Energy Future Coalition v. Environmental Protection Agency

United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued March 20, 2015 Decided July 14, 2015

No. 14-1123

ENERGY FUTURE COALITION, ET AL.,
PETITIONERS

v.

ENVIRONMENTAL PROTECTION AGENCY AND GINA
MCCARTHY,
RESPONDENTS

AMERICAN FUEL & PETROCHEMICAL MANUFACTURERS AND
AMERICAN PETROLEUM INSTITUTE,
INTERVENORS

On Petition for Review of Final Action of the
United States Environmental Protection Agency

Adam R.F. Gustafson argued the cause for petitioners.
With him on the briefs were C. Boyden Gray and Adam J.
White.

Anna J. Wildeman and Valerie L. Green were on the brief
for amicus curiae Governors’ Biofuels Coalition in support of
petitioners.

Michael C. Augustini, Attorney, U.S. Department of
Justice, argued the cause for respondents. With him on the
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brief were John C. Cruden, Assistant Attorney General, and
Mark M. Kataoka, Attorney, U.S. Environmental Protection
Agency.

Stacy R. Linden, Richard S. Moskowitz, Chet M.
Thompson, Robert Meyers, and David Y. Chung were on the
brief for intervenors American Fuel & Petrochemical
Manufacturers and American Petroleum Institute in support of
respondents.

Before: TATEL, KAVANAUGH, and PILLARD, Circuit
Judges.

Opinion for the Court filed by Circuit Judge
KAVANAUGH.

KAVANAUGH, Circuit Judge: The goal of the Clean Air
Act is “to protect and enhance the quality of the Nation’s air
resources so as to promote the public health and welfare and
the productive capacity of its population.” 42 U.S.C.
§ 7401(b). To help achieve that objective, the Clean Air Act
grants EPA authority to regulate vehicle emissions. As
relevant here, EPA has adopted regulations that require
vehicle manufacturers to test the emissions of new vehicles.
Vehicle manufacturers must conduct emissions testing using a
“test fuel.” 40 C.F.R. § 1065.701(a). And under the
regulation at issue here, the test fuel must be a fuel that is
“commercially available.” Id. § 1065.701(c). That regulation
implements the statutory directive that “vehicles are tested
under circumstances which reflect the actual current driving
conditions under which motor vehicles are used, including
conditions relating to fuel.” 42 U.S.C. § 7525(h).
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Petitioners in this case include several biofuel producers. 1
Petitioners want EPA to approve E30, which is a fuel that
contains about 30% 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.

In this suit, petitioners argue that the test fuel regulation
is arbitrary and capricious. We disagree. We therefore deny
the petition.

I

Before reaching the merits, we address several threshold
arguments raised by EPA regarding the Court’s authority to
decide the case. We reject each of those arguments.

First, petitioners have Article III standing to maintain this
suit. They have suffered an injury in fact caused by EPA and
redressable by the Court. See Lujan v. Defenders of Wildlife,
504 U.S. 555, 560-61 (1992).

Several of the petitioners produce ethanol. Petitioners
want EPA to approve E30 as a test fuel. According to
petitioners, 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. See Abigail Alliance for Better Access to

1
The biofuel producers are Carbon Green BioEnergy, DENCO
II, Iroquois Bio-Energy Company, LSCP, Patriot Renewable Fuels
(owned by Patriot Holdings, which is also a petitioner), and
Siouxland Ethanol. They are joined as petitioners by ICM, which is
a company that designs and builds ethanol plants, and by the
biofuel advocacy group Energy Future Coalition.
 4
Developmental Drugs v. Eschenbach, 469 F.3d 129, 134-35
(D.C. Cir. 2006).

EPA points out that the test fuel regulation is technically
directed at vehicle manufacturers, not biofuel producers. But
that does not undermine petitioners’ standing. The standing
question in this case is straightforward: If the Government
prohibits or impedes Company A from using Company B’s
product, does Company B have standing to sue? Suppose the
FDA bans or makes it harder for soda manufacturers to use
sugar. Does a sugar manufacturer have standing to sue? Or
suppose the District of Columbia bans or makes it harder for
concession stands to sell hot dogs. Does a local hot dog
manufacturer have standing to sue? Ordinarily the answer to
those questions is yes. In such cases, both Company A and
Company B are “an object of the action (or forgone action) at
issue,” so “there is ordinarily little question” that they have
standing under Lujan. 504 U.S. at 561-62; see also Ethyl
Corp. v. EPA, 306 F.3d 1144, 1148 (D.C. Cir. 2002) (fuel
additive manufacturer has standing to challenge EPA
emissions testing regulation). So it is here.

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. See Abigail Alliance, 469 F.3d at
135 (Many “hurdles impeding Alliance members from
accessing post-Phase I investigational new drugs have been
erected by the FDA. This is sufficient to establish
causation.”).

It is true that “vehicle manufacturers may have valid
business reasons” other than EPA’s test fuel regulation “for
not seeking to use” E30 as a test fuel. EPA Br. 27. But that
 5
does not undermine causation here. Petitioners simply seek
an opportunity to compete in the marketplace. As of now,
they claim they are being denied that opportunity because of
EPA’s regulation. Moreover, if EPA permitted vehicle
manufacturers to use E30 as a test fuel, there is substantial
reason to think that at least some vehicle manufacturers would
use it. Indeed, Ford Motor Company submitted comments to
EPA saying that it “supports the development and
introduction of an intermediate level blend fuel (E16-E50)”
and that the “development of such a fuel would enable the
first steps to the development of a new generation of highly
efficient internal combustion engine vehicles.” J.A. 145.

Finally, petitioners’ injury is redressable. Invalidating
the “commercially available” requirement would remove a
regulatory hurdle to the use of E30 as a test fuel. That is
enough to demonstrate redressability. A “plaintiff satisfies
the redressability requirement” by showing “that a favorable
decision will relieve a discrete injury” to the plaintiff.
Massachusetts v. EPA, 549 U.S. 497, 525 (2007). The
plaintiff “need not show that a favorable decision will relieve”
his or her “every injury.” Id. 2

2
This case differs from Chamber of Commerce v. EPA, 642
F.3d 192 (D.C. Cir. 2011). In that case, the Chamber of Commerce
and an association of automobile dealers challenged EPA’s decision
to grant California a waiver from federal preemption under the
Clean Air Act. The automobile dealers claimed that EPA’s
decision injured them because it (i) required automobile
manufacturers to alter the mix of vehicles sold in California, putting
California dealers at a disadvantage compared to out-of-state
dealers and (ii) increased the cost of buying vehicles, decreasing the
dealers’ profit margins. As relevant here, the Court stated that
objective evidence directly undermined petitioners’ theory of
standing. Multiple empirical studies showed that car manufacturers
 6
Put simply, petitioners have standing to challenge the
legality of the test fuel regulation.

Second, petitioners are within the zone of interests
protected by the Clean Air Act. See Lexmark International,
Inc. v. Static Control Components, Inc., 134 S. Ct. 1377,
1388-89, slip op. at 10-11 (2014). The Clean Air Act
provides that a “petition for review of . . . any other nationally
applicable regulations promulgated, or final action taken, by
the Administrator under this chapter may be filed only in the
United States Court of Appeals for the District of Columbia.”
42 U.S.C. § 7607(b)(1). The Clean Air Act seeks to further
clean air while at the same time still allowing some
productive economic activity, even though that economic
activity may result in some emissions of pollutants.

As the Supreme Court has emphasized, the zone of
interests test “is not meant to be especially demanding.”
Match-E-Be-Nash-She-Wish Band of Pottawatomi Indians v.
Patchak, 132 S. Ct. 2199, 2210, slip op. at 15 (2012); see also
Ethyl, 306 F.3d at 1148. Indeed, the “test forecloses suit only
when a plaintiff’s interests are so marginally related to or

were likely to meet California’s regulatory requirements without
altering the mix of vehicles sold in California. See id. at 202-03.
Moreover, because car manufacturers could alter their vehicle mix
by selling smaller cars in urban areas and larger cars near
mountainous areas, and because one of the two car dealers that
submitted a standing affidavit was located near a mountainous area,
the Court concluded that petitioners had not established that the car
dealers would be unable to meet their customers’ demands for
larger vehicles because of EPA’s waiver decision. See id. at 203.
Given those facts, the Court stated that the petitioners in Chamber
of Commerce lacked standing. In this case, by contrast, EPA does
not cite any similar evidence that undermines petitioners’ theory of
standing.
 7
inconsistent with the purposes implicit in the statute that it
cannot reasonably be assumed that Congress intended to
permit the suit.” Match-E, 132 S. Ct. at 2210, slip op. at 16
(internal quotation marks omitted); see also Myersville
Citizens for a Rural Community, Inc. v. FERC, 783 F.3d
1301, 1316 (D.C. Cir. 2015).

In Ethyl, this Court held that a fuel additive manufacturer
fell within the zone of interests under the Clean Air Act and
could challenge EPA regulations governing emissions testing
for vehicles. See 306 F.3d at 1148. Petitioners here challenge
an EPA regulation governing emissions testing for vehicles
under the same part of the Clean Air Act. We see no
principled way to distinguish the fuel additive manufacturer in
Ethyl from the biofuel producers in this case, a conclusion
only strengthened by the Supreme Court’s recent cases
emphasizing that the zone of interests test is not especially
demanding. Petitioners are within the zone of interests.

Third, petitioners’ challenge is timely. A petition for
review of final EPA action under the Clean Air Act ordinarily
must “be filed within sixty days from the date notice” of the
action “appears in the Federal Register.” 42 U.S.C.
§ 7607(b)(1). On April 28, 2014, EPA issued a final rule
extending the test fuel regulation to light-duty cars and trucks.
On June 26, 2014, fewer than 60 days after publication,
petitioners timely filed this petition.

Fourth, petitioners’ suit is ripe. The “fitness of an issue
for judicial decision depends on whether it is purely legal,
whether consideration of the issue would benefit from a more
concrete setting, and whether the agency’s action is
sufficiently final.” National Association of Home Builders v.
Army Corps of Engineers, 417 F.3d 1272, 1281 (D.C. Cir.
2005) (internal quotation marks omitted). If “there are no
 8
significant agency or judicial interests militating in favor of
delay,” a lack of hardship “cannot tip the balance against
judicial review.” National Association of Home Builders v.
Army Corps of Engineers, 440 F.3d 459, 465 (D.C. Cir.
2006).

Petitioners argue that the test fuel regulation is arbitrary
and capricious because it requires that a test fuel be
“commercially available.” That claim is ripe. The test fuel
regulation is a final agency action, and petitioners’ challenge
is purely legal. “It is well-established that claims that an
agency’s action is arbitrary and capricious or contrary to law
present purely legal issues.” Cement Kiln Recycling Coalition
v. EPA, 493 F.3d 207, 215 (D.C. Cir. 2007) (internal
quotation marks omitted). Consideration of the issue would
not benefit from a more concrete setting. In a similar case,
EPA argued that the suit was “not ripe for review” because it
was “entirely speculative how EPA’s” action would impact
regulated entities. National Environmental Development
Association’s Clean Air Project v. EPA, 752 F.3d 999, 1008
(D.C. Cir. 2014). We rejected that objection, saying that
“EPA’s argument misses the point.” Id. If a suit “presents a
purely legal question of whether EPA’s final action” violates
the Clean Air Act or EPA regulations, it is “unnecessary to
wait” for EPA’s legal conclusion “to be applied in order to
determine its legality.” Id. So too here.

II

On the merits, petitioners argue that a fuel should not
have to be “commercially available” in order to be approved
as a test fuel. They contend that EPA’s regulation, which
requires that a test fuel be “commercially available,” is
therefore arbitrary and capricious. We disagree. It is entirely
commonsensical and reasonable for EPA to require vehicle
 9
manufacturers to use the same fuels in emissions testing that
vehicles will use out on the road. 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.” 42 U.S.C. § 7525(h).

Petitioners say, however, that the test fuel regulation
creates a catch-22. Consistent with the statute’s directive, the
regulation prohibits the use of a test fuel that is not
“commercially available.” 40 C.F.R. § 1065.701(c). At the
same time, another statutory provision prohibits the sale of a
fuel that is not “substantially similar” to an approved test fuel.
42 U.S.C. § 7545(f). 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.

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. 3

Petitioners also contend that the “commercially
available” requirement is arbitrary and capricious because it
conflicts with EPA’s stated purpose of permitting the use of
new kinds of test fuels. But as we have already explained, the

3
We do not decide here whether the test fuel regulation’s
“commercially available” requirement is compelled by the statute
or whether, consistent with the statute, EPA could relax the
“commercially available” requirement. We need not reach that
question and do not imply an answer one way or the other.
 10
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.”
Id. § 7525(h). It is not arbitrary and capricious for EPA to
fulfill that statutory mandate by requiring that test fuels be
“commercially available.”

In short, the “commercially available” requirement is not
arbitrary and capricious.

***

We have considered all of petitioners’ arguments. We
deny the petition for review.

So ordered.