Auto industry sues to block state regulations curbing greenhouse gas emissions from new motor vehicles; courts reject industry’s arguments that the regulations are preempted by federal law and that they interfere with U.S. foreign policy.
Status: Appeal by auto industry pending in the Second Circuit Court of Appeals. (Nos. 07-4342,-4360); EPA granted California’s waiver request on June 30, 2009 allowing the states to enforce the regulations.
Discussion & Analysis: The Clean Air Act (CAA) establishes uniform national standards for controlling emissions from new motor vehicles. The law expressly preempts states from setting their own standards. However, Section 209(b) of the Act creates an exception: California has the authority to set its own, more protective emissions standards, which other states may choose to follow. To exercise this option, California must obtain from EPA a waiver of the preemption provision. In 2004, California completed work on a regulation addressing greenhouse gas emissions from new motor vehicles, calling for a thirty percent reduction in greenhouse gases from new cars and light trucks by the year 2016. In 2005, Vermont adopted the California standards (thirteen other states have since done the same). In December 2005, California formally asked EPA to issue the waiver required under the CAA.
The automotive industry launched legal challenges to these proposed greenhouse gas regulations in federal courts in three states: Vermont, California, and Rhode Island. The key legal arguments pressed by industry in each case are the same: (1) that the state regulations are preempted by the Energy Policy and Conservation Act (EPCA); and (2) that the regulations interfere with U.S. foreign policy. The Vermont court was the first to render judgment.
In a rigorous, 240-page opinion, following a 16-day bench trial, the district judge ruled in favor of Vermont and, in so doing, squarely rejected industry’s constitutional arguments. The court first determined that preemption doctrine—a claim that state law is superseded by conflicting federal law—does not apply at all in this case. Rather, the question is how the CAA must be interpreted in light of EPCA, the federal statute that provides for establishment of minimum corporate average fuel economy (CAFE) standards by the National Highway Traffic Safety Administration (NHTSA). The court found that a properly-issued California emissions standard under the CAA simply becomes another “government standard” to be taken into account under the requirements of EPCA.
The court went on to explain that even if the preemption doctrine were applicable, EPCA does not preempt state greenhouse gas regulations adopted under the CAA’s California waiver scheme. First, there is no “express preemption,” as the language of EPCA’s preemption provision is intended to preempt fuel economy standards, not greenhouse gas emission standards. Second, there is no “field preemption,” which would require evidence that Congress intended regulation of automotive greenhouse gas emissions to remain solely the province of the federal government; after all, the CAA invites state involvement under the California waiver scheme. Third, on the issue involving “the bulk of the evidence at trial,” the court declined to find “conflict preemption”—that is, that the effects of Vermont’s regulation thwart the ability of the federal government to set fuel economy standards under EPCA.
Next, the court rejected the claim of foreign policy preemption, the argument that Vermont’s regulation intrudes on U.S. foreign policy prerogatives or conflicts with an express foreign policy. To the contrary, the court cited multiple recent statements made by the federal government in international fora that actually applaud the contribution of non-federal efforts to combat greenhouse gas emissions in the United States—specifically referencing state efforts under the CAA California waiver scheme.
Green Mountain Chrysler is also important for its discussion of the Supreme Court’s recent decision in Massachusetts v. Environmental Protection Agency. As a consequence of the Supreme Court’s determination that EPA may regulate greenhouse gases under the CAA, some commentators argued that lower courts are increasingly likely to find that state efforts to combat global warming are preempted. But Green Mountain Chrysler rejects this notion, at least in the context of emissions regulations adopted through the CAA’s California waiver scheme. Additionally, on the persistent question of whether state efforts to regulate domestic greenhouse gas emissions intrude on federal primacy in the foreign policy sphere, the Vermont court referenced with approval the Supreme Court’s observation in Massachusetts that the President’s broad authority over foreign policy does not extend to a refusal to execute domestic laws.
The Vermont court’s ruling was followed in December of 2007 by a similar one on the same issues in California, in Central Valley Chrysler-Jeep, Inc. v. Goldstene. That court stated that while it did not disagree with the Green Mountain Chrysler court’s “conclusion of non-conflict,” the California court relied on a different approach to reach that conclusion. First, the court looked at the “interplay” between the regulatory functions of the CAA and EPCA, and concluded that Massachusetts confirmed that Congress intended EPA to be able to regulate emissions notwithstanding the regulation’s impact on EPCA fuel economy standards. Second, the court asked whether NHTSA’s authority to set fuel economy standards under EPCA precludes EPA from setting standards under the CAA. Here the court turned industry’s argument on its head. Relying again on language in Massachusetts, the court concluded that it is not EPA that must conform its regulations to NHTSA’s fuel economy standards, but rather NHTSA that must take into account EPA’s emissions standards when setting fuel economy standards. Finally, the court asked whether there is any basis for treating a state regulation granted a waiver under Section 209 of the CAA any differently than an EPA-promulgated regulation, and concluded that if EPA possesses the power to set emissions standards that have an incidental effect on fuel economy, there is no basis in the law to deny a state acting under Section 209 this authority as well. The court went on to conclude that EPCA does not preempt the California regulation.
Status of California’s Waiver Request: The Obama Administration EPA granted the waiver request on June 30, 2009. Originally, in December 2007, EPA had announced it would deny California’s waiver request, and issued a written decision in February 2008. California filed a petition for review in the D.C. Circuit Court of Appeals in May 2008. The federal government filed a brief seeking denial of the petition on January 9, 2009, but the litigation was mooted by the June 2009 waiver grant. Because EPA had already promulgated national automotive emissions standards that California agreed would be deemed to meet its standard, the formal waiver grant was largely symbolic. Nonetheless, according to an EPA press release, the decision to grant the waiver represents a return to EPA’s “traditional legal interpretation of the Clean Air Act that has been applied consistently during the past 40 years.”
Key Opinions: Green Mountain Chrysler
But See: Metropolitan Taxicab Board of Trade v. City of
Clean Air Act Waiver-Related Litigation: Chamber of Commerce of the
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