DC Circ. Panel Won’t Reconsider Test Fuel Ruling

Source: By Juan Carlos Rodriguez, Law360 • Posted: Tuesday, October 20, 2015

Law360, New York (October 19, 2015, 10:52 PM ET) — The D.C. Circuit on Friday declined to revisit its opinion upholding U.S. Environmental Protection Agency rules governing automotive test fuels, but biofuel advocates were mollified by the EPA’s assurances that not all test fuels must be commercially available before approval.

The Energy Future Coalition and its biofuel producer co-petitioners had challenged the EPA’s test fuel rules, which update specifications for test fuel used by manufacturers when testing newly manufactured vehicles for compliance with emissions standards, arguing the rules limited their ability to market experimental fuels with high ethanol content.

Although the D.C. Circuit panel that shot down their challenge declined to modify its opinion upholding the EPA’s rule, attorneys representing the EFC said they were pleased with the overall outcome of their request because the agency ended up taking the position that it has discretion to approve the kinds test fuels envisioned by the petitioners.

“We were pleased by EPA’s response to our petition for panel rehearing. EPA agrees with the petitioners that the agency has discretion ‘to approve an alternative test fuel that is not currently on the market’ and that the agency may base such a decision on ‘future market projections,” said Adam Gustafson, an attorney at Boyden Gray & Associates, which represents the EFC and the other petitioners.

Gustafson said the EPA’s response to the petition for panel rehearing largely resolved the EFC’s concern, as the agency said it does not believe that test fuels are required to mirror current market fuels.

“As a result of this case, the auto industry now has much needed clarity on EPA’s interpretation of its test fuel rule. Before this case, EPA had stated that new certification fuels must be ‘readily available nationwide,’ but the agency renounced that interpretation in this case,” Gustafson said. “EPA now says that next-generation fuels need not be commercially available before the agency may approve them for certifying new vehicles.”

The EFC and its fellow petitioners had asked the D.C. Circuit to review the EPA’s so-called Tier 3 emissions standard for cars and gasoline, which are designed to cut sulfur levels by more than 60 percent starting in 2017. The petitioners argued that that the rule’s commercially available provision prevents gasoline producers from creating new fuel blends containing more ethanol.

They said that the test fuel regulation creates a catch-22 in making a test fuel’s use illegal unless the fuel is first approved for sale in the market and making a fuel’s sale in the market illegal unless the fuel is first approved for use as a test fuel.

The panel found that under the new rule, the EPA is required to ensure that the vehicles are tested under circumstances reflecting actual current driving conditions, so it makes sense to require that those fuels be commercially available. But in its response to the EFC’s request that the panel modify its opinion, the agency made clear it reserves the discretion to allow other types of fuels to be tested.

The petitioners are represented by Adam R.F. Gustafson, C. Boyden Gray and Adam J. White of Boyden Gray & Associates PLLC.

The EPA is represented by Michael C. Augustini, John C. Cruden and Sam Hirsch of the U.S. Department of Justice and Mark M. Kataoka of the U.S. Environmental Protection Agency.

The case is Energy Future Coalition et al. v. U.S. Environmental Protection Agency et al., case number 14-1123, in the U.S. Court of Appeals for the District of Columbia Circuit.

–Additional reporting by Dani Meyer and Aebra Coe. Editing by John Quinn.