AMERICAN FUEL & PETROCHEMICAL MANUFACTURERS v. ENVIRONMENTAL PROTECTION AGENCY
No. 19-1124
United States Court of Appeals FOR THE DISTRICT OF COLUMBIA CIRCUIT
Decided July 2, 2021
Argued April 13, 2021; Consolidated with 19-1159, 19-1160, 19-1162; On Petitions for Review of an Order of the Environmental Protection Agency
Kevin F. King and Elizabeth B. Dawson argued the causes for the Industry Petitioners. With them on the briefs were Thomas A. Lorenzen, Robert J. Meyers, Richard S. Moskowitz, Robert A. Long, Jr., Thomas R. Brugato, Carlton Forbes, and John Wagner.
Jonathan Berry argued the cause for petitioners Urban Air Initiative, et al. With him on the briefs were C. Boyden Gray and James R. Conde.
Suzanne Beaudette Murray argued the cause for Small Retailers Coalition Petitioners. With her on the briefs was Michael J. Scanlon.
Perry M. Rosen, Senior Attorney, U.S. Department of Justice, argued the causes for the respondent. With him on the brief were Jeffrey Bossert Clark, Assistant Attorney General, and Jonathan D. Brightbill, Principal Deputy Assistant Attorney General.
Ethan G. Shenkman argued the cause for intervenors Growth Energy, et al. in support of respondent. With him on the joint brief were Matthew W. Morrison, Shelby L. Dyl, Jonathan S. Martel, William C. Perdue, Seth P. Waxman, Brian M. Boynton, and David M. Lehn.
Elizabeth B. Dawson argued the causes for intervenor American Fuel & Petrochemical Manufacturers in support of respondent. With her on the brief were Thomas A. Lorenzen, Robert J. Meyers,
Opinion for the Court by Circuit Judge ROGERS.
ROGERS, Circuit Judge: In October 2018, the President directed the Environmental Protection Agency “to initiate a rulemaking to consider expanding Reid Vapor Pressure waivers for fuel blends containing gasoline and up to 15 percent ethanol,” also known as E15, and to “increase transparency in the Renewable Identification Number (RIN) market,” a feature of the Renewable Fuel Standard (“RFS”) program. White House, Fact Sheet: President Donald J. Trump Is Expanding Waivers for E15 and Increasing Transparency in the RIN Market (Oct. 11, 2018) (emphasis omitted). EPA issued a final rule on June 10, 2019, after notice and comment, revising its regulations on fuel volatility and the RIN market. Modifications to Fuel Regulations To Provide Flexibility for E15; Modifications to RFS RIN Market Regulations, 84 Fed. Reg. 26,980 (June 10, 2019) (the “E15 Rule”). In Section II, EPA announced a new interpretation of when the limits on fuel volatility under the Clean Air Act could be waived pursuant to
I.
The Clean Air Act establishes, among other things, “a comprehensive scheme for regulating motor vehicle emission and fuel standards for the prevention and control of air pollution.” Ethyl Corp. v. EPA, 51 F.3d 1053, 1054 (D.C. Cir. 1995).
To safeguard the efficacy of emission control devices in motor vehicles,
Congress was also aware of various benefits of ethanol as compared to gasoline, however. See S. Rep. No. 101-228, at 110 (1989). Because, up to a point, adding ethanol to gasoline increases the fuel‘s RVP, requiring E10 (fuel with 10% ethanol) to satisfy the 9-psi limit “would likely result in the termination of the availability of ethanol in the marketplace.” Id.
For fuel blends containing gasoline and 10 percent denatured anhydrous ethanol, the [RVP] limitation under this subsection shall be one pound per square inch (psi) greater than the applicable [RVP] limitations established under paragraph (1) . . . .
Both kinds of waivers — pursuant to Subsections
In 2010 and 2011, EPA determined that E15 would not impair certain motor vehicles’ emission controls under Subsection 7545(f)(4) and by waivers approved the use of E15 in light-duty motor vehicles made after 2000. See Partial Grant of Clean Air Act Waiver Application Submitted by Growth Energy To Increase the Allowable Ethanol Content of Gasoline to 15 Percent, 76 Fed. Reg. 4,662 (Jan. 26, 2011); Partial Grant and Partial Denial of Clean Air Act Waiver Application Submitted by Growth Energy To Increase the Allowable Ethanol Content of Gasoline to 15 Percent, 75 Fed. Reg. 68,094 (Nov. 4, 2010); see also Grocery Mfrs. Ass‘n v. EPA, 693 F.3d 169, 173 (D.C. Cir. 2012). These waivers did not include the 1-psi waiver that enabled the summer sale of E10, but instead required E15 to meet the generally applicable 9-psi limit. EPA rejected requests to apply the 1-psi waiver to E15, interpreting
In October 2018, the President directed EPA to initiate a rulemaking to consider modifying the volatility limits for E15 so it could “be sold year round rather than just eight months of the year.” White House, Fact Sheet: President Donald J. Trump Is Expanding Waivers for E15 and Increasing Transparency in the RIN Market (Oct. 11, 2018). Section II of the E15 Rule, which EPA issued in June 2019, extended the 1-psi waiver to fuel blends with an ethanol concentration of “at least 9% and no more than 15% (by volume) of the gasoline.” E15 Rule, 84 Fed. Reg. at 27,021 (codified at
Three sets of petitioners challenge Section II of the E15 Rule. Petroleum Petitioners contend that
II.
As a threshold matter, the court addresses whether at least one of the petitioners has standing under Article III of the Constitution to obtain review of the E15 Rule. Steel Co. v. Citizens for a Better Env‘t, 523 U.S. 83, 101–02 (1998); Carbon Sequestration Council v. EPA, 787 F.3d 1129, 1137 (D.C. Cir. 2015). If one of the Petroleum Petitioners has standing, and if their contention that the E15 Rule is contrary to the plain text, context, and history of the Clean Air Act is persuasive, then, absent the severability of Section II, the court must vacate the E15 Rule.
Article III standing requires that a petitioner show an “injury in fact,” a “causal connection” between the injury and the challenged conduct, and a likelihood “that the injury will be redressed by a favorable decision.” Lujan v. Defs. of Wildlife, 504 U.S. 555, 560–61 (1992) (internal quotation marks omitted). The party invoking the court‘s jurisdiction bears the burden of demonstrating a “substantial probability” of standing. Sierra Club v. EPA, 292 F.3d 895, 899 (D.C. Cir. 2002) (quoting Am. Petro. Inst. v. EPA, 216 F.3d 50, 63 (D.C. Cir. 2000)). When standing is not self-evident — for example, as may be true if a petitioner is not directly regulated by the challenged rule — “the petitioner must supplement the record to the extent necessary to explain and substantiate its entitlement to judicial review.” Id. at 900. An association may bring suit on behalf of its members “only if (1) at least one of its members would have standing to sue in [its] own right; (2) the interest it seeks to protect is germane to its purpose; and (3) neither the claim asserted nor the relief requested requires the member to participate in the lawsuit.” Chesapeake Climate Action Network v. EPA, 952 F.3d 310, 318 (D.C. Cir. 2020) (quoting Am. Trucking Ass‘ns v. Fed. Motor Carrier Safety Admin., 724 F.3d 243, 247 (D.C. Cir. 2013)).
One of the Petroleum Petitioners, American Fuel & Petrochemical Manufacturers (“AFPM”), a trade association that “represents most refiners in the United States,” Susan W. Grissom Decl. ¶ 2, has standing. Two of its members, Motiva Enterprises LLC and Sinclair Oil Corporation, could each assert a justiciable claim in its own right. Motiva and Sinclair assert injuries under the doctrine of competitor standing, which recognizes that “economic actors ‘suffer constitutional injury in fact when agencies lift regulatory restrictions on their competitors or otherwise allow increased competition.’” Nat‘l Biodiesel Bd. v. EPA, 843 F.3d 1010, 1015 (D.C. Cir. 2016) (quoting La. Energy & Power Auth. v. FERC, 141 F.3d 364, 367 (D.C. Cir. 1998)). To demonstrate competitor injury, a petitioner must “show an actual or imminent increase in competition.” Sherley v. Sebelius, 610 F.3d 69, 73 (D.C. Cir. 2010). With injury established, the rest of the standing inquiry ordinarily falls into place: the increased competition is caused by the agency‘s action and redressed by restoring the regulatory status quo ante. See Wash. All. of Tech. Workers v. U.S. Dep‘t of Homeland Sec., 892 F.3d 332, 341–42 (D.C. Cir. 2018); Nat‘l Biodiesel Bd., 843 F.3d at 1015.
Motiva and Sinclair produce petroleum products. William Spurgeon Decl. ¶ 4; Adam G. Suess Decl. ¶ 1. They compete with biofuel producers in the motor vehicle fuel market because ethanol is a substitute for the traditional petroleum-based components of gasoline. Spurgeon Decl. ¶ 25. By removing the otherwise applicable 9-psi volatility limit, the E15 Rule is substantially likely to increase demand for E15. Suess Decl. ¶¶ 10–11; see Nat‘l Biodiesel Bd., 843 F.3d at 1015–16; Delta Const. Co. v. EPA, 783 F.3d 1291, 1299–1300 (D.C. Cir. 2015). EPA, upon extrapolating from monthly E15 retail sales data collected in Minnesota between 2015 and 2018, has estimated that “annual per-station sales of E15 would have been about 16% higher had the 1psi waiver been available for E15.” Resp. to Comments at
The other two elements of associational standing are also satisfied. The interests that AFPM seeks to protect are germane to its purpose; it has an “obvious interest in challenging” a rule detrimental to the financial wellbeing of its members. Am. Trucking Ass‘ns, 724 F.3d at 247. Neither the claims asserted regarding EPA‘s statutory violations, nor the relief sought by vacatur requires the participation of AFPM‘s members. See Ctr. for Sustainable Econ. v. Jewell, 779 F.3d 588, 597 (D.C. Cir. 2015). Because AFPM has shown a substantial probability of associational standing, the court need not consider other bases offered by Petroleum Petitioners to establish Article III standing. Ctr. for Biological Diversity v. EPA, 861 F.3d 174, 182 (D.C. Cir. 2017).
III.
Turning to the merits, Petroleum Petitioners contend that the E15 Rule is contrary to the plain meaning of
The court‘s review of EPA‘s interpretation of the Clean Air Act proceeds under the two-step framework announced in Chevron, U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984). See Michigan v. EPA, 576 U.S. 743, 751 (2015); Am. Fuel & Petro. Mfrs. v. EPA, 937 F.3d 559, 574 (D.C. Cir. 2019). The court first asks “whether Congress has directly spoken to the precise question at issue.” Chevron, 467 U.S. at 842. In answering that question, the court exhausts the “traditional tools of statutory construction,” considering the provision‘s text, context, legislative history, and purpose. Id. at 843 n.9; see U.S. Sugar Corp. v. EPA, 830 F.3d 579, 605 (D.C. Cir. 2016). When Congress has written clearly, “that is the end of the matter,” because the court and EPA “must give effect to the unambiguously expressed intent of Congress.” Chevron, 467 U.S. at 842–43. When “the statute is silent or ambiguous with respect to the specific issue,” then the court will uphold EPA‘s interpretation so long as it “is based on a permissible construction of the statute.” Id. at 843.
Our interpretation of
This understanding of “containing” comports with contemporaneous dictionary definitions. When
Statutory context reinforces the conclusion that Congress intended
In contrast, Congress did not include any modifiers in
The statutory history points in the same direction. EPA had regulated fuel volatility before
Other legislative actions by Congress around the same time that it enacted the 1990 Amendments are to the same effect. Ten days before enacting the 1990 Amendments, Congress raised the tax imposed on motor vehicle fuels as part of the High Way Trust Fund. Omnibus Budget Reconciliation Act of 1990, Pub. L. No. 101-508, § 11211(a)(2), 104 Stat. 1388–423 (1990). A lower tax was imposed on “any mixture at least 10 percent of which is alcohol . . . if any portion of such alcohol is ethanol.”
Indeed, EPA itself has previously credited
The defenses of EPA‘s new interpretation of
As to legislative history, EPA and Biofuel Intervenors point out that Congress considered but ultimately rejected the House version of
Lastly, EPA and Biofuel Intervenors maintain that confining
Because the text, structure, and legislative history of
Accordingly, the court will sever and vacate Section II of the E15 Rule and dismiss the remaining petitions as moot.