Wednesday, January 16, 2013

Grocery Manufacturers Association v. U.S. EPA

Jan 15: 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 Rehearing En Banc. Plaintiffs seek a hearing of the full Court of Appeals following a split 2-1 decision of the Appeals Court in the case 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 [See WIMS 8/17/12]. In the controversial decision, the majority Appeals Court ruled, "Because we hold that no petitioner has standing to bring this action, we dismiss all petitions for lack of jurisdiction."
    In the order, the Appeals Court indicates, "The petition of the American Petroleum Institute and the Food Petitioners for rehearing en banc; the petition of the Engine Products Group for rehearing en banc; and the petition of American Fuel & Petrochemical Manufacturers and International Liquid Terminals Association for rehearing en banc, and the responses to the petitions were circulated to the full court, and a vote was requested. Thereafter, a majority of the judges eligible to participate did not vote in favor of the petitions. Upon consideration of the foregoing, it is ordered that the petitions be denied."
    Judge Kavanaugh indicated that he would grant the petitions and issued a statement dissenting from the denial of the petition for rehearing en banc. In his dissent, Judge Kavanaugh said, "This case concerns a challenge to EPA's E15 waiver decision. The E15 waiver, in conjunction with the statutory renewable fuel mandate, will require petroleum producers to refine and sell E15, a blend of gasoline that contains 15 percent ethanol. The E15 waiver also will increase the demand for corn and thus increase corn prices for food producers. Two industry groups separately challenged the E15 waivers -- the food producers who will pay higher prices for corn and the petroleum producers who will be forced to refine and sell E15. They contended that the E15 waiver will palpably and negatively affect the American food and petroleum industries, with corresponding impacts on American consumers. And they argued that the E15 waiver is unlawful because it exceeds EPA's statutory authority.
    "Even though EPA did not raise a challenge to the standing of the food producers or the petroleum producers, the panel dismissed the case on standing grounds. The panel determined that the food producers have Article III standing but lack prudential standing because, according to the panel, the food producers are not within the zone of interests under the relevant ethanol-related statute. The panel separately held that the petroleum producers lack Article III standing. We must reach the merits if either the food producers or the petroleum producers have standing. In my view, both groups plainly have standing."
    In a footnote to his dissent, Judge Kavanaugh noted, "Although not my focus here, I also note that the E15 waiver apparently will harm some cars' engines, a point made by a third set of petitioners in this case (the engine manufacturers). Indeed, just a few weeks ago, the American Automobile Association warned of the damage E15 will cause to car engines and took the extraordinary step of publicly asking EPA to block the sale of E15." [See Gary Strauss, AAA Warns E15 Gasoline Could Cause Car Damage, USA TODAY, November 30, 2012.]
    The American Fuel & Petrochemical Manufacturers (AFPM), General Counsel Rich Moskowitz, responded to the decision saying, "We are disappointed that the DC Circuit will not rehear the case and will let stand a procedural block that prevents the court from reaching the merits of this important issue. We remain concerned that EPA's partial waiver will result in significant misfueling and will harm consumers. EPA has authorized the sale of an ethanol blend that virtually every automobile manufacturer has warned will damage existing vehicles. We are analyzing the decision and will determine whether to seek review by the Supreme Court. Judge Kavanaugh issued a strong dissent based on EPA's acknowledgment that E15 damages cars and specifically referenced a recent AAA warning calling upon EPA to block the sale of E15." 
    AFPM indicated that several studies have shown that E15 causes engine damage to passenger vehicles, boats and outdoor power equipment, including chainsaws and lawnmowers, and has led AFPM and other industry groups to raise concerns about a fuel not approved for use by the manufacturers of more than 228 million vehicles on the road today. A recent survey by the American Automobile Association (AAA) reported that 95 percent of consumers surveyed had not heard of E15 gasoline which lends credence to the potential for misuse and engine harm as well as creating safety, liability and warranty issues.
    Access the order denying an en banc hearing and the dissent (click here). Access the complete original opinion and dissents (click here). Access a release from AFPM (click here). [#Energy/Ethanol, #CADC]
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