Federal court upholds California’s ability to set stricter vehicle-emission standards

A federal appeals court has upheld California’s Clean Air Act waiver, which allows the state to set vehicle-emission standards more stringent than federal standards, but the fight against the waiver is likely not over.

On Tuesday, April 9, the U.S. Court of Appeals for the District of Columbia Circuit rejected a bid by 17 Republican-led states and several oil groups to overturn California’s ability to set stricter emission standards. Although the challenge is specific to the Advanced Clean Car regulation, the court decision ensures similar programs, including the Advanced Clean Truck rule, remain intact.

The federal lawsuit is just the latest challenge to California’s Clean Air Act waiver. Since at least the President George W. Bush administration, it has gone through a cycle of being revoked, only to be reinstated with the change to a new administration. Considering court precedent could end the uncertainty that comes with each new administration, a petition to the Supreme Court is likely next.

California’s Clean Air Act waiver

Although the federal government sets vehicle-emission standards, an exception is carved out for California.

Before the Clean Air Act was enacted in 1967, California was the only state to adopt its own vehicle-emission standards. Vehicle manufacturers were worried about a patchwork of state emission standards driving up manufacturing costs. To address that issue, the Clean Air Act prohibits states from enacting stricter emission standards than the federal government’s.

However, the federal government saw value in California’s emission standards, using the state as a testing ground for potential new emission standards at the national level. Upholding both federal interest and California’s previous ability to address air quality through emission standards, the Clean Air Act also includes a waiver of federal preemption for the Golden State.

The Clean Air Act allows California, and only California, to set stricter vehicle-emission standards. However, the state must receive approval from the U.S. Environmental Protection Agency before implementing such standards. Once California receives that waiver, any state can adopt similar regulations.

Executive challenges

Over the past two decades, California’s Clean Air Act waiver has been challenged by the EPA under Republican administrations and reinforced under Democrat administrations.

In 2005, California applied for a waiver to set greenhouse gas emission regulations on vehicles beginning with model year 2009. That request was denied by the EPA in 2008 under the Bush administration. However, President Barack Obama’s EPA reversed that decision a year later, granting California the waiver.

At the heart of the federal lawsuit is California’s Advanced Clean Car program, which sets emission standards for model year 2017-25 cars. A waiver for that regulation was granted in 2013. Subsequently, car manufacturers adjusted business operations accordingly.

Another about-face occurred after President Donald Trump took office. In 2019, the National Highway Traffic Safety Administration and the EPA announced the One National Program, which stripped California of its Clean Air Act waiver granted in 2013 while also relaxing federal emission standards.

Afterward, a new administration again reversed the previous administration’s actions. In 2022, President Joe Biden’s EPA reversed the One National Program’s waiver revocation, effectively reinstating California’s Advanced Clean Car regulation.

Judicial challenge

Shortly after the EPA reinstated California’s 2013 Clean Air Act waiver, Republican states and fuel stakeholders filed a petition for review in federal court.

The states claimed financial harm by arguing California’s rule would drive up vehicle costs, reduce fuel-tax revenue and negatively impact electrical grids. But the D.C. Circuit ruled that even if the 2022 waiver reinstatement directly caused those financial harms, the states failed to explain how overturning the reinstatement would redress those injuries.

The court argued that vacating the waiver won’t change car manufacturers’ adjustment to California’s rule. Furthermore, the waiver affects up to model year 2025 vehicles, making it even less likely for manufacturers to reverse actions taken in response to the regulation in question.

Republican states have argued the EPA’s 2022 Clean Air Act waiver reinstatement is at odds with the Constitution by violating their right to equal sovereignty in granting a waiver to California but not to any other state. However, the federal court ruled that the waiver falls under the Commerce Clause, which gives complete control of interstate commerce (including vehicle emissions) to Congress.

Petitioners in the case likely will ask the Supreme Court to review the D.C. Circuit’s decision. The high court could potentially reverse the ruling. The three-judge panel in the D.C. Circuit included one Obama appointee and two Biden appointees. Conversely, the Supreme Court holds a conservative majority, which has been leaning toward limiting the scope of federal agencies’ powers. LL