Opinion ID: 321074
Heading Depth: 2
Heading Rank: 3

Heading: The Affirmative Marketing Requirement

Text: 87 The Regulations impose an affirmative duty to sell at least one grade of unleaded gasoline on 88 every person who owns, leases, operates, controls, or supervises a retail outlet at which 200,000 or more gallons of gasoline was sold during any calendar year beginning with the year 1971   . 89 40 C.F.R. 80.22(b). Petitioners contend that the Clean Air Act does not empower EPA to require marketing of any fuel; they additionally allege that the Statement and the record provide insufficient support for the requirement. 90 The statute authorizes the Administrator to 91 control or prohibit the manufacture, introduction into commerce, offering for sale, or sale of any fuel or fuel additive for use in a motor vehicle or motor vehicle engine    (B) if emission products of such fuel or fuel additive will impair to a significant degree the performance of any emission control device or system which is in general use, or which the Administrator finds has been developed to a point where in a reasonable time it would be in general use were such regulation to be promulgated. 92 Section 211(c)(1). Petitioners construe the affirmative marketing regulation as a 'control' on the sale of unleaded gasoline. They note that the statute authorizes control only of fuels or additives which 'impair    the performance of any emission control device or system.' According to petitioners, regulations-- i.e. prohibition or control-- may be directed at leaded gasoline, which impairs converters, but not at unleaded gasoline, which does not. This narrow, linguistic argument is open to a similarly narrow and linguistic answer: The affirmative marketing requirement does in fact 'control' the sale of leaded gasoline, for the regulation provides in effect that the specified retailers may sell no leaded gasoline unless and until they also offer for sale one grade of unleaded gasoline. To so condition the sale of leaded gasoline is surely one way to 'control' its sale. 93 That the term 'control' encompasses the power to promote the availability of fuels needed for proper operation of emission control devices is indicated both by the wording of Section 211(c)(1) and by the provision's legislative history. The provision allows fuel regulation whenever the Administrator finds that a device needing special fuel 'is in general use, or    has been developed to a point where in a reasonable time it would be in general use were such regulation to be promulgated.' The emphasized phrase contemplates that fuel regulation may be adopted for the express purpose of encouraging wider use of catalytic converters. If the only fuel regulation available to the Administrator were, as petitioners urge, a ban on using leaded gasoline in converter-equipped cars, there could be no direct encouragement given to the use of catalytic converters by automakers and new car buyers. The broad objectives of Section 211(c)(1) would be frustrated. 94 Petitioners' cramped reading of the statutory phrase 'control or prohibit' is directly at odds with the pertinent legislative history. The House bill conferred no power to 'control' fuels but only a power of 'prohibiting' production or sale of fuels which failed to meet standards established by regulation. 57 Under the House bill EPA could clearly have banned the sale of leaded gasoline for use in converter-equipped cars. 58 In urging that the Administrator can do no more than this under the enacted statute, petitioners ignore the Senate's contribution. Concerned to enlarge the Administrator's regulatory powers, the Senate added the word 'control' to the statute. 59 In explaining this addition, the Senate committee addressed itself directly to the problem of assuring an adequate supply of unleaded gasoline for converter-equipped cars. 95    Since the use of catalytic mufflers may be essential for compliance with standards established under section 202, the Committee has adopted language permitting the Secretary to control fuels in order to facilitate the use of emission control systems. 96 At one time the Committee considered language that would give the Secretary only the authority to 'prohibit' a fuel's introduction into commerce. After evaluation, the Committee decided that such authority should also be extended to the 'control' of a fuel's introduction into commerce. This authority to 'control' the use of fuels is intended to give the Secretary greater flexibility then the authority to 'prohibit.' For instance, the Committee expects that the Secretary may find it advisable to permit the continued sale of leaded gasolines to allow for the efficient and economic operation of automobiles presently on the highway, even if he finds it necessary to control fuels to assure the availability of non-leaded gasolines for other purposes. 60 97 The Conference Committee decided for the broad grant of authority proposed in the Senate's bill. It follows, we think, that the Administrator has the power 'to assure the availability of non-leaded gasolines' through imposition of an affirmative marketing requirement. 98 We must also reject petitioners' suggestion that the affirmative marketing requirement is insufficiently supported by the Statement and the record. 99 It is true that the Statement contains no discussion of the 200,000 gallon cutoff point, but in a subsequent and formal announcement the Administrator explained that the cutoff was intended to ensure evailability of unleaded fuel at about 45 per cent of the nation's service stations, selling about two thirds of the nation's gasoline, while sparing small retailers the investment costs required to provide unleaded gasoline. 61 The cutoff was proposed by Mobil Oil Corporation, whose formal submission to the Agency contained extensive, industry-wide data on the probable impact of the cutoff. 62 100    We do not demand sterile formality. In appropriate cases, if the necessary articulation of basis for administrative action can be discerned by reference to clearly relevant sources other than a formal statement of reasons, we will make the reference. 101 Environmental Defense Fund, Inc. v. EPA, 150 U.S.App.D.C. 348, 357, 465 F.2d 528, 537 (1972). No other interested party argued for an alternative cutoff point; the one chosen is facially reasonable. 102 The small, 'independent' oil companies have complained that the affirmative marketing requirement may increase the concentration of the oil industry. Their theory is that the large refiners may drive the independent distributors and retailers out of business by refusing to sell them unleaded gasoline, either out of spite or out of an inability to meet all gasoline demands in an era of general shortage. We think EPA has given good faith, reasoned consideration to these complaints. 63 The 200,000 gallon cutoff exempts many small retailers from the marketing requirements. 64 Moreover, the Statement makes clear that the Administrator will not demand the impossible and that he will entertain regulatory amendments as changing circumstances require. 103    Based on the results of the Agency's evaluation of the independent marketers' supply problems, the Administrator has determined that it would be premature to conclude that gasoline refiners will be unable or unwilling to provide adequate supplies of unleaded gasoline to retail outlets required by these regulations to offer it. If the shortage of unleaded gasoline feared by the independent marketers materializes, this Agency will consider whether additional measures are necessary to assure the general availability of unleaded gasoline. 65 104 The Administrator's 'wait and see' attitude seems to us cautious and realistic. He is entitled to assume that the Federal Trade Commission and the Antitrust Division of the Department of Justice will prevent brand name refiners from using the affirmative marketing requirement as a cover for anticompetitive practices. And the Administrator has the power to assure that the impact of a general petroleum shortage will not be visited unduly upon those fuels needed to to meet the requirements of the Clean Air Act. See 42 U.S.C. 1857g(a) (1970). 105 Finally, and most basically, petitioners argue that the Statement and the record are insufficient to support the Administrator's decision to require marketing rather than to rely on free market forces. The Statement meets this issue very tersely but, we think, adequately: 106 The regulations provide for the general availability of a lead-free and phosphorous-free gasoline   . It is the Administrator's determination that without regulatory action requiring retail outlets to market at least one grade of such gasoline availability of that product to the general public in all areas of the country would be uncertain, and may not be sufficient to assure the protection of catalytic control devices.    66 107 Petitioners do not seriously deny that, absent the affirmative marketing requirement, the availability of unleaded gasoline 'would be uncertain.' No doubt there will eventually be enough converter-equipped cars on the road, and thus a sufficient demand for unleaded gasoline, to induce a conveniently distributed number of the nation's gas stations to provide at least one grade of unleaded fuel. 67 But there is no guarantee, nor even a good reason to believe, that this result would materialize during the transition months of 1975 and 1976. New cars make up only about 10 per cent of the American automobile population. How many of these new cars will be converter-equipped in 1975 is impossible to predict with precision. The plans of the automakers are still developing; car buying habits are in an unsettled state. With the potential demand for unleaded gasoline in this state of flux and doubt, the supply response of the oil industry, and particularly of the retail stations, must necessarily be characterized as 'uncertain.' 108 It is petitioners' position that EPA must accept this uncertainty rather than impose financial costs on the oil industry through an affirmative marketing requirement. Petitioners' premise is that very few new cars outside California will be converter-equipped; accordingly, petitioners reason, EPA is acting extravagantly and arbitrarily in requiring provision of unleaded gasoline throughout the nation. Rejecting the premise, we reject the conclusion. The Administrator's decision to replace the 1975 emission standards with an 'interim' program will not result in a 'California only' pattern of converter use. In establishing that program the Administrator stated expressly: 109 I have not felt constrained to avoid any reliance upon catalysts to enable auto manufacturers to meet the certification requirement (outside California). I anticipate that for certain model lines catalysts may be required. The likelihood that a significant number of cars will be distributed across the country equipped with catalysts will supplement the experience derived in California in a beneficial way. 68 110 The central purpose of the 'interim' program was to provide automakers with an opportunity to perfect and practice mass production and nationwide distribution of converter-equipped cars. Ford has announced that 15 per cent of its non-California models will be converter-equipped; 'perhaps all' of General Motors' non-California models will have converters; 69 California vehicles will travel nationwide. If unleaded gasoline is not conveniently available for these vehicles, the new car market may well collapse, the phasing-in of converter technology will be paralyzed, and the Clean Air Act's schedule for reducing air pollution will be severely compromised. When the stakes are this high, the Agency need not gamble. Section 211(c)(1) clearly empowers the Administrator to regulate fuels so as to encourage wider use of emission control devices; 70 a fortiori, he may regulate so as to facilitate use of those converters which the automakers have already planned to install. In requiring marketing of unleaded gasoline, the Agency took a conservative course in the face of very substantial risks. This was a considered policy judgment, Industrial Union Department, AFL-CIO v. Hodgson, supra, 162 U.S.App.D.C. at , 499 F.2d at 475, and it would be irresponsible for us to upset it. Compare International Harvester Co. v. Ruckelshaus, supra, 155 U.S.App.D.C. at 429-437, 478 F.2d at 633-641.