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EXXON Corp. v. City of New York


decided: January 17, 1977.


Appeal from an order of the United States District Court for the Southern District of New York, Charles E. Stewart, Jr., Judge, denying appellants' motion for summary judgment which was made on the ground that City regulations concerning gasoline were preempted by 42 U.S.C. § 1857f-6c(c)(4)(A). Reversed.

Mulligan and Van Graafeiland, Circuit Judges and Gagliardi, District Judge.*fn*

Author: Mulligan

MULLIGAN, Circuit Judge:

Plaintiffs-appellants appeal from an opinion and order dated March 8, 1974 of the Hon. Charles E. Stewart, Jr., United States District Judge for the Southern District of New York, reported at 372 F. Supp. 335, denying their motion for summary judgment on Count I in their complaints. This otherwise unappealable interlocutory order is before the court pursuant to 28 U.S.C. § 1292(b). Since the only issue before this court is whether certain local air pollution regulations are preempted by the federal statute and regulations governing the same subject, we will review the local and federal law, as well as the history of this litigation, before proceeding to the merits.


On August 20, 1971 the City of New York amended its Administrative Code to provide for controls regulating the lead content and the volatility of gasoline offered for sale in the City. §§ 1403.2-13.11 and 1403.2-13.12 of Chapter 57 of the Administrative Code of New York City (N.Y.C. Admin. Code). The City's regulations provided for a staggered reduction in the lead content of gasoline. By January 1, 1973 it was to contain no more than 0.5 gram of lead per gallon and a year later the lead content of gasoline sold in New York City was not to exceed 0.075 gram per gallon. N.Y.C. Admin. Code § 1403.2-13.11(a)(3) and (4).

Congress in 1970 amended the Clean Air Act, 42 U.S.C. §§ 1857 et seq. (the Act), authorizing the Administrator (Administrator) of the Federal Environmental Protection Agency (E.P.A.) to issue regulations controlling or prohibiting the use of a fuel or fuel additive upon finding that its use either endangered the public health or welfare or that it significantly impaired the performance of any emission control device. P.L. 91-604, § 9(a) (Dec. 31, 1970), 84 Stat. 1698, codified at 42 U.S.C. § 1857f-6c(a). A preemption provision was included in the section:

Except as otherwise provided in subparagraph (B) or (C), no State (or political subdivision thereof) may prescribe or attempt to enforce, for purposes of motor vehicle emission control, any control or prohibition respecting use of a fuel or fuel additive in a motor vehicle or motor vehicle engine -

(i) if the Administrator has found that no control or prohibition under paragraph (1) is necessary and has published his finding in the Federal Register, or

(ii) if the Administrator has prescribed under paragraph (1) a control or prohibition applicable to such fuel or fuel additive, unless State prohibition or control is identical to the prohibition or control prescribed by the Administrator.

42 U.S.C. § 1857f-6c(c)(4)(A). The statute allows a state to issue regulations with respect to fuels for purposes of motor vehicle emission control if such regulations are provisions contained in an implementation plan provided for in 42 U.S.C. § 1857c-5 and approved by the Administrator. 42 U.S.C. § 1857f-6c(c)(4)(C).*fn1

On January 10, 1973 the Administrator, in order to prevent the impairment of catalytic converters, an emission control device, promulgated regulations that were to become effective on February 9, 1973 governing the lead content of gasoline. 38 Fed. Reg. 1254-56. These regulations, which are still in effect, provided, inter alia, that all retail gasoline outlets dispensing 200,000 or more gallons annually must offer for sale at least one grade of unleaded gasoline. They also required that the nozzles on lead and unleaded gas pumps be different sizes. 40 C.F.R. § 80.22. Unleaded gasoline was defined as "gasoline containing not more than 0.05 gram of lead per gallon." 40 C.F.R. § 80.2(g).

The Administrator on December 6, 1973, based on the needs of public health, published more regulations concerning the lead content in gasoline which were to become effective January 7, 1974. 38 Fed. Reg. 33734-41. These regulations provided a staggered schedule for gasoline refiners to follow in reducing the fuel's lead content to the ultimate goal of 0.5 gram per gallon after January 1, 1979. 40 C.F.R. § 80.20. The promulgated schedule was in the Administrator's judgment "reasonable from the standpoint of protection of health and from the standpoint of economic and technological feasibility." 38 Fed. Reg. 33734. Lead additive manufacturers were required to submit quarterly reports to the Administrator showing the amount of lead shipped to each refinery during the reporting period. 40 C.F.R. § 80.25. A panel of the District of Columbia Circuit set aside these regulations on December 20, 1974. Consequently, the E.P.A. suspended their enforcement. 40 Fed. Reg. 7480 (Feb. 20, 1975). On March 19, 1976, sitting en banc, the District of Columbia Circuit upheld the regulations. Ethyl Corporation v. Environmental Protection Agency, 176 U.S. App. D.C. 373, 541 F.2d 1. The E.P.A. reinstated the reporting requirements of 40 C.F.R. §§ 80.20(a)(3), 80.25 on April 1, 1976. 41 Fed. Reg. 13984. Certiorari was denied by the Supreme Court on June 14, 1976, 426 U.S. 941, 96 S. Ct. 2662, 2663, 49 L. Ed. 2d 394, and since the litigation as to the regulations' validity was ended, the E.P.A. published a notice on July 9, 1976 announcing its termination of the suspension of their enforcement. 41 Fed. Reg. 28352. The Agency amended the regulations concerned with public health, 40 C.F.R. § 80.20, on September 28, 1976. It changed the lead phase-down schedule by moving the required date for gasoline with 0.5 gram of lead per gallon from January to October, 1979 and also added new reporting requirements. It left in effect a 0.8 gram per gallon standard to begin January 1, 1978. 41 Fed. Reg. 42676.

Appellant Exxon Corporation (Exxon) on November 6, 1972 applied to the New York City Environmental Protection Administration for a variance from the provisions of N.Y.C. Admin. Code § 1403.2-13.11(a)(3) which was to become effective on January 1, 1973 and required that all grades of gasoline intended for use in New York City not have a lead content exceeding 0.5 gram per gallon. Exxon requested the relief on two grounds: that this restriction was an onerous burden and that the E.P.A. was preparing national regulations on lead in gasoline. The E.P.A. on January 10, 1973 issued its fuel regulations based on emission control devices, 40 C.F.R. § 80.22. On February 16, 1973 the City rejected Exxon's application for a variance from its regulations. Exxon then commenced this action against the City of New York on March 9, 1973. It was consolidated with a similar action against the same defendant begun on March 14, 1973 by Getty Oil Co. (Eastern Operations), Inc., Gulf Oil Co.-U.S., Mobil Oil Corporation, and Sun Oil Company of Pennsylvania (Getty plaintiffs). Appellants' complaints, as now amended, allege in Count I that 42 U.S.C. § 1857f-6c and the regulations issued thereunder preempted N.Y.C. Admin. Code § 1403.2-13.11(a)(3) and (4). In Count II it is alleged that the City regulations on the lead content of gasoline discriminate against and impose an impermissible burden upon interstate commerce. Both counts seek declaratory and injunctive relief against these regulations. In addition, the Getty plaintiffs seek the same relief against the city's volatility requirements in N.Y.C. Admin. Code § 1403.2-13.12.

On March 22, 1973 Judge Stewart denied appellants' motions for a preliminary injunction. Exxon Corporation v. City of New York, 356 F. Supp. 660. Judge Stewart did order a stay pending appeal which enjoined the defendant from enforcing N.Y.C. Admin. Code § 1403.2-13.11(a)(3). A panel of this court on May 17, 1973 continued that stay and remanded for a prompt trial. 480 F.2d 460. On March 8, 1974 Judge Stewart denied appellants' motion for summary judgment on their preemption claim. 372 F. Supp. 335. On April 15, 1974 the district court, pursuant to 28 U.S.C. § 1292(b), certified the order to this court which accepted it on May 28, 1974. Oral argument was postponed until a final determination by the District of Columbia Court of Appeals in Ethyl Corporation v. Environmental Protection Agency, supra. Certiorari having been denied in that case and the validity of the public health based regulations having been upheld, the appeal is finally before us.


We note at the outset that this is not a case where we are asked to infer preemption because the Congress has legislated in the same area as the City of New York, but rather this is the unusual case where explicit preemption language appears in the Act.*fn2 We recognize that the exercise of federal supremacy is not lightly to be presumed and that there must be a clear manifestation of a congressional purpose to supersede the exercise of power by the state. New York State Department of Social Services v. Dublino, 413 U.S. 405, 413, 37 L. Ed. 2d 688, 93 S. Ct. 2507 (1973); Schwartz v. Texas, 344 U.S. 199, 202-03, 97 L. Ed. 231, 73 S. Ct. 232 (1952); see Murphy & La Pierre, Nuclear "Moratorium" Legislation in the States and the Supremacy Clause, 76 Colum. L. Rev. 392 (1976). Thus our task is to determine the congressional intention expressed in an Act which is extremely complex. This task is further complicated by a paragraph, sub-paragraph and sub-sub-paragraph system of alphabetical and numbered headings which adds confusion.*fn3 Nonetheless there are three basic provisions in the statute from which a pattern of preemption arises which is fatal to the City's ordinances and requires reversal here, the granting of summary judgment for the appellants and the nullification of both of the City regulations in issue.

A. Lead Content

1) The prime section involved, and the only provision considered below, is section 1857f-6c(c)(4)(A) which is set forth supra. That section explicitly precludes a state or any political subdivision thereof from prescribing or attempting to prescribe any controls or prohibition respecting the use of fuels or fuel additives in motor vehicles, if the Administrator has prescribed an applicable control or prohibition unless the state prohibition or control is identical to that prescribed by the Administrator. There is no question but that the Administrator has promulgated standards prescribing controls and prohibitions with respect to the lead content of gasoline used in motor vehicles. 40 C.F.R. § 80.20 et seq.*fn4 Neither is there any question that N.Y.C. Admin. Code § 1403.2-13.11 which prescribes a lead content for gasoline used in the City of New York is not identical to the federal regulations. Indeed, the local ordinance is more demanding as to both lead content and the time limitations within which such reduction must be achieved.*fn5 In face of the clear preemption language of section 1857f-6c(c)(4)(A) it is difficult to perceive how the non-identical City regulation can survive.

The City has argued, and its position was accepted below, that since the federal controls on lead content do not become applicable until January 1, 1978, federal preemption does not become effective until that time.*fn6 We cannot accept this position.*fn7 While the timetable for reduction of lead content does not commence until January 1, 1978, the regulation imposing them becomes effective on September 28, 1976. This is no mere quibble. Under the amended regulations, a host of monitoring and reporting provisions, some set forth in the margin*fn8 have been imposed upon the gasoline industry. The authority of the Administrator is not limited merely to ascertaining the permissible lead content of gasoline in grams per gallon. He is authorized to regulate "the manufacture, introduction into commerce, offering for sale, or sale" of fuel or fuel additives. 42 U.S.C. § 1857f-6c(c)(1). The controls presently existing are directed to ensuring that the industry is physically prepared to manufacture low-lead gasoline by the January 1, 1978 deadline. 41 Fed. Reg. 42675-77 (Sept. 28, 1976). Hence, there is a necessary nexus between the existing controls on the industry and the phase-down timetable promulgated by the Administrator. Preemption therefore has already taken place and the conflicting City regulatory scheme must fall.

The City argues that the preemption language of a statute must be narrowly construed where the exercise of the local police power serves the purpose of the federal act. Chrysler Corporation v. Tofany, 419 F.2d 499 (2d Cir. 1969). We do not cavil at the principle but find that the City ordinances here do not serve the purpose of the federal act but in fact disrupt it. The problems faced by the Administrator in determining the quality of national ambient air*fn9 are made evident from a reading of the text accompanying the promulgation of the amended regulations of 40 C.F.R. § 80.20 revising the lead content phase-down schedule and providing for its enforcement by controls now effective. 41 Fed. Reg. 42675-77 (Sept. 28, 1976). On the basis of analyses made by private consultants to the E.P.A. and the Federal Energy Administration (F.E.A.), as well as a preliminary assessment of F.E.A., the E.P.A. concluded that due to the gasoline industry's inability to produce sufficient high octane gasoline enforcement of the then promulgated lead phase-down schedule could result in a gasoline shortage of about 6.6% of demand in 1977 and 9% in 1978. The Administrator stated that "the intent of these regulations is to achieve the desired reduction of lead in gasoline as expeditiously as practicable for protection of public health without causing a gasoline shortage." 41 Fed. Reg. 42676.

These considerations account for the amendments to the phase-down schedule which took into consideration both the technological problems of the industry which must add equipment and plant capacity on an expedited basis and the concern for preserving energy in a period of national shortage. What consideration the City of New York may have given these factors in 1971 does not appear in the record before us. In sum, logic as well as the express language of section 1857f-6c(c)(4)(A) mandate that the City regulation be identical to that of the Administrator. Fragmented, piecemeal local legislation could only bring chaos particularly in view of the national character of the industry supplying motor vehicle fuel and the technical problems associated with the production of unleaded gasoline.

2) Our inquiry into this question does not cease here. We find that the federal scheme does not impose a complete strait jacket on the states or their subdivisions. Section 1857f-6c(c)(4) which in subdivision (A) precludes local regulation unless identical to federal regulation, provides a relevant exception in subdivision (C). That section allows a state to prescribe a control or prohibition respecting the use of a fuel or fuel additive in a motor vehicle if such restriction is included as a provision in an applicable implementation plan for such state as provided under section 1857c-5. The state restrictions so allowed could be more severe than the federal regulations. The Administrator may approve a state plan with a provision governing automotive fuels "if he finds that the State control or prohibition is necessary to achieve the national primary or secondary ambient air quality standard which the plan implements." 42 U.S.C. § 1857f-6c(c)(4)(C). Thus the Act provides a mechanism which would allow New York to set up standards concerning fuels that varied from the federal norms.*fn10

It was emphasized below and argued here that the court should not lightly strike down a regulation which could result in the degradation of the air breathed by the residents of New York City (including the judiciary). As explained above, Congress has not precluded variation so long as the local regulation has been made part of a state implementation plan approved by the Administrator. Aside from the admission that no such implementing plan has been submitted, there is no explanation for the state's inaction. Thus we are not in the position of reviewing the Administrator's action in approving or disapproving a state implementation plan embracing the City's regulations. The Administrator is a stranger to this litigation.

That the only permissible local variance is that allowed by this section is made clear in the legislative history of the 1970 Amendments to the Clean Air Act. The Conference Report stated:

No State may prescribe or enforce controls or prohibitions respecting any fuel or additive unless they are identical to those prescribed by the Federal Government or unless a State implementation plan under sec. 110 [42 U.S.C. § 1857c-5] includes provision for fuel or additive control and such plan is approved by the Administrator as being necessary for achievement of national air quality standards. These restrictions will not apply to California.

Conf. Rep. 91-1783, 91st Cong., 2d Sess., reprinted in 3 U.S. Code Cong. & Admin. News pp. 5374, 5385 (1970).

3) Any doubt that the Congress has explicitly provided for state or local regulation here only through the route of a state implementation plan is removed when we consider the third applicable section of the statute. Section 1857d-1 provides:

Except as otherwise provided in sections 1857c-10(c), (e) and (f), 1857f-6a, 1857f-6c(c)(4) and 1857f-11 of this title (preempting certain State regulation of moving sources) nothing in this chapter shall preclude or deny the right of any State or political subdivision thereof to adopt or enforce (1) any standard or limitation respecting emissions of air pollutants or (2) any requirement respecting control or abatement of air pollution; except that if an emission standard or limitation is in effect under an applicable implementation plan or under section 1857c-6 or section 1857c-7 of this title, such State or political subdivision may not adopt or enforce any emission standard or limitation which is less stringent than the standard or limitation under such plan or section.

(Emphasis supplied).

We note that the statute itself refers to the preemption of state regulation of moving sources (as distinguished from stationary sources)*fn11 and reserves to the state or subdivision the right to enforce its own standards respecting emissions of air pollutants except as provided in certain sections including section 1857f-6c(c)(4) which is the basic preemption statute here in issue. The legislative history again is enlightening. With respect to section 1857d-1 it states, "Except with respect to standards for moving sources, the States' authority to adopt and enforce standards applicable to air quality and emissions is retained in the conference substitute." Conf. Rep. 91-1783, supra, 3 U.S. Code Cong. & Admin. News at 5381.*fn12

We conclude therefore that with respect to standards for moving sources such as the gasoline utilized in motor vehicles, the Congress has explicitly provided that state or local regulation is preempted unless such control or prohibition is identical with the federally promulgated standards. Variation is permitted only if it is accomplished through the mechanism of a state implementation plan, a procedure not followed here. The right of a state or subdivision to proceed on its own without approval of the Administrator is limited to the regulation of fuel in stationary sources and therefore not pertinent to the issue before us.

B. The Volatility Ordinance

The Getty plaintiffs have also sought declaratory and injunctive relief with respect to the City's volatility regulation. N.Y.C. Admin. Code § 1403.2-13.12.*fn13 This regulation was an attempt by the City to deal with the problem caused by evaporated hydrocarbons emitted into the air by gasoline. Gasoline volatility is limited by removing the butane-pentane (C4C5) fraction. This cut is replaced by another hydrocarbon fraction with a lower front end volatility. This process results in gasoline with a higher evaporation curve and usually an increased octane rating. The City has argued successfully below that since the Administrator has not promulgated any regulation at all with respect to volatility and has failed to make any finding that no regulation is needed, preemption has not taken place under section 1857f-6c(c)(4)(A). This presents a closer question than the City lead content regulation which squarely conflicts with the federal regulation governing that precise fuel additive. Moreover, the City urges that in no instance is lead used or required to replace the C4C5 fraction.

We note however that the pertinent federal regulation provides, "This part prescribes regulations for the control and/or prohibition of fuels and additives for use in motor vehicles and motor vehicle engines." 40 C.F.R. § 80.1. Since the federal regulations make no reference to the volatility of gasoline, it cannot be said that the City has imposed controls or prohibitions "identical" to the prohibitions or controls prescribed by the Administrator. The City has added a control or prohibition applicable to the fuel of motor vehicles which is more onerous than that provided by the Administrator. Thus N.Y.C. § 1403.2-13.12 is preempted by section 1857f-6c(c) (4) (A) and the regulations thereunder.

Aside from this as we have pointed out, the congressional scheme only allows such variance if contained as a provision in an approved state implementing plan and allows unilateral action only in the case of emissions from stationary sources. Neither exception is pertinent here. Again, the scheme makes sense. We have nothing in the record before us to indicate what, if any, plant, equipment or technological changes may be required to assure compliance with the City's volatility regulation. Whether it has any effect on national energy sources is also beyond our ken. The Act sensibly provides for an exception from its comprehensive preemption of local regulation of motor vehicle fuels only when such regulation is a provision in a state implementation plan approved by the Administrator who has the competence to make the needed professional engineering and energy conservation decisions. The alternative is a host of varying and conflicting state and local ordinances which can only create confusion and thwart the objectives of the Act.

While it has been urged that we should give a narrow interpretation to the congressional preemption statutes here involved, we note that "each 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, 36 L. Ed. 2d 547, 93 S. Ct. 1854 (1973). We have commented at some length on the federal regulatory scheme at issue and are persuaded that the provisions of the City regulating lead content and volatility, N.Y.C. Admin. Code §§ 1403.2-13.11 and 1403.2-13.12 have been preempted and are therefore void. The judgment below is reversed and remanded to the district court with instructions to enter summary judgment for the plaintiffs-appellants.

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