In its second set of arguments before the appeals court, the owner of a duty-free gas station on the U.S.-Canada border said Michigan summer gas volatility regulations cannot be applied to the fuel it sells.
CINCINNATI (CN) — A Michigan gas station situated at the foot of the Ambassador Bridge to Canada argued Tuesday before the Sixth Circuit that gasoline vapor laws cannot be applied to its products because it essentially exports them to America’s northern neighbor.
Ammex Inc., the owner of a duty-free gas station that sells fuel only to people leaving the United States, found itself in front of the Cincinnati-based appeals court for the second time in just over two years.
In 2019, the company argued Michigan’s so-called summer fuel laws, which outlaw the sale of gasoline with a vapor pressure of greater than 7.0 psi between June 1 and Sept. 15., violate the Foreign Commerce and Supremacy Clauses of the U.S. Constitution. The rules are part of Michigan’s attempt to comply with federal air quality standards.
The first panel that heard the case ruled otherwise, and upheld the decision of U.S. District Judge Laurie Michelson to deny Ammex’s motion for a preliminary injunction.
Although the laws were passed by the Michigan Legislature, they were not put into effect until the federal government ratified and incorporated them into the Clean Air Act via the Environmental Protection Agency, or EPA.
“The Michigan statute and the federal regulation are not independent of each other,” U.S. Circuit Judge Helene White said in the 2019 decision. “The two are interconnected because the EPA regulation incorporates by reference the state bill containing the statute setting the summer [volatility] standard, and the interpretation of one necessarily affects the interpretation of the other.”
This interconnectedness led the court to rule the laws were federal in nature, and, therefore, constitutional.
The case was remanded to Michelson, an Obama appointee, who granted Michigan’s motion to dismiss Ammex’s amended complaint in March 2020.
She disagreed with the company’s argument that an exemption from the state law that applies to vehicle manufacturers also applied to its gas station, given vehicles that refuel there drive “de minimis distances in southeast Michigan.”
“The inference that Ammex draws – that [the Michigan Department of
Agriculture and Rural Development] created the exemption because it thinks that [the exemption] does not apply to sites that fuel cars driven outside southeast Michigan – is speculation. And a claim based on speculation does not get pass [sic] the plausibility threshold,” Michelson said wrote.
Ammex also claimed that because U.S. Customs and Border Protection considers its duty-free business outside the borders of the United States, the vapor laws do not apply.
Michelson was unconvinced and rejected the argument in her opinion.
“Even if the customs laws do not consider Ammex’s gas station to be within the United States,” she wrote, “it does not follow that Ammex is not physically within ‘Wayne’ County as that term is used in [the statute] …Ammex has given the court no convincing reason to use a definition designed for customs purposes to interpret a federal regulation designed for environmental purposes.”
In its brief to the Sixth Circuit, Ammex argued that the EPA’s fuel volatility requirements are not only superseded by customs regulations, but also cannot be applied to its gas, which is sold for export.
“When the chosen remedies of the EPA conflict with clear congressional policy over which the EPA has no authority … the agency’s chosen remedial scheme must yield,” the brief states.
Attorney Leah Mintz argued on Tuesday on behalf of Ammex and told the panel that regulations regarding duty-free shops allow the retailers to sell all merchandise “without limitation,” so long as the goods are not illegal in the destination country.
Mintz explained that any good sold in Ammex’s store comes from an outside, duty-free source, and “never enters the domestic market.”
U.S. Circuit Judge John Bush, an appointee of Donald Trump, asked about the fumes created by the higher vapor gasoline, and claimed they enter the air of the United States when buyers drive their cars across the bridge into Canada.
The attorney disputed Bush’s point, and claimed no gas bought at her client’s station is used in the United States. Rather, she argued, gas already found in the cars’ tanks is expended to get across the border.
U.S. Circuit Judge Richard Griffin, a George W. Bush appointee, asked if Ammex had expert testimony to back up its claim. Mintz responded that it did not, at least at the moment.
“You have no support for your claim?” Griffin asked. “You can’t just make up things.”
The attorney reminded the panel that the case had been decided at a motion to dismiss stage without discovery and emphasized that “the gasoline that Ammex sells is for Canada.”
Attorney Elizabeth Morrisseau argued on behalf of the Michigan Department of Agriculture and Rural Development, or MDARD.
She told the panel the gasoline is “different from every other product Ammex sells” because it is not in a sealed container and is used by customers in the United States.
“The gas takes them to Canada; they do not take the gas to Canada,” Morrisseau said.
The state’s attorney pointed out that all of the pumps at Ammex’s station are inspected and licensed by MDARD.
“Ammex simply doesn’t make a plausible argument that what it sells is Canadian gasoline,” she said.
U.S. Circuit Judge Helene White, also a George W. Bush appointee, rounded out the panel, which included the same judges as the first set of arguments. No timetable has been set for the court’s decision.