Thank you for the opportunity to submit comments on the Environmental Protection Agency’s (EPA) reconsideration of Part One of the Trump administration’s Safer Affordable Fuel-Efficient Vehicles Rule (SAFE 1). The Competitive Enterprise Institute (CEI) strongly supports the SAFE 1 Rule, and urges the EPA to leave it in place. Please direct any questions about these comments to CEI Senior Fellow Marlo Lewis ([email protected]).
SAFE 1, finalized on September 27, 2019, is a joint product of the EPA and the National Highway Traffic Safety Administration (NHTSA). NHTSA determined that California’s tailpipe carbon dioxide (CO2) emission standards and zero-emission vehicle (ZEV) mandates are “related to” fuel economy standards and, thus, are preempted by Section 32919(a) of the Energy Policy and Conservation Act (EPCA). The EPA, for its part, withdrew its January 2013 Clean Air Act (CAA) preemption waiver authorizing California to enforce those policies.
The EPA based its decision on two separate grounds. First, it determined, based on NHTSA’s determination regarding EPCA’s preemptive effect, that the January 2013 preemption waiver for California’s tailpipe CO2 standards and ZEV mandates was “invalid, null, and void.” The agency also concluded, based on a lengthy review of the text, structure, and legislative history of CAA Section 209(b), that those policies do not qualify for a Clean Air Act preemption waiver because California does not “need” such policies to “meet compelling and extraordinary conditions.”
Nothing to See Here (EPCA Preemption)
The EPA makes no bones about the fact that it is reconsidering SAFE 1 “for purposes of rescinding that action.” Unsurprisingly, the EPA does not invite comment on SAFE 1’s core argument that EPCA 32919(a) automatically voids state policies that regulate or prohibit CO2 emissions from new motor vehicles. The EPA suggests that because EPCA preemption is “beyond the scope” of the three waiver denial criteria set forth in CAA 209(b), it need not inquire about EPCA preemption. But EPCA preemption is the proverbial elephant in the room. If SAFE 1’s EPCA preemption argument is correct, the EPA could not grant a valid CAA preemption waiver for California’s tailpipe CO2 standards and ZEV mandates, because EPCA had already turned those policies into legal phantoms—mere proposals without legal force or effect.
Only once in its reconsideration does the EPA obliquely ask about EPCA’s preemptive effect: “Because EPA relied on NHTSA’s regulation on preemption, what significance should EPA place on the repeal of that regulation if NHTSA does take final action to do so?” The prior question—what significance the EPA should place on EPCA preemption if SAFE 1 got it exactly right—is never asked.
One might assume the EPA’s lack of curiosity about EPCA preemption reflects a division of labor, with NHTSA, in its reconsideration of SAFE 1, addressing EPCA-specific issues on the merits. Not so. NHTSA says even less about the substance of SAFE 1’s EPCA preemption argument than the EPA does.
Indeed, NHTSA proposes to delete what it declines to debate—SAFE 1’s regulatory text and the associated preemption analysis in the rule’s preamble. The agency professes to have “significant doubts” about the validity of that analysis, but never articulates those doubts. Nor is that all. NHTSA proposes to delete all similar utterances in previous rulemakings going back to 2003 or earlier even though the regulations codified by those rules expired long ago and were not based on preemption language in the first place.
This plan to delete all previous instances of NHTSA’s consistent view of EPCA preemption, while offering no reasoned rebuttal or alternative interpretation, is unprecedented. We appear to be witnessing the birth of regulatory cancel culture.
The seeds of this behavior appear to have been sewn during the Obama-Biden administration. When confronted with the incompatibility between EPCA 32919(a) and California’s tailpipe CO2 standards, NHTSA, in the 2010 joint fuel economy/greenhouse gas (GHG) motor vehicle standards rule, opted to “defer” consideration of preemption issues until an unspecified later date. It did so again in the 2012 joint rulemaking. NHTSA did not officially stop deferring until the Trump administration proposed the SAFE Rule in November 2018.
The EPA’s forthright approach in SAFE 1 is in sharp contrast to the agencies’ current efforts to ignore or divert public attention from the elephant. The EPA stated:
But the unique situation in which EPA and NHTSA, coordinating their actions to avoid inconsistency between their administration of their respective statutory tasks, address in a joint administrative action the issues of the preemptive effect of EPCA and its implications for EPA’s waivers, has no readily evident analogue. EPA will not dodge this question here.
Before commenting on the specific issues the EPA raises, we want to put on the record the clear logic of SAFE 1’s EPCA preemption analysis, which the agencies’ reconsiderations thrust into the shadows. The bottom line conclusion may be summarized as follows. EPCA 32919(a) voided California’s tailpipe CO2 standards and ZEV mandates before California could request, or the EPA grant, a waiver of Clean Air Act preemption. EPCA preemption is clear (expressly stated), broad (prohibiting policies merely “related to” fuel economy standards), and categorical (non-waivable and allowing no exceptions). A waiver of Clean Air Act preemption cannot give legal force and effect to emission standards EPCA automatically nullified.
EPCA 32919(a) states:
When an average fuel economy standard prescribed under this chapter is in effect, 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 for automobiles covered by an average fuel economy standard under this chapter.
Section 32919(a) expressly prohibits state policies merely “related to” fuel economy standards. The statute envisions no exceptions, does not even allow equivalent or identical state regulations, and provides no authority to waive preemption of state laws or regulations. That means EPCA 32919(a) is not a “general rule of preemption” requiring subsequent regulatory adjudication to fine tune the boundaries of permissible state action. It is difficult to imagine a clearer, broader, or more categorical preemption statute.
Federal preemption statutes derive their authority from the Supremacy Clause (Article VI, Clause 2), which states:
This Constitution, and the Laws of the United States which shall be made in Pursuance thereof; and all Treaties made, or which shall be made, under the Authority of the United States, shall be the supreme Law of the Land; and the Judges in every State shall be bound thereby, any Thing in the Constitution or Laws of any State to the Contrary notwithstanding.
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.” That means any conflicting state policy is void ab initio—from the moment the policy is adopted or enacted, not when a court later declares it so.
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.
In addition, tailpipe CO2 standards are fleet average standards, just like the fuel economy standards they mimic, and unlike tailpipe emission standards for criteria and toxic air pollutants, which apply to each vehicle. Tailpipe CO2 standards and Corporate Average Fuel Economy (CAFE) standards are “two sides (or, arguably, the same side) of the same coin.”
The two types of standards will remain mathematically convertible as long as affordable and practical onboard carbon capture technologies do not exist. Since the start of the CAFE program in 1975 and for the foreseeable future, all design and technology options for reducing tailpipe CO2 emissions, such as aerodynamic streamlining, low rolling resistance tires, and vehicle electrification, are fuel-saving strategies by another name.
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.
California’s ZEV mandates also have a substantial impact on corporate average fuel economy. As ZEV mandates tighten, average fuel consumption per mile decreases, and fleet-average fuel economy increases. Thus, EPCA also expressly preempts state ZEV mandates.
Furthermore, the aforementioned California policies interfere with the national fuel economy system Congress created; hence they also are implicitly preempted. The California policies interfere with the congressional scheme in three main ways.
First, California’s policies revise regulatory determinations Congress authorized NHTSA to make. EPCA and D.C. Circuit case law require NHTSA to weigh and balance five factors when determining CAFE standards: technological feasibility, economic practicability, the effect of other federal emission standards on fuel economy, the national need to conserve energy, and the impact of fuel economy standards on occupant safety. California is not bound by those factors, and is free to subordinate them to climate ambition.
Only by sheer improbable accident would CARB, when prescribing tailpipe CO2 standards, weigh and balance such factors the same way NHTSA does when prescribing fuel economy standards. Indeed, there is no policy rationale for elevating CARB from fuel economy stakeholder to decisionmaker unless its technical assessments and regulatory priorities differ from NHTSA’s.
Second, California’s ZEV mandates directly conflict with the CAFE program. ZEV standards are technology-prescriptive, requiring 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 size or type.” Rather, 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 ten percent of new car sales to be ZEVs by 2003—despite it being obvious that the mandate was neither feasible nor affordable.
The 2007 Energy Independence and Security Act (EISA) amended EPCA to prohibit NHTSA from considering the fuel economy of alternative vehicles (including EVs) when setting CAFE standards. The amendment aims to ensure that CAFE standards never become so stringent automakers must sell EVs to comply. Mandating EV sales is the very purpose of the ZEV program, which logically culminates in banning the sale of new gasoline-powered vehicles.
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. It negotiates a deal allowing four automakers to meet reduced mileage standards—if they promise not to challenge California’s authority. It expels from the state’s government procurement market automakers who oppose California’s litigation against the SAFE 1 Rule. Rescinding SAFE 1 would re-empower CARB to pursue quid-pro-quo regulatory favoritism and infringe automakers’ due process and equal protection rights.