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Federal Judge Upholds California Law Regulating Greenhouse Gas Emissions From Motor Vehicles

Beveridge & Diamond, P.C., December 13, 2007

Central Valley Chrysler-Jeep Inc. v. Goldstone, E.D. Cal., No. CV F 04-6663, Filed December 11, 2007

On December 12, 2007, U.S. District Court Judge Anthony Ishii rejected a lawsuit filed by automobile manufacturers challenging California’s authority to regulate greenhouse gas (GHG) emissions from motor vehicles.  Judge Ishii 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.”  Central Valley Chrysler-Jeep, Inc. v. Goldstone, ___, slip op. at 55 (2007).

Under the Clean Air Act (CAA), California may mandate motor vehicle emissions that are more stringent than federal rules if the state obtains a waiver from EPA in accordance with Section 209 of the CAA.  California’s regulations would require car manufacturers to cut GHG emissions by 25 percent from cars and light trucks, and 18 percent from SUVs, starting with the 2009 model year.  Automobile manufactures challenged the California standards, asserting that California’s motor vehicle regulations, when and if they are granted a waiver under Section 209, are still state regulations that are preempted by federal fuel economy standards and by the foreign policy of the United States. 

The court’s decision relied heavily on the Supreme Court’s holding in Massachusetts v. Environmental Protection Agency, 127 S. Ct. 1438 (2007), that GHGs are “air pollutants” subject to regulation under the CAA.  Central Valley, slip op. at 14-16.  In Massachusetts, the Supreme Court also rejected EPA’s assertion that it could not regulate carbon dioxide emissions because doing so would require EPA to tighten mileage standards, which, EPA argued, was the responsibility of the Department of Transportation (DOT) under the Energy Policy and Conservation Act (EPCA).  Massachusetts, 127 S. Ct. at 1462.  As Judge Ishii notes, “the Supreme Court observed EPA has been charged with protecting the public’s “health and welfare,” a statutory obligation wholly independent of DOT’s mandate to promote energy efficiency. The two obligations may overlap, but there is no reason to think the two agencies cannot both administer their obligations and yet avoid inconsistency.” Central Valley, slip op. at 16 (citations omitted) (quoting Massachusetts, 127 S. Ct. at 1462). 

In rejecting the automobile manufacturers’ assertion that EPCA precludes an EPA-approved state regulation on GHG emissions from motor vehicles, the Court made several findings.  First, the court determined that Congress empowered EPA, by tasking it with protection of public health and welfare, to adopt controls on GHGs notwithstanding that such regulation might impact fuel efficiency standards established under EPCA.  Central Valley, slip op. at 21-22.  Second, the Court held that it is DOT’s responsibility to conform and harmonize its average fuel economy standards with any standards that EPA has promulgated to protect health and welfare.  Central Valley, slip op. at 27.  The court based this conclusion on the fact that Congress gave EPA authority to regulate broadly to protect public health and welfare, while EPCA requires DOT, as set forth in 42 U.S.C. § 32902(f), to give consideration to “other motor vehicle standards of the Government,” including, explicitly, regulations promulgated by EPA.  Id.  Third, the court concluded that a California-promulgated regulation that is granted a waiver by EPA under Section 209 does not function any differently than an EPA-promulgated regulation because both are “other motor vehicle standards of the Government” that DOT must consider when setting its fuel economy standard.  Central Valley, slip op. at 30, 32. 

The Court also rejected the automobile manufacturers’ preemption arguments.  EPCA provides that “. . . a State or a political subdivision of a State may not adopt or enforce a law or regulation related to fuel economy standards or average fuel economy standards . . . .”  49 U.S. C. § 32919.  Judge Ishii concluded that the preemptive force of this express language in the statute extends very narrowly and expressly preempts only those regulations that are explicitly aimed at the establishment of fuel economy standards.  Central Valley, slip op. at 34.  Because California regulations allow for air conditioning offsets, hybrid and plug-in hybrid credits, and other sources of emissions that mitigate the need for fuel efficiency improvements, there is not a one-to-one relationship between GHG reductions and the increase in average fuel efficiency standards.  Id.  Accordingly, the court determined that California’s regulations are not explicitly focused on fuel economy standards such that they are preempted by EPCA’s narrow preemption clause.  Id. at 36.  With regard to conflict preemption, the court held that there is no preemption because California must give consideration to the same factors that EPA must consider when promulgating regulations, and any technology forcing that occurs to meet the California standards does not constitute an interference with EPCA’s purpose of setting average fleet mileage standards to the maximum feasible level.  Id. at 40.   

Lastly, Judge Ishii also rejected the automobile manufacturers’ foreign policy preemption claim.  The Court relied on Massachusetts and concluded that “whatever the foreign policy of the executive branch might be, it does not conflict with or prevent EPA from carrying out its congressionally mandated regulatory duties.”  Id. at 43.  The court held that there is no Executive Branch foreign policy that can interfere with Congress’ determination that states may obtain a Section 209 waiver under the CAA.  Id. at 53.  The court also concluded that there is no reason to presume that the efforts of California to reduce GHG emissions would interfere with efforts by the Executive Branch to negotiate agreements with other nations to do the same.  Finally, Judge Ishii noted that if states can be barred from taking action to curb their GHG emissions based on the Executive Branch’s foreign policy, then efforts by states to encourage the use of compact florescent light bulbs, amongst other things, would also constitute an interference.  Id. at 53. 

California requested a Section 209 waiver from EPA in December 2005.  On November 8, 2007, the state filed a complaint in the U.S. District Court for the District of Columbia against the EPA in an effort to force EPA to make a decision on the waiver.  If EPA grants the waiver, other states have the option of adopting California’s standard; 16 states have indicated that they will follow the California standard.  See B&D News, September 20, 2007.  In September 2007, a federal district court in Vermont upheld Vermont’s adoption of the California standards in response to an automobile industry lawsuit that was argued on similar grounds as this California case.  See Green Mountain Chrysler Plymouth, et al. v. Crombie, 508 F.Supp.2d 295 (D. Vt. 2007).

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