EPA Says Refiners Lack Standing In E15 Misfueling Rule Suit

Source: Inside EPA • Posted: Sunday, March 2, 2014

EPA says refiners and vehicle engine manufacturers lack legal standing for their suit challenging the agency’s rule designed to prevent misfueling of vehicles with 15-percent ethanol blends (E15), saying neither sector can prove injury from the rule and therefore they have no standing — a crucial legal threshold to challenge an EPA rule.

Even if the U.S. Court of Appeals for the District of Columbia Circuit disagrees and finds the groups have standing for the suit, Alliance of Automobile Manufacturers, et al., v. EPAthe agency in a Feb. 24 brief says the court should still reject the litigation because the mitigation rule is a “rational” rulemaking under the Clean Air Act.

EPA issued the mitigation rule to address concerns about misfueling with E15 in vehicles that cannot handle the fuel, after the agency granted Clean Air Act waivers allowing the use of E15 in a limited set of vehicles. Opponents say that E15 will cause vehicle and engine damage, and also sued over the waivers allowing E15.

The D.C. Circuit in a 2-1 ruling issued in 2012 in Grocery Manufacturers Association (GMA) v. EPA rejected the lawsuit over the E15 waivers, after finding that the food and oil industries suing lacked prudential standing to sue over the E15 waivers issued under the Clean Air Act, as the agency’s waivers did not directly regulate them. Critics of the waivers appealed the suit to the Supreme Court, but the justices in 2013 declined to take the case.

Separately, the American Petroleum Institute (API) and the Alliance of Automobile Manufacturers and other vehicle and engine makers, known as the Engine Products Group, filed suit over the misfueling mitigation rule. API and others argue that the measure is an attempt by EPA to rush what critics say is an unsafe fuel to market.

Refiners and engine makers argue that the rule will not ensure against misfueling with E15, creating liability concerns at all points in the E15 fuel supply chain for vehicle damage stemming from misfueling.

However, EPA in its recent brief says that the groups pursuing the mitigation rule suit “spend a significant amount of effort that the use of E15, even in the motor vehicles for which the waiver authorizes use, will damage those vehicles. These claims are not relevant here. Although petitioners plainly believe that the waiver should not have been issued, the validity of the waiver is a closed issue,” in light of the court’s ruling in GMA.

“Even if the court were to vacate the misfueling mitigation rule in its entirety, the sale and distribution of E15 consistent with the terms of the waiver would still be authorized,” EPA notes.

On the merits of the misfueling rule itself, the agency says that neither API nor the Engine Products Group can prove any harm from the rule, which has four mitigation measures: misfueling is prohibited, E15 pumps must display a specific label, product transfer documents must include certain information, and manufacturers, blenders, and distributors of E15 must conduct surveys to assess compliance with the rule.

“In particular, API fails to justify why its members have adequately alleged injury, given that they could avoid all the potential harms they claim simply by choosing not to enter the E15 market. Moreover, API has not provided any evidence that its members even intend to enter that market,” according to EPA.

The Engine Products Group similarly “fails to show how the injuries it claims, which are all consequences of potential decisions by consumers to use E15,” can be traced to the mitigation rule.

All groups involved in the litigation are due to file final briefs April 7. Oral argument in the suit is not yet scheduled.