Federal Agencies Begin Rulemaking to Weaken Fuel Economy Standards


By: Nathaniel Eisen

As one of numerous attempts by the Trump Administration to roll back Obama-era rules, in the coming weeks, the Environmental Protection Agency (EPA) and National Highway Traffic Safety Administration (NHTSA) are expected to announce a proposed rule that would weaken the agencies’ 2012 national standards for vehicular greenhouse gas emissions and fuel economy and could potentially challenge California’s ability to establish a parallel set of emissions standards that has been adopted by 12 other states.

The details of the expected proposed rule have not been released, though reports indicate the administration favors freezing fuel economy standards at 2020 levels (around 35-40 miles per gallon). Future litigation challenging these efforts can be expected. This post examines some of the arguments that may be advanced by EPA in support of a proposed rule.

EPA may attempt to revive prior arguments that the agency does not have statutory authority to regulate vehicular carbon dioxide emissions at all. Though the Supreme Court squarely rejected this argument in Massachusetts v EPA, 549 U.S. 497 (2007), that decision may be in peril of reversal following the retirement of Justice Kennedy, who voted with the 5-4 majority.  The Clean Air Act, 42 U.S.C. § 7521, directs EPA to prescribe standards applicable to new vehicles for air emissions of any pollutant that may reasonably be anticipated to endanger public health or welfare. However, the subsequently-enacted Energy Policy and Conservation Act (EPCA), 49 U.S.C § 32919, empowered the U.S. Department of Transportation (DOT) to revise average fuel economy standards. In Massachusetts v. EPA, the George W. Bush-era EPA argued that this subsequent grant of power to DOT negated EPA’s ability to regulate vehicular carbon dioxide emissions, as the primary means for automakers to reduce carbon dioxide emissions is to improve fuel economy. In Massachusetts v. EPA, the Court concluded that “the two obligations may overlap,” but that the two agencies could each regulate without any inconsistency. Accordingly, at least until this decision is revisited, EPA is legally obligated to regulate greenhouse gas emissions from vehicles, although it has broad discretion regarding how best to exercise that authority.

California has special permission under the Clean Air Act to apply for a waiver that permits it to set its own emissions standards for various pollutants, which other states can then adopt.  Automakers have previously challenged California’s carbon dioxide emissions standards in two district court cases, Green Mountain Chrysler Plymouth v, Crombie and Central Valley Chrysler-Jeep v. Goldstene. In both cases, the manufacturers argued that EPCA’s preemption of state authority to establish fuel economy standards applies equally to any state attempt to establish vehicular carbon dioxide emissions standards. However, after Massachusetts, it was relatively easy for the lower courts to find that the state greenhouse gas regulations were not preempted. The District of Vermont found in Green Mountain Chrysler Plymouth that California’s regulations were federalized by the waiver and that the Supreme Court’s finding of non-conflict between CAA and EPCA applied. The Eastern District of California found in Central Valley Chrysler-Jeep that the language of the CAA and EPCA meant DOT had to take EPA-approved California regulations into account but not vice versa.

In its upcoming rule, EPA may attempt to prevent California from imposing more stringent regulations, despite the state having long exercised its statutory authority to do so. If the California standards are as protective of public health and welfare as the federal regulations, the rulemaking is not arbitrary or capricious, and California demonstrates a compelling need to set its own standards, a waiver must be granted by the federal government. Consistent with longstanding authority to set more stringent vehicle emission standards, California received a waiver from EPA in 2009 to set its own carbon dioxide standards through Model Year 2025. The 2012 Obama-era federal regulations matched the California standards, effectively creating a nationwide standard. EPA’s proposed rule could return matters to a pre-Obama-era situation, where manufacturers contended with two sets of emissions standards.

In order to impose national uniformity, EPA has threatened to revoke California’s waiver to chart its own course under the Clean Air Act. The Institute for Policy Integrity interprets the Clean Air Act’s silence on the possibility of revocation to mean it is “simply not an option.” At the very least, revoking an existing waiver could prove more difficult for EPA than would be the case were it writing on a clean slate. It could prove challenging for EPA to rationally argue against the extensive record that supported the decision to grant a waiver to California. EPA would likely argue California no longer has demonstrated a compelling need to set its own standards—but EPA would have to provide a rational basis for this determination by referencing changed circumstances or information.

For more information about climate change issues or the Clean Air Act, contact Jeffrey B. Gracer.

Nathaniel Eisen is an SPR Summer Associate.