Governors' Biofuels Coalition

Today the U.S. Court of Appeals for the D.C. Circuit issued a decision denying the petition of the Energy Future Coalition and several biofuel petitioners for review of an EPA rule governing the test fuels used to certify new vehicles for compliance with emissions and fuel economy standards. The challenged rule purports to require an auto manufacturer to demonstrate that a fuel is “commercially available” before it may be approved as an alternative test fuel.

Although we are disappointed by the decision, we agree with the Court’s conclusion that “if EPA permitted vehicle manufacturers to use E30 as a test fuel, there is substantial reason to think that at least some vehicle manufacturers would use it.” The Court quoted Ford Motor Company’s comment that development of such a mid-level ethanol blend fuel “would enable the first steps to the development of a new generation of highly efficient internal combustion engine vehicles.”

We are pleased with the concessions by EPA that led to this decision. In response to petitioners’ arguments, EPA committed to accept automakers’ applications for alternative test fuels without requiring that the fuel be “readily available nationwide.” EPA Brief at 50. The agency further conceded that the rule’s “commercial available” standard is a discretionary “factor[] EPA would consider,” rather than a “mandatory prerequisite” for approving a new test fuel. EPA Brief at 26. And EPA conceded at oral argument that the rule’s reference to “commercial availability” merely “codif[ies] the practice of the agency,” which has been to consider a new fuel’s potential to become commercially viable in the future. Transcript at 23.

Any reasonable consideration of commercial availability must be directed at the future, not the present, since federal law prohibits the sale of fuel that is not “substantially similar” to an existing test fuel, and EPA insists that its rule is “certainly not impossible.” Transcript at 21, ll. 24- 25. Thus, EPA said at oral argument that it will ask how the new fuel is “going to be available on the market,” not whether it is currently available on the market. Transcript at 20, ll. 11-12.

A fuel like E30 will become commercially available if EPA approves it as an alternative test fuel. Other automakers agree with Ford that they need the high octane offered by a mid-level ethanol blend to develop the highly efficient vehicles of the future. Mercedes commented that a vehicle “optimized for a high-octane, mid-blend ethanol fuel . . . can simultaneously fulfill what the customer desires—performance and economy, while reducing the environmental impact.” Joint Appendix at 170. And GM “supports the future of higher octane and higher ethanol content in order to provide a pathway to improved vehicle efficiency and lower [greenhouse gas] emissions.” Joint Appendix at 151. The automakers noted that such vehicles are already available in Europe and could easily be introduced into the United States if they were allowed to certify on the new fuel. Joint Appendix at 146, 170. Automakers will need to sell more efficient vehicles to comply with federal law, and drivers will welcome the better mileage and lower cost offered by a mid-level ethanol blend.