United States: Supreme Court Refuses To Hear Trade Groups' Challenge To E15 Fuel Waivers

Last Updated: November 26 2013
Article by Shimshon Balanson

On June 24, 2013, the U.S. Supreme Court ended a dispute between the ethanol industry and trade groups over U.S. EPA's approval of the use and sale of gasoline blended with 15 percent ethanol. Grocery Mfrs. Ass'n v. EPA, No. 12-1055; Alliance of Auto. Mfrs. v. EPA, No. 12-1167; Am. Fuel & Petrochemical Mfrs. v. EPA, No. 12-1229. Following of a decision by the D.C. Circuit holding that the trade groups lacked standing to challenge EPA's approval of E15, various trade associations representing stakeholders in the engine manufacturing, petroleum, and food industries filed petitions for writ of certiorari with the Supreme Court. The Supreme Court denied those petitions, handing a victory to the ethanol industry.

The dispute stemmed from EPA's statutory duty to approve the introduction of most new renewable fuels. The Renewable Fuel Standard ("RFS") of the Clean Air Act requires qualifying refiners and importers of fuel to bring to market an increasing volume of renewable fuels. Unless a new renewable fuel is "substantially similar" to fuels used in the federal emissions certifications for motor vehicles manufactured after model year 1974, a fuel manufacturer must apply to EPA for a waiver before introducing the new renewable fuel. 42 U.S.C. § 7545(f)(4).

In March 2009, Growth Energy, an ethanol industry trade group, applied for a waiver to introduce E15. In the first of two waiver decisions, EPA approved the introduction of E15 for use in light-duty motor vehicles for model year 2007 and later. See "Partial Grant and Partial Denial of Clean Air Act Wavier Application Submitted by Growth Energy to Increase the Allowable Ethanol Content of Gasoline to 15 Percent," 75 Fed. Reg. 68,094 (Nov. 4, 2010). It denied the waiver for all model-year 2000 and earlier vehicles. Because it was awaiting further testing results from the Department of Energy, EPA deferred its decision for model-years 2001 through 2006 light-duty motor vehicles. After receiving those results, EPA issued a second partial waiver, permitting the use of E15 in light-duty motor vehicles from model-years 2001 through 2006. "Partial Grant of Clean Air Act Wavier Application Submitted by Growth Energy to Increase the Allowable Ethanol Content of Gasoline to 15 Percent," 76 Fed. Reg. 4662 (Jan. 26, 2011).

The three industry groups subsequently petitioned the D.C. Circuit to review EPA's E15 waivers. Growth Energy intervened in support of EPA. In August 2012, in a split decision, the D.C. Circuit dismissed the petitions for lack of jurisdiction. See Grocery Mfg. Ass'n v. EPA, 693 F.3d 169 (2012). Writing for the court, Chief Judge Sentelle concluded that none of the petitioners had standing to bring a claim against EPA.

The engine manufacturers argued that E15 may harm their engines and expose them to warranty and safety-related lawsuits by consumers and the government. Chief Judge Sentelle rejected both arguments, noting that the engine manufacturers had provided "no support for their assertion that E15 'may' damage the engines" and that any potential injury resulting from lawsuits depended on the intervening acts of third parties not before the court. Chief Judge Sentelle similarly rejected arguments of the petroleum trade associations that the partial approval of E15 effectively compelled their members to incur substantial costs to introduce and/or accommodate E15. The court reasoned that the petroleum trade petitioners had failed to establish that the partial waiver, and not economic forces, would force importers, refiners, and downstream entities to introduce or handle E15. Decisions to import, refine, or handle E15 are thus the product of self-interest and not any particular administrative action.

In contrast to the dismissal of the engine-manufacturer and petroleum groups' claims for failing to establish Article III standing, the D.C. Circuit dismissed the food group's petition on prudential standing grounds. The food group could not show that the interest it sought to protect—prices its members were required to pay for corn—was arguably within the zone of interests protected or regulated by the statute in question or any provision integrally related to it.

Judge Kavanaugh dissented on multiple grounds and would have struck down EPA's waivers as plainly running afoul of the statutory text of the Clean Air Act.

After being rebuffed by the three-member panel in the D.C. Circuit, petitioners separately sought panel rehearing or hearing en banc, which were denied on January 13, 2013. Shortly thereafter, petitioners filed petitions for writ of certiorari. In their petitions, the trade associations argued that the D.C. Circuit's decision conflicted with Supreme Court precedent regarding Article III and prudential standing. Petitioners also contended that the Supreme Court should grant certiorari to determine whether EPA had forfeited its ability to challenge the food group's prudential standing by failing to raise the issue. In response, EPA argued that the D.C. Circuit properly applied Supreme Court precedent and that the fact-specific inquiry undertaken by the D.C. Circuit was not suited to review by the Supreme Court. EPA also noted that petitioners did not timely preserve in the D.C. Circuit their argument that EPA had forfeited prudential standing.

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