EHS Administration, Regulatory Developments, Sustainability

California GHG Emissions Regulations Waiver Under Fire

Four petitions for review were filed in the D.C. Circuit Court of Appeals challenging the EPA’s reinstatement of the waiver that allows the State of California to regulate greenhouse gas (GHG) emissions from motor vehicles.

The case presents significant questions regarding state and federal sovereignty, and any decisions reached in the matter have the potential to set national precedence.

“The petitions were filed by (1) 17 states led by Ohio; (2) the Soybean Associations for the States of Iowa, Minnesota, and South Dakota, and Diamond Alternative Energy, LLC, a subsidiary of Valero Energy Corporation; (3) American Fuel & Petrochemical Manufacturers, Domestic Energy Producers Alliance, Energy Marketers of America, and National Association of Convenience Stores; and (4) Clean Fuels Development Coalition and six other petitioners that described themselves as ‘part of the renewable fuel industry and … specifically focused on the production and sale of corn ethanol,’” reports  “Twenty states, the District of Columbia, Los Angeles, and New York City moved to intervene in support of EPA, as did 10 nongovernmental organizations that identified themselves as ‘public interest organizations.’”

The legal battles center on the EPA’s decision to reinstate California’s authority to regulate motor vehicle GHG emissions and mandate zero-emission vehicles under the California Advanced Clean Car (ACC) program.

“Section 209 of the Clean Air Act (‘CAA’) authorizes EPA to adopt vehicle emission standards and preempts state regulation in the field, except for California, which may adopt its own regulations that are stricter than federal standards upon successful application to EPA for a preemption waiver,” says a Jones Day article in Lexology. “EPA granted a waiver for the ACC program in 2013 but rescinded that waiver in 2019. In 2022, EPA reversed course again, and reinstated the ACC waiver.”

The petitions ask the court to invalidate the EPA’s reinstatement decision based on:

  1. An allegation that the California waiver is unconstitutional under the equal sovereignty doctrine because it grants California powers that are denied to other states, and “alternatively that even if such unequal treatment may sometimes be justified due to the unique circumstances of a state, California lacks any unique interest in combating climate change,” the Jones Day article adds.
  2. The position that the Energy Policy and Conservation Act (EPCA) of 1975 preempts California’s ACC program. The EPCA grants the National Highway Traffic Safety Administration (NHTSA) exclusive authority to regulate fuel economy standards. “In a separate briefing, Industry Petitioners present statutory arguments that EPA exceeded its authority under the CAA by approving a program aimed at the global issues of climate change; that California has not demonstrated that it meets the statutory requirements for eligibility for the ACC waiver; and that EPA properly exercised its reconsideration authority when it issued the Rescission Decision,” continues Jones Day.

In its January 13, 2023, response, the EPA argues that CAA Section 209(b) is “within Congress’s plenary authority under the Commerce Clause to regulate interstate commerce,” Jones Day notes. Additionally, there is no express promise for equal treatment of states under the Commerce Clause.

The EPA also argues that “CAA Section 209(b) is a legitimate instance of Congress’ authority to exempt an existing state program from a new general preemption (i.e., grandfathering)” and that the particularly severe air quality in California justifies a waiver for the state.

“On the statutory questions, EPA argues, among other things, that NHTSA no longer interprets the EPCA’s preemption provision as applicable to California’s ACC, and therefore EPA appropriately did not rely on any such preemption when reinstating California’s waiver,” Jones Day says. “EPA also argues that the ACC waiver satisfied the statutory requirements for a proper waiver under Section 209(b); that EPA properly exercised its authority to reconsider and reject its Recission Decision; and that the Petitioners lack standing to assert their claims.”

In a rare twist in this matter, seven automakers filed a brief in support of California and the EPA.

“The brief explains the automakers’ goals to go electric and the multibillion-dollar investments they are making. … The companies report combined EV investments approaching $100 billion over the next five years,” according to the National Resources Defense Council. “The oil industry and its state allies claim California is ‘forcing’ a ‘wholesale shift’ and ‘fundamentally transforming the automobile industry.’ To the contrary, the carmakers respond, ‘both internal sustainability goals and market forces, including surging consumer demand and the limitations of existing technology,’ are prompting their transition toward electric vehicles. And the car companies identify why consumer demand is surging: ‘Consumers derive numerous benefits from electric vehicles besides emissions reductions, including lower lifetime operating costs and maintenance requirements and ready integration with other consumer technology.’”

A decision in this case and any subsequent U.S. Supreme Court decision have the potential to completely change the balance between state and federal sovereignty under the equal sovereignty doctrine. Should the petitioners prevail in their challenge of CAA Section 209(b), California’s entire plans for climate change and vehicle emissions could be tanked. These would include its Advanced Clean Cars II, Advanced Clean Trucks, and Omnibus Heavy-Duty Vehicle Emission rules, as well as the current Advanced Clean Fleets rulemaking.

Additionally, a broad decision in the petitioners’ favor under the equal sovereignty doctrine would have wider implications, such as reneging the exemption for the Texas power grid that removes it from federal utility regulation.

“As the Supreme Court noted in its 2013 decision in Shelby County v. Holder, the Constitution does not bar disparate treatment of the states per se,” according to Jones Day’s analysis. “In Shelby, the Supreme Court struck down certain sections of the Voting Rights Act requiring some states, but not others, to receive preclearance before changing their election laws, on the grounds that the preclearance provisions violate the equal sovereignty doctrine. Both sides in Ohio v. EPA rely on Shelby but disagree on its implications for the case. If the courts ultimately extend the equal sovereignty doctrine to CAA Section 209(b), a key question will be how to draw the line between constitutional and unconstitutional disparate treatment of the states.”

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