EPA Agrees to Reconsider Trump Administration’s Withdrawal of California’s Waiver to Enforce Greenhouse Gas Emission Standards for Cars and Light Trucks

The Environmental Protection Agency (EPA) announced on April 26, 2021 that it is formally reconsidering the Trump Administration’s withdrawal of a waiver of preemption that previously allowed California to regulate greenhouse gas (GHG) emissions from cars and light trucks. The EPA’s action follows a similar proposal issued last week by the National Highway Traffic Safety Administration (NHTSA) to repeal a rule regarding preemption of state and local laws related to fuel economy standards. Because EPA’s preemption waivers do not require rulemaking, the EPA notice is largely descriptive, in addition to identifying questions commenters should address. But the likely outcome is no secret: The EPA and NHTSA actions are a first step toward reinstating California’s authority, and that of states opting into California’s program, to enforce California’s GHG emission standards for cars and light trucks, and reflect the Biden Administration’s focus on restoring local efforts to combat climate change.

The Clean Air Act generally preempts state and local governments from “adopt[ing] or attempt[ing] to enforce any standard relating to the control of emissions from new motor vehicles or new motor vehicle engines . . . .” 42 U.S.C. § 7543(a). The Act provides a limited exception for California, pursuant to which California is eligible to seek and receive a waiver of preemption from EPA. See 42 U.S.C. § 7543(b)(1). For the past 30 years, California has relied on EPA waivers to adopt and enforce emission standards for cars, trucks and other vehicles.  

Relevant to the Agency’s recent action, in 2013, EPA granted a waiver of preemption for California’s Advanced Clean Car (ACC) program, which includes requirements to control both smog and soot-causing pollutants and GHG emissions from cars and light-duty trucks. The ACC program also incorporates California’s zero emission vehicle (ZEV) mandate, which requires manufacturers to produce and offer for sale certain numbers of electric, hydrogen fuel cell and plug-in hybrid-electric vehicles as a proportion of their overall fleets. The ACC GHG standards were generally in line with stringent EPA GHG standards adopted during the Obama Administration, and the California standards included a “deemed to comply” provision such that compliance with the similar federal standards would qualify as compliance with the California standards. 

In 2019, however, the Trump Administration revoked portions of that wavier in a final rule promulgated jointly with NHTSA titled “The Safer Affordable Fuel-Efficient (SAFE) Vehicles Rule Part One: One National Program” (SAFE 1), and subsequently revised EPA’s GHG standards to be less stringent than the ACC GHG standards (SAFE 2). The SAFE 1 Rule promulgated regulations reflecting NHTSA’s interpretation that the federal Energy Policy and Conservation Act (EPCA) preempted California’s GHG emission standards and ZEV mandate, withdrew the EPA waiver of preemption for California to enforce such standards, and interpreted Section 177 of the Clean Air Act to not permit other states to adopt or enforce California’s GHG emission standards. In withdrawing the waiver, EPA reasoned that (1) standards preempted under EPCA could not be afforded a valid waiver of preemption under the Clean Air Act, and (2) California did not need GHG standards “to meet compelling and extraordinary conditions,” and even if California did have compelling and extraordinary conditions resulting from climate change, the GHG standards would not meaningfully address this global problem. 

The Safe 1 Rule was challenged in federal court, and that litigation remains pending. In addition, EPA received multiple petitions for reconsideration from states and non-governmental organizations urging the Agency to reconsider the withdrawal of the waiver. In the Notice of Reconsideration signed by EPA Administrator Michael S. Regan last week and announced on April 26, EPA granted the petitions for reconsideration and sought public comment on whether the prior Administration “properly evaluated and exercised its authority in reconsidering a previous waiver granted to CARB and whether the withdrawal was a valid exercise of authority and consistent with judicial precedent.” In an EPA Press Release, Administrator Regan provided his perspective on the waiver revocation and potential reinstatement, stating: “I am a firm believer in California’s long-standing statutory authority to lead. The 2019 decision to revoke the state’s waiver to enforce its greenhouse gas pollution standards for cars and trucks was legally dubious and an attack on the public’s health and wellbeing.”

California is currently administering the affected portions of its program on a voluntary basis, including issuing certifications for the GHG emissions and ZEV programs. If the waiver is ultimately reinstated, however, California may begin to enforce its standards again, potentially creating a bifurcation in standards across the United States with the more stringent ACC GHG standards applicable in California and opt-in states and the rolled back SAFE 2 standards applicable in the rest of the country, at least until EPA might complete rulemaking to revisit the SAFE 2 standards.

© Arnold & Porter Kaye Scholer LLP 2021 All Rights Reserved. This Advisory is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.