An Update on Recent U.S. Mobile Source Air Emissions Regulations and Ongoing Challenges

As noted in previous editions of The Climate Report, in recent months, the United States Environmental Protection Agency ("EPA"), Federal Highway Administration ("FHA"), and California Air Resource Board ("CARB") have imposed new, more stringent regulations on mobile source emissions from both on-road and off-road sources. The regulations are designed to significantly curtail certain emissions, including greenhouse gases ("GHGs"), from mobile sources. Given the ramifications for industries impacted by the regulations, the rules are subject to ongoing litigation, clouding their future.  

In January 2024, a FHA rule establishing a performance-based method for measuring GHG emissions that are associated with transportation on the National Highway System became effective. This rule requires state departments of transportation and metropolitan planning organizations to measure and track GHG emissions on the national highway systems within their jurisdiction and to establish targets for reducing GHG emissions. The rule was promptly challenged by the State of Texas and a coalition of other states. On March 27, 2024, the District Court for the Northern District of Texas granted the states' motion for summary judgment holding that the FHA lacked the statutory authority to enact the rule. The FHA appealed the case to the Fifth Circuit Court of Appeals on May 23, 2024, where briefing is ongoing. 

The FHA was not alone in addressing mobile source emissions in the early part of 2024. In March, EPA finalized new emission standards for passenger cars, light-duty trucks, and medium-duty vehicles for model years 2027 through 2032 and beyond. EPA is accelerating the adoption of purportedly cleaner vehicle technologies by gradually tightening emissions standards—and effectively requiring that 35% to 56% of vehicle sales be either hybrid or fully electric to meet the model year 2032 standards. A total of 26 states and 56 industry participants have filed eight petitions for review in the D.C. Circuit Court of Appeals, challenging EPA's rule on the basis that it exceeds EPA's statutory authority and violates the major questions doctrine, among other grounds. The parties are currently briefing the case, with final briefs due on January 31, 2025.   

EPA also finalized new emission standards for heavy-duty vehicles for model years 2027 and 2032. This rule tightens emission standards for heavy-duty vocational vehicles, such as delivery trucks, refuse haulers, and public utility trucks and tractors. The reductions are phased in on the basis of vehicle type, with the first standards becoming effective for model year 2027 and the last category of vehicles being subject to initial reductions in 2030. A coalition of 24 states and 32 organizations and individuals have filed eight petitions for review challenging the final rule. The rule is being challenged on the basis of its characterization of carbon dioxide as an air pollutant under the Clean Air Act and the major questions doctrine, among other bases. Final briefs are due on March 10, 2025. 

California, through the California Air Resources Board ("CARB"), has also taken action to reduce emissions from mobile sources over the last two years. In April 2023, CARB finalized the "In-Use Locomotive Regulation" that targets air emissions from diesel-powered locomotives. Under the rule, unless an alternative method of compliance is selected, locomotive operators are required to fund a trust account (based on the emissions created by their locomotive operations in California) that can be used to purchase, lease, or rent purportedly cleaner categories of locomotives and to build the necessary infrastructure. Starting in 2030, only locomotives less than 23 years old will be able to be used in California, unless operated in a zero-emissions configuration. The rule has been subject to a challenge brought in federal court by trade associations. On September 30, 2024, the United States District Court granted the State of California's (and several intervenors') motion for summary judgement as to the challenge to part of the rule (setting idling requirements) and denied it as to the remainder of the rule. The court stayed the matter with a decision on the challenger's motion for summary judgment pending on the basis that its decision is likely to be influenced by EPA's decision on whether California is authorized to regulate emissions for non-new locomotives (which also remains pending).  

California is the only state that is permitted to set standards for on-road and off-road vehicles and engines pursuant to a Clean Air Act waiver (though other states and the District of Columbia are permitted to adopt California standards). California has received more than 100 federal preemption waivers for new and amended state-level vehicle emissions standards. California's waiver has been subject to revocations and reinstatements in recent years as a result of repeated shifts in political winds. In April, the D.C. Circuit rejected a challenge to California's 2013 GHG emission standards for light-duty cars and trucks on the basis that petitioners' lacked standing to assert the challenges. In July, the challengers petitioned the Supreme Court for a writ of certiorari seeking to overturn the D.C. Circuit's decision. The Supreme Court is still considering whether to grant the challenger's petitions. 

The volatile political environment concerning GHG emissions and how or whether to address them will continue to impact the ability of regulated entities to take steps to meet new standards with any certainty. The promulgation of more stringent or less stringent regulations, followed by fierce challenges by states, industry, and public interest groups, is likely to continue, no matter the results of upcoming elections. Regulated entities should continue to monitor developments closely and participate in the regulatory process where proposed actions are likely to impact their business. 

Read the full Climate Report.