D.C. Circuit Court Upholds California’s Clean Air Act Waiver in Ohio v. EPA

April 2024

On April 9, 2024, the U.S. Court of Appeals for the District of Columbia Circuit ruled in favor of California’s longstanding authority to establish stricter fuel emissions standards for automobiles, surpassing federal regulations. The decision in Ohio v. EPA, 2024 U.S. App. LEXIS 8472 (D.C. Cir., Apr. 9, 2024) is a victory for both environmental regulation and state autonomy. It upholds California’s 50-year-old Clean Air Act waiver, allowing the state to continue its efforts to combat greenhouse gas emissions.

Background

The Clean Air Act Waiver.

Congress has recognized and respected California’s unique authority to regulate motor vehicle emissions for over half a century since 1967. This authority allows the state to set its own emissions standards that are more stringent than federal standards. The Clean Air Act (CAA), the first federal legislation controlling air pollution, was passed by Congress in 1963. The CAA primarily assigns the control of air pollution from stationary sources to local and state governments, while the federal government exercises control over mobile-source emissions (42 USC § 7401(a)(3) [2022]; see also Engine Manufacturers Ass’n v. U.S. EPA, 88 F.3d 1075, 1079 (D.C. Cir. 1996)).

However, California’s role in environmental regulation is unique. When Congress amended the CAA in 1967, they recognized that California had distinct pollution problems and was at the forefront of efforts to regulate vehicle emissions. As a result, Congress implemented a waiver system that allowed the state to serve as a testing ground for innovations that could later be adopted nationwide (see Motor & Equipment Mfrs. Asso. v. U.S. EPA, 627 F.2d 1095 (D.C. Cir. 1979)). The CAA grants California this authority through an Environmental Protection Agency (EPA) waiver.

Legal Challenges to the CAA Waiver

California’s waiver allowed it to combine multiple regulations, such as the Low-Emission Vehicle (LEV) criteria, greenhouse gas regulations, and the zero-emission vehicle (ZEV) regulation, under a single package called Advanced Clean Cars I, adopted in 2012. Recently, in August 2022, the California Air Resources Board adopted a new rule called Advanced Clean Cars II. This rule, which prohibits the sale of new gas-fueled passenger vehicles after 2035, could shape the future of nationwide vehicle emissions standards.

In the wake of Advanced Clean Cars II, 17 Republican-led states challenged the EPA’s authority to issue California a waiver, arguing it would negatively affect their interests by obliging manufacturers to increase the cost of traditional fuel-powered vehicles. The lawsuit also prompted concerns about the “major questions” principle, which mandates that Congress explicitly authorize federal agencies to regulate significant political and economic matters.

The Court’s Decision

States’ Rights vs. Federal Authority

Two groups of Petitioners challenged the EPA’s decision to grant California a waiver under the Clean Air Act. The first group (the “State Petitioners”) comprised the seventeen state parties, while the second group (the “Fuel Petitioners”) included entities associated with the production or sales of liquid fuels. Both groups claimed the EPA lacked the authority to grant California the waiver under the CAA. The State Petitioners additionally argued that a separate federal statute (the Energy Policy and Conservation Act of 1975 (“EPCA”)) preempted the relevant California regulations. The Court rejected the Fuel Petitioners’ statutory claim and the State Petitioners’ preemption claim for lack of standing. The Court found that the State Petitioners had the standing to raise their constitutional claim but rejected it on its merits. This decision affirms California’s right to implement more stringent environmental regulations within its borders, a contentious issue in the debate between states’ rights and federal authority.

Implications

In the short term, the decision to uphold California’s regulations is a victory in the state’s push towards cleaner vehicle emissions technologies. However, some legal experts have dubbed it “SCOTUS bait” and predict it may reach the Supreme Court. If the Supreme Court hears an appeal from Ohio v. EPA, it could dovetail with its recent decision in West Virginia v. EPA, 142 S. Ct. 2587 (2022), where the Court overturned a comparable decision by the U.S. Court of Appeals for the District of Columbia Circuit. In the West Virginia case, the Supreme Court agreed with Republican-led states and coal company petitioners that the EPA did not have expansive power to regulate carbon emissions.

California remains at the forefront of sustainable transportation, but the road ahead may lead to the highest court in the land.

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