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Fuel Economy: DOJ Defends One National Program Rule

The Department of Justice (DOJ) last week filed its initial reply brief in Union of Concerned Scientists v. National Highway Traffic Safety Administration, a case in which California and its allies are petitioning the D.C. Circuit Court of Appeals to vacate the One National Program Rule. That rule, which is also Part 1 of the Trump administration’s Safer Affordable Fuel-Efficient (SAFE) Vehicles Rule, clarifies that federal law preempts state government greenhouse gas and zero emission vehicle standards. The One National Program Rule, a joint undertaking of the Environmental Protection Agency (EPA) and the National Highway Traffic Safety Administration (NHTSA), terminates the California Air Resource Board’s (CARB) de facto reign as the vanguard agency in fuel economy regulation. It does that in three main ways.
  • First, NHTSA determines that California’s greenhouse gas (GHG) motor vehicle standards directly and substantially regulate fuel economy, and hence conflict with the Energy Policy Conservation Act’s (EPCA) express preemption of state laws or regulations “related to” fuel economy standards. That means California’s GHG motor vehicle standards are null and void.
  • Second, the EPA determines that California’s GHG motor standards should not have received a waiver of Clean Air Act (CAA) preemption of state motor vehicle emission standards under Section 209(b) of the Act, because California does not “need” such standards to “meet compelling and extraordinary conditions.” California is not “extraordinary” with respect to global warming. Moreover, the standards will not discernibly reduce global warming, and the state cannot “need” an ineffectual remedy. Accordingly, the EPA revokes parts of the CAA Section 209(b) waiver it granted to California in 2013.
  • Third, the EPA also determines that CAA section 177 excludes other states from adopting California’s GHG standards. Section 177 authorizes states to adopt California motor vehicle standards for the purpose of coming into attainment with national ambient air quality standards (NAAQS), but there are no NAAQS for carbon dioxide (CO2) and other GHGs.

In fine autocratic fashion (pun intended), California and its allies are spitting blood over the loss of their policy privileges. Petitioners’ opening brief, filed June 29, throws the kitchen sink at the One National Program Rule. According to petitioners, GHG standards do not inherently regulate fuel economy, NHTSA has no power to determine the scope of preemption under the EPCA fuel economy program it administers, the EPA has no power to withdraw a previously granted CAA Section 209(b) waiver, and the Court has no power to review NHTSA’s preemption regulations. DOJ’s reply brief, filed September 9, offers a precise and convincing point-by-point rebuttal. Today’s post—Part 1 of this series—summarizes and excerpts DOJ’s defense of NHTSA’s EPCA-based preemption of California’s CO2 tailpipe and zero-emission vehicle standards. 

  1. The D.C Circuit Court of Appeals has jurisdiction to review NHTSA’s preemption regulations.

Petitioners’ claim that the Court lacks such jurisdiction is very convenient, as that would prevent the Court from concluding that California’s GHG motor vehicle standards were null and void ab initio—from the moment the government of California approved them, hence were legal phantoms well before the EPA granted California a waiver to implement them.

Petitioners argue as follows. EPCA Section 32909(a)(1) states that the D.C. Circuit Court of Appeals has original jurisdiction over “a regulation prescribed in carrying out any of sections 32901-32904 or 32908.” Those sections set forth the framework and mechanics of the EPCA fuel economy program. EPCA’s preemption provision, Section 32919(a), is not among those. Hence, the Court may only review NHTSA’s preemption regulations on appeal from a district court, not in the current proceeding.

That plausible-sounding argument implodes on inspection. Petitioners ignore the difference between the phrase “regulation prescribed under”—the language of Section 32909(a)(1) codified in 1976—and “regulation prescribed in carrying out”—the language as recodified by Congress in 1994. The latter phrase is broader and reasonably applies to NHTSA’s preemption regulations, which are prescribed in “carrying out” the EPCA fuel economy program. Indeed, the preemption regulations are essential to protecting the integrity of the nationwide and uniform fuel economy standards Congress directed NHTSA to administer. In DOJ’s words: “The preemption regulations are directly and integrally tied to NHTSA’s authority over national fuel-economy standards. Thus, they ‘carry[] out’ the EPCA provisions for such standards.”

  1. NHTSA has authority to issue preemption regulations.

Petitioners claim NHTSA cannot “pronounce on preemption absent express delegation by Congress.” That is nonsense. As the Supreme Court held in Medtronic, Inc. v. Lohr (1996), the Food and Drug Administration (FDA) is “uniquely qualified to determine whether a particular form of state law ... should be preempted” under the Medical Device Amendments (MDA) of 1976, even though that statute contains no express preemption provision. Why does the MDA implicitly confer that power? Because the FDA “is the federal agency to which Congress has delegated its authority to implement the provisions of the Act.” The same reasoning applies more strongly to EPCA, which expressly preempts all state regulations “related to fuel economy standards.”

Petitioners bizarrely suggest that NHTSA cannot interpret by regulation the preemption provision because it is “self-executing” (it automatically renders null and void any state law or regulation that conflicts with it). However, that which is self-executing is not necessarily self-explanatory. As the present controversy shows, “the provision’s scope is nonetheless disputed,” which is “among the reasons that NHTSA is formalizing its views in a regulation.”

  1. The Court owes deference to NHTSA’s interpretation.

EPCA Section 32919(a) on its face preempts state laws and regulations related to fuel economy standards. “But if any ambiguity exists,” DOJ argues, “NHTSA is entitled to Chevron deference,” meaning the Court should uphold NHTSA’s interpretation provided it is reasonable, even if the court would have preferred another interpretation.

Petitioners argue, in part, that deference to NHTSA’s interpretation is unwarranted because the agency never previously stated that EPCA may preempt state emission standards for which the EPA has granted a CAA 209(b) waiver. In fact, DOJ points out, NHTSA “recognized more than a dozen years ago that state standards may be preempted ‘regardless of whether or not they have received ... a [CAA] waiver.’” NHTSA stated that preempted standards include “A law or regulation that has essentially all of the effects of a fuel economy standard, but is not labeled as one (example: State tailpipe CO2 standard).” See 71 FR 17566 (April 6, 2006).

  1. EPCA expressly preempts state tailpipe GHG emission standards.

EPCA preempts state laws and regulations “related to” fuel economy standards. State standards regarding tailpipe CO2 emissions are directly and substantially related to fuel economy standards. Indeed, the relationship is so close that EPCA Section 32904(c) “even specified that fuel economy be measured using test procedures gauging carbon dioxide emissions.” Petitioners “strain to obscure that relationship.” They argue that the two types of standards are not “inherently related” because technologies are being developed to capture and store carbon dioxide emissions without improving fuel economy.

That is pettifoggery. The possibility that technological advances may someday make on-board carbon capture systems commercially viable does not diminish the direct and substantial relationship between fuel economy standards and GHG standards that exists now and will for years to come. Petitioners’ futurology does not impair the mathematical convertibility of fuel economy standards (miles per gallon) into tailpipe CO2 standards (grams per mile) that was the basis for “harmonizing” NHTSA’s and EPA’s respective standards in both the Obama administration’s 2012 motor vehicles rule covering model years 2017-2025 and the Trump administration’s SAFE Rule covering model years 2021-2026.

Currently and for the foreseeable future, state GHG requirements conflict with EPCA. “[I]f automotive technology ever changes to a sufficient extent to warrant a change in course,” petitioners will be “free then to request a change in how NHTSA interprets and applies EPCA.” Petitioners cannot negate EPCA preemption based on experimental technologies that are not economically practicable now and may never be.

  1. Zero-emission-vehicle (ZEV) mandates are related to fuel-economy standards and, thus, also preempted under EPCA.

Petitioners claim the preemption rule’s justifications do apply to zero-emission-vehicle (ZEV) standards, because ZEVs do not directly consume any fuel at all. There is thus no “mathematical relationship” between ZEV standards and fuel consumption.

Not so. As DOJ explains, ZEV mandates “have just as direct and substantial an impact on corporate average fuel economy as regulations that explicitly eliminate carbon dioxide.” Indeed, the ZEV program explicitly aimed to boost fuel economy until April 2003, when CARB removed “all references to fuel economy or efficiency,” apparently spooked by the 2002 Central Valley Chrysler-Plymouth case, in which California’s eastern district court granted petitioners a preliminary injunction of the state’s ZEV mandate due to its incompatibility with EPCA’s preemption provision.  

I would put the point as follows. ZEV standards mandate that specified percentages of all vehicles manufactured for sale in a particular year be zero-emission vehicles. Fuel economy standards are fleet average standards. As ZEV mandates tighten, fleet average fuel economy increases, in a mathematically predictable manner, until the program finally eliminates petroleum fuel consumption altogether. A ZEV mandate is a de facto fuel economy standard on steroids.

  1. The 1990 Clean Air Amendments and 2007 Energy Independence and Security Act (EISA) do not “preserve” the ZEV mandate.

Petitioners argue as follows. Section 246 of the 1990 CAA requires states with NAAQS non-attainment areas to revise their implementation plans so that fleet operators receive compliance credits for the purchase of “clean fuel vehicles.” In administering this program, the EPA’s “clean fuel vehicle” standards must “conform as closely as possible to standards which are established by the State of California for [ultra-low emission and zero-emission] vehicles.” Petitioners claim that directive would be meaningless if California were not able to establish ZEV standards in the first place. But the CAA “clean fuel vehicles” provision pertains only to “centrally-fueled” fleets—those owned and operated by government agencies. It does not apply to new vehicles manufactured for sale to the public at large. DOJ explains:

Under [EPCA Section 32019(c)], a state is not preempted from prescribing requirements for fuel economy for vehicles obtained for its own use. It is not meaningless for Congress to require EPA’s “clean fuel vehicle” standards to conform to the non-preempted standards California sets for its own vehicles. But it is implausible that Congress would use a state implementation plan credit provision to implicitly modify the scope of EPCA’s express preemption provision. Congress does not “hide elephants in mouseholes.” Whitman v. Am. Trucking Ass’ns, Inc. (2001).

The same error invalidates petitioners’ EISA argument. Petitioners note that EISA section 141 requires EPA to prioritize models of “low greenhouse gas emitting vehicles” in federal fleet procurement, and “take into account the most stringent standards for vehicle greenhouse gas emissions applicable to and enforceable against motor vehicle manufacturers sold anywhere in the United States.” Petitioners claim this provision is “meaningless” if California could not prescribe such standards. Again, they ignore the difference between government procurement and general commerce.

As noted above, EPCA Section 32919(c) specifically allows states and local governments to prescribe fuel economy requirements for vehicles obtained for their own use. Moreover, DOJ points out, such “requirements both apply to manufacturers and, through procurement contracts, are enforceable against them.” DOJ reasonably concludes: “Just as with the CAA’s subsection on state implementation plan [clean-fuel-vehicle] credits, it is implausible that Congress would use a federal procurement policy to tacitly modify EPCA’s preemption provision.”

  1. EPCA impliedly as well as expressly preempts state tailpipe GHG standards and ZEV mandates.

Even if EPCA Section 32919(a) did not explicitly preempt state tailpipe CO2 standards and ZEV mandates, those requirements would still be impliedly preempted because they “frustrate Congress’s goals for the federal fuel-economy program and conflict with NHTSA’s implementation thereof.”

EPCA requires NHTSA to weigh and balance four statutory factors when establishing maximum feasible fuel economy standards: technological feasibility, economic practicability, the effect of other government motor vehicle standards on fuel economy, and the nation’s need to conserve energy. In addition, courts have held that NHTSA must consider the impacts of fuel economy standards on occupant safety. California is not required to weigh and balance those factors in setting its GHG and ZEV standards, and there is no reason to assume that in any given rulemaking California would strike the same balance NHTSA does.

California’s ZEV mandate inherently conflicts with the regulatory scheme Congress established. DOJ explains:

Zero-emission-vehicle mandates in particular conflict with NHTSA’s ability to consider and balance the statutory factors EPCA mandates in establishing fuel-economy standards. Such standards are intended to force the deployment of zero-emission vehicles regardless of their technological feasibility or costs. They are design mandates, whereas EPCA requires NHTSA to set performance-based standards. 

“Adding to the complexity, California regulates under an entirely different regulatory paradigm” than NHTSA does. This is DOJ’s polite way of describing California’s descent into gangster politics. DOJ’s analysis is worth quoting in extenso:

NHTSA sets and applies standards based on the rule of law. It treats regulated parties equally based on their objective performance. California, in contrast, has granted select automakers special dispensation in the form of reduced standards in part in exchange for their agreement not to challenge California’s ability to establish tailpipe greenhouse-gas emission standards and a zero-emission-vehicle mandate. At the same time, California refuses to purchase cars from automakers who have challenged California’s standards.

DOJ goes on to observe that California’s “punitive fit of pique” unconstitutionally penalizes certain automakers for “exercising their lawful option to contest the illegality of California’s state law.” DOJ comments:

This type of “quid pro quo” regulation for certain favored entities is anathema to the federal framework, which imposes a single set of objective standards for all regulated entities. NHTSA (and EPA) found that California’s “voluntary framework” “conflict[s] with the maintenance of a harmonized national fuel economy and tailpipe [greenhouse-gas] program,” and “confirm[s] that the only way to create one actual, durable national program is for [greenhouse gas] and fuel economy standards to be set by the Federal government, as was intended by Congress.”

Part 2 of this series will excerpt and summarize DOJ’s defense of the EPA’s decision to revoke parts of California’s 2013 Clean Air Act waiver and interpret CAA Section 177 to exclude other states’ adoption of California’s GHG and ZEV standards.