Clean Air Act Cases

EME Homer City Generation v. EPA (United States Court of Appeals for the District of Columbia Circuit, August 21, 2012).

In this case, the Court was asked to decide whether new EPA regulations defining emissions reduction responsibilities for SOX and NOX for upwind states that are major contributors to air quality problems in downwind states, exceed the scope of the Clean Air Act. The Petitioner challenged the EPA's "Transport Rule" (also referred to as the Cross-State Air Pollution rule and before that as the Clean Air Interstate rule) which defined emission reduction responsibilities for NOx and SOx for states that, because of prevailing weather patterns, are major contributors to air quality problems in downwind states. The rule interprets the "good neighbor" provision of the Clean Air Act, which requires state emissions standards to ensure that in-state sources do not have significant detrimental impacts on air quality in other states. The rule defines the emissions reduction responsibilities of each contributing state under the good neighbor provision and prescribes Federal Implementation Plans to implement those responsibilities at the state level.

Holding: On August 21, 2012, a divided panel of the U.S. Court of Appeals for the District of Columbia Circuit (D.C. Circuit) vacated the Environmental Protection Agency's (EPA) Cross-State Air Pollution Rule (CSAPR). The Court's opinion also directed EPA to continue administering the Clean Air Interstate Rule (CAIR) until the agency can finalize a replacement. The majority's decision reads the Clean Air Act narrowly and places substantial restrictions on EPA's flexibility in addressing cross-state air pollution issues. In particular, it finds that two elements of the CSAPR exceed EPA's authority under the Clean Air Act: (1) EPA's two-step process for determining each listed upwind state's emission reduction obligations; and (2) EPA's imposition of Federal Implementation Plans (FIPs) simultaneously with its quantification of the states' reduction obligations, without first allowing each state to submit a compliant State Implementation Plan (SIP).

First, the court found that the emissions reduction requirements imposed on upwind states were disproportionate in relation to the states' contributions to downwind air pollution problems. The court also concluded that the EPA exceeded its statutory authority by prematurely issuing Federal Implementation Plans to impose obligations on states. Under the Clean Air Act, standards are set at the federal level but states "bear primary responsibility for attaining, maintaining, and enforcing them" through State Implementation Plans. The court held that the EPA should only step in to impose a federal plan when states fail to submit a workable plan. In this case, states were not given the initial right to submit a workable plan, a right granted to them in the Clean Air Act.

Implications: The court's decision vacates the CSAPR, but also directs EPA to continue administering the CAIR. Therefore CAIR will apply until EPA finalizes a new replacement rule.

Potential future rehearing: On October 5, EPA requested a rehearing of the D.C. Circuit's decision vacating the agency's Cross State Air Pollution Rule (CSAPR). On January 24, 2013 the U.S. Court of Appeals for the D.C. Circuit denied the petition for rehearing, and rehearing en banc. On March 29, 2013, the Department of Justice, on behalf of the EPA, filed a petition with the U.S. Supreme Court seeking review of the D.C. Circuit's decision to vacate the CSPAR. On April 22, nine states, five cities and the District of Columbia urged the Supreme Court to grant U.S. EPA's request to review D.C. Circuit's decision.

Louisiana Department of Environmental Quality v. EPA (Fifth Circuit, July 20, 2012).

The Louisiana Department of Environmental Quality filed a lawsuit in June, 2012, alleging that EPA erroneously rejected state-issued Clean Air Act permits that for the first time included GHG limits. The lawsuit contests EPA's March 23, 2012 order disapproving Title V operating permits for a steel plant in St. James Parrish, Louisiana. EPA rejected the permits because it stated that the plant's cumulative emissions impacts were underestimated by dividing the plant's operations into two permits instead of aggregating them. Among other things, the lawsuit alleges that the permits meet the minimum requirements of the Clean Air Act and that EPA's objection was untimely. This case remains pending at this time.

Coalition for Responsible Regulation v. EPA (United States Court of Appeals for the District of Columbia Circuit, June 26, 2012).

Background: The Endangerment Finding, the Tailpipe rule, the Tailoring and Timing rules, (the four rules that were challenged and later upheld in this case) originated with the Supreme Court's decision in Massachusetts v. EPA, 549 U.S. 497 (2007), arguably the most influential climate change decision to date. In Massachusetts, the Supreme Court held that GHGs are "air pollutants" under the Clean Air Act and ordered EPA to come to a science based conclusion as to whether GHG pollution from new motor vehicles causes or contributes to an endangerment of public health and welfare. In December 2009, EPA responded by issuing an Endangerment Finding. The Endangerment Finding concluded that (1) six classes of GHGs endanger public health and welfare by causing global climate change, and (2) the GHGs emitted from new motor vehicles contribute to GHG pollution, which in turn, endangers public health and welfare. The natural outgrowth of the Endangerment Finding was rules imposing greenhouse gas restrictions on automobiles. These rules, collectively known as the Tailpipe Rule, established GHG emission standards for light duty motor vehicles in model years 2012-2016. They were issued by EPA in May 2010 and took effect on January 2, 2011. Finally, EPA determined that the Clean Air Act required major stationary sources of greenhouse gases to obtain construction and operating permits. To avoid overwhelming regulatory burdens on greenhouse gas producers who needed permits, the agency issued Timing and Tailoring Rules (PSD and Title V permitting) The 'Timing Rule" is EPA's ruling regarding when regulations of GHGs would begin whereas the Tailoring Rule establishes what sources are subject to regulation; (it "tailors" the requirements of these Clean Air Act permitting programs to limit covered facilities to the nation's largest greenhouse gas emitters: power plants, refineries, and cement production facilities).

Suit was brought by various state and industry group petitioners, who challenged all four EPA GHG actions (the Endangerment Finding, the Tailpipe Rule, the Timing and the Tailoring rule), alleging that they are based on improper constructions of the Clean Air Act or are otherwise arbitrary and capricious. The Court (U.S. Court of Appeals for the District of Columbia Circuit) had to decide whether these GHG regulatory rules were legally permissible under the Clean Air Act.

Holding: The Court found that 1) the Endangerment Finding and the Tailpipe Rule were not arbitrary and capricious, 2) EPA's interpretation of the Clean Air Act as it applies to stationary sources is "unambiguously correct" and 3) the petitioners lacked standing to challenge the Timing and Tailoring Rules.

Endangerment Finding: Among other things, petitioners alleged that the Clean Air Act required EPA to consider policy in making its Endangerment Finding. They also challenged the adequacy of the scientific record supporting the Endangerment Finding. The Court rejected these claims, finding that the Clean Air Act precludes EPA from basing the Endangerment Finding on policy considerations and that EPA's ultimate conclusions were based on overwhelming scientific record. Affirming the adequacy of EPA's scientific record, the D.C. Circuit also found that EPA was justified in relying on "major assessments" of climate science produced by the National Academy of Sciences, US GCRP, the Intergovernmental Panel on Climate Change and other institutions, and emphasized that EPA must be afforded an "extreme degree of deference" on scientific matters within EPA's expertise.

Tailpipe Rule: Petitioners claimed that EPA acted arbitrarily and capriciously in failing to consider the cost implications of its motor vehicle regulations on stationary sources (i.e., by triggering new source review). Petitioners also alleged that EPA failed to show that the Tailpipe Rule was justified by the risks identified in the Endangerment Finding or that the rule would mitigate those risks. The Court rejected this argument, instead finding that the Clean Air Act imposes a non-discretionary duty on EPA to regulate emissions from motor vehicles once it makes an endangerment finding. Finally, the Court found that the Clean Air Act does not require motor vehicle regulations to achieve a particular level of mitigation, but, even so, noted that EPA did find that the Tailpipe Rule would result in meaningful reductions of GHG emissions. The D.C. Circuit did not reach the merits of petitioner's argument. Rather, the court found that all of the petitioners lacked standing to bring this claim because they failed to demonstrate that the Tailoring Rule caused them "injury in fact," and in addition, even if the rule was repealed this would not remedy the situation.

Note: EPA's authority to regulate GHGs under the Clean Air Act was unanimously affirmed by the Court in this case. EPA has recently moved forward to finalize more stringent GHG emission standards for motor vehicles for model year 2017-2025.

Building Industry Association of Washington v. Washington State Building Code Council (Ninth Circuit, June 25, 2012).

The Ninth Circuit affirmed a district court decision that found that an energy-efficient building energy code adopted by the Washington Building Code Council in 2009 met the requirements for obtaining an exemption under the Energy Policy and Conservation Act (EPCA). Specifically, the court held that the 2009 Code met all seven requirements for obtaining a building code exemption under the statute. EPCA sets federal energy efficiency guidelines for residential appliances used in buildings, including heating, ventilation, and air conditioning equipment. EPCA also requires that states adopt and periodically revise their building energy codes to comply with the International Energy Conservation Code (IECC). While EPCA prohibits imposing state regulations that are stricter than those set by the IECC, it does allow for exceptions for state energy codes as long as they meet seven enumerated requirements. In February 2011, the district court held that the Council did not violate EPCA when it enacted the 2009 Code. Specifically, the court held that the 2009 Code met all seven of EPCA's requirements to obtain a building code exception under the statute. The Ninth Circuit affirmed, holding that the Code met all seven requirements to obtain an exception.

Las Brisas Energy Center LLC v. EPA (D.C. Circuit Court, filed June 11, 2012) White Stallion Energy Center, LLC v. EPA, (D.C. Circuit Court, filed June 12, 2012).

The Mercury and Air Toxic Standards (MATS) Rule (standards administered by the EPA that require power plants to limit their emissions of toxic air pollutants) has been challenged by the coal-fired energy sector, whose various players have filed suit. Upon filing, several developers of new coal-fired Electric Generating Units (EGUs) asked the D.C. Circuit to expedite their challenges to EPA's rule, showing the time sensitive nature of this suit. As the new-unit developers explained, on the one hand, EPA's MATS Rule prevented them from constructing their projects because the standards are so low they cannot be measured or guaranteed; while on the other hand, the proposed GHG New Source Performance Standards (NSPS) would require them to commence construction within one year or be subject to EPA's new proposed standards for greenhouse gas emissions. Though the NSPS allow compliance flexibility by allowing plants to average reductions across years, opponents claim that the standards are difficult for coal fired power plants to meet because the commercialization of the technology is still developing. The D.C. Circuit granted the motion to expedite, severed the new-unit developers' claims from the consolidated case, and put their case on a fast track schedule for briefing and oral argument that will have the case decided by the end of the year. EPA filed response in January, 2013. Limited reconsideration by EPA of new unit standards and startup shutdown and malfunction requirements. See Litigation is currently underway.

Chabot-Las Positas Community College District v. EPA (Ninth Circuit, May 4, 2012).

In this case, the Ninth Circuit upheld the first power plant permit that includes a GHG emission limit. In endorsing the permit, the court found that EPA's decision not to require a 24-hour particulate matter standard in an area re-designated as a nonattainment area during the permitting process was supported by precedent.

Center for Biological Diversity v. EPA (United States District Court for the District of Columbia, March 20, 2012).

Several environmental groups filed an action seeking to force EPA to regulate GHG emissions from aircrafts, ships, and non-road engines used in heavy industrial equipment. According to the complaint, these sources produce about a quarter of the GHG emissions from mobile sources in the United States but have not yet been regulated by EPA. In a July 2011 decision, the district court held that EPA is not required to issue endangerment findings under the Clean Air Act for GHG emissions from marine vessels and non-road vehicles and engines but held that it is required to issue such findings for aircraft engines. EPA moved to dismiss several additional causes of action in the complaint concerning GHG emissions and black carbon from non-road vehicles and engines. The district court denied the motion as moot given that EPA agreed to respond to three outstanding petitions by plaintiffs within ninety days.

Resisting Environmental Destruction on Indigenous Lands v. EPA (Ninth Circuit, February 17, 2012).

Several environmental and Alaska Native groups filed an action in the Ninth Circuit seeking to overturn two air quality permits issued by EPA to Shell for offshore Arctic drilling operations. The permits allow a ship owned by Shell and several support vessels to operate in both the Chukchi Sea and the Beaufort Sea. The authorizations are "major source" permits, which allow Shell to emit more than 250 tons of pollutants annually and to adhere to the Clean Air Act's prevention of significant deterioration requirements. Among other things, the plaintiffs contend that greenhouse gases and black carbon from the ships will accelerate the loss of snow and sea ice in the Arctic to the detriment of members of the Alaska Native communities. This case is currently pending.

Texas v. EPA (Fifth Circuit, February 24, 2011).

Texas and two industry groups (the Utility Air Regulatory Group and the SIP/FIP advocacy group) filed lawsuits challenging an EPA rule known as the "greenhouse gas SIP Call," which requires states to change their air quality state implementation plans to allow them to issue new source review permits for GHG emissions from large new and modified stationary sources such as power plants. Though originally filed in the Fifth Circuit, it was transferred to the D.C. Circuit on the ground that the SIP call rule is a nationally applicable regulation that the Clean Air Act specifies can only be reviewed by the D.C. Circuit.

Texas refused to add GHG emissions to the air pollutants covered by state permits for new and modified stationary sources under the prevention of significant deterioration (PSD) program, a Clean Air Act permitting program. The Program applies to all pollutants that do not exceed the National Ambient Air Quality Standards (NAAQS) in an area. The Clean Air Act allows EPA to issue federal implementation plans in states that either would not or were unable to change their own laws and regulations and their state implementation plans by January 2, 2011, to allow PSD permitting for GHG emissions. Consequently, EPA has assumed PSD permitting for GHG emissions in Texas, a move that Texas has opposed. For example, Texas Attorney General Greg Abbott (R) testified before the House Energy and Commerce Committee on February 11, 2011, in support of the Energy Tax Prevention Act of 2011, a bill that would bar EPA from regulating GHG emissions under the Clean Air Act. Texas's February 11 petition for review is its fourth challenge to EPA's program of regulations for GHG emissions and its third in the D.C. Circuit. See Texas v. EPA, No. 10-1425 (D.C. Cir. filed Dec. 30, 2010); Coalition for Responsible Regulation v. EPA, No. 09-1322 (D.C. Cir. filed Dec. 23, 2009); Texas v. EPA, no. 10-60961 (5th Cir. filed Dec. 15, 2010). Texas filed separate suits challenging both the Interim and Final FIPs. The cases have been consolidated by the D.C. Circuit Court of Appeals and are currently pending.

Chamber of Commerce v. EPA (United States Court of Appeals for the District of Columbia Circuit, January 18, 2011).

Background: Provisions of the Clean Air Act permit the EPA to allow states to adopt their own automobile emissions standards under certain circumstances, exempting them from federal preemption. Under these rules, EPA has historically granted California the authority to set its own automobile emissions standards. In 2004, California sought an EPA waver in order to adopt its own greenhouse gas emissions standards for new cars beginning in model year 2009. In September 2009, the U.S. Chamber of Commerce and the National Automobile Dealers Association (NADA) petitioned the D.C. Circuit for review of the EPA's decision to grant a waiver allowing California to set its own automobile standards. They argued that California lacked justification for promulgating its 2004 standards for fleet-average GHG emissions for new vehicles. They argued that the regulation, which took effect in 2009, would hurt their members in California and other states that have signed onto the California rules because it would increase the manufacturing cost of vehicles and dictate the mix of vehicles with which auto manufacturers would supply them, which could cost them sales if the mix does not match market preferences.

In September 2009, the D.C. Circuit dismissed the case, finding that petitioners lacked standing to seek review and that a subsequent agreement on emissions standards between the EPA and the National Highway Transportation Safety Administration, harmonizing California and national standards, had mooted the case. The D.C. Circuit never reached the question of whether the California rules are justified because it concluded that the auto dealers had not asserted an imminent or actual injury that was fairly traceable to implementation of the state rules and could be redressed by a favorable court decision.

The court was presented with the following issues: 1) whether the U.S. Chamber of Commerce and National Automobile Dealers Association had standing to challenge EPA's grant of a waiver to California to implement its own emissions standards under the Clean Air Act; and 2) whether the case was mooted by California's subsequent compliance with national emissions standards.

Holding: In January of 2011, the three-judge panel of the D.C. Circuit Court found that "Because the Chamber has not identified a single member who was or would be injured by EPA's waiver decision, it lacks standing to raise this challenge." The dealers too, it said, had failed to prove economic harm. The Court held that even if EPA's decision to grant California a waiver for its emission standards once posed an imminent threat of injury to the petitioners, the agency's subsequent adoption of federal standards has eliminated any independent threat that may have existed.

Sierra Club v. Jackson (2009-2011).

September 2009: EPA ordered Kentucky officials to set emissions standards for hazardous air pollutants for a coal-fired power plant as part of an agreement settling a former lawsuit. Under the order, the Kentucky Division of Air Quality was required to revise the operating permit issued to the plant to include a MACT standard for mercury and other air toxics. EPA issued the order as part of a consent decree with the Sierra Club. The decree required EPA to take action on a revised operating permit to be issued to the plant. Sierra Club had sued EPA, alleging that it failed to take action on the operating permit for the plant within the time frame required by the Clean Air Act, after EPA had ordered state officials to strengthen the permit's pollution control requirements.

Different lawsuit filed by Sierra Club against Jackson:

July 2010: A Federal Court dismissed a lawsuit seeking to force EPA to stop the construction of three coal-fired power plants in Kentucky, holding that it lacked jurisdiction over the matter. The lawsuit alleged that because Kentucky's State Implementation Plan (SIP) under the Clean Air Act was out of date, EPA was required to stop the construction of new sources of air pollution. EPA claimed that its ability to intervene was discretionary and that federal courts lacked jurisdiction to force it to act in such cases. The district court agreed and dismissed the case.

July 2011: The D.C. Circuit affirmed the dismissal of a lawsuit brought by the Sierra Club seeking to compel EPA to halt construction of two power plants in Kentucky. The lawsuit alleged that because Kentucky's State Implementation Plan (SIP) was out of date, EPA was required to stop the construction of new sources of air pollution. EPA claimed that its ability to intervene was discretionary and that federal courts lacked jurisdiction to force it to act in such cases. The district court agreed and dismissed the case. The D.C. Circuit affirmed the decision, holding that the Administrative Procedure Act does not provide a cause of action to review the EPA Administrator's failure to act under Sec. 167 of the Clean Air Act.

Massachusetts et al vs. Environmental Protection Agency (U.S Supreme Court, July 26, 2007)

On April 2, 2007 the Supreme Court released its ruling in the case of the state of Massachusetts vs. the Environmental Protection Agency. Massachusetts and eleven other states, along with several local governments and non-governmental organizations (petitioners), sued the EPA for not regulating the emissions of four greenhouse gases, including carbon dioxide (CO2), from the transportation sector. The petitioners claimed that human-influenced global climate change was causing adverse effects, such as sea-level rise, to the state of Massachusetts. In a 5-4 decision, the court ruled in favor of Massachusetts et al, finding that EPA has the authority to regulate CO2 and other greenhouse gases. The decision was written by Justice Stevens and was signed by Justices Kennedy, Souter, Bader Ginsburg, and Breyer. Chief Justice Roberts and Justices Alito, Scalia, and Thomas dissented. The Court's findings are summarized below:


The EPA argued that Massachusetts et al could not prove standing in this case. The Court ruled that Massachusetts et al do in fact have standing in challenging EPA's decision not to regulate CO2 and other greenhouse gases from the transportation sector. Standing requires injury, causation, and the existence for a remedy. The Court found that EPA's refusal to regulate CO2 has led to "actual" and "imminent" harm to the state of Massachusetts, mainly in the form of rising sea-levels along the state's coast. The ruling also noted that "the harms associated with climate change are serious and well recognized." The Court also found that "given EPA's failure to dispute the existence of a causal connection between man-made greenhouse gas emissions and global warming, its refusal to regulate such emissions, at a minimum, contributes to Massachusetts' injuries." Finally, while acknowledging that regulating greenhouse gases from motor vehicles alone will not reverse global warming, the Court found that domestic action such as this can play a role in slowing or reducing warming.

EPA Has Authority to Regulate Greenhouse Gases

The EPA argued that it was not given the authority under the Clean Air Act to regulate CO2 or other greenhouse gases. The Court challenged the EPA's refusal to regulate CO2 as an air pollutant under the statute. The Court found that CO2 fits within the statute's broad definition of an air pollutant. Further, the Court stated that "EPA identifies nothing suggesting that Congress meant to curtail EPA's power to treat greenhouse gases as air pollutants." In its case, the EPA argued that regulating CO2 would require regulating fuel economy standards, which – according to the EPA – is under the purview of the Department of Transportation. The Court countered the EPA by recognizing that multi-agency efforts can indeed overlap when addressing an issue as important as global climate change: "The fact that DOT's mandate to promote energy efficiency by setting mileage standards may overlap with EPA's environmental responsibilities in no way licenses EPA to shirk its duty to protect the public health and welfare." Protecting public health and welfare is a duty mandated by the Clean Air Act.

EPA Must Protect Public Health and Welfare

Finally, EPA argued that even if it was granted authority to regulate greenhouse gases under the Clean Air Act, it would be "unwise to do so at this time," stating that it might conflict with the current administration's effort to address climate change, particularly with regard to international climate negotiations. The Court found EPA's argument that regulating emissions from the transportation sector "might hamper the President's ability to persuade key developing nations to reduce emissions" to be insufficient. Rather, according to the Court, "A reduction in domestic emissions would slow the pace of global emissions increases, no matter what happens elsewhere." Further, the Court ruled that "under the Act's clear terms, EPA can avoid promulgating regulations only if it determines that greenhouse gases do not contribute to climate change or if it provides some reasonable explanation as to why it cannot or will not exercise its discretion to determine whether they do." Finally, the Court found unreasonable EPA's argument that regulation of CO2 in the transportation sector would not make significant reductions in emissions, noting that although enforcing regulations may not by itself reverse global warming, it is the duty of EPA to take such a step in order to "slow or reduce" global warming.

This opinion is important for national and local climate change policy. Not only does it open the door to regulation of greenhouse gases under the Clean Air Act, but is also likely to catalyze calls for more comprehensive federal climate change legislation (pdf) – legislation that covers sectors other than transportation as well as non-CO2 greenhouse gases. This ruling could lend support for state efforts such as the California legislation intended to regulate greenhouse gases as a pollutant in the transportation sector. In turn, expanded state activity will likely build even more pressure for a more uniform federal program.

Read more about GHG emissions standards in the transportation sector.

Read the complete Ruling (pdf).

Green Mountain Chrysler Plymouth Dodge Jeep v. Crombie (D. Vt. Sept. 12, 2007).

Green Mountain Chrysler Plymouth Dodge Jeep v. Crombie was a case brought by individual car manufacturers, the Alliance of Automobile Manufacturers, and several car dealerships located in the State of Vermont against state agencies. The plaintiff automotive groups sought to invalidate Vermont's efforts to adopt the standards of the California Air Resources Board (CARB) for the "California car." The 240-page ruling was issued following a bench trial and the Supreme Court's decision in Mass. v. EPA. The arguments to invalidate the regulation were based on express and implied preemption of the Vermont standards by the Energy Policy and Conservations Act (EPCA) or, alternatively that the standards were invalid due to a conflict between the EPCA and the Clean Air Act (CAA). Additionally, an argument was made for foreign affairs preemption, which claimed that the regulation would inappropriately interfere with the President's ability to negotiate an international agreement to address greenhouse gases. Plaintiffs originally had additional claims under the dormant commerce clause, the Sherman Antitrust Act, and the Clean Air Act prior to trial, but these claims were dropped. Several citizens' groups, the State of New York, and Denise M. Shaheen, in her capacity as Commissioner of Environmental Conservation of the State of New York also joined the State as intervenor-defendants.

The State and citizens' groups attempted to dismiss the case because of ripeness. The ripeness claim was based on the lack of a section 209 preemption waiver of the CAA granted to California by the EPA. A waiver is required before the California standards can take effect. Without such a waiver, the California standards are preempted under the CAA. Vermont's legislation was not to be effective until the preemption waiver was granted to California. Section 177 of the CAA would then allow other states, such as Vermont, to adopt the California standards. Although California had not received the waiver, the United States District Court of Vermont ruled that the trial could proceed on the preemption issues and the court's ruling would be based on the assumption that the EPA granted the waiver to California. The court reasoned that the plaintiff automakers faced a "realistic danger of sustaining a direct injury" necessary to proceed with a declaratory judgment, because the companies must act now to redesign their automobiles in order to comply with the new standards. The court's decision to proceed with declaratory judgment was also supported by findings that the regulation had been formally enacted and the constitutional challenges were as concrete now as they would be in the future.

The court started its preemption analysis by determining that the CAA's authority to regulate greenhouse gases and more specifically the California's standards allowed under the CAA were not preempted by the National Highway Traffic Safety Administration's (NHTSA) obligation to comply with the EPCA. The court found that California's regulations and, consequently, Vermont's would become part of the federal "regulatory backdrop" upon the grant of the CAA preemption waiver. The court then found Congressional intent through case law and legislative history to allow California's regulations to be considered "other motor vehicle standards of the Government" which the NHTSA must consider when formulating fuel economy standards under section 32902 of the EPCA. The court found additional support for agency collaboration in Executive Order 13432 which requires coordination of regulatory action where possible. The court also cited the Supreme Court's ruling in Mass. v. EPA, which determined that there is "overlap" but no conflict between the two statutes. For these reasons, the court concluded that preemption doctrines do not apply to the interplay between section 209 of the CAA and the EPCA, because the alleged conflict is between federal schemes whereas preemption requires a federal scheme to forbid the implementation of a state scheme. Despite this finding, the court conducted a standard preemption analysis because the express language of the EPCA's preemption provision appears to forbid the Vermont regulation, and the plaintiffs alleged that the Vermont regulations result in an actual conflict with the EPCA fuel economy standards.

The court's preemption analysis then turned to whether the EPCA's preemption clause expressly preempts Vermont's regulation, because it is essentially a fuel economy regulation or it is related to fuel economy standards. In order to find express preemption, the court must find that it was the "clear and manifest purpose of Congress" to supersede power of the state. The court found that Congress had not stated such intent because of legislative history indicating that regulation of air pollution from mobile sources was traditionally a state responsibility prior to the CAA, and the regulation of greenhouse gases from mobile sources was an area "regarded as a cooperative state federal legislative effort." The court also found that the Vermont regulation was not a "de facto fuel economy" standard, because there are ways to reduce greenhouse gas emissions without regulating fuel efficiency such as the use of alternative fuels. The court then found the Vermont standards were not "related to fuel economy standards" as prohibited by the EPCA. The court reached this finding because the EPCA was enacted against a backdrop of other federal laws that affected motor vehicles and could affect fuel economy such as the CAA, noise emissions standards, and safety standards but did not discuss displacing them in the EPCA's legislative history. Furthermore, the court found that the CARB standards could not be preempted, because the NHTSA was required by the EPCA to consider California standards when determining the maximum feasible average economy. Accordingly, the court rejected the express preemption challenge.

The court then rejected the issue of field preemption. Field preemption occurs when state law attempts to regulate in a field that Congress intended for the federal government to occupy exclusively. Congressional intent in field preemption cases must be "clear and manifest" where the area has "been traditionally occupied by the States." The court found this was not the case, because the Supreme Court found in Mass. v. EPA that "the regulation of carbon dioxide emissions from motor vehicles is not the exclusive province of the federal Department of Transportation." The court also cited the Supreme Court's determination that the EPA's obligation to protect public health and welfare under the CAA may include carbon dioxide. Furthermore, the district court found that Congress was well aware of the CAA practice of granting California waivers when it passed the EPCA and the scheme does not express sufficient dominance of the field that an EPA-approved state regulation would be precluded. These reasons led the court to conclude that a "clear and manifest intent to render the regulation of carbon dioxide emissions from motor vehicles exclusively a federal domain."

The court also rejected the claim of conflict preemption. A state statute is found to be preempted to the extent that it intrudes upon Congressional objectives expressed by a federal statute. The plaintiffs claimed that the conflict occurred in three ways: "first, that it frustrates Congressional intent to maintain a single, nationwide fuel economy standard; second, that it upsets the balance that NHTSA has chosen to strike in setting 'maximum feasible average fuel economy' levels by restricting consumer choice, reducing employment in the domestic automobile industry, and decreasing traffic safety; and third, that EPA's waiver process will not ensure the absence of a conflict with EPCA objectives." The court rejected the first argument by citing Mass. v. EPA's finding that Congress anticipated the overlap and allowed the NHTSA to consider the effects of such other standards when formulating the NHTSA standard. The second and third arguments were also rejected. There the district court stated that the plaintiffs failed to carry the burden of showing that "compliance with the regulation is not feasible; nor have they demonstrated that it will limit consumer choice, create economic hardship for the automobile industry, cause significant job loss, or undermine safety." Here the court went through the trial record and cited testimony demonstrating past successes of technology-forcing legislation, changing consumer trends, and current trends of emissions reductions through alternative fuels, hybrid vehicles, and efficiency technologies as evidence that the plaintiff's burden was not met.

The final claim rejected by the court was foreign policy preemption. A state law may be preempted if, in absence of a federal statute or treaty, the state law "impairs the effective exercise of the Nation's foreign policy." The plaintiffs made two arguments. The first argument was that "Vermont's regulation is preempted in the absence of any conflict with national foreign policy, by virtue of its intrusion into foreign affairs." The court rejected this argument by stating that Vermont's regulation "exemplifies" the "cooperative federal state approach" to climate change described in a State Department letter to the United Nations Framework Convention on Climate Change. Furthermore, the district court cited the Supreme Court's conclusion in Mass. v. EPA that "while the President has broad authority in foreign affairs, that authority does not extend to the refusal to execute domestic laws." Therefore, the district court rejected the first foreign policy preemption argument.

The plaintiffs' second foreign policy preemption argument was that "the regulation is preempted because there is a 'sufficiently clear conflict' with an 'express foreign policy of the national government.'" The plaintiffs claimed "that there is an express national foreign policy against the adopting unilateral binding limitations on GHG emissions in favor of a comprehensive international response on the issue." The district court was unable to find such a policy and rejected the claim that the United States' disapproval of the Kyoto Protocol was evidence of such a policy. The court also cited the State Department's letter mentioned above as well as the Supreme Court's dismissal of a similar argument in Mass. V. EPA. The district court then concluded that the Vermont regulation was not in conflict with national foreign policy.

Having held that the Vermont regulations were not preempted, the district court ordered judgment for the defendants and upheld the regulation assuming that the CAA waiver was granted to the State of California. California's waiver request was later rejected but is currently being appealed before the Ninth Circuit Court of Appeals.

View the case document here

Central Valley Chrysler-Jeep Inc. v. Goldstone (No. CV-F-04-6663 (E.D. Cal. 2006).

Central Valley Chrysler-Jeep, Inc. filed a complaint against James Goldstone, in his capacity as Executive Director of the California Air Resources Board (CARB) claiming that CARB's regulations of greenhouse gasses were preempted by the Clean Air Act (CAA), the Energy Policy and Conservation Act (EPCA), and the foreign policy of the United States. The complaint was joined by plaintiff-intervenor, the Association of International Automobile Manufacturers (AIAM). The case was filed with the United States District Court for the Eastern District of California.

On January 16, 2007, CARB was granted a motion for a stay of proceedings pending the outcome Mass. v. EPA before the Supreme Court of the United States. The Supreme Court's decision in that case was announced on April 2, 2007. After the Supreme Court issued its opinion in Mass. v. EPA, CARB and AIAM moved for summary judgment on the issues of preemption. Additionally, CARB moved for summary judgment on the issue of preemption by the foreign policy of the United States.

California enacted Assembly Bill 1493 (AB 1493) in 2002. The bill required CARB to promulgate "regulations that achieve the maximum feasible and cost-effective reduction of greenhouse gas emissions from motor vehicles" not later than January 1, 2005. The regulations were applicable to new cars in the model year of 2009. CARB was required to consider these time constraints as well as "environmental, economic, social, and technological factors." CARB's regulations were also required to be "[e]conomical to an owner or operator of a vehicle, taking into account the full life-cycle costs of the vehicle." In 2004, the regulations were completed in CARB's Resolution 04-28 (also known as AB 1493 regs).

The district court was first asked to determine whether CARB standards were preempted by the CAA. The court found that California must receive a waiver under section 209 of the CAA in order to enact standards that are more stringent than those offered by the EPA. If California is granted the waiver, other states may then adopt the California standard. The district court conditionally concluded that California and EPA can both promulgate regulations of motor vehicles' greenhouse gas emissions if a waiver is granted. Therefore, CARB's standards were not preempted by the CAA but are subject to the section 209 waiver process. [See discussion in States' news regarding California waiver. –ADD LINK] Additionally, the district court noted that CARB's regulations could also be enacted if new federal legislation enabled California to do so.

The court then addressed the issues of preemption and preclusion under the EPCA. The EPCA requires the Department of Transportation, more specifically the National Highway Traffic Safety Administration (NHTSA), to determine the maximum feasible mileage standards for new vehicles on a fleet-wide basis. The NHTSA establishes the standard by considering the following factors: "(1) technological feasibility; (2) economic practicability; (3) the effect of other Federal motor vehicle standards on fuel economy; and (4) the need of the nation to conserve energy." The EPCA also contains an express preemption provision that prohibits states from adopting laws or regulations related to fuel economy standards and, unlike the CAA, has no waiver provision.

In making its determination on the issues of preemption and preclusion the district court noted, "in questions of both preemption of state law and preclusion of federal statutory remedies by other federal statutes, the touchstone is congressional intent." The district court found that the EPCA's provision preempting state laws regulating fuel efficiency does not expressly preempt CARB from reducing greenhouse gasses through AB 1493. The district court reached this decision by citing the Supreme Court's ruling in Mass. v. EPA which indicates Congress intended that there be no conflict between EPA's duty to protect public health and welfare and NHTSA's duty to set fuel efficiency standards through the EPCA. Therefore, the doctrine of conflict preemption does not apply even though there may be overlap between the agencies' obligations. The district court also ruled that "to the extent the enforcement of California's AB 1493 Regulations may be inconsistent with existing CAFE standards," EPCA grants the NHTSA "authority to reformulate CAFE standards to harmonize with the AB 1493 Regulations if, and when, such standards are granted waiver of preemption by EPA."

The district court also stated that no disagreement was found with the United States District Court of Vermont's Green Mountain Chrysler Plymouth Jeep v. Dalmasse in regards to that court's conclusion that a waiver granted under section 209 causes a state's regulations to become federal law not subject to preemption. Instead the court in this case "offered an alternative analysis that avoids the issue of 'federalization' in the hope of adding a measure of clarity to the discussion." In other words, the court here did not rule on the issue of whether CARB's standards were considered federal once a waiver was granted, but instead found that the CARB's standards and the EPCA did not have the necessary conflict required for a finding of preemption if CARB's standards are to be considered state law nor a finding of preclusion if CARB's standard were considered federal by means of the EPA's waiver.

The district court also ruled for CARB on the issue of foreign policy preemption. The district court found that the plaintiffs failed to show that the United States foreign policy is to disallow state-based efforts to reduce greenhouse gas emissions so that other countries may be leveraged into forming agreements. Furthermore, the court found that the plaintiffs failed to show how AB 1493 will conflict in any way with United States foreign policy. Accordingly, the court found that there was no foreign policy preemption.

The court then rejected the plaintiffs' motions for summary judgment and granted CARB's motions for summary judgment. The court stated that if the EPA granted the section 209 waiver, California and other states adopting California's standard should not be prevented by the doctrines of conflict preemption, express preemption, or foreign policy preemption from enforcing those standards. The district court also rejected the plaintiffs' claims under the dormant commerce clause and the Sherman Antitrust Act.

Central Valley Chrysler-Jeep Inc. v. Goldstone (Ninth Circuit, October 30, 2008)