Friday, August 17, 2012

Grocery Manufacturers Assoc. v. U.S. EPA (i.e. E15 Petitions)

Aug 17: In the U.S. Court of Appeals, D.C. Circuit, Case No. 10-1380, consolidated with 10-1414, 11-1002, 11-1046, 11-1072, 11-1086. On Petitions for Review of Final Actions of U.S. EPA. In this high profile case, petitioners, trade associations whose members are part of the petroleum and food industries, filed petitions for review of two EPA decisions approving the introduction of E15 -- a blend of gasoline and 15 percent ethanol -- for use in select motor vehicles and engines. In summary, in this controversial split decision, the majority Appeals Court rules, "Because we hold that no petitioner has standing to bring this action, we dismiss all petitions for lack of jurisdiction."
    In sum, U.S. EPA has granted "partial" waivers approving the introduction of E15 for use in model-year 2001 and newer lightduty motor vehicles and engines. These waivers are conditional. E15 manufacturers are required to (1) introduce only E15 that
meets certain fuel quality parameters and (2) submit for approval by EPA a plan for the implementation of "misfueling mitigation conditions" set forth in the EPA decision. The term "misfueling," as used in the EPA decisions, refers to the use of E15 in pre-2001 vehicles and other non-approved vehicles, engines, and equipment. The misfueling mitigation conditions and strategies which EPA set forth as necessary for such a plan included pump-labeling requirements, participation in a pump-labeling and fuel-sample compliance survey, and proper documentation of ethanol content on transfer documents.
    Three sets of industry groups (collectively, Petitioners) representing members who either: (1) manufacture engines and related products (engine manufacturers); (2) sell food (including livestock) that requires corn as an input (food producers); or (3)
produce or handle petroleum and renewable fuels (petroleum suppliers) petitioned the court for review of EPA's E15 waivers. Growth Energy, the waiver applicant, intervened in support of EPA's defense of its waiver decisions.
    Regarding the engine manufacturers, the majority says, "As they admit. . . their engines are not warranted for E15, nor is it clear why manufacturers would be liable for damages from consumer induced misfueling. As for their recall theory, they have failed
to establish any probability that the government would recall engines because third parties had misfueled. . . The engine-products group has not established standing to bring these petitions."
    Regarding the petroleum suppliers, the majority says, "We cannot fairly trace the petroleum group's asserted injuries in fact—the new costs and liabilities of introducing and dealing with E15 -- to the administrative action under review in this case. That action, EPA's approval of the introduction of E15 for use in certain vehicles and engines, does not force, require, or even encourage fuel manufacturers or any related entity to introduce the new fuel. . . In short, the only real effect of EPA's partial waivers is to provide fuel manufacturers the option to introduce a new fuel, E15. . . If anything is "forcing" these entities to incur the costs of introducing a new fuel, it is the obligations set by the RFS, competitive pressures, or some combination thereof. . .
There is not a cause of those costs providing the petroleum group with standing.
    Regarding the food producers, the majority says these petitioners "point out only that their interests are protected by EISA [Energy Independence and Security Act of 2007 (Pub.L. 110-140)], the legislation that set forth the RFS, because EISA requires EPA to review, among other things, "the impact of the use of renewable fuels on ... the price and supply of agricultural commodities ... and food prices" when EPA sets renewable fuel volume requirements in the future. . . However, the statute Petitioners challenge here is the CAA's fuel-waiver provision, Section 211(f)(4 -- not EISA. . . more is required to establish an 'integral relationship' between the statute a petitioner claims is protecting its interests and the statute actually in question. . ."
    The majority rules, "For the above reasons, we hold that no petitioner has standing to bring these claims. We therefore dismiss all petitions for lack of jurisdiction." The dissenting Justice indicates, "Despite the fact that two enormous American industries
will be palpably and negatively affected by EPA's allegedly illegal E15 waiver, the majority opinion tosses the case for lack of standing. . . This suit may proceed if either the food group or the petroleum group has standing. In my view, both have standing. . ."
    The Environmental Working Group (EWG) Vice-President for Government Affairs Scott Faber issued a statement saying, "If gasoline was blended to include 15% ethanol during the current drought, two-thirds or more of the corn crop could be diverted from food and feed to U. S. fuel supplies. That's bad for American consumers, bad for most farmers, and bad for the environment. Today's decision will pave the way for runaway food inflation at a time when Americans are already struggling with rising food prices. Increasing the corn ethanol blend will drive up the cost of feeding animals and cause more engines to fail. And, it will increase emissions of toxic air pollutants and increase pressure to plow up even more grasslands and wetlands. Today's decision should accelerate efforts by policymakers to re-open and reform the corn ethanol mandate."
    Bob Greco, American Petroleum Institute (API) downstream group director said, "Today's court decision is a big loss for consumers, for safety and for our environment. EPA approved E15 before vehicle testing was complete, and we now know that the fuel may cause significant mechanical problems in millions of cars on the road today." API indicated, "E15 may cause significant mechanical problems in millions of cars on the road today, according to a three-year study conducted by the auto and oil industries. Automobile manufacturers have told Congress that vehicle warranties will not cover damage due to E15."

    Greco said, "Moreover, EPA approved E15 even though government research showed potential infrastructure concerns to our nation's gas stations that could lead to serious safety and environmental problems. EPA's decision was premature and irresponsible, and consumers could bear the burden." Half of all retail station equipment in the country is incompatible with E15, according to a thorough
analysis of government and independent research
, conducted for API. He said, "It is astounding that the Court does not accept that refiners, who must comply with the ethanol mandate, have standing to bring this case."
    Access the complete opinion and dissents (click here). Access the statement from EWG (click here). Access the statement from API and link to more information (click here). [#Energy/Ethanol]
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