States and Industry Groups Challenge California's Regulation of Vehicular Greenhouse Gas Emissions

Ohio et al. v. EPA, No. 22-1081, currently being briefed in the U.S. Court of Appeals for the D.C. Circuit, presents significant issues about the scope of federal and state sovereignty, the resolution of which could have far-reaching consequences beyond the particular issues before the court. The Petitioners, 17 U.S. states ("State Petitioners") and a group of energy industry participants and trade associations ("Industry Petitioners"), are challenging U.S. EPA's decision to reinstate California's authority to regulate motor vehicle greenhouse gas emissions and institute zero-emission vehicle mandates for vehicles sold in California under its Advanced Clean Car ("ACC") program. Section 209 of the Clean Air Act ("CAA") authorizes EPA to adopt vehicle emission standards and preempts state regulation in the field, except for California, which may adopt its own regulations that are stricter than federal standards upon successful application to EPA for a preemption waiver. EPA granted a waiver for the ACC program in 2013, but rescinded that waiver in 2019 (the "Recission Decision"). In 2022, EPA reversed course again, and reinstated the ACC waiver (the "Reinstatement Decision"). 

The 17 State Petitioners ask the D.C. Circuit to invalidate EPA's Reinstatement Decision on two primary grounds. First, they ask the court to rule that the CAA waiver is unconstitutional under the equal sovereignty doctrine, because it grants California a sovereign power that is denied to all other states. The State Petitioners present both facial and as applied challenges, arguing that CAA Section 209(b) is unconstitutional on its face because it allows California to exercise a sovereign power that is denied every other state, and alternatively that even if such unequal treatment may sometimes be justified due to the unique circumstances of a state, California lacks any unique interest in combating climate change. Second, the State Petitioners argue that the ACC program is preempted by the Energy Policy and Conservation Act of 1975 ("EPCA"), which grants to the National Highway Traffic Safety Administration ("NHTSA") the exclusive authority to regulate fuel economy standards with no waiver or exception for California. In a separate briefing, Industry Petitioners present statutory arguments that EPA exceeded its authority under the CAA by approving a program aimed at the global issues of climate change; that California has not demonstrated that it meets the statutory requirements for eligibility for the ACC waiver; and that EPA properly exercised its reconsideration authority when it issued the Rescission Decision. 

In its January 13, 2023, response, EPA argues, on the constitutional question, that CAA Section 209(b) is within Congress's plenary authority under the Commerce Clause to regulate interstate commerce. Moreover, EPA contends that the lack of any express promise of equal treatment among states under the Commerce Cause, unlike the express promise of uniform duties, imposts and excides under Article I § 8, indicates there is no requirement of uniform treatment under the Commerce Clause. EPA also contends that CAA Section 209(b) is a legitimate instance of Congress's authority to exempt an existing state program from a new general preemption (i.e., grandfathering), and that California's waiver is justified by California's particularly severe air-quality problems. On the statutory questions, EPA argues, among other things, that NHTSA no longer interprets the EPCA's preemption provision as applicable to California's ACC, and therefore EPA appropriately did not rely on any such preemption when reinstating California's waiver. EPA also argues that the ACC waiver satisfied the statutory requirements for a proper waiver under Section 209(b); that EPA properly exercised its authority to reconsider and reject its Recission Decision; and that the Petitioners lack standing to assert their claims. 

The decision by the D.C. Circuit, and possibly a subsequent one by the U.S. Supreme Court, could have major implications for the balance between federal and state power under the equal sovereignty doctrine. A decision that upholds the Petitioners' facial constitutional challenge to CAA Section 209(b) could effectively invalidate many more of California's current and planned vehicle emission and climate change programs, including the recently adopted Advanced Clean Cars II, Advanced Clean Trucks, and Omnibus Heavy-Duty Vehicle Emission rules, and the ongoing Advanced Clean Fleets rulemaking. Moreover, as EPA argues in its briefing, a broad ruling under the equal sovereignty doctrine could implicate other preemption exceptions that federal law grants for individual states, such as a carveout for Texas' intrastate electric grid from federal utility regulation. As the Supreme Court noted in its 2013 decision in Shelby County v. Holder, the Constitution does not bar disparate treatment of the states per se. In Shelby, the Supreme Court struck down certain sections of the Voting Rights Act requiring some states, but not others, to receive preclearance before changing their election laws, on the grounds that the preclearance provisions violate the equal sovereignty doctrine. Both sides in Ohio v. EPA rely on Shelby, but disagree on its implications for the case. If the courts ultimately extend the equal sovereignty doctrine to CAA Section 209(b), a key question will be how to draw the line between constitutional and unconstitutional disparate treatment of the states. 

Read the full Climate Report here.