Judges Question Industry Groups’ Standing In Lawsuit Challenging E15 Labeling Rule

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By Andrew Childers

Oct. 6 — Federal appellate judges raised significant questions about the standing of industry groups seeking to overturn an Environmental Protection Agency rule requiring warning labels on pumps selling gasoline containing 15 percent ethanol.

Petroleum refiners haven't demonstrated that they are harmed by the rule, issued under Section 211 of the Clean Air Act, given they have no plans to produce or sell E15, judges from the U.S. Court of Appeals for the District of Columbia Circuit said Oct. 6.

“It would be a very different case if you had affidavits saying you plan to engage in this activity,” Judge David Tatel said.

Argument was heard by Tatel and Judges Janice Rogers Brown and Stephen Williams.

The EPA approved the use of E15 only in model year 2001 and newer passenger vehicles. The labels are intended to indicate which pumps offer the E15 blend and to warn customers about which vehicles are considered incompatible with E15, including older cars and light trucks, motorcycles, watercraft, and other equipment that uses gasoline, such as lawn mowers and chain saws (76 Fed. Reg. 44,406).

The labeling requirement is being challenged by several industry groups, including the American Petroleum Institute, Alliance of Automobile Manufacturers, Association of Global Automakers, National Marine Manufacturers Association and Outdoor Power Equipment Institute.

No Harm Shown

Eileen McDonough, the Justice Department attorney representing the EPA, argued the groups lack standing because the labeling rule doesn't harm them.

“At this point, there's no sense for them to claim they can be harmed by rules designed to minimize misfueling,” she said.

However, she conceded the industry groups, particularly petroleum refiners, might have been able to demonstrate standing if they could show a tangible harm caused by the rule.

William Wehrum, a partner at Hunton & Williams LLP representing the industry groups, argued the EPA's rule imposes new burdens on petroleum refiners in particular, which could affect their decision to pursue E15.

“It immediately changed the rights and responsibilities of my clients and impacted current business decision-making,” he said.

Prior Decision Cited

The judges said many of the same industry groups failed to demonstrate standing in a prior lawsuit that sought to overturn the EPA's Clean Air Act waivers allowing the use of E15. Those challenges were dismissed due to lack of standing (Grocery Mfrs. Ass'n v. EPA, 2012 BL 210947, 693 F.3d 169 (D.C. Cir. 2012); 160 DER A-1, 8/20/12).

In that case, the industry groups' standing was challenged by ethanol producers who intervened on behalf of the EPA, not by the agency itself.

“If you had not issued that decision, our position may have been different,” McDonough told the court. “The court issued its decision, and we have to live with it.”

The judges never reached the merits of the industry groups' challenges during oral argument Oct. 6. In a brief, the industry groups argued the EPA hadn't conducted the analysis necessary to demonstrate that its labeling rule would prevent misfueling. They also challenged the rule's “presumptive reliability” provisions, which could hold companies throughout the fuel distribution supply chain liable for misfueling incidents.

To contact the reporter on this story: Andrew Childers in Washington at achilders@bna.com

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