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Home | BakerHostetler

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Regulating Automotive Emissions: Part V – The Future of Mobile Source Enforcement

The Next Secretary of Defense and National Security Priorities: What Companies Need to Know

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The second Trump Administration is likely to withdraw California’s emissions waivers, particularly where California seeks to regulate greenhouse gas emissions from mobile sources, such as in the case of the most recent federal waiver for the Advanced Clean Cars II rule.

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California has six waiver or authorization requests filed and pending EPA action. If President Joe Biden’s Administration does not finalize these waiver requests prior to President-elect Trump’s inauguration, it is likely that the incoming administration will deny these waiver requests.

The Supreme Court recently declined to take up the merits of California’s waiver to set emissions standards, limiting the Court’s judicial review to industry petitioners’ standing claim. However, challenges to California’s waiver are likely to be renewed in light of the Biden Administration’s recent approval of California’s wavier for its Advanced Clean Cars II standards.

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In November 2019, President-elect Donald Trump’s first administration’s withdrawal of California’s emissions waiver went into effect.<a href="#_ftn1" id="_ftnref1">[1]</a> Trump’s Environmental Protection Agency (EPA) interpreted Title II of the Clean Air Act such that global greenhouse gases and their effects were outside the scope of local or regional air pollution and therefore did not present “compelling and extraordinary conditions” specific to California<a href="#_ftn2" id="_ftnref2">[2]</a> – thus reaching the determination that California did not “need” its own greenhouse gas emissions standards because such standards would not meaningfully address global air pollution.<a href="#_ftn3" id="_ftnref3">[3]</a>

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We anticipate that the second Trump Administration will again seek to withdraw or to deny California’s emissions waivers, particularly those setting standards for greenhouse gas emissions.

In the 1950s, thick pollution obscured much of the Los Angeles skyline. Motorcyclists reported wearing gas masks to combat the smog and improve visibility. California enacted its own legislation requiring its State Department of Health to establish controls for motor vehicles. As a result, California developed the country’s first vehicle emissions standards, which included crankcase requirements and exhaust emissions standards. The federal Clean Air Act followed thereafter and required EPA to establish standards for emissions of pollutants from new motor vehicles that cause or contribute to air pollution that may reasonably be anticipated to endanger public health or welfare.<a href="#_ftn4" id="_ftnref4">[4]</a> The Clean Air Act preempted state governments from adopting their own air pollutant emissions standards for new motor vehicles and new motor vehicle engines. However, because of California’s preexisting motor vehicle emissions control work, Congress allowed a single exemption for the state.

Specifically, Congress reasoned that because “only the State of California ha[d] demonstrated compelling and extraordinary circumstances sufficiently different from the Nation as a whole to justify standards on automobile emissions which may, from time to time, need to be more stringent than national standards,” it should receive an express waiver.<a href="#_ftn5" id="_ftnref5">[5]</a> California’s own Representative John E. Moss argued that California, as a pioneer of mobile source emissions control, offered “a unique laboratory … to develop effective control devices” to be shared with the nation.<a href="#_ftn6" id="_ftnref6">[6]</a>

Under Section 209 of the Clean Air Act, California received authorization to apply for preemption waivers from EPA. After notice and an opportunity for public hearing, the EPA Administrator is required to grant California’s application for a waiver unless certain disqualifying conditions are present. Section 209(b) lists three conditions under which EPA may determine that California does not qualify for a preemption waiver: (i) the determination of California is arbitrary and capricious, (ii) California does not need the standards to meet compelling and extraordinary conditions, or (iii) California’s standards and accompanying enforcement procedures are not consistent with Section 202(a) of the Clean Air Act.<a href="#_ftn7" id="_ftnref7">[7]</a>

To date, California has submitted more than 100 waivers or authorization requests for new or amended state-level vehicle emissions standards. Since 1967, EPA has granted waivers, authorizations and “within the scope” determinations for all but one of California’s requests. The only denial was for California’s initial waiver request for its MY 2009 light-duty vehicle greenhouse gas emissions standards.<a href="#_ftn8" id="_ftnref8">[8]</a> And it is on the issue of greenhouse gas emissions that the first Trump Administration successfully withdrew a previously granted waiver – the MY 2021-MY 2025 light-duty vehicle greenhouse gas standards.

Section 177 of the Clean Air Act allows other states to adopt California’s motor vehicle emissions standards, provided that each state’s regulations are identical to the California standards and EPA grants a waiver for enforcement.<a href="#_ftn9" id="_ftnref9">[9]</a> To date, 18 states, including Washington, D.C., have adopted – at least in part – California’s new motor vehicle standards under Section 177 of the Act. It is estimated that California and the Section 177 States accounted for 40.2 percent of new light-duty vehicle registrations and 25.5 percent of new heavy-duty vehicle registrations in 2023.<a href="#_ftn10" id="_ftnref10">[10]</a>

History of Regulating Greenhouse Gas Emissions from Mobile Sources

The second Trump Administration will have the most success targeting California waivers seeking to regulate greenhouse gases. This is because historically the regulation of greenhouse gases has less institutional support. As mentioned earlier, in 2008, EPA denied California’s first request for a waiver related to greenhouse gas emissions regulation.<a href="#_ftn11" id="_ftnref11">[11]</a> At the time, EPA concluded that “California [did] not need its [greenhouse gas] standards for new motor vehicles to meet compelling and extraordinary conditions” because “the atmospheric concentrations of these greenhouse gases is [sic] basically uniform across the globe” and are not uniquely connected to California’s “peculiar local conditions.”<a href="#_ftn12" id="_ftnref12">[12]</a>

When President Barack Obama’s Administration reviewed the waiver in 2009, the Obama EPA reconsidered and reversed the prior waiver denial. After receiving the 2009 waiver, the California Air Resources Board (CARB) worked alongside EPA and the National Highway Traffic Safety Administration (NHTSA), responsible for setting the Corporate Average Fuel Economy (CAFE) standards, to develop the National Program to harmonize federal fuel economy standards, federal greenhouse gas emission standards and California’s adopted greenhouse gas emissions standards so that regulated industry could produce a single fleet of motor vehicles that complied with all three regulatory programs.

It is this effort that the first Trump Administration challenged. Trump’s EPA and NHTSA proposed amendments called the SAFE Vehicles Rule, and EPA proposed withdrawing California’s waiver for its vehicle greenhouse gas standards for MY 2021-MY 2025. Further, NHTSA argued that the Energy Policy and Conservation Act of 1975 (EPCA), which allows NHTSA to set fuel economy standards, preempts California’s ability to set greenhouse gas emissions standards specifically because EPCA preempts state laws related to federal fuel economy standards.<a href="#_ftn13" id="_ftnref13">[13]</a>

In 2019, EPA issued a new interpretation of Section 209(b). EPA suggested that Congress intended the required “compelling and extraordinary conditions” to refer to state-specific pollution problems that have a “particular nexus” to vehicle emissions and the health effects from such pollution.<a href="#_ftn14" id="_ftnref14">[14]</a> EPA determined that global greenhouse gas emissions and their effects are outside the scope of local or regional air pollution and do not present “compelling or extraordinary conditions” specific to California because California does not “need” its own vehicle greenhouse gas standards, as the standards will not “meaningfully” address global air pollution problems.<a href="#_ftn15" id="_ftnref15">[15]</a> As such, the withdrawal of the previously granted waiver became effective in November 2019.

In addition to California losing that waiver, the Section 177 states that had adopted those California standards no longer had authority to enforce those vehicle greenhouse gas standards in their states. Trump’s EPA took it a step further by also concluding that Section 177 did not apply to California’s greenhouse gas standards and was only intended to address criteria pollutants. It is probable that a second Trump Administration would pursue a similar policy again.

As of December 2024, California has six waiver or authorization requests filed and pending EPA action, many of which have significant compliance implications and costs for regulated industry.

California Waiver Request

Small Off-Road Engine Authorization Request

Transport Refrigeration Unit Authorization Request

Commercial Harbor Craft Authorization Request

In-Use Off-Road Diesel-Fueled Fleets Authorization Request

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If Biden’s EPA does not finalize these waiver requests prior to President-elect Trump’s inauguration, it is likely that the Trump EPA will deny them. However, one potential outcome is that prior to President-elect Trump’s inauguration, if the Biden EPA has not granted the pending waivers, California may withdraw its petitions to avoid receiving a denial. Relatedly, we would expect the incoming Trump EPA to revoke existing waivers granted to California where those waivers regulate greenhouse gas emissions, this is especially likely with the recently granted waiver for California’s Advanced Clean Cars II standards. There is no guarantee that California will be able to secure waivers or authorizations from the Trump EPA during a second Trump Administration. In fact, there is some indication that a Trump EPA might only be willing to grant such waivers to California-specific issues, such as ground-level ozone. Further, the Trump EPA may work to limit Section 177 states to only using California standards for traditional or criteria pollutants, not greenhouse gases.

In response to EPA’s efforts during the first Trump Administration, CARB and four automakers entered into Framework Agreements that imposed alternative greenhouse gas standards for the relevant model years. These voluntary agreements were put in place to attempt to resolve the significant regulatory uncertainty present in the marketplace. However, because the standards remained the law in California, CARB maintained that it could retroactively enforce its standards should the waiver be reinstated by a later administration.

CARB could move forward with a similar response to the second Trump Administration by working with automotive manufacturers to enter into additional Framework Agreements. CARB may also take the position that it has retroactive enforcement authority when a revoked waiver is reinstated. This creates additional uncertainty for regulated industry.

The Biden Administration’s decision to reinstate CARB’s waiver in 2022 is currently being challenged in federal court. On April 9, 2024, the D.C. Circuit issued its opinion in Ohio v. EPA, upholding the reinstatement of California’s waiver. The D.C. Circuit found that both the state and industry petitioners lacked standing to bring their claims of economic injury because neither group met their burden of demonstrating that those injuries were redressable by the court.<a href="#_ftn16" id="_ftnref16">[16]</a> Specifically, the Court determined that petitioners failed to show that automotive manufacturers would alter their manufacturing and product lines given that such strategies were largely settled through MY 2025. The Court did find that the state petitioners had standing to bring forward their constitutional claims, but then rejected those claims on the merits.

In July, both industry and state petitioners filed petitions for writs of certiorari from the Supreme Court. The justices spent several weeks delaying a decision on the petitions. On Friday, the Supreme Court granted cert, limited to the issue of standing.<a href="#_ftn17" id="_ftnref17">[17]</a> And on Monday, the Supreme Court declined state petitioners’ request to review whether EPA has the authority to grant California’s waivers to set greenhouse gas emissions standards for mobile sources.<a href="#_ftn18" id="_ftnref18">[18]</a> While the Supreme Court will not directly consider the constitutionality of California’s waiver itself, it will consider whether a petitioner can assert injuries based on the response of a third-party to a government action – or more specifically whether industry and fuel groups can assert injuries based on predicted actions taken by automotive manufacturers subject to California’s emissions standards. A decision in favor of industry petitioners could have significance beyond environmental regulations, especially in situations where the directly regulated entity has not alleged injury.

Despite the Supreme Court deciding not to take up the merits of California’s waiver program, challenges to that program are far from over. The Biden Administration’s recent grant of California’s waiver for its Advanced Clean Cars II standards is likely to be challenged by states and industry stakeholders. In these challenges, the redressability hurdle may be easier to overcome given that the standards require all new passenger cars, trucks, and SUVs sold in California to be zero emissions by 2035. This is in contrast to the corresponding federal standards, which allow automotive manufacturers to comply with increased emissions requirements through a mix of powertrain options within their fleet—including traditional or plug-in hybrid vehicles, fuel cell or fuel-efficient gas-powered vehicles, along with battery electric vehicles.

Automotive manufacturers have identified a number of obstacles to meeting California’s standards—such as a lack of public charging infrastructure, supply chain challenges, available consumer demand and market share. All of which could be exacerbated if the second Trump Administration revokes the EV tax credit and restricts federal funding for investments in charging infrastructure and battery manufacturing. Given these challenges and the longer runway available to petitioners, challenges against California’s waiver to set the Advanced Clean Cars II standards are likely to be much stronger than those previously litigated.

Stability in the automotive industry does not appear to be on the horizon, as the second Trump Administration will almost certainly revert to positions taken during the first Trump Administration to revoke California’s waivers where it seeks to regulate greenhouse gases. As a result, regulated industry may find it useful to work closely with regulators to ensure that its vehicles meet all necessary on-road emissions requirements now and in the future. This may take the form of voluntary Framework Agreements that also meet federal requirements. Further, while the Supreme Court has declined to take up the merits of California’s waiver to set emissions standards, new challenges to the waiver are likely forthcoming given the Biden Administration’s recent grant of California’s waiver for its more stringent Advanced Clean Cars II standards.

For additional insight into how the second Trump Administration will approach mobile sources, please see <a href="https://www.bakerlaw.com/insights/regulating-automotive-emissions-part-i-what-to-expect-under-the-second-trump-administration/" target="_blank" rel="noreferrer noopener">Regulating Automotive Emissions: Part I – What to Expect Under the Second Trump Administration</a>.

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<a href="#_ftnref1" id="_ftn1">[1]</a> See EPA and NHTSA, “The Safer, Affordable, Fuel-Efficient (SAFE) Vehicles Rule, Part One: One National Program,” 84 Fed. Reg. 51310 (Sep. 27, 2019).

<a href="#_ftnref2" id="_ftn2">[2]</a> Id. at 51349.

<a href="#_ftnref3" id="_ftn3">[3]</a> Id. at 51340-1.

<a href="#_ftnref4" id="_ftn4">[4]</a> See 42 U.S.C. §7521(a).

<a href="#_ftnref5" id="_ftn5">[5]</a> 113 Cong. Rec. 30975, 1967.

<a href="#_ftnref6" id="_ftn6">[6]</a> Id.

<a href="#_ftnref7" id="_ftn7">[7]</a> See 42 U.S.C. §7543(b)(1). Through the 1990 Clean Air Act Amendments, California was also given federal preemption for the adoption of emissions standards for certain new nonroad vehicles and new nonroad vehicle engines. See Section 209(e).

<a href="#_ftnref8" id="_ftn8">[8]</a> EPA, “California State Motor Vehicle Pollution Control Standards; Notice of Decision Denying a Waiver of Clean Air Act Preemption for California’s 2009 and Subsequent Model Year Greenhouse Gas Emissions,” 73 Fed. Reg. 12156 (Mar. 6, 2008).

<a href="#_ftnref9" id="_ftn9">[9]</a> See 42 U.S.C. §7507.

<a id="_ftn10" href="#_ftnref10">[10]</a> See California Air Resources Board (CARB), “Section 177 States Regulation Dashboard,” <a href="https://ww2.arb.ca.gov/our-work/programs/advanced-clean-cars-program/states-have-adopted-californias-vehicle-regulations" target="_blank" rel="noreferrer noopener">https://ww2.arb.ca.gov/our-work/programs/advanced-clean-cars-program/states-have-adopted-californias-vehicle-regulations</a>.

<a href="#_ftnref11" id="_ftn11">[11]</a> EPA, “California State Motor Vehicle Pollution Control Standards; Notice of Decision Denying a Waiver of Clean Air Act Preemption for California’s 2009 and Subsequent Model Year Greenhouse Gas Emissions,” 73 Fed. Reg. 12156 (Mar. 6, 2008).

<a href="#_ftnref12" id="_ftn12">[12]</a> Id. at 12159-69.

<a href="#_ftnref13" id="_ftn13">[13]</a> See EPA and NHTSA, “The Safer, Affordable, Fuel-Efficient (SAFE) Vehicles Rule for Model Years 2021 – 2026 Passenger Cars and Light Trucks,” 83 Fed. Reg. 42986 (Aug. 24, 2018).

<a href="#_ftnref14" id="_ftn14">[14]</a> 84 Fed. Reg. 51310.

<a href="#_ftnref15" id="_ftn15">[15]</a> Id. at 51340-1.

<a href="#_ftnref16" id="_ftn16">[16]</a> Ohio v. EPA, 98 F.4th 288 (D.C. Cir. 2024) at 22.

<a href="#_ftnref17" id="_ftn17">[17]</a> Certiorari Granted, Diamond Alternative Energy, LLC v. EPA, et al., No. 24-7. (Question Presented is “Whether a party may establish the redressability component of Article III standing by relying on the coercive and predictable effects of regulation on third parties.”)

<a href="#_ftnref18" id="_ftn18">[18]</a> Denial of Petition for Writ of Certiorari, Ohio v. EPA, No. 24-13, (“The petition for a writ of certiorari is denied. Justice Thomas would grant the petition for a writ of certiorari.”)

Regulating Automotive Emissions: Part II – The Future of California’s Emissions Waivers

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