Oxygenated Fuels Ass'n Inc. v. Davis

• Decision Date: 04 June 2003
• Docket Number: No. 01-17078.,01-17078.
• Citation: 331 F.3d 665
• Parties: OXYGENATED FUELS ASSOCIATION INCORPORATED, Plaintiff-Appellant, v. Gray DAVIS, in his capacity as Governor of the State of California; Alan C. Lloyd, in his capacity as Chairman of the California Air Resources Board, Defendants-Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

331 F.3d 665

OXYGENATED FUELS ASSOCIATION INCORPORATED, Plaintiff-Appellant, v. Gray DAVIS, in his capacity as Governor of the State of California; Alan C. Lloyd, in his capacity as Chairman of the California Air Resources Board, Defendants-Appellees.

No. 01-17078.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted February 11, 2003.

Filed June 4, 2003.

Frederick R. Anderson and Geraldine Edens, Cadwalader, Wickersham & Taft, Washington, DC, Rebecca Ceniceros and Gene Livingston, Livingston & Maattesich, Sacramento, CA, for appellant.

Russell B. Hildreth, Office of the Attorney General, Sacramento, CA, Marc N. Melnick, Office of the Attorney General, Oakland, CA, for appellees.

Appeal from the United States District Court for the Eastern District of California; David F. Levi, District Judge, Presiding. D.C. No. CV-01-00156-DFL.

Before CANBY, O'SCANNLAIN and W. FLETCHER, Circuit Judges.

OPINION

WILLIAM A. FLETCHER, Circuit Judge.

Plaintiff-appellant Oxygenated Fuels Association Inc. ("OFA") sued various state officials after California enacted a ban on methyl tertiary-butyl ether ("MTBE"), an oxygenate used to reduce gasoline emissions. OFA, a trade association representing MTBE producers, argued that California's MTBE ban is preempted by the federal Clean Air Act, 42 U.S.C. § 7401 et seq., and sought to enjoin the ban. The defendants filed a motion to dismiss, which was granted by the district court.

We affirm. We conclude that, in enacting the Clean Air Act, Congress left the states substantial authority to enact legislation governing matters of public health and safety. Though the MTBE ban is not expressly exempted from preemption by the Clean Air Act, the ban nonetheless is not preempted because it does not conflict with the goals and purposes of the Act.

I. Background

Congress enacted the Clean Air Act "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." Id. § 7401(b)(1). The Act includes a variety of provisions aimed at reducing air pollution. Implementation and enforcement responsibilities under the Act are shared between the federal government and state governments. For example, the EPA has the authority to set national ambient air quality standards, see id. § 7409, while the states have the authority to devise implementation plans to meet those standards, see id. § 7410.

One of the specific aims of the Clean Air Act is to reduce air pollution by reducing motor vehicle emissions. Section 211 of the Act, codified at 42 U.S.C. § 7545, sets forth the statutory framework for regulating motor vehicle fuels and fuel additives to achieve that aim. Among other things, § 211 requires that gasoline sold in certain areas of the country have an oxygen content that equals or exceeds 2.0 percent by weight. Id. § 7545(k)(2)(B). Section 211 further requires that, during the winter months, gasoline sold in certain areas have an oxygen content that equals or exceeds 2.7 percent by weight. Id. § 7545(m)(2)(B).

In order to meet the Clean Air Act's oxygen content requirements, gasoline manufacturers add oxygenate fuel additives to gasoline. MTBE and ethanol are the two most widely used oxygenates. California determined that, while MTBE reduces air pollution from motor vehicle emissions, it also causes substantial and deleterious groundwater pollution. In response to concerns about groundwater pollution, the California Air Resources Board decided to ban the use of MTBE as a fuel additive. See Cal.Code Regs. tit. 13, § 2262.6 (2003). The ban, adopted on December 9, 1999, was originally scheduled to take effect on December 31, 2002. The effective date has since been postponed for one year.

On May 4, 2001, OFA filed suit in the district court seeking to enjoin California's MTBE ban. OFA argued, among other things, that the ban conflicts with the objectives of the Clean Air Act and is therefore preempted. The defendants moved to dismiss the case under Rule 12(b)(6). Ruling that California is expressly exempted from Clean Air Act preemption, the district court granted the motion. Oxygenated Fuels Ass'n v. Davis, 163 F.Supp.2d 1182, 1186-87 (E.D.Cal.2001). The district court also held, in the alternative, that, even if not expressly exempted, California's MTBE ban is in any event not impliedly preempted by the Act. See id. at 1187-88. OFA appeals.

"We review de novo a dismissal under Fed.R.Civ.P. 12(b)(6) for failure to state a claim. In such a case, we must accept all factual allegations of the complaint as true and draw all reasonable inferences in favor of the nonmoving party." TwoRivers v. Lewis, 174 F.3d 987, 991 (9th Cir.1999) (citation omitted).

II. Discussion

A. Background

Under Article VI of the Constitution, laws of the federal government "shall be the supreme Law of the Land; ... any Thing in the Constitution or Laws of any State to the Contrary notwithstanding." Art. VI, cl. 2. Congress has the authority, when acting pursuant to its enumerated powers, to preempt state and local laws. The Supreme Court has recognized three types of preemption: express preemption, field preemption, and conflict preemption:

First, Congress can define explicitly the extent to which its enactments pre-empt state law....

Second, in the absence of explicit statutory language, state law is pre-empted where it regulates conduct in a field that Congress intended the Federal Government to occupy exclusively....

Finally, state law is pre-empted to the extent that it actually conflicts with federal law. Thus, the Court has found pre-emption where it is impossible for a private party to comply with both state and federal requirements, or where state law "stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress."

English v. Gen. Elec. Co., 496 U.S. 72, 78-79, 110 S.Ct. 2270, 110 L.Ed.2d 65 (1990) (quoting Hines v. Davidowitz, 312 U.S. 52, 67, 61 S.Ct. 399, 85 L.Ed. 581 (1941)) (other citations omitted). Field preemption and conflict preemption are both forms of implied preemption. See Lorillard Tobacco Co. v. Reilly, 533 U.S. 525, 541, 121 S.Ct. 2404, 150 L.Ed.2d 532 (2001).

"Congressional purpose is the `ultimate touchstone' of preemption analysis." Id. (quoting Cipollone v. Liggett Group, Inc., 505 U.S. 504, 516, 112 S.Ct. 2608, 120 L.Ed.2d 407 (1992)). Because it is assumed that Congress does not cavalierly decide to override state authority, there is a general presumption against preemption in areas traditionally regulated by states. "[W]e start with the assumption that the historic police powers of the States were not to be superseded by the Federal Act unless that was the clear and manifest purpose of Congress." Rice v. Santa Fe Elevator Corp., 331 U.S. 218, 230, 67 S.Ct. 1146, 91 L.Ed. 1447 (1947). Preemption analysis requires a close examination of the particular statutes and regulations at issue. "[E]ach case turns on the peculiarities and special features of the federal regulatory scheme in question." City of Burbank v. Lockheed Air Terminal, Inc., 411 U.S. 624, 638, 93 S.Ct. 1854, 36 L.Ed.2d 547 (1973).

B. Express Exemption from Preemption

The defendants argue that California's MTBE ban is expressly exempted from preemption under the Clean Air Act. The Act contains both an express preemption provision regarding the regulation of oxygenate fuel additives and an express statutory exemption for California from the preemption provision. Generally, "no State (or political subdivision thereof) may prescribe or attempt to enforce, for purposes of motor vehicle emission control, any control or prohibition respecting any characteristic or component of a fuel or fuel additive in a motor vehicle or motor vehicle engine." 42 U.S.C. § 7545(c)(4)(A). California, however, "may at any time prescribe and enforce, for the purpose of motor vehicle emission control, a control or prohibition respecting any fuel or fuel additive." Id. § 7545(c)(4)(B) (the "(c)(4)(B) exemption") (emphasis added). The defendants argue that California's MTBE ban falls squarely within the (c)(4)(B) exemption. OFA argues that the MTBE ban is not exempted because it is not "for the purpose of motor vehicle emission control."

OFA claims that California did not adopt the MTBE ban to control motor vehicle emissions, or for any other reason related to air pollution. Rather, it adopted the ban to protect groundwater. The defendants do not really dispute this claim. They argue, however, that the ban fits within the (c)(4)(B) exemption because the ban is part of its overall "emissions control regulatory scheme" and that the scheme, as a whole, largely has the purpose of emissions control. The disagreement between the parties on this point thus turns to a substantial extent on whether the object of preemption analysis is (1) the MTBE ban itself, or (2) California's comprehensive emissions regulatory scheme of which the ban is just one part.

There is no obvious answer to this question, but the Supreme Court's approach in analogous cases offers some guidance. In Pacific Gas & Electric Co. v. State Energy Resources Conservation & Development Commission, 461 U.S. 190, 103 S.Ct. 1713, 75 L.Ed.2d 752 (1983), the Supreme Court addressed California's moratorium on the construction of nuclear power plants. Energy companies had challenged the moratorium, arguing that it was preempted by the federal Atomic Energy Act ("AEA"). The AEA contained a preemption provision that preserved states' power "to regulate activities for purposes other than protection against radiation hazards." Id. at 210, 103 S.Ct. 1713 (quoting 42 U.S.C. § 2021(k)). The Supreme Court concluded that Congress had taken "complete control of the safety and `nuclear' aspects of energy generation," while leaving other aspects to states. Id. at 212, 103 S.Ct. 1713. Whether the moratorium was preempted — that is, whether it fell within the...