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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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Cooperative federalism will return but is less likely for mobile sources. The incoming Trump Environmental Protection Agency (“EPA”) is likely to coordinate with states on environmental enforcement actions, but given the incoming administration’s likely revocation of California’s emissions waivers, EPA will remain the lead agency for mobile source enforcement.

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The Trump Administration is likely to prioritize the enforcement of excess NOx and PM emissions, while deprioritizing efforts to enforce strict greenhouse gas emissions standards.

Entities engaged in settlement negotiations with the federal government are likely to find a disfavoring of supplemental environmental projects (“SEPs”) and a reduction in mandated environmental mitigation projects.

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Previously we’ve reviewed <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">overarching expectations of the second Trump Administration</a>, how the Trump Administration will act on <a href="https://www.bakerlaw.com/insights/regulating-automotive-emissions-part-ii-the-future-of-californias-emissions-waivers/" target="_blank" rel="noreferrer noopener">California’s emissions waivers</a>, the steps the Trump Administration is likely to take with respect to <a href="https://www.bakerlaw.com/insights/regulating-automotive-emissionspart-iii-the-future-of-the-electric-vehicle-industry/" target="_blank" rel="noreferrer noopener">electric vehicles</a>, and how the Trump Administration will approach <a href="https://www.bakerlaw.com/insights/regulating-automotive-emissions-part-iv-emissions-litigation-to-watch/" target="_blank" rel="noreferrer noopener">pending litigation over federal emissions standards</a>. In our final installment of our series Regulating Automotive Emissions, we look at the future of mobile source enforcement.

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Enforcement priorities under President Donald Trump’s second administration will diverge from those under the Biden Administration but are likely to mirror those under the first Trump Administration. Perhaps the most dynamic shift will be a reflection of the second Trump Administration’s overarching policy goals, which include reducing the size of federal agencies. Efforts to streamline EPA will result in a decreased workforce to handle enforcement matters, leading to an increased reliance on states. But given the second Trump Administration’s focus on withdrawing California’s emissions waivers, EPA will put itself in a position to remain the lead agency for mobile source enforcement actions under Title II of the Clean Air Act.

At the beginning of his first term, President Trump appointed Scott Pruitt as EPA Administrator. In the first six months of Pruitt’s leadership, there was an estimated 60 percent drop in civil penalties against polluters. One of the causes of this drop was a change in policy that required the Office of Enforcement and Compliance Assurance (“OECA”) to sign off on all regulatory enforcement efforts, permits and agreements, regardless of how routine. This resulted in a backlog despite many existing rules being paused for review. It seems unlikely that such an approach would be taken by EPA under the second Trump Administration, so we would not anticipate such a steep drop in enforcement action early into Trump’s second term. However, we would expect a delay in EPA action so that the incoming leadership can review pending enforcement matters.

One action we do anticipate from the Trump EPA is a focus on coordination with states. During the first Trump Administration, EPA frequently offered states the right of first refusal in handling and prosecuting cases within their borders. And while it is likely that EPA will pursue this path again as it concerns stationary sources and other environmental statutes, EPA will remain the lead agency for enforcement actions concerning mobile sources under Title II of the Clean Air Act. This is because the second Trump Administration intends to challenge California’s authority to seek a waiver to set its own emissions standards, and thereby disallow Section 177 states from adhering to such standards.

National Enforcement and Compliance Initiatives

EPA’s being the lead agency for enforcement of mobile source emissions violations may be one reason that the first Trump Administration identified stopping aftermarket defeat devices as part of the National Enforcement and Compliance Initiative, which began in FY 2020. EPA resolved over 130 cases from FY 2020 to FY 2023. This initiative was recently returned to the core program by the Biden Administration. However, EPA continues to investigate and pursue enforcement actions against manufacturers, distributors, dealerships, and online marketplaces.

In working on these defeat device cases, the first Trump Administration focused on enforcement of criteria pollutant emissions violations. We expect this to be carried over into the second Trump Administration, which will deprioritize greenhouse gas emissions regulations, but has expressed interest in maintaining a reduction of NOx and PM emissions. This effort is consistent with the first Trump Administration’s major successes in mobile source enforcement, which included large settlements in January 2019 with Fiat Chrysler and in September 2020 with Daimler Mercedes.

The Biden Administration continued to target the use of defeat devices in mobile sources. OECA has stated that known sales of defeat devices for certain diesel trucks after 2009 and before 2020 resulted in more than 570,000 tons of excess NOx and 5,000 tons of excess PM over the lifetime of the trucks. EPA has not only targeted original equipment manufacturers (“OEMs”) for initial installation of hardware and software that could be considered defeat devices, but also expanded that effort to aftermarket sales, online marketplace sales and the individuals involved in such efforts.

We would expect the second Trump Administration to continue enforcement efforts against entities tampering with emissions control systems in mobile sources. As discussed above, if the Administration is successful in withdrawing California’s emissions waivers, EPA will effectively be the only entity with the authority to handle these types of mobile source enforcement actions. Further, because the second Trump Administration is likely to pursue a strategy of repealing and replacing greenhouse gas emissions standards, or to take steps in pending litigation leading to such rules’ vacatur, EPA is unlikely to actively enforce greenhouse gas emissions standards and likely to spend more time focusing on the enforcement of criteria pollutant standards.

Another area where regulated industry can expect a change is in the tools available to resolve enforcement actions. The Biden Administration routinely allowed entities to pursue SEPs in settlements with the federal government. These projects are voluntarily undertaken by the alleged violating entity to provide an environmental benefit, usually to a local community allegedly harmed by the entity’s actions. These projects are generally supported by the business community and local stakeholders because most SEPs directly benefit local communities. The first Trump Administration restricted the use of SEPs in settlement negotiations, and we would expect the same restricted use under a second Trump Administration. This is because the Trump Administration disfavors payments to third-party groups, a standard practice in SEPs. The one exception to the Trump Administration’s disfavoring of SEPs concerns those that reduce diesel emissions because they were congressionally authorized.<a href="#_ftn1" id="_ftnref1">[1]</a>

Given that the Trump Administration is most likely to focus its enforcement efforts on excess NOx and PM emissions, the availability of a diesel emissions-focused SEP could prove useful to companies that find themselves working to settle emissions violations with the federal government.

Additionally, we would expect the second Trump Administration to look more favorably on mitigation projects – injunctive relief intended to remedy the alleged environmental harm – than on SEPs. Entities that find themselves engaged in settlement negotiations with the Trump Administration should consider calculating their own emissions estimates, challenging figures reached by the government in order to craft a strategy for negotiating a reasonable environmental mitigation project. We expect the number of mitigation projects included in settlements to decline, and we would expect them to be more narrowly tailored.

While there will be a shift in enforcement priorities with the Trump administration, the more substantial difference will be a shift in who handles those enforcements, which in most cases are likely to be led by state agencies, and in what tools are available during an enforcement action. Mobile source enforcement will be the exception. We can expect the second Trump Administration to remain committed to stopping aftermarket defeat devices and prioritizing the enforcement of criteria pollutant emissions violations.

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<a href="#_ftnref1" id="_ftn1">[1]</a> Memorandum from Assistant Attorney General Jeffrey Clark, “Supplemental Environmental Projects (‘SEPs’) in Civil Settlements with Private Defendants,” (March 12, 2020). The memorandum noted that 42 U.S.C. § 16138 authorizes EPA to accept diesel emissions reduction SEPs, but that they must satisfy certain criteria, including that the SEPs be “related to the underlying alleged violations.”

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