Vol. 50-1 Federal Casenotes

By Amanda Halter and Matthew Frederick

Federal Casenotes

Cooperation or Retaliation: California’s Recent Push for Electric and Zero Emissions Vehicles Highlights the Trump Administration’s Attack on Clean Air Act Waivers

Introduction

After a record-smashing six weeks of wildfires, heat waves, and even some black-outs in California and the western U.S., on September 23, 2020, California Governor Gavin Newsom issued Executive Order N-79-20 (EO), declaring California’s intent to accelerate the transportation sector’s energy transition by setting a goal that all cars and trucks sold in the state be zero-emission by 2035 and medium- and heavy-duty vehicles by 2045.^[1] Subsequently touted as a “ban on gas-guzzlers”^[2] for its attention-grabbing zero emissions vehicles targets, not to mention its signing atop a Ford Mustang Mach-E electric crossover,^[3] the order directed state agencies to plan for, encourage, and develop broader build-outs of sustainable transportation infrastructure and called for rulemaking to protect communities and workers from oil extraction impacts.^[4] The EO reflects Governor Newsom’s latest effort to ensure that California meets its GHG reductions targets by challenging deadlines.^[5]

Many industry and political commentators have used the headline “Newsom bans gas-powered cars by 2035,” even though the EO does not in fact impose a ban, reflecting some fear that the goals could be unrealistic and end up hurting California businesses and consumers.^[6] However, some California automotive industry workers approve of the EO, recognizing that it is not a ban and may help Californians solve their transportation emissions problem.^[7] Notwithstanding the support of some proponents, the major takeaway from the EO is that California is in for a steep climb to equip its power grid to handle the projected increase in electric vehicles (EVs).^[8]

While the EO directs state agencies—including the California Public Utility Commission (CPUC), responsible for ratemaking and regulation of the state’s Investor Owned Utilities—to “accelerate deployment of affordable fueling and charging options for zero-emission vehicles,” “update the biennial statewide assessment of zero-emission vehicle infrastructure,” and “develop a Zero-Emissions Vehicle Market Development Strategy . . . that ensures coordinated and expeditious implementation of the system of policies, programs and regulations necessary to achieve the goals and orders established by this Order,” it stops shy of addressing how the demand and supply will be balanced to meet the new goals.^[9] The CPUC and the California Air Resources Board (CARB) have their work cut out in attempting to juggle all of California’s energy, population, and pollution regulations while paving the way for 100% EV sales.^[10] The EO appears to presuppose further developments on battery storage technology and EV cost reduction.^[11]

Regardless of technological feasibility, the fact remains that it is now and, unless overturned by California’s legislature or a court, will remain,^[12] California’s policy that all in-state automobile sales should be sales of zero emissions vehicles (ZEVs) by 2035.^[13] Governor Newsom has instructed CARB to continue refining, “to the extent consistent with State and federal law,”^[14] its regulations mandating certain percentages of annual vehicle sales consist of ZEVs.^[15] However carefully Governor Newsom treaded the line between the executive and legislative action by calling upon CARB to go no further than the law already allows, the EO clearly did not emerge in a political vacuum. The EO comes in the midst of a political fire-storm over California’s status as the nation’s air pollution control technology driver.^[16]

Clean Air Act Waivers – Past and Present

California has been able to set its own mobile source air emissions standards, “to afford California the broadest possible discretion in selecting the best means to protect the health of its citizens and the public welfare,” since 1977.^[17] Since then, other states have been able to voluntarily conform their regulations to California’s, rather than the federal, standard.^[18] The U.S. Environmental Protection Agency (EPA) has historically granted California waivers, required under the Clean Air Act § 209 to set air emissions standards more stringent than the EPA’s, to include ZEV standards^[19] and, more recently, GHG standards.^[20] That is, recent EPA and National Highway Transportation Safety Administration (NHTSA) rulemaking reinterpreted those portions of the Energy Policy and Conservation Act of 1975 pertaining to national fuel economy standards as preempting the State’s ability “to limit or prohibit tailpipe GHG emissions or establish ZEV mandates.”^[21]  That rulemaking premised its conclusion on another recent determination by the EPA— that California, and thereby the 177 States,^[22] cannot obtain the § 209 waivers that regulated GHGs and set ZEV targets.^[23] Litigants challenging the rulemaking in federal court called attention to the rulemaking’s litany of faults and over-reaches under the federal Administrative Procedure Act and National Environmental Policy Act; perhaps most salient is the charge that the EPA and NHTSA did not adequately address their sudden reversal of decades of collaboration between California, the federal government, and industry.^[24] They simply read broad preemptive effects (extending to tailpipe emission standards historically set by California and adopted by the 177 States) into the Energy and Policy Conservation Act’s national fuel economy regulations portion and bolstered their interpretation by giving a new restrictive view of California’s § 209 waivers.^[25] Adding to the pressure is discord within the regulated community, with some automakers decrying the governor’s decision^[26] and some staunchly in support^[27]; the fight over California’s waivers and mobile source emissions targets has never been more fierce.

Predictably, given that the tumult between the EPA and the NHTSA and California, the 177 States, and industry has spilled from the administrative realm to the judicial,^[28] Andrew Wheeler, the EPA Administrator, responded a few days after the EO’s issuance with a barrage of accusatory and conclusory statements in a letter to Governor Newsom.^[29] The thrust of this letter—that California’s electric grid and charging infrastructure is not prepared to scale up to support an increasingly electric vehicle fleet—has reverberated across the media landscape.^[30] Citing recent blackouts as evidence, the EPA Administrator envisions scenarios where the state is forced to choose between keeping the A/C on in the hot summer and powering California’s transportation sector.^[31]

Renewable energy proponents point out, though, that there is a perfectly good explanation as to why 400,000 customers recently lost power during some of the hottest weather on record across the West and Great Basin:

Critics of renewable energy such as President Trump point to the state’s supposed over-reliance on solar and wind power. The criticism is misplaced, however. The outages the California ISO ordered during a heat wave Aug. 14 and 15 were the product of an unusual combination of circumstances. These included the unexpected shutdown of a natural gas-fueled generating plant, an unexpected delay in returning a second plant to service, smoke from wildfires that reduced the generating capacity of solar units, and the regional nature of the heat wave, which increased air conditioner use in states that ordinarily would be exporting electricity to California.^[32]

While these circumstances may recur and may become likelier with climate change affects, citing to the first “capacity-driven outages since the energy crisis of 2000 and 2001”^[33] as evidence of ongoing failure lacks resonance. At its heart, though, Wheeler’s letter exemplifies the battle between federal and state control over energy policy. The Administration’s view is that when California regulates GHG emissions from mobile sources, it acts beyond its delegated scope under the CAA.^[34] Litigation awaits, while imperatives to address climate change mount.^[35] 

Conclusion

The resolution of this discord between federal and state has significant potential implications for acceleration of the clean energy transition and the regulation of air pollutants. Moreover, how California fares in this dispute will have impacted each of the 177 States and opposes the narrative that uniform standards are necessary to ensure smooth industrial function across the many states. The argument goes, if each state has a different emissions standard, we’ll need to make a different car for every state: A classic slippery slope. The history of mobile source regulation under Section 209 shows the exact opposite: states are left free to choose either the federal standard or adopt California’s more stringent standards. The issues that conflicting standards create has not risen yet, save in the limbo that the rulemaking and subsequent laws have created.^[36] Likewise, automakers have been and are ready to collaborate both with California and the 177 States to market low-emission vehicles and with the federal government to market higher emissions vehicles that “customers desire,”^[37] reinforcing the conclusion that the previous cooperation between the states and the federal government under the CAA was successful.^[38] 

Governor Newsom’s EO is a bold experiment on climate change action given Congress’s hesitancy to setting national mobile source emissions standards. Meanwhile, the NHTSA and the EPA may fail in their assault on California’s regulatory approach, both through strained reinterpretation of the CAA and by publicly denigrating the EO, as much of the world, including the auto industry, is rapidly embracing both the imperatives and opportunities of the clean energy transition.

Amanda Halter is managing partner of the Houston office of the international law firm of

Pillsbury Winthrop Shaw Pittman, a member of the firm’s Environmental & Natural

Resources practice section and co-leader of the firm’s Crisis Management team. Amanda

helps companies resolve environmental liabilities and negotiate compliance conditions, as well as manage financial and reputational losses associated with a crisis. Her experience includes a diverse array of environmental regulatory, litigation and crisis matters, including contamination investigations and remedial actions, natural resource damages assessments and claims, environment, health and safety compliance counseling, mass toxic tort actions, permitting and planning for large-scale industrial projects, an project impacts mitigation and restoration strategies. Amanda is a native of Houston, a graduate of Rice University and The University of Texas School of Law.

Matthew Frederick is a third-year student at The University of Texas School of Law and a senior editor of the Texas Environmental Law Journal.