CEI Submits Comments on Biden Administration Proposal to Repeal Trump Auto Rule Enforcing Preemption of California Motor Vehicle CO2 Regulations

On Friday, June 11, the Competitive Enterprise Institute (CEI), joined by eight other free market organizations, submitted comments on the National Highway Traffic Safety Administration’s (NHTSA) notice of proposed rulemaking (NPRM) to repeal Part 1 of the Trump administration’s Safer Affordable Fuel Efficient (SAFE) Vehicles Rule.

The SAFE 1 Rule, finalized in September 2019, determines that state policies regulating or prohibiting tailpipe carbon dioxide (CO₂) emissions “directly or substantially affect corporate average fuel economy” (84 FR 51313). Because such policies are “related to” fuel economy standards, they are expressly preempted under Section 32919(a) of the Energy Policy and Conservation Act (EPCA).

The SAFE 1 Rule restores the pre-2009 institutional framework for determining Corporate Average Fuel Economy (CAFE) standards. By eliminating California’s tailpipe CO₂ emission standards and zero-emission vehicle (ZEV) mandates, SAFE 1 ends Sacramento’s power to bully automakers into serving its ideological agenda rather than the revealed preferences of consumers. That should relieve the political pressure on NHTSA, the Environmental Protection Agency (EPA), and manufacturers to ignore the adverse effects of CAFE standards on vehicle affordability, consumer choice, and occupant safety.

Repealing SAFE 1 and returning to the Obama administration’s unlawful exemption of California from EPCA preemption will result in more stringent CAFE standards. Those more stringent standards will increase new car prices and further limit consumer choice by restricting the availability of larger, heavier vehicles. The immediate impact will be on new cars, but those effects will quickly extend to used cars as well.

The Biden administration seeks to rapidly phase out the fossil fuel industry. It therefore wants to reestablish the California Air Resources Board (CARB) as the nation’s vanguard fuel economy regulator. The Obama administration put CARB in the regulatory driver’s seat by giving it the power to create market chaos if automakers do not bend to its will. That negates EPCA preemption and inverts the statutory scheme Congress created.

While professing nondescript “doubts” about SAFE 1’s preemption analysis, the NPRM offers no reasoned rebuttal. Instead, the NRPM argues that NHTSA has no authority to promulgate regulations interpreting and applying EPCA 32919. The NPRM would have us believe Congress enacted a broad, clear, and categorical preemption just so states, and their allies in the White House and federal agencies, could evade it.

The eight organizations signing on to CEI’s critique of the NPRM are the American Energy Alliance, Americans for Tax Reform, Caesar Rodney Institute, Energy & Environment Legal Institute, Committee for a Constructive Tomorrow, FreedomWorks, Roughrider Policy Center, and 60 Plus Association.

Our comments develop the following points:

• The SAFE 1 Rule conclusively demonstrates that California’s tailpipe CO₂ standards and ZEV mandates are directly and substantially “related to” fuel economy standards and, thus, are preempted by EPCA Section 32919(a).

• The SAFE 1 Rule is an “unprecedented” rulemaking but so was the Obama administration’s collusion with California to evade EPCA preemption. Unprecedented violations require unprecedented corrections.

• The NPRM is itself unprecedented—the first-ever assertion of regulatory cancel culture.  It proposes to delete not only the SAFE 1 Rule’s EPCA preemption analysis, but also all similar statements in previous rules with long-expired regulations that were not based on such statements in the first place. Moreover, the NPRM declines to debate the opinions it proposes to delete.

• It strains credulity to suppose, as the NPRM does, that Congress would declare preemption in broad and categorical terms, textually link preemption to NHTSA’s “core duties,” “substantive tasks,” and the CAFE program’s “substance,” and yet expect NHTSA to sit on the regulatory sidelines when states and other political actors collaborate to gut Congress’ express preemption.

• The NPRM is confused about the nature of preemption. To say that a preemption statute is “self-executing” does not mean it is self-explicating or self-implementing. Self-executing simply means that any conflicting state policy is automatically void. Preemption occurs ab initio—at the moment such policy is enacted or adopted, not when a court later declares it so. However, a preemption statute has no practical effect unless someone interprets and implements it. Who better than the agency Congress has authorized to administer the program that preempts state policy making in the same field?

• The NPRM infers from the absence of “express regulatory authority” in Section 32919(a) that NHTSA has no authority prescribe “legislative rules” addressing EPCA preemption. Two alternative explanations of the statute’s “silence” are more reasonable.

• First, because EPCA preemption is broad, clear, and categorical (allowing no exceptions and providing no waiver provision), Congress in 1975 likely assumed no state would dare try to evade it. For example, because the scientific relationship between tailpipe CO₂ emissions and fuel consumption was the very basis for testing compliance with CAFE standards, California’s subterfuge of regulating fuel economy by regulating tailpipe CO₂ emissions would have seemed ridiculous to EPCA’s drafters. The provision’s “silence” regarding “supplemental regulations” partly reflects Congress’s inability in 1975 to anticipate the brazenness of 21^st century “climate ambition.”

• Second, and more importantly, as the NPRM’s examples of other preemption statutes confirm, Congress provides express regulatory authority when subsequent regulatory adjudication is required to approve state policies that a broad categorical preemption would prohibit. The absence of express regulatory authority in Section 32919(a) is simply a reflection of the preemption’s absoluteness. It in no way implies that NHTSA is prohibited from reasserting preemption when state and federal actors scheme to nullify it.

• The July 2009 EPA waiver purporting to authorize California’s tailpipe CO₂ standards did not merely elevate California from fuel economy stakeholder to decision maker. It also gave CARB the whip hand in fuel economy negotiations, empowering the agency to balkanize auto markets unless it gets its way. That dynamic is antithetical to “Congress’s purpose,” which, the Supreme Court reminds us, is the “ultimate touchstone of preemption analysis.”

• The clear meaning and straightforward application of EPCA 32919(a) are fatal to California’s tailpipe CO₂ standards and ZEV mandates. That is why the NPRM does not attempt to rebut SAFE 1’s analysis of Congress’s purpose, and instead proposes to cancel statutory interpretations it declines to debate. The NPRM abandons reasoned decision making. It cannot stand.