Take Care is privileged to publish this guest post by Gabriel Daly, a recent graduate of Harvard Law School

Eli’s recent post on why the Environmental Protection Agency (EPA) cannot gut federal climate change policy appropriately pumps the breaks on fevered calls for repeal of EPA’s 2009 Endangerment Finding.  As Eli details, doing away with the Endangerment Finding would be a near-impossible task for the Trump EPA.^[1]  Administrator Scott Pruitt likely understands this; he is, after all, an experienced Clean Air Act litigator.  And as Eli notes, the Obama administration built an edifice of climate-change regulation atop the Endangerment Finding foundation.  In this post, I’ll take a look at one of those two structures: the Corporate Average Fuel Efficiency (CAFE) standards.

Last week in Motor City, President Trump announced that EPA would reconsider the CAFE standards applicable to cars in model years 2022-2025.  Although Trump’s speech has been described as having “halted” CAFE standards promulgated during President Obama’s administration, the road from applause line to regulatory repeal presents stumbling blocks that may prevent any substantive change to the CAFE standards. Perhaps the most significant obstacle in Trump and Pruitt’s way is California.

Some background.  Under our federal constitutional structure, federal law is supreme over state law.  Thus, federal law preempts state law in many areas where the federal government has legislated.  For the most part, this is true in environmental regulation; states generally do not impose their own emission standards (except in concert with the federal government).  But the Clean Air Act creates an exception to the general rule of federal preemption.

Section 209(a) of the Clean Air Act prohibits any state from adopting any emissions standard applicable to new motor vehicles.  Section 209(b), however, introduces a wrinkle. For any state that had emissions standards in place prior to 1966—that is, California, and only California—EPA is required to waive the preemption provision of Section 209(a) and allow the state to set its own, more stringent standard, unless three criteria are met:

1.  California’s determination that its standards are at least as protective as the applicable federal standards was arbitrary or capricious;

2.  California does not have a need for its own standards to meet “compelling and extraordinary conditions";

3.  California’s standard is inconsistent with Section 202(a) of the Clean Air Act.

See Clean Air Act § 209(b)(1)(A)-(C), codified at 42 U.S.C. § 7543(b).

EPA has granted California dozens of waivers.  But in 2008, EPA, for the first time in the Clean Air Act’s history, rejected outright a request for a waiver from California. That waiver denial was based on EPA’s determination that California had not satisfied the second criterion:  EPA concluded that California did not need its own greenhouse gas emissions standards to meet a compelling and extraordinary need.

That conclusion was based on EPA’s interpretation of the statutory language in Section 209(b)(1)(B).  EPA read that section to require consideration of “compelling and extraordinary” local or regional conditions only—not, the compelling and extraordinary global condition of global climate change.

In 2009, after President Obama took office, California asked EPA to reconsider its waiver denial decision.  In a 2009 rulemaking, EPA reversed course and granted California its waiver. Congress did not intend, EPA concluded, to limit California’s authority to only local pollutants. EPA reasoned that California’s standards regulating GHGs are necessary to address compelling and extraordinary conditions because California’s smog conditions are exacerbated by climate change.  Moreover, EPA would consider California’s entire motor vehicle standard as a whole—which regulates many pollutants that contribute to Southern California’s smog—rather than simply the GHG standard. 

No court has addressed either EPA’s 2008 denial of the waiver, or EPA’s 2009 decision to grant the waiver.  Challenges to the 2008 denial were mooted by the 2009 decision.  And the 2009 decision was never challenged by the automakers because it was the result of the complex negotiated rulemaking between EPA (authorized to regulate car emissions), the National Highway Traffic Safety Administration (authorized by statute to regulate fuel efficiency), the California Air Resources Board (in charge of promulgating California’s standards), and the automakers.  Thus it’s hard to know how courts would evaluate a decision to revoke the waiver.

California would have at least two good arguments that the waiver cannot be rescinded.  First, it could argue that the 2008 legal interpretation, limiting the “compelling and extraordinary need” assessment to only local or regional environmental issues, is foreclosed by the statutory text.  Such an argument would be supported by Massachusetts v. EPA, which held that the term “air pollutant” cannot be read to exclude greenhouse gases.  

Second, California might argue that, even if the “compelling and extraordinary need” to which California’s standards respond must be local or regional, climate change does present such local conditions.  While drawing causal links between any particular weather phenomenon and climate change is difficult, California could nevertheless make a strong case that the effects of climate change do present compelling and extraordinary conditions in California.  Indeed, as noted earlier, EPA already has determined that climate change exacerbates smog in southern California.

If EPA cannot revoke California’s waiver, then any “repeal” of the CAFE standards will be largely meaningless.  As long as California maintains its emission standards at the levels set in the 2009 joint rulemaking, California’s standard will continue to exert significant influence in the American auto market.  Under Section 209, other states are free to adopt California’s standards.  But even if they do not, California’s market share means that automakers ignore its standards at the risk of missing out on more than 2 million new car sales per year.

[1] I disagree with Eli on one point.  EPA would not necessarily need to show that greenhouse gases are not reasonably likely to cause climate change.  Rather, EPA could concede that GHGs are reasonably likely to cause climate change, as the science establishes, but argue instead that climate change is not reasonably likely to “endanger public health or welfare.”  Particularly if EPA were able to convince a court that only American health and welfare need be considered in that calculus, EPA’s chance of success might be significantly greater than Eli predicts.  But to do so would require reversing a decision EPA has already made. See Greenhouse Gas Emissions and Fuel Efficiency Standards for Medium- and Heavy-Duty Engines and Vehicles—Phase 2, 81 Fed. Reg. 73,478, 73,486 (Oct. 25, 2016).  That would be hard to justify.

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