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Federal Court Upholds California’s Vehicle-Emission Standards, subject to EPA Waiver

December 12, 2007

A district court judge has held that the State of California may adopt and enforce greenhouse gas (GHG) vehicle emissions standards for new cars and trucks sold in the state, if granted a waiver to do so by EPA. In a 57-page decision issued on December 11, 2007 in Central Valley Chrysler-Jeep, Inc. v. Goldstone,[1] the court held that “both EPA and California … are equally empowered through the Clean Air Act to promulgate regulations that limit the emission of greenhouse gases, principally carbon dioxide, from motor vehicles.”[2] California filed a lawsuit last month seeking to force EPA to act on its waiver request under the Clean Air Act (CAA) to allow the state to adopt its own vehicle emission standards; 14 other states have intervened in that lawsuit.[3]

After the California Air Resources Control Board (CARB) issued regulations in 2004 setting emissions standards for passenger cars and light duty trucks, a group of California automobile dealers and the Association of International Automobile Manufacturers challenged the regulations, claiming they were pre-empted under the CAA and the Energy Policy and Conservation Act (EPCA), the statute under which federal emissions standards are issued.[4] In its decision yesterday, the court rejected those preemption arguments.

The court’s ruling relies heavily on the Supreme Court’s decision earlier this year in Massachusetts v. EPA,[5] which gave EPA the authority to regulate GHGs as air pollutants under the CAA, and an earlier decision in September by the Vermont District Court in Green Mountain Chrysler v. Crombie,[6] which upheld the State of Vermont’s right to regulate greenhouse gas emissions from new vehicles. Relying on Massachusetts, the court stated that “there is no necessary conflict between the Clean Air Act’s purpose to protect health and welfare and EPCA’s purpose to establish maximum feasible fuel efficiency standards”[7] and that “it would be the very definition of folly if EPA were precluded from action simply because the level of decrease in greenhouse gas output is incompatible with existing mileage standards under EPCA.”[8] Finding that EPA was not preempted from issuing GHG emissions regulations, the court concluded that California’s regulations were likewise not preempted for the same reasons.[9]

EPA had previously announced its intention to promulgate federal rules to limit carbon emissions from fuels by the end of 2008,[10] but California and the other states are demanding the right to act earlier, and independently.[11] If California obtains a waiver from EPA, then other states may adopt the identical standards, subject only to a two-year lead-time for implementation.[12] Stories on the decision have reported that EPA has now said that it will issue a decision on the waiver request by the end of this year, which is much earlier that EPA had previously committed to.[13]

We will have a more thorough analysis of this decision in next week’s Environmental News. For more information on the decision or other climate change news, contact a member of our Climate Change/Sustainability Practice Group.

[1] Eastern District of California Case No. CV-F-04-6663(AWI LJO) (Docket No. 656) (“Order”).

[2] Order at 55.

[3] See California Files Suit to Compel Decision on New Motor Vehicle GHG Emissions Standards, Marten Law Group Environmental News (November 28, 2007). States that are joining California’s lawsuit as intervenors are Massachusetts, New York, Arizona, Connecticut, Illinois, Maine, Maryland, New Jersey, New Mexico, Oregon, Rhode Island, Vermont, Washington and Pennsylvania.

[4] Other claims for preemption under the Sherman Act and Dormant Commerce Clause were previously dismissed by the Court. Order at 3. The court also considered and rejected the plaintiffs’ claim that CARB’s regulations were preempted by U.S. foreign policy, “because the evidence submitted does not identify any ‘policy’ with which California’s … [r]egulations might conflict.” Id. at 53.

[5] 127 S.Ct. 1438, 167 L.Ed.2d 248 (2007).

[6] ____ F. Supp.2d____, 2007 WL 2669444 (D. Vt. Sept. 12, 2007). See also Court Upholds State's Right to Regulate GHG Emissions from New Motor Vehicles, Marten Law Group Environmental News (September 26, 2007).

[7] Order at 26-27.

[8] Id. at 27.

[9] Order at 28-32.

[10] See Jonathan S. Martel, Climate Change Law and Litigation in the Aftermath of Massachusetts v. EPA, BNA Environment Reporter Vol. 38 No. 44. (Nov. 9, 2007).

[11] Under section 209(a) of the CAA, in order to avoid a patchwork of varying standards, states are explicitly preempted from adopting or enforcing motor vehicle emission standards. California, however, had enacted automobile emissions standards several years before the federal government, and section 209(b) of the CAA allows California to set its own state vehicle emissions standards, as long as they are at least as protective of human health and the environment as federal standards, and the EPA grants a waiver.

[12] Order at 31.

[13] See U.S. judge gives green light to Calif. tailpipe regs, E&E News (December 12, 2007) (subscription required).

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