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California Sues EPA Over Vehicle Emissions Standards

January 9, 2008

The State of California sued the U.S. Environmental Protection Agency (EPA) on January 2, 2008, in the hope of overturning EPA’s denial of California’s request for a waiver under the Clean Air Act (CAA) to set stricter vehicle emissions standards than required under federal law. California’s three-page petition for review of EPA’s action can be viewed here. California filed its appeal in the Ninth Circuit, rather than the Circuit Court for the District of Columbia, based on EPA’s failure to make a “finding of nationwide scope and effect,” as provided for in Section 307(b)(1) of the CAA.[1]

Background

EPA announced that it would deny California’s request for a waiver on December 19, 2007.[2] California’s waiver request has been pending before EPA since December 2005. Following the announcement, EPA Administrator Stephen Johnson conveyed the agency’s decision to deny California’s waiver request by way of a letter to Governor Arnold Schwarzenegger. A copy of that letter may be viewed here. Final action by EPA triggering the right to appeal would normally come through publication of EPA’s decision in the Federal Register; however, California chose to sue in response to EPA’s letter, rather than wait for this step. As a result, it is possible that EPA may use the publication of its decision in the Federal Register as an opportunity to make a finding of nationwide scope, and then argue for a change in venue to the D.C. Circuit Court of Appeals, which is normally considered to be more deferential to agency action, rather than have the appeal heard by the Ninth Circuit.

Fourteen other states[3] adopted California’s vehicle emissions standards, and three others have stated their intention to do so.[4] Fifteen states, including the State of Washington, have stated that they plan to intervene in California’s appeal, including 13 of those that have either adopted or are in the process of adopting the rules. Delaware and Illinois, which have not passed the standards, have stated that they intend to joint the lawsuit.[5]

Under section 209(a) of the CAA, in order to avoid a patchwork of varying standards, states are preempted from adopting or enforcing motor vehicle emissions standards.[6] Instead, that role is given to EPA. However, California, which had enacted automobile emissions standards several years before the federal government, is permitted by section 209(b) of the CAA 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 for California to enforce them.[7]

In 2002, the California Legislature enacted AB 1493, requiring the California Air Resources Board (CARB) to establish new standards for motor vehicle greenhouse gas (GHG) emissions. These standards are applicable to model year 2009 motor vehicles and are designed to cut GHG emissions from new vehicles sold in California by nearly 30 percent by model year 2016. Under section 177 of the CAA, other states can adopt the more stringent motor vehicle emissions standards enacted by California, as long as the regulations are adopted at least two years prior to the model year to which they will apply.[8] These states would not need to request their own waiver, as long as their standards are identical to the California standards, provided the waiver was granted.[9]

EPA’s Denial Based on Congressional Adoption of Nationwide Fuel Economy Standards

This is the first time EPA has denied a waiver request from California. Previous waivers had allowed California to enforce stricter air quality regulations than those imposed by the CAA. EPA had granted all 40 of California’s requests for these waivers over the last 30 years.[10] EPA Administrator Stephen Johnson distinguished the current waiver request from prior requests based on the nature of the pollutants that California sought to regulate, stating that “[u]nlike other air pollutants covered by previous waivers, greenhouse gases are fundamentally global in nature. … [As a result], this challenge is not exclusive or unique to California and differs in a basic way from the previous local and regional air pollution problems addressed in prior waivers.”[11]

EPA’s position is supported by a recent Congressional Research Service study on California’s regulation which reported that, even if the regulation was implemented by all 16 states, it would only reduce worldwide GHG emissions by 0.6 %. Based on these figures, EPA may argue that the only effective way to address California’s conditions is to implement a national standard. Under section 209, California must “determine that the State standards will be, in the aggregate, at least as protective of public health and welfare as applicable Federal standards.” EPA is required to defer to such a finding, unless it finds California’s decision to be arbitrary and capricious.

Johnson relied on the fact that Congress recently adopted nationwide fuel efficiency standards as part of the “Energy Independence and Security Act,” which was signed into law by President Bush the same day as Mr. Johnson’s letter:

Congress has recognized the need for very aggressive yet technically feasible national standards to address greenhouse gases and energy security by passing the Energy Independence and Security Act. Just today the President signed these national standards into law, providing environmental benefits and economic certainty for Californians and all Americans. I strongly support this national approach to this national challenge which establishes an aggressive standard of 35 miles per gallon for all 50 states, as opposed to 33.8 miles per gallon in California and a patchwork of other states.[12]

In light of the “global nature of the problem of climate change,” Johnson stated that he had determined that California does not have a “need to meet compelling and extraordinary conditions” required for a waiver.[13]

CARB Disputes EPA’s Claim that New Federal Standards Would be as Effective as California’s

In response to Johnson’s public statements, the same day that California filed its appeal, CARB issued a “Technical Assessment” rebutting EPA’s claim that the emissions standards adopted by Congress were as effective as California’s emissions standards in reducing GHG emissions from vehicles. CARB’s Technical Assessment can be viewed at this link.

In its report, CARB rejected Administrator Johnson’s claim that the new federal standards would be as effective at lowering GHG emissions from automobiles. According to CARB, the reason was that “California standards regulate GHG emissions [while the] federal CAFE standards are aimed at reducing the nation’s fuel consumption.”[14] When adjustments are made to allow an “apples to apples” comparison, CARB claimed that, by 2016, California’s vehicle emissions standards would have resulted in the removal of 17 million metric tons (MMT) of carbon dioxide, “more than double the 8 MMT reduction produced by the federal rules.”[15] By 2020, this amount would increase to 33 MMT, when compared to 19 MMT removed by the federal standard – a 74 percent increase.[16]

CARB maintains that the cumulative benefits of the enforcement of California’s vehicle emissions standards would be more than three times those produced by the federal standards, and when the effect of the other states who had adopted California’s standards were factored in, CARB claimed that there would be a 59% increase in GHG emissions reductions by 2020, when compared to the federal standards.[17]

Previous Litigation Regarding State Vehicle Emissions Standards

California’s current lawsuit is the latest in a series of cases that have involved the issue of whether the states may issue and enforce vehicle emissions standards. One week prior to EPA’s announcement of its denial, a federal judge in California held that the State had power to adopt and enforce GHG vehicle emissions standards for new cars and trucks sold in the state, but only if EPA granted the state a waiver to do so. In a 57-page decision issued on December 11, 2007 in Central Valley Chrysler-Jeep, Inc. v. Goldstone,[18] 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.”[19]

The opinion in Central Valley Chrysler-Jeep, Inc. in turn relied heavily on the Supreme Court’s decision earlier this year in Massachusetts v. EPA,[20] which gave EPA the authority to regulate GHGs as air pollutants under the CAA, as well as an earlier decision in September by the Vermont District Court in Green Mountain Chrysler v. Crombie,[21] which, in similar fashion to the decision by the California District Court, upheld the State of Vermont’s right to regulate greenhouse gas emissions from new vehicles. In addition to Green Mountain, in Lincoln-Doge, Inc. v. Sullivan,[22] the District Court for the District of Rhode Island recently allowed a challenge to Rhode Island’s vehicle emissions regulations (which are based on California standards) to go forward over the State’s objection that the challenge was not ripe until either EPA granted or denied California’s waiver request.[23]

In Central Valley Chrysler-Jeep, the court pointed to the Supreme Court’s decision in Massachusetts to support its conclusion that “there is no necessary conflict between the Clean Air Act’s purpose to protect health and welfare and [the federal law providing authority to issue federal CAFE standards] purpose to establish maximum feasible fuel efficiency standards.”[24]

Conclusion

California’s lawsuit challenging EPA’s denial of its waiver request to enforce its own vehicle emissions standards raises fundamental questions about the appropriate method of regulating vehicle emissions generally, and greenhouse gas emissions from mobile sources in particular. As a factual matter, CARB has directly challenged EPA’s claim that Congress’ newly-adopted fuel efficiency standards will be more effective at addressing the global problem of climate change caused by vehicle emissions, directly rebutting a Congressional Research Service report on the effect of implementing California’s standards. And as a regulatory matter, California’s challenge to EPA’s action goes to the heart of how air pollutants are to be regulated under the CAA.

In addition, the immediate intervention of 15 other states in the litigation demonstrates the frustration that many of the states have felt with the federal government’s response to climate change. In the event that California’s appeal is successful, these states will be free to enforce California’s vehicle emissions standards, as an additional effort over and above any standards adopted by the federal government to combat GHG emissions from vehicles.

For more information, please contact any member of our Climate Change/Sustainability Practice Group.

[1] Petition at 2-3.

[2] A story reporting on EPA’s decision to deny California’s waiver request appeared that same day in this newsletter. See EPA Rejects California’s Waiver Request for State-Specific Vehicle Emissions Standards, Marten Law Group Environmental News (Dec. 19, 2007).

[3] States that have adopted California’s standards are Massachusetts, New York, Arizona, Connecticut, Illinois, Maine, Maryland, New Jersey, New Mexico, Oregon, Rhode Island, Vermont, Washington and Pennsylvania.

[4] The governors of Arizona, Colorado, Florida and Utah have each indicated that they intend to adopt the California emissions standards.

[5] See Washington to join California's suit against EPA KATU News (January 2, 2008).

[6] 42 U.S.C. § 7543(a).

[7] 42 U.S.C. § 7543(b).

[8] 42 U.S.C. § 7507.

[9] 42 U.S.C. 7507.

[10] California Office of the Governor Press Release (April 11, 2006).

[11] December 19, 2007 letter from S. Johnson to Governor A. Schwarzenegger at 1.

[12] Id.

[13] Id. at 2.

[14] CARB “Technical Assessment,” (January 2, 2008), Executive Summary at 1.

[15] Id.

[16] Id.

[17] Id. at 2

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

[19] Order at 55.

[20] 127 S.Ct. 1438, 167 L.Ed.2d 248 (2007).

[21] ____ 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).

[22] Slip Opinion, ___ F. Supp.2d ___, 2007 WL 4577377 (D. R.I., December 21, 2007).

[23] Id. at *3-5. In its opinion, the Court acknowledged that EPA’s denial of California’s waiver request had been issued just two days before the opinion was issued, but noted the likelihood of an appeal of that decision, citing the Supreme Court’s opinion in Massachusetts.

[24] Order at 26-27.

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