WASHINGTON (CN) — A D.C. Circuit panel ruled against a coalition of red states and fuel industry groups Tuesday by affirming a 2022 decision by the Environmental Protection Agency preserving a decades-old exception that allows California to enact stricter emission standards than the federal government.
The exception, known as the California waiver, was enacted in 1970s so the state could address smog over Los Angeles. It has since evolved to make the state a “laboratory of innovation” where automakers can test new technology.
The three-judge panel, made up of U.S. Circuit judges Robert Wilkins, J. Michelle Childs and Bradley Garcia — a Barack Obama appointee and two Joe Biden appointees, respectively — ruled unanimously in favor of the EPA.
The panel opted to issue a per curiam opinion, to speak as a single body rather than select a judge to write the opinion. The panel wrote that so long as California’s emission standards are at least as protective as federal regulations, the Clean Air Act requires the EPA to affirm them, unless they are deemed unnecessary or otherwise problematic.
“In other words, the federal regulations continue to act as the floor for emissions regulations, but California can seek to enact its own more stringent regulatory program above those federal requirements,” the panel wrote.
When Congress passed the Clean Air Act in 1967, California faced significant air quality and pollution problems that the federal emission standards were unlikely to address, the panel noted. However, at that time California was the only state with its own vehicle emission standards and its regulations had helped craft federal law.
Taking both California’s unique situation and automobile manufacturers concerns about a patchwork system of emission standards across all 50 states, Congress created the California waiver directly in the Clean Air Act, balancing both issues.
The Trump administration revoked the exception in 2019 as part of its wide-reaching rollback of efforts to fight climate change. Then-EPA Administrator Andrew Wheeler said the rule worked against the idea of federalism by allowing a single state dictate standards for the nation.
President Joe Biden reinstated the rule in March 2022.
Ohio sued in May 2022 joined by Alabama, Arkansas, Georgia, Indiana, Kansas, Kentucky, Louisiana, Mississippi, Missouri, Montana, Nebraska, Oklahoma, South Carolina, Texas, Utah and West Virginia. A group of fuel industry groups filed a similar challenge the same day, while automakers sided with the EPA in the case.
In September 2022, California's powerful Air Resources Board passed a new set of regulations that essentially require all vehicles sold in the state to be either electric, hydrogen-fueled or at least plug-in hybrid by 2035. Soon after, 17 states adopted similar rules, showing the influential role the Golden State has.
At oral arguments in September 2023, attorney Jeffrey Wall of the firm Sullivan Cromwell representing the intervening Valero Renewable Fuels Company, argued that California’s role as both a testing ground and the leading consumer of cars gives the state power over the rest of the nation.
Wall argued that by maintaining the California waiver, the EPA has given the state a regulatory power unequal to the rest of the states and even comparable with the federal government. He argued that is particularly problematic if, apart from its smog, California faces the same climate change issues as the rest of the country.
The panel rejected both groups’ arguments, finding that the fuel industry groups had failed to establish standing on their statutory claims, and the states had similar failed to establish standing on claims of economic injury.
Taking aim at the states’ claim that the waiver violated their constitutional right to equal sovereignty, the panel rejected the states' reliance on the 2013 Supreme Court decision Shelby County v. Holder, where the high court deemed a key section of the Voting Rights Act — pre-clearance on voting regulations — unconstitutional.
The panel found that while the Shelby County ruling said the Constitution contains a “fundamental principle of equal sovereignty,” the California waiver was subject to review under the commerce clause, which the Supreme Court nor any other court has never limited with that principle.
“We hold therefore that [the California waiver] is subject to traditional rational basis review for commerce clause legislation and — as no one disputes — that it is constitutional under that standard,” the panel wrote.
Further, the equal sovereignty debate among the founders was based representation among states in Congress, not on Congress’ authority to legislate, the panel said.
The court is expected to issue a ruling on two similar cases, centered on a pair of emission standards set by the EPA and the National Highway Traffic Safety Administration for “light-duty” vehicles — cars, vans, SUVs and pickup trucks — in the coming weeks.
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