Court issues opinion in E30 test fuel lawsuit filed against EPA

By Erin Voegele | July 15, 2015

On July 14, the D.C. Circuit Court of Appeals threw out a lawsuit filed by the Energy Future Coalition and other groups against the U.S. EPA regarding the agency’s failure to use E30 as a test fuel in a recent rulemaking.

The petition was originally filed with the court in late June 2014. Oral arguments were held in March. In addition to the Energy Future Coalition, petitioners include Carbon Green BioEnergy LLC; DENCO II LLC; ICM Inc.; Iroquois Bio-Energy Co. LLC; LSCP LLP, doing business as Little Sioux Corn Processors LLLP; Patriot Holdings LLC; Patriot Renewable Fuels LLC; and Siouxland Ethanol LLC. The case was heard by a panel of three judges.

According to court documents, the petitioners asked the court to review the EPA’s rule governing general requirements for test fuels, originally promulgated in a 2002 rule focused on emission control from nonroad large spark-ignition engines and recreational engines, and the agency’s final action reopening that rule in the Tier 3 Motor Vehicle Emission and Fuel Standards rulemaking, which was finalized in April 2014.

The opinion published by the court notes that the regulation at issue in the lawsuit requires a test fuel to be “commercially available” and implements a statutory directive that “vehicles are tested under circumstances under which motor vehicles are used, including conditions relating to fuel.”

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. “It is entirely commonsensical and reasonable for EPA to require vehicle manufacturers to use the same fuels in emissions testing that vehicles will use out on the road,” said the court. “Moreover, the regulation is rooted in (if not compelled by) the statute, which says that EPA must ensure that ‘vehicles are tested under circumstances which reflect the actual current driving conditions under which motor vehicles are used, including conditions relating to fuel.’”

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.