash blending. |
| PMPA preemption scope | PMPA preempts state laws affecting franchise terminations or relationships. | 1994 amendments narrowed PMPA preemption, leaving Blending Statute non-preempted. | Statute not preempted by PMPA. |
| Federal Renewable Fuel Program preemption | Blending Statute interferes with EPA's renewable fuel mandates and RIN mechanics. | Statute aligns with program goals and does not obstruct RIN transfer or compliance. | Not preempted by the federal renewable fuel program. |
| Opt-out theory of preemption | Suppliers can avoid the statute by limiting unblended sales, undermining preemption. | Opt-out does not rescue a preempted statute from preemption. | Rejected as a dispositive defense; does not resolve preemption entirely. |
Key Cases Cited
- Shell Oil Co. v. Commercial Petroleum, Inc., 928 F.2d 104 (4th Cir. 1991) (Lanham Act quality-control framework; trademark controls essential for genuineness)
- Mobil Oil Corp. v. Virginia Gasoline Marketers & Automobile Repair Ass'n, 34 F.3d 220 (4th Cir. 1994) (Lanham Act preemption framework; contextual limits when state rules do not affect quality control)
- Wyeth v. Levine, 555 U.S. 555 (2010) (Congressional purpose as touchstone in preemption; interpret to harmonize statutes)
- Cox v. Shalala, 112 F.3d 151 (4th Cir. 1997) (express/field/conflict preemption framework; supremacy clause context)
- Arizona v. United States, 133 S. Ct. 2492 (2012) (conflict preemption and field mechanics; federal objectives as touchstone)
- Columbia Venture, LLC v. Dewberry & Davis, LLC, 604 F.3d 824 (4th Cir. 2010) (presumption against preemption; harmonization of federal and state statutes)