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EPA Issues Notice For Reconsideration of Agency’s Denial of California Clean Air Act Waiver Request

Beveridge & Diamond, P.C., February 6, 2009

The Environmental Protection Agency (EPA) today issued a notice for public hearing and comment in the Federal Register on the Bush administration’s denial of California’s application for a preemption waiver under the Clean Air Act (CAA).  The waiver would allow the state to set strict automobile greenhouse gas emission and fuel efficiency standards.  EPA’s notice follows President Obama’s January 26, 2009 executive order directing the agency to revisit its prior denial of California’s waiver request.  For more detail on the waiver application, EPA’s prior denial of the waiver, and Obama’s executive order, see http://www.bdlaw/news-news-468.html.

President Obama’s executive order last week directed EPA to reconsider its prior denial of the waiver.  Language in EPA’s notice suggests the agency is leaning toward overturning the denial.  It states, “EPA believes that there are significant issues regarding the Agency’s denial of the waiver.  The denial was a substantial departure from EPA’s longstanding interpretation of the Clean Air Act’s waiver provisions and the history of granting waivers to California for its new motor vehicle emission program.”  The notice goes on to note that many parties, members of Congress, scientists, and other stakeholders have raised concerns about the denial of the waiver.  A copy of the notice can be accessed here.

EPA’s notice will disappoint the State to some degree though, as EPA did not do as California Air Resources Board Chair Mary Nichols had suggested in a January 21 letter to EPA Administrator Lisa Jackson and skip a public hearing on the waiver request.  Rather, in accordance with CAA Section 209(b)(1)’s requirement of “notice and opportunity for a public hearing,” the EPA notice provides for a 60-day comment period and a public hearing to be held in Washington, DC on March 5, 2009.  Interested parties should take advantage of the opportunity to participate in the public process on this issue.  EPA will accept written comments on the waiver request until April 6, 2009.

EPA’s notice leaves at least two major issues unresolved that may pose significant hurdles to the agency overturning its prior waiver denial.  (These issues are described in more detail in B&D’s January 27, 2009 Client Alert).  First, for EPA to reverse its prior decision, it will have to develop a legal rationale for a complete reversal of its prior legal analysis.  It is unclear how EPA can justify reversing its prior legal analysis if it ultimately grants the waiver request.

Second, it is not clear how EPA’s reconsideration of the waiver will affect or be reconciled with California’s pending lawsuit in the U.S. Court of Appeals for the District of Columbia (California v. E.P.A., appeal docketed, No. 08-1178 (D.C. Cir. May 5, 2008)).  That case, brought by California to challenge former EPA Administrator Stephen Johnson’s denial of the waiver request, has been briefed, and the decision to dismiss or remand it to the district court at this point lies solely with the Court of Appeals and not the parties.  As of today, the parties have not filed a motion to stay or remand the case. 

Interestingly, the court issued an order yesterday granting a motion to extend the time for reply briefs and revising the schedule that has the last brief filed in early April.  The government defendants may request a stay of the case based on EPA’s reconsideration process, but it is unclear how the court would view such a request.  It may come down to whether and how the automobile industry, which has been granted intervenor party status, responds.  The government and automakers may use the reconsideration process and pending litigation as an opportunity to structure a compromise, one which may be tied to the anticipated federal bail-out legislation.

For more information, please contact Nicholas van Aelstyn at nvanaelstyn@bdlaw.com or Tom Richichi at trichichi@bdlaw.com.

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