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DC Circuit rounds out trio of hearings on emission standards

Car manufacturers have widely supported California's exception, which supporters say allows the state to be a testing ground for new technology.

WASHINGTON (CN) — A D.C. Circuit panel heard from a group of conservative states and business groups Friday as they argued against a caveat that allows California to restrict fuel emissions beyond the federal government's rules. It was the third hearing at the appellate court this week centered on emission standards.

The exception, known as the California Waiver, was enacted in the 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 states argued the exception for the largest car market in the country is effectively pushing the car industry to adopt electric vehicles faster than they otherwise would have, if California’s standards matched those set by the federal government. 

Friday’s arguments before U.S. Circuit Judges J. Michelle Childs, Bradley Garcia and Robert Wilkins follow a pair of similar cases argued before another panel of judges on Thursday, targeting emission standards set by the Environmental Protection Agency and the National Highway Traffic Safety Administration. 

The challengers in one case, 15 conservative states and industry groups, found a surprising ally in the other suit's plaintiff, the National Resources Defense Council, which also argued that the standards were a veiled attempt to phase out traditional liquid-fuel vehicles in favor of their electric counterparts. 

Car manufacturing companies sided with the federal government in all three of the cases. 

On Friday attorney Jeffrey Wall, of Sullivan & Cromwell, represented the intervening the Valero Renewable Fuels Company. He brought up the so-called “major questions doctrine” — as he did Thursday morning over the EPA rule — saying California’s role as both a testing ground and the leading consumer of cars gives the state power over the rest of the nation. 

The three-judge panel seemed less receptive to the major questions argument compared with Thursday’s panel — Chief U.S. Circuit Judge Sri Srinivasan and U.S. Circuit Judges Gregory Katsas and Florence Pan — and spent little time on the topic. 

In September 2022, the state’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 state has. 

Ohio led the challenge, along with Alabama, Arkansas, Georgia, Indiana, Kansas, Kentucky, Louisiana, Mississippi, Missouri, Montana, Nebraska, Oklahoma, South Carolina, Texas, Utah and West Virginia.

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. In his view that's particularly problematic if, apart from its smog, California faces the same climate change issues as the rest of the country.

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.

Eric Hostetler, a Justice Department attorney representing the EPA, argued that the rule has nothing to do with federalism, rather it enhances the state’s authority, and likened it to Texas’s power to maintain its own electrical grid. 

“The states’ theory would undermine that exception,” Hostetler said. 

Judge Garcia, a Biden appointee, noted that states like Alabama, Louisiana, Mississippi and Texas each have special authority over their coastal seabed in the Gulf of Mexico, a form of enhanced sovereignty that other states do not.

When other states brought the Supreme Court challenge United States v. Louisiana, the justices denied the challenge and affirmed the coastal state’s sovereignty.

Judge Wilkins, a Barack Obama appointee, seemed to be the most receptive to the idea that the exception gave California unnecessary special rights, using an analogy to characterize the state’s stricter emission limits to soldiers.

He said if a state needs protection, it really only needs as many soldiers as any other state, “that doesn’t mean they need to have a million more soldiers.” 

Chloe Kolman, another Justice Department attorney for the EPA, pointed out that car manufacturers make their plans years in advance and many base their decisions off California’s standards. 

If the exception were overturned, it could be extremely disruptive for the auto industry, which saw 12,700 United Auto Workers begin striking Thursday night in Michigan, Ohio and Missouri for better wages and working conditions. The industry generated approximately $2.86 trillion in 2021 and employs over 1.7 million people. 

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Categories / Appeals, Environment

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