NHTSA Proposes to Repeal Preemption of California’s GHG Vehicle Regulations

The comment period opens today for the National Highway Traffic Safety Administration’s (NHTSA) notice of proposed rulemaking (NPRM) to repeal portions of the Trump administration’s One National Program Rule, also known as Part 1 of  the 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.” Such policies are “related to” fuel economy standards (84 FR 51313) and thus are expressly preempted under Section 32919(a) of the Energy Policy and Conservation Act (EPCA).

The SAFE 1 Rule is arguably the Trump administration’s finest deregulatory achievement. 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. That should relieve the political pressure on NHTSA, the Environmental Protection Agency (EPA), and manufacturers to ignore the adverse effects of regulatory ambition on vehicle affordability, consumer choice, and occupant safety.

The Biden administration seeks to rapidly phase out the fossil fuel industry. It therefore wants to revive and enforce the California Air Resources Board’s (CARB) regulatory dominance. However, while professing nondescript “doubts” about SAFE 1’s preemption analysis, the NPRM offers no reasoned rebuttal. Instead, the NRPM argues that NHTSA had no discernible authority to promulgate the SAFE 1 Rule.

The NPRM would have us believe Congress enacted a broad, clear, categorical preemption just so states (and their allies in the White House and federal agencies) could ignore it.

SAFE 1 Preemption Analysis

SAFE 1’s preemption analysis may be summarized as follows. EPCA 329119(a) prohibits states from adopting or enforcing laws or regulations “related to” fuel economy standards. California’s tailpipe CO2 standards are physically and mathematically “related to” fuel economy standards. An automobile’s CO2 emissions per mile are directly proportional to its fuel consumption per mile. If an agency regulates tailpipe CO2 emissions, it also regulates fuel economy, and vice versa.

The Congress that enacted EPCA in 1975 understood the scientific relationship between CO2 emissions and fuel economy. That is why it approved the EPA’s procedure of testing automotive fuel economy by measuring tailpipe CO2 emissions (83 FR 43234).

California’s zero-emission vehicle (ZEV) mandates also have a direct and substantial impact on corporate average fuel economy (84 FR 51314). As ZEV mandates tighten, fleet-average fuel economy increases in a mathematically predictable manner. Thus, EPCA also expressly preempts state ZEV mandates.

Furthermore, because the aforementioned California policies interfere with the national fuel economy system Congress created, they also are “impliedly” preempted. The interference occurs in three main ways.

First, only by sheer improbable accident would CARB, when prescribing tailpipe CO2 standards, weigh and balance technological feasibility, economic practicability, occupant safety, and energy security in the same way NHTSA does when prescribing fuel economy standards. Indeed, the only policy rationale for CARB to set tailpipe CO2 standards is that its technical assessments and policy priorities differ from NHTSA’s.

Second, California’s ZEV mandates directly conflict with the Corporate Average Fuel Economy (CAFE) program. ZEV standards are technology prescriptive, in that they require automakers to sell increasing percentages of vehicles powered by batteries or fuel cells. CAFE standards are technology-neutral. Manufacturers are not compelled to build vehicles of any particular type. Each manufacturer has its own fleet-wide performance standard that “reflects the vehicles it chooses to produce.”

By law, NHTSA’s standards are to be set in light of technological feasibility and economic practicability. The ZEV program is not similarly constrained. For example, in 1998 CARB required 10 percent of new car sales to be ZEVs by 2003—a mandate neither feasible nor affordable.

Third, California’s modus operandi is autocratic. CARB assures automakers it will not subject them to a market-balkanizing fuel economy patchwork—but only if the companies pledge not to contest California’s authority (75 FR 32528). It negotiates a deal allowing four automakers to meet reduced mileage standards—if they promise not to challenge California’s authority. It expelled from the state government’s procurement market automakers that opposed California’s litigation against the SAFE 1 Rule. The NPRM would once again allow CARB to infringe automakers’ due process and equal protection rights.

Federal preemption statutes derive their authority from the Supremacy Clause. As the Supreme Court explained in Maryland v. Louisiana (1981): “It is basic to this constitutional command that all conflicting state provisions be without effect.”

Among preemption statutes, there are few broader, clearer, or more categorical than 32919(a). As the proposed SAFE Rule explained:

Unlike the CAA [Section 209 preemption of state motor vehicle emission standards], EPCA does not allow for a waiver of preemption. Nor does EPCA allow for states to establish or enforce an identical or equivalent regulation. In a further indication of Congress’ intent to ensure that state regulatory schemes do not impinge upon EPCA’s goals, the statute preempts state laws merely related to fuel economy standards or average fuel economy standards (83 FR 43233).

Unprecedented Violations Call for Unprecedented Corrections

The NPRM notes that SAFE 1 “represented the first time, in the nearly 50-year history of the Corporate Average Fuel Economy (CAFE) program, that NHTSA had adopted regulations expressly defining the agency’s views on the scope of preemption of state laws that regulate fuel economy” (86 FR 25981). That is correct. However, the innuendo that unprecedented = unlawful is false.

Unprecedented violations call for unprecedented corrections. The EPA’s July 2009 waiver purporting to authorize California’s CO2 tailpipe standards marked the first time in the CAFE program’s nearly 35-year history that California’s emission standards directly regulated fuel economy. Never before had federal policy makers colluded with California to evade EPCA preemption.

Regulatory Cancel Culture

The NPRM proposes to “withdraw” not only the SAFE 1 Rule’s “interpretive views” on EPCA preemption but also all similar preamble language in rules going back to 2003 or earlier. The NPRM claims such retroactive censorship “is appropriate to reaffirm the proper scope of NHTSA’s preemption authority and remove the uncertainty created by the SAFE 1 Rule” (86 FR 25982). But what those statements exclusively discuss in the earlier rules, and chiefly discuss in SAFE 1, is the scope of EPCA preemption, not NHTSA’s regulatory authority.

The only way an agency can reduce “uncertainty” about a statute’s meaning is to make a compelling case for its own interpretation. The NPRM proposes instead to delete opinions it declines to debate.

This is regulatory cancel culture. It is one thing for an agency to withdraw preamble language linked to regulatory text it seeks to repeal. It is quite another to delete preamble language in rules with long-expired regulations that were not based on such language in the first place. Deleting the agency’s prior views without offering substantive criticism is arbitrary and capricious—and unprecedented.

More importantly, the NPRM gets things exactly backwards. Uncertainty results not from the SAFE 1 Rule, which sets forth NHTSA’s consistent interpretation of 32919(a), but the Obama and Biden administrations’ ambition to legalize state policies Congress has prohibited.

NPRM’s Core Argument

The NPRM contends that neither 32919(a) nor any other provision “expressly authorizes” NHTSA “to adopt legislative rules implementing express preemption under EPCA.” Although the agency may set forth “advisory views” about EPCA preemption (contrary to the NPRM’s proposed cancellation of such opinions), “NHTSA appears to lack the authority to conclusively determine the scope or meaning of the EPCA preemption clauses with the force and effect of law.” Accordingly, the NPRM proposes to repeal SAFE 1’s regulatory text (86 FR 25982).

While it is axiomatic that agencies only have such power as Congress delegates, not all delegated powers are specifically delegated. SAFE 1 cites the Secretary of Transportation’s “general powers” under 49 U.S.C. 322 to “prescribe regulations to carry out” her “duties and powers.” California’s tailpipe CO2 standards and ZEV mandates encroach on her CAFE-specific duties and powers. NHTSA therefore has “clear authority” to prescribe regulations needed “to effectuate a national automobile fuel economy program unimpeded by prohibited State and local requirements” (84 FR 53120).

Noting that both NHTSA and courts “have repeatedly understood Section 32919 as self-executing and capable of direct application to state regulatory activity,” the NPRM concludes that the “statute does not require any supplemental agency regulations to implement this standard” (86 FR 25985).  

The NPRM is confused. To say that a preemption statute is self-executing does not mean it is self-explicating or self-implementing. It simply means that any conflicting state policy is automatically voided. Preemption occurs ab initio—at the moment such policy is enacted or adopted, not when a court later declares it so.

However, the “self-executing” preemption will have no practical effect unless someone interprets and implements it. Who better than the agency Congress authorizes to administer the program that preempts state policy making?

For its opinion that no “supplemental regulations” are required to interpret and implement EPCA, the NPRM cites the 2007 district court decisions in Vermont and California. The courts misunderstood the nature of preemption. They supposed that if the EPA grants California a waiver of Clean Air Act preemption, the state’s tailpipe CO2 standards and ZEV mandates become federal standards, which are not subject to EPCA preemption.

That is not how it works. To reiterate, preemption statutes void conflicting state policies ab initio. EPCA 32919(a) turned California’s tailpipe CO2 standards and ZEV mandates into legal phantoms years before the EPA agreed to review them. The EPA could not give legal effect to state policies already voided by EPCA.  

Section 32919’s “Notable Silence”

The NPRM asks why EPCA 32919 does not expressly authorize NHTSA “to issue regulations with the force of law that regulate and define the scope of preemption,” and infers from the statute’s “silence” that Congress did not give the agency such power (86 FR 25987). Three alternative explanations spring to mind.

First, because EPCA preemption is broad, clear, and categorical, Congress in 1975 may have 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, the subterfuge of regulating fuel economy by regulating tailpipe CO2 emissions would have seemed particularly lame to EPCA’s drafters.

Not until 27 years later did California enact the state’s greenhouse gas vehicle emission standards law (AB 1493). Not until 2009 did the EPA connive with CARB to subvert EPCA preemption. The provision’s “silence” regarding “supplemental regulations” may partly reflect Congress’ inability in 1975 to anticipate the brazenness of “climate ambition.”

Second, Congress includes express regulatory authority in preemption statutes that provide for exceptions and waiver programs. For such statutes, agencies need express regulatory authority to determine which state policies are not preempted, and whether waivers should be granted or denied.

All the examples the NPRM cites of preemption statutes with express regulatory authority are cases in which the scope of preemption is in some way narrowed and requires subsequent adjudication by the agency. For instance, the NPRM cites the Supreme Court’s statement in City of New York v. F.C.C. (1988) that, when interpreting the preemptive force of a federal regulation, “a narrow focus on Congress’ intent to supersede state law [is] misdirected.” Courts should focus instead on the “proper bounds of [the agency’s] lawful authority.”

That seeming gotcha evaporates when read in context. City of New York concerned the scope of preemption under the Cable Act of 1984. The statute specifically exempts from preemption state and municipal regulation of cable company facilities, services, and equipment. The issue was whether that carveout also allows municipalities to impose cable signal quality standards more stringent than those set forth in Federal Communications Commission regulations. The Court upheld the Commission’s rule preempting state and local signal standards.

In reviewing the Cable Act, a “narrow focus on Congress’s intent to supersede state law” would be “misdirected” because Congress allowed states some role in regulating the cable industry. That created a gray area requiring subsequent regulatory clarification. In contrast, EPCA 32919(a) gives states no role in determining national fuel economy requirements. When interpreting EPCA, a “narrow focus” on Congress’s intent to supersede state law is right on target.

A third and related reason for EPCA’s “silence” is that including express regulatory authority could foster confusion and uncertainty. It would create the appearance that, despite the statute’s categorical language, 32919(a) is a “general rule of preemption” allowing exceptions in certain circumstances. That misperception could beget the very state interference Congress sought to prevent.

Conclusion

Quoting Cipollone v. Liggett Grp. Inc. (1992), the NPRM acknowledges that “the purpose of Congress is the ultimate touchstone of pre-emption analysis.” The NPRM does not mention the Court’s further statement that “Congress’ intent may be ‘explicitly stated in the statute’s language or implicitly contained in its structure and purpose.’”

Congress’ intent is explicitly stated in EPCA 32919(a), but is also implicit in the statute’s “structure.” Section 32919(a) is the structural linchpin of the CAFE program. It establishes a system of uniform fuel economy requirements based on the specific statutory factors NHTSA must weigh and balance.

The NPRM insinuates that California’s motor vehicle program is lawful under EPCA 32919(a) but declines to provide any reasons. The NPRM is silent about “the ultimate touchstone of pre-emption analysis.” It cannot stand.