Ammex, Inc. v. Wenk
This text of 326 F. Supp. 3d 472 (Ammex, Inc. v. Wenk) is published on Counsel Stack Legal Research, covering District Court, E.D. Michigan primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.
Opinion
LAURIE J. MICHELSON, U.S. DISTRICT JUDGE
After the United States Environmental Protection Agency designated southeast Michigan as not in attainment of national air-quality standards, Michigan came up with a plan to improve air quality in the region. This included enacting Michigan Compiled Laws § 290.650d. That statutory provision requires dispensing facilities in southeast Michigan to sell gasoline with a Reid Vapor Pressure of no more than 7.0 pounds per square inch during the summer. As Ammex, Inc.'s gas station is located in southeast Michigan, the Michigan Department of Agriculture & Rural Development intends to enforce § 290.650d against Ammex this summer.
While Ammex's gas station is located in southeast Michigan, the station is more precisely located right before the Ambassador Bridge connecting the United States and Canada. In fact, the station is located beyond what United States Customs and Border Protection considers the "exit point" from the United States. Moreover, the station is part of a duty-free store and for a duty-free store to sell gasoline tax free, the gasoline must come from a foreign country (or foreign trade zone), stay beyond the exit point, and be sold to people leaving the United States. Indeed, the physical design of Ammex's gas station ensures that those who refuel there must immediately head into Canada. For these and related reasons, Ammex believes that MDARD would violate the Federal Constitution if it enforced Michigan Compiled Laws § 290.650d against it.
The parties' disagreement, coupled with Ammex's present inability to find a foreign source of 7.0 RVP gasoline, led to this lawsuit. Ammex asks this Court to enjoin MDARD from enforcing § 290.650d (and associated laws) against it and to declare that § 290.650d cannot be lawfully applied to it. Moreover, with summer imminent, Ammex has sought a preliminary injunction. (R. 8.)
As will be explained in detail below, the Court finds that Ammex is not likely to show that either the Supremacy Clause or the Foreign Commerce Clause bars MDARD from enforcing a 7.0 RVP standard against Ammex. As such, the Court will deny Ammex's motion for preliminary relief.
I.
A.
Customs bonded warehouses have existed in America for over 170 years. See Xerox Corp. v. Harris Cty., Tex. ,
A duty-free store, while still considered a customs bonded warehouse, see
Plaintiff Ammex, Inc. operates a duty-free store near the Ambassador Bridge that connects Detroit, Michigan to Windsor, Canada. While Ammex's store is in Wayne County, Michigan, it is "beyond the exit point" established by the United States Customs and Border Protection. (R. 20, PID 732). "Exit point," for CBP purposes, is not the "actual exit" from the United States but near the actual exit, see
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LAURIE J. MICHELSON, U.S. DISTRICT JUDGE
After the United States Environmental Protection Agency designated southeast Michigan as not in attainment of national air-quality standards, Michigan came up with a plan to improve air quality in the region. This included enacting Michigan Compiled Laws § 290.650d. That statutory provision requires dispensing facilities in southeast Michigan to sell gasoline with a Reid Vapor Pressure of no more than 7.0 pounds per square inch during the summer. As Ammex, Inc.'s gas station is located in southeast Michigan, the Michigan Department of Agriculture & Rural Development intends to enforce § 290.650d against Ammex this summer.
While Ammex's gas station is located in southeast Michigan, the station is more precisely located right before the Ambassador Bridge connecting the United States and Canada. In fact, the station is located beyond what United States Customs and Border Protection considers the "exit point" from the United States. Moreover, the station is part of a duty-free store and for a duty-free store to sell gasoline tax free, the gasoline must come from a foreign country (or foreign trade zone), stay beyond the exit point, and be sold to people leaving the United States. Indeed, the physical design of Ammex's gas station ensures that those who refuel there must immediately head into Canada. For these and related reasons, Ammex believes that MDARD would violate the Federal Constitution if it enforced Michigan Compiled Laws § 290.650d against it.
The parties' disagreement, coupled with Ammex's present inability to find a foreign source of 7.0 RVP gasoline, led to this lawsuit. Ammex asks this Court to enjoin MDARD from enforcing § 290.650d (and associated laws) against it and to declare that § 290.650d cannot be lawfully applied to it. Moreover, with summer imminent, Ammex has sought a preliminary injunction. (R. 8.)
As will be explained in detail below, the Court finds that Ammex is not likely to show that either the Supremacy Clause or the Foreign Commerce Clause bars MDARD from enforcing a 7.0 RVP standard against Ammex. As such, the Court will deny Ammex's motion for preliminary relief.
I.
A.
Customs bonded warehouses have existed in America for over 170 years. See Xerox Corp. v. Harris Cty., Tex. ,
A duty-free store, while still considered a customs bonded warehouse, see
Plaintiff Ammex, Inc. operates a duty-free store near the Ambassador Bridge that connects Detroit, Michigan to Windsor, Canada. While Ammex's store is in Wayne County, Michigan, it is "beyond the exit point" established by the United States Customs and Border Protection. (R. 20, PID 732). "Exit point," for CBP purposes, is not the "actual exit" from the United States but near the actual exit, see
While Ammex sells goods commonly found at duty-free stores, since the late 1990s Ammex has also sold gasoline. (See R. 29, PID 852.) Ammex's gas station is designed to ensure that cars that refuel there continue onto Canada afterwards. (R. 8, PID 94); see also Ammex, Inc. v. United States ,
B.
In 1970, dissatisfied "with earlier efforts at air pollution abatement," Congress made major changes to the Clean Air Act. Friends of the Earth v. Carey ,
*477The states' implementation plans were subject to EPA approval, as were any post-approval changes to the plans. See N. Ohio Lung Ass'n v. E.P.A. ,
In 1990, Congress again made major changes to the Clean Air Act. For one, Congress set a national Reid Vapor Pressure standard for gasoline. See
In 2004, the EPA designated eight counties in southeast Michigan as in "nonattainment" of the NAAQS for ozone.
This forced Michigan to come up with a strategy to bring southeast Michigan into attainment. (See R. 18, PID 562.) Part of the strategy was to require gas stations to use lower RVP gasoline in the summer months. (R. 18, PID 562; see also R. 18, PID 537, 542). In particular, Michigan enacted House Bill 5508, which says in part, "Beginning June 1 through September 15 of 2007 and for that period of time each subsequent year, the vapor pressure standard shall be 7.0 psi for dispensing facilities in Wayne" and seven other counties in southeast Michigan. (R. 18, PID 542.) And the Bill defined "dispensing facilities" as "a site used for gasoline refueling." (R. 18, PID 537.) Those two provisions of House Bill 5508 are now found in Michigan Compiled Laws § 290.650d and § 290.642, respectively. The Court will refer to § 290.650d, § 290.642, and associated state laws and regulations (e.g., Michigan Compiled Laws § 290.645(10) and Michigan Administrative Code Rules 285.561.1 - 3 ) as the "Summer-Fuel Laws."
In 2006, Michigan asked the EPA to approve most of House Bill 5508, including the 7.0 RVP standard and the associated enforcement provisions, as a revision to its state implementation plan. See (R. 18, PID 529);
On January 31, 2007, the EPA found Michigan's 7.0 RVP standard "necessary for Southeast Michigan to achieve the 8-hour NAAQS for ozone" and "approv[ed] [the] SIP revision submitted by the State of Michigan ... establishing a 7.0 psi RVP fuel requirement for gasoline distributed in Southeast Michigan."
C.
In the summer of 2012, the Michigan Department of Agriculture & Rural Development-the Michigan entity responsible for enforcing the Summer-Fuel Laws-tested gasoline Ammex was selling, found that it had an RVP of more than 7.0 psi, and thus issued Ammex a "Stop Sale Order." (R. 13, PID 223.)
The parties' dispute ended up in state court, but was resolved-for a time. Under a settlement, Ammex agreed to sell gas that complied with the 7.0 RVP standard "[b]etween June 1 and September 15 of each year." (R. 13, PID 226.) The settlement contained a "retention of jurisdiction" provision giving MDARD three years to return to the state court where it filed suit to enforce the settlement agreement. (R. 13, PID 227.)
Consistent with the settlement agreement, during the summers of 2013, 2014, 2015, 2016, and 2017, Ammex sold duty-free gasoline that had a RVP of 7.0 psi during the summer months.
D.
But Ammex says it cannot do that this upcoming summer. In particular, Ammex's foreign (or, more precisely, foreign trade zone) supplier has an issue with one of its tanks. And while there are other foreign sources where Ammex could obtain gasoline, Ammex claims that none of those sell 7.0 RVP gasoline. And while there are domestic sources that sell 7.0 RVP gasoline, buying from those would preclude Ammex from selling gasoline tax-free. In any event, says Ammex, domestic gasoline would have to be stored in different tanks which would be cost prohibitive. But see
Ammex's complaint consists of two counts. In Count I, Ammex says that the dormant side of the Foreign Commerce Clause prevents Wenk from enforcing the Summer-Fuel Laws against it. (R. 1, PID 12-14.) From Ammex's perspective, if Wenk enforced those laws, Michigan would be unconstitutionally discriminating against foreign commerce, regulating commerce beyond its borders, and infringing on Congress' right to be the "one voice" for the Nation on foreign commerce. (See R. 8, PID 82-86.) In Count II, Ammex asserts that the Supremacy Clause prevents Wenk from enforcing the Summer-Fuel Laws against it. (R. 1, PID 14-15.) From Ammex's perspective, Congress and U.S. Customs and Border Protection regulate the entire field of products sold at duty-free shops so Michigan laws that affect what can be sold are preempted. (See R. 8, PID 81-82.) Ammex also claims the Summer-Fuel Laws are preempted because they conflict with Congress' goals for duty-free shops. (
And Ammex asks this Court to do so in a hurry. Ammex stresses that June 1, 2018 (the date when the Summer-Fuel Laws come into effect) is looming and that without an injunction in place it will either have to sell gas in violation of the 7.0 standard or simply not sell gas at all. It thus seeks a preliminary injunction. (R. 8.)
II.
Wenk argues that this Court does not have subject-matter jurisdiction over Ammex's *479complaint for two reasons: because he, as a state official sued in his official capacity, is immune from suit in federal court and because the Clean Air Act requires Ammex to pursue relief in the Court of Appeals for the Sixth Circuit. (R. 7, PID 49-53.) The Court disagrees with Wenk.
Although often referred to as Eleventh Amendment immunity, sovereign immunity extends beyond the text of the Eleventh Amendment and "limits the grant of judicial authority in Art. III." Pennhurst State Sch. & Hosp. v. Halderman ,
That said, some types of official-capacity suits can proceed in federal court under the Ex parte Young exception to sovereign immunity. The idea (courts sometimes call it a "fiction") behind the Ex parte Young exception is that when a state law is contrary to federal law, any attempt by the official to enforce the state law is not on behalf of the state. See Virginia Office for Prot. & Advocacy v. Stewart ,
Wenk says that is not what Ammex is seeking to do. In Wenk's view, House Bill 5508 and its 7.0 RVP standard are federal law. ( R. 7, PID 41, 43.) So, says Wenk, Ammex's suit is not to prevent him from violating federal law but to avoid its own violation of federal law this summer. ( R. 7, PID 50.) "This," says Wenk, "turns the Ex parte Young exception on its head." ( R. 7, PID 50.)
Not so. "In determining whether the doctrine of Ex parte Young avoids an Eleventh Amendment bar to suit, a court need only conduct a straightforward inquiry into whether [the] complaint alleges an ongoing violation of federal law and seeks relief properly characterized as prospective." Verizon Maryland, Inc. v. Pub. Serv. Comm'n of Maryland ,
Ammex has. As described in some detail above, Ammex has pled that if Wenk were to enforce the Summer-Fuel Laws against it this summer, he would violate the Federal Constitution. (See R. 1, PID 12-15.) Right or wrong, these claims are neither frivolous nor made solely for the purpose of manufacturing jurisdiction. As such, Michigan's sovereign immunity does not prevent a federal court from deciding Ammex's claims against Wenk. See Muscogee (Creek) Nation ,
Wenk also claims that the Clean Air Act's judicial-review provision strips this Court of jurisdiction. ( R. 7, PID 52.) That statutory provision provides, in relevant part, "[a] petition for review of the Administrator's action in approving or promulgating any implementation plan under section 7410 of this title ... or any other final action of the Administrator under this chapter which is locally or regionally applicable may be filed only in the United States Court of Appeals for the appropriate circuit."
The Court disagrees with Wenk.
As an initial matter, it seems that the relevant EPA action was in 2007, not 1997. In 1997, the EPA merely approved a "summertime gasoline RVP limit of 7.8 psi for gasoline sold in Wayne" and other counties.
But whether the relevant EPA action is the 1997 approval or the 2007 approval, what is not debatable is that the judicial-review provision's "any other final action" clause does not apply. See
So the question then is whether Ammex's complaint seeks "review of the Administrator's action in approving ... any implementation plan."
The answer is "no." Ammex's lawsuit is limited to claims that the Summer-Fuel *481Laws cannot be enforced against it without violating the Constitution. Ammex is not saying that the EPA was wrong to "approv[e]" House Bill 5508 as a revision to Michigan's SIP. That is, Ammex neither claims that the EPA failed to follow proper procedures in approving a SIP revision nor claims that EPA's approval of a SIP revision was arbitrary or capricious. Instead, Ammex merely claims that the Summer-Fuel Laws cannot be lawfully applied to it. See Utah Power & Light Co. v. Envtl. Prot. Agency ,
In arguing for a different result, Wenk primarily relies on California Dump Truck Owners Ass'n v. Nichols ,
In Dump Truck Owners , an association of dump-truck operators sought to enjoin the California Air Resources Board (CARB) from enforcing a state law regulating heavy-duty truck emissions. See
For three reasons, the Ninth Circuit was not persuaded. For one, it thought that "the SIP's effectiveness depend[ed] largely on its enforcement by the state," and so if the association's suit was successful, it "would effectively nullify that provision of California's SIP."
Despite obvious similarities with this case, there is at least one critical difference between the association's claims in Dump Truck Owners and Ammex's claims. There, the association argued that because its members would have to increase their prices and change their routes to comply with the state law, the state law was preempted by federal laws governing motor-carrier *482pricing and routes.
That leaves the Fourth and Eighth Circuit decisions Wenk relies on.
In Virginia v. United States , the EPA found that two of Virginia's programs did not satisfy the Clean Air Act.
In Missouri v. United States , the EPA issued Missouri "five formal deficiency findings."
This case is not like Virginia or Missouri . In those cases, states either sought to invalidate the Clean Air Act provisions that the EPA relied upon to take action or sought to invalidate the sanctions associated with the EPA's action. In other words, if successful, Virginia and Missouri would have rendered the EPA's actions either unlawful or without effect. That is not what Ammex is attempting to do. As explained, the EPA's actions were approving revisions to Michigan's SIP. Ammex merely claims that Summer-Fuel Laws cannot be constitutionally applied to it. Ammex thus does not seek to render any EPA action unlawful or without effect.
In short, § 7607(b)(1) does not mandate that Ammex seek relief in the Court of Appeals.
* * *
In sum, neither Michigan's sovereign immunity nor the Clean Air Act's judicial-review provision deprive this Court of subject-matter jurisdiction over Ammex's claims. The Court thus turns to the merits.
III.
"[P]reliminary injunctions are extraordinary and drastic remedies never awarded as of right." O'Toole v. O'Connor ,
IV.
Ammex is unlikely to succeed in this case. As will be explained, the 7.0 RVP standard in § 290.650d appears to be a federal regulation and Ammex has conceded that if that is so, "then no Supremacy or Commerce [C]lause issues would exist with respect to that law." (R. 33, PID 885.) And, as will also be explained, even assuming in Ammex's favor that the Summer-Fuel Laws are purely state laws, Ammex has not shown that the Supremacy Clause or the Foreign Commerce Clause bars Wenk from enforcing the Summer-Fuel Laws against it.
Throughout his briefing, Wenk has argued that House Bill 5508, or at least § 290.650d, is federal law. ( R. 7, PID 43; see also R. 7, PID 54; R. 13, PID 189; R. 21, PID 745; R. 32, PID 875.) Wenk appears to be correct.
One way a state law made part of a state implementation plan looks like a federal law is that it makes a limited appearance in the Code of Federal Regulations. When the EPA approves a revision to a state implementation plan, the corresponding state rule is "[i]ncorporat[ed] by reference" into the CFR. For example, the CFR says, "(a) Purpose and scope. This section sets forth the applicable State Implementation Plan (SIP) for Michigan .... (b) Incorporation by reference. Material listed in paragraph[ ] (c) ... of this section with an EPA approval date prior to May 1, 2016, was approved for incorporation by reference by the Director of the Federal Register ...."
True, a listing in the CFR could just be for notice purposes. After all, state implementation plans are made up of a plethora of state rules. Without collecting them in one place, it might be difficult to know what laws comprise a SIP. See
But House Bill 5508 looks like federal laws in another way: a federal agency can and, in some cases, must enforce its provisions. In particular, if the EPA found that a gasoline station in southeast Michigan was selling gas in the summer with a RVP higher than 7.0 psi, the EPA could "issue an order requiring [the gas station owner] to comply," "issue an administrative penalty order" against the station owner, or even sue him in court.
Thus, not only do the Code of Federal Regulations incorporate House Bill 5508 and its 7.0 RVP standard, that standard is also partly-and ultimately-a federal agency's responsibility to enforce.
It is likely for these two reasons that numerous courts, including the Sixth Circuit Court of Appeals, have said that when the EPA approves a state law to be part of a SIP, the state law "becomes" federal law. Sierra Club v. Korleski ,
And even if not every state law made part of a SIP becomes a federal regulation, there are good reasons to think that the 7.0 RVP standard for southeast Michigan became one.
Start with the fact that it was the EPA which prompted the 7.0 RVP standard. As mentioned, the EPA found that southeast Michigan was a "nonattainment" area. And while in theory Michigan could have accomplished attainment in a variety of ways, in fact there were no practicable measures to bring about timely attainment other than lowering the RVP for gasoline to 7.0 psi. See
Second, it appears that Michigan could not even enact a 7.0 RVP standard without the EPA finding that it was necessary. In the EPA's view at least, Congress prohibited states from enacting RVP standards for gasoline that differed from the national 9.0 standard found at
Third, consider that both the Michigan legislature and MDARD now have no ability to do anything but adhere to § 290.650d. The Clean Air Act prohibits states from "adopt[ing] or enforc[ing] any emission standard or limitation which is less stringent than the standard or limitation" in its implementation plan.
Summarizing these last three points, the EPA required Michigan to lower ozone and the only feasible plan included a 7.0 RVP standard, it appears that Michigan's enactment of that standard had no legal effect unless and until the EPA found it "necessary," and the 7.0 RVP standard remains the law unless and until the EPA says otherwise. Short of the EPA actually promulgating § 290.650d, how could it be more federal?
That said, the Court ultimately declines to find that § 290.650d is a federal regulation and instead will assume, as Ammex claims, that the EPA's approval of House Bill 5508 as part of Michigan's SIP merely made state laws enforceable by a federal agency. (See R. 14, PID 247; R. 33, PID 883.) There are several reasons for choosing this analytical path.
First, the EPA has not been clear about whether it believes that by approving a state law as part of a SIP, it is promulgating a federal regulation. In approving the 7.0 RVP standard for southeast Michigan, the EPA at one point indicated that the standard was a federal regulation: "The Congressional Review Act ... generally provides that before a rule may take effect, the agency promulgating the rule must submit a rule report, which includes a copy of the rule, to each House of the Congress .... EPA will submit a report containing this rule and other required information to the U.S. Senate, the U.S. House of Representatives, ..." Id. at 4435. But at other points, the EPA suggested that the 7.0 RVP standard was merely a state law. See
Second, it may be that the judicial opinions stating that state law "becomes" federal law may have been imprecisely worded. See Kentucky Res. Council, Inc. v. E.P.A. ,
Third, it could be the case when the EPA approves a SIP revision, the state law remains a state law but the SIP includes an identical federal law, i.e., there are parallel provisions. But see *486California Dump Truck Owners Ass'n v. Nichols ,
Fourth, while Ammex seems to concede that a finding that the provisions of House Bill 5508 are federal regulations defeats its claims under the Supremacy Clause and Foreign Commerce Clause, Ammex is quick to add that "[t]here would remain, for purposes of those clauses[,] ... a need to determine the intended scope of CAA regulation of fuel volatility." (R. 33, PID 885.) Apparently then, a finding that § 290.650d is a federal law would not resolve Ammex's preliminary-injunction motion. Instead, the new battleground would be the scope of § 290.650d and whether it applies to Ammex. Not only is that terrain relatively uncharted by the parties, it might be necessary to draw a third entity-the EPA-into that fray.1
Finally, answering the state-or-federal-law question is not absolutely necessary to resolve Ammex's motion for preliminary relief. Ammex has taken the position that it is challenging state law. (See R. 14, PID 247; R. 33, PID 883.) So the Court may assume that Ammex is correct on this point if Ammex's Foreign Commerce Clause and Supremacy Clause claims nonetheless fail. And that is the case, as will be explained next.
The Constitution grants Congress the power "[t]o regulate Commerce with foreign Nations." U.S. Const. art. I, § 8, cl. 3. And if Congress has the power to regulate foreign commerce, then, by implication, the states do not. In other words, the Foreign Commerce Clause has a "dormant" side. Ammex says that Michigan's Summer-Fuel Laws violate the dormant Foreign Commerce Clause in three different ways. (See R. 8, PID 82-86.)
1.
Although relegating the argument to a conclusory footnote in its motion (R. 8, PID 82 n.4), Ammex spent much of oral argument asserting that Michigan's Summer-Fuel Laws fail the two-step test set out in Brown-Forman Distillers Corp. v. New York State Liquor Auth. ,
Before delving into the particulars of Ammex's argument, it helps to get a better understanding of the Brown-Forman framework. When a state law is alleged to be a violation of the Interstate Commerce Clause (more on "Interstate" below), courts perform a two-step analysis. In the Sixth Circuit, the first step focuses on whether the state law is protectionist: does it favor in-state economic interests over out-of-state ones? See Int'l Dairy Foods Ass'n v. Boggs ,
The Court flagged the fact that the Brown-Forman framework has been applied in the context of the Interstate Commerce Clause. Although Ammex asserts the Foreign Commerce Clause, it says that the Brown-Forman framework still applies. Whether that is accurate or not is also a question that the Court need not answer. As the Court finds that the Summer-Fuel Laws are not protectionist and that they pass the Pike balancing test, the Court can assume Ammex is correct that Brown-Forman applies to claims under the Foreign Commerce Clause.
With the framework in place, the Court turns to the specifics of Ammex's argument. Ammex points out that the summer-fuel regulations require dispensing facilities to sell gasoline with a RVP of 7.0 psi but permit a vehicle manufacturer to use higher RVP gas at its "proving grounds," "testing facilities," and "assembly facility." Mich. Admin. Code R. 285.561.7. As Michigan is the home of the "Big Three," i.e., America's three largest vehicle manufacturers, Ammex infers that Michigan's summer-fuel regulations favor in-state economic interests. (See R. 14, PID 252.)
Ammex has not shown that the Foreign Commerce Clause concerns itself with this variety of protectionism. While the summer-fuel regulations favor vehicle-manufacturing facilities over gas stations, it does not matter whether the facilities and stations are owned or operated by in- or out-of-state companies. See Int'l Dairy Foods ,
That means Michigan's Summer-Fuel Laws are not subject to heightened scrutiny. Instead, they need only pass Pike 's deferential test: the laws violate the dormant Commerce Clause only if their burden on foreign commerce is "clearly excessive" in relation to the benefits to Michigan. See Int'l Dairy Foods ,
On this point, Ammex says that it currently has no supply of 7.0 RVP gasoline and so if Wenk enforces the summer-fuel against it this summer, it cannot sell gas. And if that happens, Ammex avers that it will "lose substantial profits" not only from lost gasoline sales, but also from "lost sales of other products that would have been purchased by the lost gasoline customers." (R. 29, PID 51-52.) And Ammex suggests that its contribution to Michigan's ozone is minimal given that cars burn the fuel they buy from Ammex in Canada and advances in vapor-capture technology. (See R. 14, PID 244-45.) In other words, Ammex thinks that the burden that the Summer-Fuel Laws place on foreign commerce is in clear excess of the benefits to Michigan.
*488The Court disagrees. Over the past five years, Michigan's 7.0 RVP standard imposed little burden on the foreign commerce at issue: Ammex was able to buy significant quantities of gas from a foreign supplier and sell significant quantities of gas to those leaving this country. True, it is likely that there will be a greater burden on that commerce this summer. But that is only because Ammex's foreign supplier of 7.0 RVP gasoline has a temporary problem with one its tanks. Save for the next three months then, Michigan's Summer-Fuel Laws have not significantly burdened foreign commerce and are not anticipated to in the future. And enforcing the Summer-Fuel Laws against Ammex benefits Michigan. An analyst with the Michigan Department of Environmental Quality avers that gas stations contribute to ground-level ozone formation when fuel is placed in the station's storage tanks and when people refuel their vehicles. (R. 13, PID 208.) A meteorologist with MDEQ avers that "[e]missions associated with fueling at Ammex's gas station will add additional ozone precursor to an area that already has ozone exceeding the" NAAQS for 8-hour ozone. (R. 13, PID 214.) On balance, the Court finds that the generally-minimal burden on foreign commerce imposed by the Summer-Fuel Laws does not "clearly" outweigh Michigan's interest in clean air.
So, properly raised or not, the Court finds that Ammex is not likely to show that the Summer-Fuel Laws fail Brown-Forman 's two-part test.
2.
Next, Ammex says that Michigan's Summer-Fuel Laws violate the Foreign Commerce Clause because the laws infringe on Congress' right to speak for the nation on matters of foreign commerce. (R. 8, PID 85-86.) To better understand this argument, it is helpful to review Ammex's sole authority on the issue: Japan Line, Ltd. v. Los Angeles County ,
In Japan Line , shipping containers passed through California as part of their "international journeys" and if they happened to be in the state on March 1, California levied a tax.
Although not raised in its briefing, at oral argument Ammex claimed that the Summer-Fuel Laws failed the multiple-taxation prong of Japan Line 's test. In Ammex's view, the multiple-taxation test should be "reformulated" to a multiple-regulation test for purposes of this case. And Ammex says that the Summer-Fuel Laws expose it to multiple regulation because Canada does not have a 7.0 RVP standard for gasoline but Michigan does.
Even accepting Ammex's generalization of JapanLine 's multiple-taxation test, the *489situation Ammex confronts is materially different than the one that the container companies confronted. The container companies were "in fact" subject to taxes by both Japan and California and satisfying one demand did not (and could not) satisfy the other. Here, if Ammex sells gas that complies with Michigan's summertime RVP standard, it also satisfies Canada's summertime RVP standards. The burdens Canada and Michigan impose on Ammex are neither cumulative nor inconsistent.2
Ammex also claims that the Summer-Fuel Laws violate the "one voice" prong of Japan Line , i.e., if Michigan's 7.0 RVP standard were enforced against Ammex, it would prevent Congress from speaking for the nation on foreign trade.
To better understand Ammex's "one voice" argument, some additional background is necessary. In amending § 1555 to more formally and more specifically regulate duty-free stores, Congress found that duty-free stores "play a significant role in attracting international passengers to the United States." Pub. Law 100-418 (1988); see also S. Rep. 100-71 (1987) (providing that duty-free stores "induce foreign visitors to increase their expenditures for goods in the United States"). Congress also found that duty-free stores are an "important source of revenue for the State, local and other governmental authorities" because duty-free stores pay those authorities "concession fees." Pub. Law 100-418 (1988); see also
In Ammex's view, via these pronouncements, Congress has declared a national foreign-trade policy of allowing duty-free stores to sell any goods that international travelers want to buy (save perishables and explosives) at prices that those travelers want to buy them at. And Michigan's Summer-Fuel Laws purportedly interfere with this declaration because they force Ammex to buy 7.0 RVP gasoline at higher costs than Canadian-compliant fuel, which, in turn, means that Ammex must sell gasoline at prices unattractive to international travelers. Or worse, in circumstances like the present, the Summer-Fuel Laws prevent Ammex from selling tax-free gasoline entirely.
As an initial matter, the Court does not understand § 1557(a)(1) to regulate at the level of granularity that Ammex thinks it does. Ammex reads § 1557(a)(1) as not only permitting it to sell every good (other *490than perishables and explosives) but every variety of every good. It is not enough that § 1557(a)(1) permits Ammex to sell gasoline, in Ammex's view the statute permits it to sell Canadian-compliant gasoline. But the statute speaks of classes of goods (perishables) not specific goods (strawberries) let alone a specific variety of a specific good (California strawberries). The Court acknowledges that the Court of International Trade has stated, "the plain language of § 1557(a)(1) shows Congress' intent that there be only two restrictions on the type of dutiable merchandise that may be stored or withdrawn from a bonded warehouse: (1) perishable articles and (2) explosive substances other than firecrackers." Ammex ,
A hypothetical leads to a similar reading of § 1557(a)(1). If a statute said, "any vehicles, with the exception of military vehicles, may be sold at a car dealership," no one would think that the statute authorizes car dealers to sell vehicles without legally-required safety features (e.g., airbags). See
Here, the Summer-Fuel Laws do not preclude Ammex from selling a good. It may sell gasoline. The Summer-Fuel Laws at most preclude Ammex from selling a variety of gasoline, namely gasoline with a RVP above 7.0 psi. Or, viewed slightly differently, the Summer-Fuel Laws are like the airbags in the hypothetical, they ensure that a good meets a certain quality or safety standard. Either way, the Summer-Fuel Laws are not contrary to what Congress has said in § 1557(a)(1).
But Ammex stresses that in this case, regulating a good is the same as prohibiting its sale. More specifically, because Ammex presently has no foreign source of 7.0 RVP gasoline, an effect of the Summer-Fuel Laws is to prohibit Ammex from selling gasoline this summer.
The Court is not persuaded by Ammex's regulation-is-prohibition argument. As explained, whether Michigan's Summer-Fuel Laws can be constitutionally applied to Ammex should not turn on whether Ammex has a temporary supply problem. It would be more than odd to say that Wenk does not violate the Commerce Clause by enforcing the Summer-Fuel Laws when Ammex can readily obtain 7.0 RVP gasoline from a foreign source (say, last summer), but he does when Ammex cannot (this summer). Stated differently, the Summer-Fuel Laws are in no way directly contrary to Congress' foreign-trade policy; they only indirectly affect that policy in uncommon circumstances. Cf. Japan Line ,
Similar reasoning applies to Congress' goal of attracting international travelers to the United States, Pub. Law 100-418 (1988), and inducing those travelers to spend more money in this country, S. Rep. 100-71 (1987). For the past five years, Ammex has been able to sell gasoline. And Ammex has sold gasoline at prices attractive to travelers from Canada despite complying with the Summer-Fuel Laws. This *491is evidenced by the fact that Canadian travelers have the option of stopping at a Canadian gas station just across the Ambassador Bridge but frequently stop at Ammex instead. Indeed, while not all its sales are to Canadians, Ammex sells 400,000 gallons of fuel a month. That the Summer-Fuel Laws may, in combination with other factors, result in Ammex not selling duty-free gasoline for one summer, does not show that the laws "substantial[ly]," Japan Line ,
As for concession fees, Ammex has not shown that the amount it pays to Michigan in concession fees is tied to the amount of gasoline it sells. Ammex has argued that if it is forced to sell gasoline at unattractive prices or not at all, it will pay less in single-business tax to Michigan. See Ammex, Inc. v. Dep't of Treasury ,
That leaves uniformity. Ammex claims that by amending § 1555(b) to "encourage uniformity and consistency of regulation of duty-free sales enterprises," Pub. Law 100-418 (1988), Congress indicated that all duty-free stores should be able to sell the same goods. Ammex says that if states were able to regulate goods, duty-free stores would be subject to a "patchwork" of state regulations.
Ammex's argument adds words to Congress' finding. In amending § 1555, Congress found that there was "a need to encourage uniformity and consistency of regulation of duty-free sales enterprises." Congress did not find that there was "a need to encourage uniformity and consistency of regulation of goods that can be sold at duty-free sales enterprises."
And the history of duty-free stores further suggests that Congress was referring to uniformity in the operations of duty-free stores rather than the goods they are able to sell. In 1983, U.S. Customs explained that it had been regulating duty-free stores "as part of its overall bonded warehouse program" but "the special nature of the stores and their procedures ha[d] become increasingly difficult to 'contain' within the other categories of bonded warehouses." See
In short, Ammex has not shown that Michigan's Summer-Fuel Laws violate the Foreign Commerce Clause because they subject Ammex to multiple regulation or because they infringe on Congress' right to speak for the nation on matters of foreign commerce. See Japan Line ,
3.
Finally, Ammex says that the Summer-Fuel Laws violate the extraterritoriality branch of the dormant Foreign Commerce Clause.
In Healy v. Beer Institute ,
Ammex thinks these propositions apply squarely to this case because "[i]n both the legal and factual sense," its gasoline sales "never touch the domestic stream of commerce." (R. 8, PID 84.) Ammex points out it buys gasoline from a foreign supplier or one located in a foreign trade zone. (R. 29, PID 848-49.) And Ammex points out that under the regulations governing duty-free shops, the merchandise it sells is for use outside the United States. (R. 8, PID 84.) In fact, Ammex says, "[t]he geography of the Ammex Facility offers no direct physical route for products stored or sold at the store to enter the United States. Thus, cars entering the gas station must proceed into Canada upon exit." (R. 8, PID 84.) Therefore, in Ammex's view, its gasoline sales "occur[ ] entirely outside" of Michigan. (R. 8, PID 85.) And because Michigan's Summer-Fuel Laws regulate the gasoline it sells, the Summer-Fuel Laws impermissibly regulate commerce outside of Michigan. (Id. )
Although Ammex presents a compelling argument, the Court is not persuaded that the extraterritoriality doctrine applies to the facts of this case.
*493As an initial matter, the doctrine should not be readily applied. In the Supreme Court, the extraterritoriality doctrine has only been used to strike down state laws on three occasions. Energy & Env't Legal Inst. v. Epel ,
Second, Wenk would not contravene the concepts animating the extraterritoriality doctrine if he were to enforce the Summer-Fuel Laws against Ammex. The doctrine stems from three Founding Era concepts: (1) a state's regulatory power ends at its borders; (2) respect for other states' sovereignty; (3) respect for the federal government's sovereignty. See Am. Beverage ,
Regarding regulatory reach, Michigan is in one sense regulating beyond its borders but, in another, not at all. True, the gasoline Ammex purchases comes from a foreign country or foreign trade zone, is stored beyond CBP's "exit point" from the United States, and is taken to Canada immediately after purchase. But even under CBP's definition of "exit point" (and it is by no means a given that CBP's definition should be controlling for purposes of the Foreign Commerce Clause), Ammex is still within the United States and thus, within Michigan. See
The extraterritoriality doctrine's other two concerns-a state infringing on the sovereignty of other states (or, here, foreign governments) and a state infringing on the sovereignty of the federal government-are even more plainly not implicated in this case.
Starting with foreign governments, the fuel laws do not prevent Canada (or Ontario) from setting any RVP for gasoline that it wishes. Nor does it prevent any Canadian business (or any business for that matter) from selling gasoline in Canada that does not comply with Michigan's 7.0 RVP standard.
In this way, Michigan's Summer-Fuel Laws are like Ohio's labeling laws in Int'l Dairy Foods Ass'n v. Boggs ,
That leaves the possibility that the Summer-Fuel Laws infringe upon the sovereignty of the federal government. As explained above in addressing Ammex's "one voice" argument, Michigan's Summer-Fuel Laws do not substantially limit a duty-free store's ability to "attract[ ] international passengers to the United States," Pub. Law 100-418 (1988), or to "induce foreign visitors to increase their expenditures for goods in the United States," S. Rep. 100-71 (1987). Nor does it contravene Congress' statement in
In short, Ammex not only invites the Court to invoke the "most dormant" dormant Commerce Clause doctrine to bar Wenk's enforcement of the Summer-Fuel Laws, it asks the Court to do so when one of the three concepts animating the doctrine must be stretched to fit this case and the other two just do not fit. The Court declines the invitation.
That decision is not inconsistent with American Beverage , the only case in which the Sixth Circuit has applied the extraterritoriality doctrine to strike down a state law. In that case, the Michigan law at issue essentially went a step further than the Ohio law at issue in Int'l Dairy Foods : Michigan not only required beverage manufactures to place their drinks in bottles with a unique Michigan mark (like the Ohio law), it prohibited those bottles from being sold in any other state that did not have a similar marking law (unlike the Ohio law). See id. at 367, 374-75. Thus, there was concern that Michigan's law would adversely " 'interact with the legitimate regulatory regimes of other States' "
*495or that an adverse " 'effect would arise if not one, but many or every, State adopted similar legislation.' " See id. at 376 (quoting Healy ,
The same concerns are not present here. The Summer-Fuel Laws will not adversely "interact with the legitimate regulatory regimes of other [sovereigns]." As explained, there is no conflict between Canada's existing RVP standards and Michigan's existing RVP standards. And the Summer-Fuel Laws do not conflict with any RVP standard set by the federal government. Nor would "havoc" or a perverse effect arise if other sovereigns implemented RVP standards similar to the one set in the Summer-Fuel Laws. If Canada were to set a maximum RVP standard, Ammex could comply with the lower of Michigan's and Canada's standards. And the same is true if the EPA were to set a maximum RVP standard different than Michigan's. Accordingly, the Court finds that American Beverage does not require this Court to find Michigan's Summer-Fuel Laws unconstitutional under the extraterritoriality doctrine.
In sum, Ammex has not shown that the Summer-Fuel Laws fail Brown-Forman 's discrimination test, JapanLine 's multiple-taxation and "one voice" tests, or Healy 's extraterritoriality test. As such, Ammex is not likely to succeed in showing that the dormant Foreign Commerce Clause bars Wenk from enforcing the Summer-Fuel Laws against it.
The Court thus turns to Ammex's two preemption claims. Because federal law is "the supreme Law of the Land," U.S. Const. art. VI, cl. 2, state laws can be trumped by federal ones. Congress' intent to preempt state law can be manifested in several ways. See United Automobile Workers, Local 3047 v. Hardin Cty., Kentucky ,
The Court begins with Ammex's field-preemption claim and then turns to its conflict-preemption claim. In doing so, the Court is mindful that there is a "strong presumption against federal preemption of state law." Merrick v. Diageo Americas Supply, Inc. ,
Ammex argues, "If Congressional regulation is so pervasive that it occupies the field on state taxation of bonded goods for export, then this principle applies with added force to preempt state efforts to regulate the type of goods sold, such as gasolines with various octanes, additives, or vapor pressures." (R. 8, PID 81.) In Ammex's view, the Summer-Fuel Laws are even "more invasive" than state taxation, and so if Congress has regulated customs bonded warehouses to the point where *496state taxes cannot intrude, it must be that there is no room for Michigan to impose a 7.0 RVP requirement on gasoline stored at a customs bonded warehouse. (See R. 8, PID 81.)
As an initial matter, the Court is not entirely convinced that any court has held that Congressional regulation of customs bonded warehouses is so pervasive that there is no room for states to tax bonded goods for export. Among Ammex's authorities, Xerox Corp. v. Harris Cty., Tex. ,
But even granting Ammex its premise, its conclusion does not necessarily follow. That is, even if Congress has left no room for states to impose taxes on goods stored in customs bonded warehouses and destined for export, it does not follow that there is no room for states to regulate those goods. Ammex believes that the Summer-Fuel Laws are even more invasive than a state tax, but a state tax goes to the very core of Congress' regulation of bonded warehouses. Congress has specifically legislated that a merchant may store goods at customs bonded warehouses and defer import duties until the goods are placed into the stream of U.S. commerce or not pay them at all if exported to foreign country. See
At oral argument, Ammex did not focus on this a fortiori argument (i.e., state taxes are field preempted and so more intrusive regulations are field preempted). Instead, Ammex argued that while there may be room for Michigan to regulate certain aspects of customs bonded warehouses, Congress had completely regulated the set of goods that may be sold at a customs bonded warehouse. In support of this claim, Ammex directed the Court to Ammex, Inc. v. United States ,
The Court has effectively addressed Ammex's preemption argument based on Ammex v. United States. In finding that the Summer-Fuel Laws do not infringe on Congress' voice, this Court found that because the Summer-Fuel Laws merely regulated gasoline or dictated that Ammex sell a variety of gasoline, they were not inconsistent with § 1557(a)(1). And, in responding to Ammex's assertion that the Summer-Fuel Laws go further, i.e., that they prohibit the sale of gasoline, the Court found that the constitutionality of the Summer-Fuel Laws should not turn on Ammex's short-term supply problem. Accordingly, even if Congress dictated which goods may be sold at a duty-free store when it enacted § 1557(a)(1), the Court finds that Congress left room for Michigan to impose a volatility standard on gasoline sold at a duty-free store.
That leaves Ammex's claim that if the Summer-Fuel Laws were enforced against Ammex, it would frustrate Congress' goals for duty-free stores. Ammex argues that if Wenk were permitted to enforce the Summer-Fuel Laws against it, the "direct effect" would be "precluding Ammex from selling Canadian-compliant gasoline-which is the product naturally desired by customers proceeding to Canada-during the summer months." (R. 8, PID 81; see also R. 14, PID 258.) "Therefore," says Ammex, "the Summer Fuel Requirements plainly stand as an obstacle to the purposes of the federal customs law." (R. 14, PID 258; see also R. 8, PID 81.)
The Court disagrees. As discussed, in providing more formal and more comprehensive regulation of duty-free stores, Congress found that duty-free stores attracted international travelers to the United States and found that duty-free stores provided revenue (in the form of concession fees) to the states. See Pub. Law 100-418 (1988). And Congress sought to "encourage uniformity and consistency of regulation of duty-free sales enterprises."
In sum, Ammex is not likely to show that federal laws governing customs bonded warehouses are so pervasive that they left no room for an application of Michigan's Summer-Fuel Laws or that the Summer-Fuel Laws are an "obstacle" to Congress' goals for duty-free stores.
V.
Because Ammex is not likely to succeed on the merits, the Court does not address the other preliminary injunction factors. See Cooper v. Honeywell Int'l, Inc. ,
VI.
For the reasons provided, Ammex's motion for preliminary injunction (R. 8) is DENIED.
SO ORDERED.
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