Federal Court Slams Ethanol and EPA in One Ruling

by John Siciliano (Washington Examiner) A federal appeals court slammed the ethanol industry on Tuesday for suing the Environmental Protection Agency, and then slammed the EPA's defense even though the agency won the case.

The D.C. Circuit Court of Appeals threw out a lawsuit brought against the EPA a year ago for not including 30 percent ethanol fuel blends (E30) as a test fuel in the agency's landmark Tier 3 clean fuel and vehicle rules. The test fuel is used for setting baseline emissions for vehicles that the EPA regulates. Changing the fuel could change the stringency of emission reductions.

The three-judge panel ruled that because E30 ethanol fuels are not commercial, it had only one choice — to "disagree" and "therefore deny the petition," according to the opinion written by Judge Brett Kavanaugh.

Kavanaugh's opinion briefly touches on the decision against the industry, before launching into why most of the EPA's key arguments against the petitioners were wrong.

"According to petitioners, the EPA's test fuel regulation prohibits the use of E30 as a test fuel. As a direct result of that regulation, petitioners claim that they face a regulatory impediment (what they view as an illegal regulatory impediment) that prevents their product from being used as a test fuel. That qualifies as an injury in fact," Kavanaugh writes.

The ethanol industry had proposed using a higher blend of ethanol for the engine test fuel the EPA uses in setting pollution regulations for vehicles. But the EPA decided not to change the blend.

"Petitioners want EPA to approve E30, which is a fuel that contains about 30 percent ethanol, for use as a test fuel. But according to petitioners, E30 is not yet 'commercially available,' as required by EPA's test fuel regulation," and is why the court denied the suit, Kavanaugh writes.

Many of the industry's other arguments would have been deemed "ripe" by the court if the fuel were commercially available.

Petitioners also passed another hurdle in showing causation. "Petitioners have also demonstrated causation and redressability. Petitioners contend that the 'commercially available' requirement is a direct regulatory impediment that prevents their product from being used as a test fuel. That suffices to show causation," Kavanaugh writes.

"Put simply, petitioners have standing to challenge the legality of the test fuel regulation," Kavanaugh adds in admonishing the EPA, calling the petitioners' arguments "ripe" and "timely."

He reiterated that the only impediment to the industry's arguments is that the EPA's decision not to include the E30 test fuel is not arbitrary nor capricious.

The Clean Air Act "provides that EPA's test fuel regulations must 'reflect the actual current driving conditions under which motor vehicles are used, including conditions relating to fuel.' It is not arbitrary and capricious for EPA to fulfill that statutory mandate by requiring that test fuels be 'commercially available.'" READ MORE and MORE (Ethanol Producer Magazine)

Excerpt from Ethanol Producer Magazine: According to court documents, the petitioners want EPA to approve E30 for use as a test fuel. However, the court opinion also notes that, according to petitioners, E30 is not yet “commercially available.”

“In this suit, petitioners argue that the test fuel regulation is arbitrary and capricious. We disagree. We therefore deny the petition,” said the court in its opinion. The court added that it addressed several threshold arguments raised by EPA regarding its authority to decide the case, and rejected each of those arguments. First, the court specified that the petitions do have standing to maintain the suite, as they have suffered an injury in fact caused by EPA and redressable by the court. Second, the court indicated the petitioners are within the zone of interests protected by the Clean Air Act. Third, the court said the petitioners’ challenge is timely. Fourth, the court said that the petitioners’ argument that the test fuel regulation is arbitrary and capricious because it requires that a test fuel be “commercially available” is ripe. “The test fuel regulation is a final agency action, and petitioners’ challenge is purely legal,” said the court.

The court explained that petitioners argue that a fuel should not have to be “commercially available” in order to be approved as a test fuel, and contend that EPA’s regulation that requires a test fuel to be “commercially available” is arbitrary and capricious. The court said it disagrees with that argument.

The court also rejected the the petitioners’ argument that EPA regulations create a catch-22 because one agency regulation requires test fuels to be “commercially available” while another statutory provision prohibits the sale of a fuel that is not “substantially similar” to an approved test fuel. “Putting those two requirements together, petitioners see a catch-22: They contend that it is illegal to use a test fuel unless it is first approved for sale in the market, and that it is illegal to sell a fuel in the market unless it is first approved for use as a test fuel,” said the court in its opinion. “Petitioners’ argument fails, however, because EPA’s test fuel regulation is not the source of any catch-22. Rather, to the extent a so-called catch-22 exists – which has been neither established nor conceded – it is the result of the statutory scheme adopted by Congress.”

A full copy of the court’s opinion can be downloaded from the U.S. Court of Appeals for the D.C. Circuit website. READ MORE