American Petroleum Institute v. United States Environmental Protection AgencyAmerican Petroleum Institute v. United States Environmental Protection Agency
USLW 2733,
AMERICAN PETROLEUM INSTITUTE and National Petroleum Refiners
Association, Petitioners,
v.
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY and Carol M.
Browner, Administrator, United States
Environmental Protection Agency, Respondents,
Renewable Fuels Association, Intervenor.
Nos. 94-1502, 94-1540, 94-1590 and 94-1654.
United States Court of Appeals,
District of Columbia Circuit.
Argued Feb. 16, 1995.
Decided April 28, 1995.
On Petition for Review of an Order of the Environmental Protection Agency.
Michael F. McBride argued the cause for petitioners American Petroleum Institute and National Petroleum Refiners Ass'n. With him on briefs were David T. Deal, George W. Frick, John E. Reese, and Maurice H. McBride.
James W. Moorman argued the cause for petitioner American Methanol Institute. With him on brief was Jonathan R. Stone and Frederick R. Anderson.
Gerard R. McConnell filed the brief for petitioner Oxygenated Fuels Ass'n, Inc.
Mary E. Ward and Timothy Burns, U.S. Dept. of Justice, argued the cause for respondents. With them on brief were Lois J. Schiffer, Asst. Atty. Gen., U.S. Dept. of Justice, Alan W. Eckert, Associate Gen. Counsel, and John T. Hannon, U.S. E.P.A.
On joint brief for intervenors Renewable Fuels Ass'n and Corn Refiners Ass'n were Barry B. Direnfeld, Robert S. Taylor, Robert V. Zener, Michael E. Ward, Stephen L. Urbanczyk, and Eric M. Braun.
On joint brief for amici curiae American Farm Bureau Federation, et al. were John J. Rademacher, James D. Keast, and Jeff Masten.
Elaine Lubin filed the brief for amicus curiae Citizen Action.
L. Steven Grasz filed the brief for amicus curiae Governors' Ethanol Coalition.
Before WILLIAMS, SENTELLE, and RANDOLPH, Circuit Judges.
Opinion for the Court filed by Circuit Judge SENTELLE.
SENTELLE, Circuit Judge:
The American Methanol Institute, the American Petroleum Institute, the National Petroleum Refiners Association, and the Oxygenated Fuels Association, Inc. (hereinafter "petitioners") challenge the promulgation by the Environmental Protection Agency ("EPA") of a renewable oxygenate requirement in its regulations for the reformulated gasoline program under the Clean Air Act. Upon review, we agree with petitioners that EPA lacked the authority to promulgate such a requirement.
I. BACKGROUND
In 1990, Congress established the reformulated gasoline program ("RFG") in section 211(k),
The primary oxygenates added to RFG to make it at least two percent oxygen by weight are ethanol and methyl tertiary butyl ether ("MTBE"). Ethanol, primarily made from corn, is considered renewable since corn can be regrown year after year. By contrast, MTBE is derived primarily from nonrenewable resources such as natural gas and petroleum. A renewable oxygenate that is not yet in common use is ethyl tertiary butyl ether ("ETBE"), which is derived from ethanol.
During the comment period for the RFG program, supporters of ethanol had argued that the volatile organic compound ("VOC") emission standards in the program,
In August 1994, EPA issued a final renewable oxygenate rule ("ROR") for RFG. Regulation of Fuels and Fuel Additives: Renewable Oxygenate Requirement in Reformulated Gasoline, 59 Fed.Reg. 39,258 (1994). The ROR adopted the proposed requirement that thirty percent of the oxygen in RFG be derived from renewable sources. EPA noted that at the time the ROR was promulgated, the two most common oxygenates were ethanol and MTBE. Id. at 39,259. In justification of the rule, EPA stated that the ROR 1) will help conserve fossil energy resources and minimize any detrimental effects the RFG program may have on energy consumption; 2) has the potential to provide global warming benefits by stimulating the market for renewable oxygenates; and 3) will maintain the benefits of the RFG program and increase those benefits through incentives for increased ETBE use in the summer, displacing ethanol use during those months. Id. at 39,262.
In the overview of the ROR, EPA observed that through various projects Congress and the Executive Branch have promoted the use of renewable fuels and the development of the renewable fuels industry to enhance domestic energy security, reduce oil imports, conserve fossil energy resources, and reduce emissions of greenhouse gases. Id. at 39,261. It also stated that under the oxygenated fuels program of the CAA,
EPA stated that ethanol is likely to be the dominant renewable oxygenate used to meet the ROR, especially during the initial years of the program, since it is the only renewable oxygenate produced in large quantities. However, EPA also concluded that ethanol cannot be blended in the summer months to meet the RFG emission requirements so that its use will be concentrated in the winter months. Id. at 39,272. Moreover, EPA observed that the production of ETBE, which can be used year round without volatility problems, is expected to be virtually non-existent in 1995, although it expected its use to increase by 1996 through the conversion of MTBE facilities. Id.
Petitioners challenge EPA's promulgation of the ROR, arguing that EPA lacked the statutory authority to impose a mandate to use renewable oxygenates in RFG, that the ROR violates the CAA and undermines VOC emission reductions, that EPA failed to consider the ROR's environmental impacts, and that the ROR is arbitrary and capricious because it interferes with California's RFG program. Specifically, petitioners argue that
Petitioners argue that Congress set specific goals and factors for EPA to seek in
Moreover,
EPA maintains that the ROR is within its authority because it is designed to ensure that the emissions reduction requirements for RFG are achieved in a way that reasonably "optimize[s] the resulting impacts on cost, energy requirements, and other health and environmental impacts." See 59 Fed.Reg. at 39,263.
EPA asserts that its interpretation is entitled to deference under Chevron,
Although petitioners assert that under Chevron 's step one analysis EPA has no authority to issue the ROR, EPA responds that the plain language of
Thus, the term "requirements," EPA asserts, does not limit it to promulgation of emission standards, since when Congress wanted to limit EPA's authority it did so expressly. See, e.g.,
As for petitioners' argument that EPA was required to adhere to the requirements of
II. ANALYSIS
We must reverse EPA's decision to require renewable oxygenates in its final rule if it is arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law. See Motor Vehicle Mfrs. Ass'n of the United States, Inc. v. EPA,
We conclude that the plain meaning of
While EPA relies on the first sentence of
In effect, EPA argues that because Congress has not explicitly limited its authority to promulgate a renewable oxygenate requirement, its interpretation of
Our conclusion is supported by
There is a clear parallel between Amoco Oil Co. and the instant case since the ROR's mandate to use renewable oxygenates necessarily controls the use of nonrenewable oxygenates. This suggests that EPA's power to control a fuel or fuel additive already in commerce is controlled by
In light of our conclusions above, we need not address petitioners' remaining arguments about the ROR.
III. CONCLUSION
Based on the foregoing reasons, the court concludes that EPA lacked the authority to promulgate the ROR under
Notes
EPA contends that judicial review of an objection to the ROR based on EPA's obligations under Sec. 7545(c) is foreclosed because these objections were not raised before the agency in accordance with the requirements of Sec. 7607(d)(7)(B). Although we consider the question a close one, we find that the objection was adequately raised before EPA. The ROR that EPA finally promulgated grew directly out of an abortive attempt to promulgate an ethanol waiver rule, meant to accomplish a substantially similar purpose. See 56 Fed.Reg. at 39,259. In that docket, one of the petitioners specifically raised the objection in question. EPA considered the record developed in those earlier hearings to be directly relevant to the ROR, and thus incorporated the ethanol waiver docket in its entirety into the ROR record. Id. at 39,258. The question of EPA's obligations under Sec. 7545(c) is thus properly before us