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Wednesday, July 17, 2024 | Back issues
Courthouse News Service Courthouse News Service

Federal gas vapor rules apply to border gas station, appeals court says

Gas vapor volatility requirements enforced by the state of Michigan apply to a retailer situated on the Canadian border even though all its gas leaves the United States after purchase, according to a three-judge panel.

CINCINNATI (CN) — A duty-free store located on the U.S.-Canada border must comply with federal vapor volatility requirements even though the gas it sells never enters domestic commerce, the Sixth Circuit ruled Thursday.

Ammex Inc., which operates the gas station at the foot of the Ambassador Bridge, initially filed suit against the Michigan Department of Agriculture in 2018, but was denied an injunction by U.S. District Judge Laurie Michelson, a Barack Obama appointee.

The company argued the state's summer fuel law, which outlaws the sale of gasoline with a vapor pressure of greater than 7.0 psi between June and September, was inapplicable to its products because it is not a domestic retailer.

The summer fuel regulations are part of Michigan's efforts to comply with federal clean air standards, and were deemed federal in nature by Michelson after they were incorporated into the Clean Air Act by the EPA.

Ammex appealed that decision in 2019, but the Sixth Circuit upheld Michelson's ruling and determined because the state and federal regulations are interconnected, the federal government can enforce them against the duty-free shop.

The gas station's case was dismissed on the merits by Michelson, and Ammex filed a second appeal with the Sixth Circuit, which heard arguments in March 2021.

On Thursday, the same three-judge panel again rejected Ammex's arguments and affirmed the lower court's decision to dismiss the case.

U.S. Circuit Judge Helene White, a George W. Bush appointee, wrote the panel's opinion, and rejected Ammex's claim that regardless of whether the regulations are state or federal in nature, they are inapplicable to its store.

White emphasized that the text of the statute is all that is necessary to adjudicate Ammex's claims.

"The law ... defines the term 'dispensing facility' to mean 'a site used for gasoline refueling,'" she said. "Ammex does not dispute that it is a retail-gasoline-refueling station located in Detroit, Michigan, which is in Wayne County. Therefore, the district court did not err in finding that Ammex has not plausibly alleged that its activities are not covered by the summer fuel law."

The retailer's status as a duty-free shop does not exempt it from all federal regulations either, according to the panel, which cited a federal warehousing law.

"The Withdrawal Statute does not grant Ammex, as a duty-free store, the positive right to sell all merchandise subject to duty, and certainly does not grant it the right to sell such merchandise in a manner that is free from other federal regulations," White wrote. "Ammex would like the statute to read: 'Duty-free stores may sell, without restriction, any merchandise subject to duty.' ... But that is not what the statute says, and such an interpretation is only possible if the reader ignores several clauses within the text." (Emphasis in original)

White pointed out that even though the summer fuel law places a restriction on the type of fuel sold by Ammex, it does not prevent the retailer from selling the fuel duty-free, and so there is no conflict between the Warehousing Act and the clean air regulations.

Ammex successfully sued for the right to sell its fuel duty-free at the Court of International Trade in 2000, but White called its reliance on that case misplaced and said the company "reads too much into" that decision.

"Ammex I does not stand for the proposition that [the Warehousing Act] can be wielded to strike down regulation of sales activities having nothing to do with whether merchandise can be sold duty-free," the ruling states.

U.S. Circuit Judges Richard Griffin, another Bush appointee, and John Bush, a Donald Trump appointee, also sat on the panel.

Neither party immediately responded to requests for comment.

In a statement to Courthouse News, the Michigan Attorney General’s Office lauded the court’s decision.

“Gas stations emit harmful air pollutants, including pollutants that can form ozone,” the state said. “Ammex is one of the largest gasoline stations in Detroit, and this case confirms that they must comply with Michigan’s gasoline vapor pressure regulations.  This is a win for the Clean Air Act and for all Michiganders."

Attorneys for Ammex did not respond to a request for comment.

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Categories / Appeals, Business, Environment, Government, Law

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