American Methyl Corp. v. E.P.A.
| Decision Date | 28 March 1984 |
| Docket Number | 84-1277,Nos. 84-1204,s. 84-1204 |
| Citation | 749 F.2d 826 |
| Parties | , 242 U.S.App.D.C. 148, 15 Envtl. L. Rep. 20,005 AMERICAN METHYL CORPORATION, Petitioner, v. ENVIRONMENTAL PROTECTION AGENCY, Respondent, Motor Vehicle Manufacturers Association of the United States, Inc., Automobile Importers of America, Inc., United America Fuels, Inc., Intervenors. AMERICAN METHYL CORPORATION, Petitioner, v. ENVIRONMENTAL PROTECTION AGENCY, Respondent, Automobile Importers of America, Inc., Motor Vehicle Manufacturers Association of the United States, Inc., United American Fuels, Inc., Intervenors. . Argued 29 Oct. 1984. Decided 4 Dec. 1984. James W. Moorman, Washington, D.C., with whom Arnold B. Podgorsky and Scott N. Stone, Washington, D.C., were on the brief, for petitioner. David E. Dearing, Atty., Dept. of Justice, Washington, D.C., with whom Margaret N. Strand, Atty., Dept. of Justice, A. James Barnes, General Counsel, Ralph J. Colleli, Jr. and Gerald K. Gleason, Attys., E.P.A., Washington, D.C., were on the brief, for respondent. Charles H. Lockwood, II, Detroit, Mich., with whom William H. Crabtree, V. Mark Slywynsky, William L. Weber, Jr. and Thomas L. Arnett, Detroit, Mich., were on the brief of intervenors, Motor Vehicle Manufacturers Association of the United States, et al. R. Sarah Compton, Washington, D.C., was on the brief of intervenor, United American Fuels, Inc. Before WILKEY, WALD and SCALIA, Circuit Judges. Opinion for the Court filed by Circuit Judge WILKEY. WILKEY, Circuit Judge: In this expedited appeal petitioner American Methyl Corporation challenges the Environmental Protection Agency's determination that it may reconsider, and if necessary revoke, American Methyl's waiver to market a methanol/gasoline fuel blend sold as "Petrocoal." 1 We find that judicial review is appropriate at this time and reverse the agency's decision that it may revoke waivers under section 211(f) of the Clean Air Act. 2 The Administrator of the EPA is not disabled from regulating Petrocoal, but he may control or prohibit the fuel only through a |
| Court | U.S. Court of Appeals — District of Columbia Circuit |
James W. Moorman, Washington, D.C., with whom Arnold B. Podgorsky and Scott N. Stone, Washington, D.C., were on the brief, for petitioner.
David E. Dearing, Atty., Dept. of Justice, Washington, D.C., with whom Margaret N. Strand, Atty., Dept. of Justice, A. James Barnes, General Counsel, Ralph J. Colleli, Jr. and Gerald K. Gleason, Attys., E.P.A., Washington, D.C., were on the brief, for respondent.
Charles H. Lockwood, II, Detroit, Mich., with whom William H. Crabtree, V. Mark Slywynsky, William L. Weber, Jr. and Thomas L. Arnett, Detroit, Mich., were on the brief of intervenors, Motor Vehicle Manufacturers Association of the United States, et al.
R. Sarah Compton, Washington, D.C., was on the brief of intervenor, United American Fuels, Inc.
Before WILKEY, WALD and SCALIA, Circuit Judges.
Opinion for the Court filed by Circuit Judge WILKEY.
In this expedited appeal petitioner American Methyl Corporation challenges the Environmental Protection Agency's determination that it may reconsider, and if necessary revoke, American Methyl's waiver to market a methanol/gasoline fuel blend sold as "Petrocoal." 1 We find that judicial review is appropriate at this time and reverse the agency's decision that it may revoke waivers under section 211(f) of the Clean Air Act. 2 The Administrator of the EPA is not disabled from regulating Petrocoal, but he may control or prohibit the fuel only through a proceeding complying with the substantive and procedural safeguards of section 211(c) of the Clean Air Act. 3 We remand to the agency for further proceedings in accordance with our judgment and mandate issued 31 October 1984, 746 F.2d 907.
In 1980 American Methyl developed an additive to be used in a methanol/gasoline blend it called Petrocoal. 4 Because methanol costs about forty cents per gallon, Petrocoal costs less than conventional gasoline. The relative inexpensiveness of Petrocoal and other alcohol/gasoline blends--to say nothing of the fact that they may be produced domestically, thereby reducing America's reliance on foreign sources of petroleum--makes them attractive substitutes for gasoline. 5
To market the Petrocoal additive, American Methyl sought a waiver from the Administrator of the Environmental Protection Agency. Under section 211(f)(1) of the Clean Air Act, 6 it is
unlawful for any manufacturer of any fuel or fuel additive to first introduce into commerce, or to increase the concentration in use, of, any fuel or fuel additive for general use in light duty motor vehicles ... which is not substantially similar to any fuel or fuel additive utilized in the certification of any ... [1975 or later model year vehicle or engine]. 7
The impetus for this section was the fear that new fuel and new fuel additives, particularly an organomanganese compound known as MMT, would impair the performance of emission control devices in cars and light duty trucks. 8 As Senator Muskie, chief sponsor of the Senate bill, put it: "This action was absolutely essential ... [given] the alarming degrees to which MMT, and potentially hundreds of other additives, threaten our entire air pollution control program." 9 The Administrator of the EPA may waive the section 211(f)(1) prohibition if the manufacturer establishes that the fuel or additive "will not cause or contribute to a failure of any emission control device or system ... to achieve compliance by the vehicle" with applicable emissions standards. 10
American Methyl applied for a waiver on 20 February 1981, 11 which the Administrator granted on 28 September of that year. 12 American Methyl's expenditures in developing and marketing Petrocoal totalled nearly one million dollars. 13
Just over two months later, on 4 December 1981, a trade association of automobile manufacturers known as the Motor Vehicle Manufacturers Association filed a petition for administrative reconsideration of the Petrocoal waiver with EPA 14 and another petition for review of the waiver in this court. 15 Despite questions relating to the high alcohol content and ratio of methanol to cosolvents in Petrocoal, and the possible presence of a corrosive additive, CV-100, in certain test samples, 16 the EPA did not act on MVMA's petition. 17
Over a year later, on 22 February 1983, MVMA filed a supplemental petition for reconsideration accompanied by new data purporting to show that Petrocoal caused automobiles to exceed limits for evaporative emissions of hydrocarbons. 18
Prompted by the recently compiled data in MVMA's supplemental petition, the Administrator on 2 May 1983 published a notice in the Federal Register that he was "considering whether an administrative action is appropriat [sic] to modify or revoke the waiver under section 211(f) or to control or prohibit sale of Petrocoal under section 211(c), or whether the waiver should stand as granted." 19 Section 211(c), in contrast to section 211(f), imposes a number of substantive and procedural requirements the agency must satisfy before controlling or prohibiting a fuel or fuel additive. 20 The Administrator's notice elicited no response from American Methyl.
Close to another year passed before the Administrator, on 16 March 1984, proposed to revoke the Petrocoal waiver; the decision was published in the Federal Register on 28 March 1984--nearly two-and-a-half years after the Petrocoal waiver was initially approved. 21 A principal basis of the Administrator's decision was the new study reported by MVMA which claimed that Petrocoal caused automobiles to exceed limits on evaporative emissions of hydrocarbons. 22 The notice stated that "[i]n reconsidering the Petrocoal waiver, the standard for review of the newly submitted and developed information is that prescribed in section 211(f)(4) of the Act." 23
Almost at the same time, on 27 March 1984, the parties to the appeals from approval of the original waiver in 1981 jointly moved to remand the record to EPA, so that the agency could take further administrative action with respect to the waiver. 24 On 3 April this court granted the motion. 25
One month later, however, on 3 May 1984, American Methyl formally requested the Administrator to rescind his proposal to revoke the Petrocoal waiver, on the ground that section 211(f) does not permit him to reconsider or revoke a waiver. 26 In a letter dated 8 June 1984, the EPA General Counsel denied American Methyl's request and asserted the agency's inherent authority to revoke a waiver pursuant to section 211(f). 27 He also explained that under section 211(f)(4) American Methyl would have to justify the validity of the Petrocoal waiver ab initio:
Finally, with regard to your question as to which party has the burden of proof in these proceedings, the March 28, 1984, Federal Register notice clearly states that the standard of review to be used in the reconsideration proceeding will be the same as that used in evaluating waiver applications under section 211(f)(4). 49 Fed.Reg. 11885. Accordingly, the burden of establishing that Petrocoal meets the criteria for a valid waiver specified in section 211(f)(4), taking into account all available information, should be borne by American Methyl. 28
The General Counsel confirmed, in a letter dated 22 June 1984, that "in keeping with my responsibilities as General Counsel" the 8 June letter "expressed the Agency's official position on these legal matters." 29
American Methyl filed a petition for review of EPA's notice of proposed revocation on 25 May 1984, and of the 8 June letter on 2 July 1984. 30 American Methyl claimed that its sales, which had been at a record high level before EPA threatened to revoke the Petrocoal waiver under section 211(f), had virtually ceased in a matter of months. 31
On 13 July, American Methyl moved this court to stay a hearing on EPA's proposal to revoke the Petrocoal waiver, which had been scheduled for 31 July. 32 EPA opposed the motion and on 20 July moved to dismiss both petitions for review. A motions panel composed of two other judges of this court, by order dated 27 July, granted American Methyl's motions to consolidate and to stay EPA's proposed revocation proceeding and denied the agency's motion to dismiss. 33
This appeal presents the following three issues: first, is judicial review appropriate at this stage in the administrative process; second, should American Methyl be estopped from challenging EPA's assertion of revocation authority; and third, does section 211(f) of the Clean Air Act empower EPA to revoke the Petrocoal waiver?
We find judicial review appropriate at this time and decline to estop American Methyl from challenging the agency's interpretation of its statutory powers. We hold that the Administrator may not revoke the Petrocoal waiver pursuant to section 211(f), but may forbid the marketing of Petrocoal only pursuant to his authority to control or prohibit fuel and fuel additives under section 211(c).
At stake in this procedural battle is the applicability of certain substantive and procedural safeguards to a proceeding in which the Environmental Protection Agency proposes to revoke American Methyl's waiver to market Petrocoal. Under American Methyl's interpretation of the Clean Air Act, EPA is authorized to control or prohibit...
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