Petition for Writ of Certiorari — Volkswagen Aktiengesellschaft, et al., Petitioners v. Ohio, ex rel. Dave Yost, Attorney General
Supreme Court briefAug 27, 2021
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In the Supreme Court of the United States
VOLKSWAGEN AKTIENGESELLSCHAFT, ET AL.,
PETITIONERS
v.
STATE OF OHIO EX REL. DAVE YOST, ATTORNEY
GENERAL, RESPONDENT.
ON PETITION FOR A WRIT OF CERTIORARI
TO THE SUPREME COURT OF OHIO
PETITION FOR A WRIT OF CERTIORARI
MICHAEL H. STEINBERG
SULLIVAN & CROMWELL LLP
1888 Century Park East
Los Angeles, CA 90067
JUDSON O. LITTLETON
SULLIVAN & CROMWELL LLP
1700 New York Ave., N.W.
Washington, DC 20006
ROBERT J. GIUFFRA, JR.
Counsel of Record
DAVID M.J. REIN
MATTHEW A. SCHWARTZ
SULLIVAN & CROMWELL LLP
125 Broad Street
New York, NY 10004
(212) 558-4000
giuffrar@sullcrom.com
Counsel for Petitioners Volkswagen Aktiengesellschaft, Audi Aktiengesellschaft, Volkswagen Group of America, Inc., and Audi of America,
LLC
[Additional parties and counsel listed on signature page]
QUESTION PRESENTED
Title II of the Clean Air Act (“CAA”) grants the U.S.
Environmental Protection Agency (“EPA”) broad and exclusive authority to enforce auto manufacturers’ compliance with CAA standards over the entire useful life of
their vehicles. To avoid conflicting regulation, Congress
directed that “[n]o State or any political subdivision
thereof shall adopt or attempt to enforce any standard relating to the control of emissions from new motor vehicles . . . .” 42 U.S.C. § 7543(a).
Exercising its authority, EPA reached a multi-billiondollar resolution with petitioners relating to, among other
things, post-sale software updates made to their vehicles
on a nationwide basis. Certain state and local governments nonetheless brought unprecedented lawsuits seeking substantial additional penalties based on the same updates. The Ohio Supreme Court below—following a decision of the U.S. Court of Appeals for the Ninth Circuit and
deepening a direct conflict with final decisions of the Alabama Supreme Court and intermediate appellate courts
in Tennessee and Minnesota—held that all 50 states and
thousands of local governments may freely regulate manufacturers’ post-sale, nationwide updates to vehicle emission systems.
The question presented is whether the CAA preempts
state and local governments from regulating manufacturers’ post-sale, nationwide updates to vehicle emission systems.
(I)
PARTIES TO THE PROCEEDING
AND CORPORATE DISCLOSURE STATEMENT
Petitioners are Volkswagen Aktiengesellschaft
(“Volkswagen AG”), AUDI Aktiengesellschaft (“AUDI
AG”), Volkswagen Group of America, Inc. (“VWGoA”),
Audi of America, LLC, Dr. Ing. h.c. F. Porsche AG (“Porsche AG”), and Porsche Cars North America, Inc.
(“PCNA”).
Volkswagen AG is the parent corporation of VWGoA
and AUDI AG. Audi of America, LLC is a wholly owned
subsidiary of VWGoA. Volkswagen AG is a publicly held
German corporation that owns 10% or more of the stock
of VWGoA and AUDI AG, and owns indirectly 10% or
more of the stock of Porsche AG. Porsche Automobil
Holding SE is a publicly held corporation that owns 10%
or more of the stock of Volkswagen AG.
Porsche AG owns the stock of two companies that own
stock of a company that owns stock in differing shares of
PCNA and has been described as an indirect parent corporation of PCNA.
Respondent is the State of Ohio ex rel. Dave Yost, Ohio
Attorney General.
(II)
RELATED PROCEEDINGS
Ohio Court of Common Pleas (Franklin County):
State ex rel. DeWine v. Volkswagen Aktiengesellschaft, et al., No. 16-cv-010206 (Dec. 7, 2018)
Ohio Court of Appeals (Tenth District):
State ex rel. Yost v. Volkswagen Aktiengesellschaft, et
al., No. 19AP-7 (Dec. 10, 2019)
Ohio Supreme Court:
State ex rel. Yost v. Volkswagen Aktiengesellschaft, et
al., Slip Op. No. 2021-Ohio-2121 (June 29, 2021)
(III)
TABLE OF CONTENTS
Opinions below...................................................................... 1
Jurisdiction ........................................................................... 1
Provisions involved .............................................................. 2
Statement .............................................................................. 3
A. Background ............................................................... 9
B. Facts and procedural history ................................ 12
Reasons for granting the petition .................................... 15
I.
The decision below deepens the existing split
among federal and state courts on the question
presented................................................................. 15
II.
The question presented is exceptionally
important. ................................................................ 18
A. National uniformity in the regulation of emission
systems has been of critical importance for
decades. ................................................................... 18
B. This issue has already arisen for another auto
manufacturer and is likely to arise repeatedly
going forward.......................................................... 22
III.
The decision below is incorrect. ............................ 24
A. The Ohio majority’s interpretation of the CAA’s
express preemption clause is incorrect................ 24
B. The Ohio majority’s implied preemption analysis
is incorrect............................................................... 29
Conclusion ........................................................................... 34
Appendix A: Supreme Court of Ohio Opinion,
June 29, 2021 ....................................................................... 1a
(IV)
V
Appendix B: Court of Appeals Opinion,
December 10, 2019 .....................................................27a
Appendix C: Trial Court Decision,
December 7, 2018 .......................................................47a
Appendix D: Relevant Statutory Provisions ................70a
TABLE OF AUTHORITIES
Page(s)
Cases:
Allway Taxi, Inc. v. City of New York,
340 F. Supp. 1120 (S.D.N.Y. 1972) ............. 25, 26, 29
Altria Group, Inc. v. Good,
555 U.S. 70 (2008) .......................................... 7, 24, 25
Arizona v. United States,
567 U.S. 387 (2012)................................................... 32
Atlantic Richfield Co. v. Christian,
140 S. Ct. 1335 (2020) .............................................. 32
Buckman Co. v. Plaintiffs’ Legal Comm.,
531 U.S. 341 (2001)................................................... 33
Carchman v. Nash,
473 U.S. 716 (1985)................................................... 17
DIRECTV, Inc. v. Imburgia,
577 U.S. 47 (2015) .................................................... 17
Engine Mfrs. Assn. v. EPA,
88 F.3d 1075 (D.C. Cir. 1996)......................... passim
Engine Mfrs. Assn. v. South Coast Air Quality
Mgmt. Dist.,
541 U.S. 246 (2004)......................................... 7, 27, 28
Geier v. Am. Honda Motor Co.,
529 U.S. 861 (2000)................................................... 29
Hillman v. Maretta,
569 U.S. 483 (2013)................................................... 17
(VI)
VII
Cases—Continued:
Montana Dept. of Env. Quality v. Volkswagen Aktiengesellschaft,
Cause No. DDV-2016-1045 (Mont. Dist. Ct. Feb.
21, 2020) .................................................................... 17
Morales v. Trans World Airlines, Inc.,
504 U.S. 374 (1992)............................................... 7, 25
Murphy v. Nat. Collegiate Athletic Assn.,
138 S. Ct. 1461 (2018) .............................................. 24
Nat. Assn. of Home Builders v. San Joaquin
Valley Unified Air Pollution Control Dist.,
627 F.3d 730 (9th Cir. 2010) ...................................... 9
People v. Volkswagen Aktiengesellschaft,
2018 WL 3384883 (Ill. Cir. Ct. June 5, 2018) ........ 17
Riley v. California,
573 U.S. 373 (2014)................................................... 17
Rutledge v. Pharm. Care Mgmt. Assn.,
141 S. Ct. 474 (2020) ............................................ 7, 25
Sims v. Fla. Dept. of Hwy. Safety & Motor
Vehicles,
862 F.2d 1449 (11th Cir. 1989) ................................ 31
State ex rel. Slatery v. Volkswagen
Aktiengesellschaft,
2019 WL 1220836 (Tenn. Ct. App.
Mar. 13, 2019) .................................................. passim
State ex rel. Swanson v. Volkswagen
Aktiengesellschaft,
2018 WL 6273103 (Minn. Ct. App.
Dec. 3, 2018) ................................................... 4, 16, 17
State v. Volkswagen AG,
279 So. 3d 1109 (Ala. 2018) ...................... 4, 16, 17, 31
VIII
Cases—Continued:
State v. Volkswagen Aktiengesellschaft,
2018 WL 3349094 (Mo. Cir. Ct. June 26, 2018) ..... 17
In re Volkswagen Clean Diesel Litig.,
Cause No. D-1-GN-16-000370 (Tex. Dist. Ct.
Feb. 21, 2018) ........................................................... 17
In re: Volkswagen “Clean Diesel” Mktg., Sales
Pracs., & Prod. Liab. Litig.,
264 F. Supp. 3d 1040 (N.D. Cal. 2017) ................... 28
In re Volkswagen “Clean Diesel” Mktg., Sales
Pracs., & Prods. Liab. Litig.,
959 F.3d 1201 (9th Cir. 2020) .................. 3, 16, 17, 28
In re: Volkswagen “Clean Diesel” Mktg., Sales
Practices, & Prods. Liab. Litig.,
310 F. Supp. 3d 1030 (N.D. Cal. 2018) ................... 21
Constitutional Provisions:
Ohio Const., Art. IV, § 2 ........................................... 4, 19
Statutes:
28 U.S.C. § 1257(a) .......................................................... 1
42 U.S.C.
§ 7507........................................................................... 6
§ 7521(a) .............................................................. 2, 8, 9
§ 7521(d) .................................................................. 8, 9
§ 7522(a) .................................................................... 11
§ 7523(b) .................................................................... 11
§ 7524(a) .................................................................... 11
§ 7524(c) .................................................................... 11
§ 7541(a) .................................................................... 10
§ 7541(b) .................................................................... 10
§ 7541(c) .............................................................. 10, 20
IX
Statutes—Continued:
§ 7541(h) ........................................................... passim
§ 7542......................................................................... 10
§ 7543(a) ........................................................... passim
§ 7543(b) ...................................................................... 6
§ 7543(d) ................................................................ 2, 10
Ohio Rev. Code § 3704.16 ............................................. 30
Pub. L. No. 91-604, 84 Stat. 1676 (1970) ..................... 11
Rules and Regulatory Materials:
40 C.F.R.
§ 86.1805-04 ................................................................ 9
§ 86.1845-04 .............................................................. 10
§ 86.1846-01 .............................................................. 10
49 Fed. Reg. 43,502 (Oct. 29, 1984) ............................. 27
59 Fed. Reg. 31,306 (June 17, 1994) ............................ 26
59 Fed. Reg. 36,969 (July 20, 1994) ............................. 27
EPA, 2014-2017 Progress Report: Vehicle &
Engine Compliance Activities
(Apr. 2019) ...................................................... 6, 12, 20
EPA, Clean Air Act Title II Vehicle & Engine
Civil Penalty Policy (Jan. 18, 2021) ...................... 12
EPA, Field Fixes Related to Emission ControlRelated Components, MSAPC Advisory
Circular No. 2B (Mar. 17, 1975) ............................. 11
Miscellaneous:
Bur. of Economic Analysis, Value Added by
Industry as a Percentage of Gross Domestic
Product ..................................................................... 18
X
Miscellaneous—Continued:
Bur. of Labor Statistics, Automotive Industry ......... 18
Census Bur., Household Size
by Vehicles Available .............................................. 18
Doug Newcomb, The Upsides and Downside of
Over-the-Air Software Updates for Automobile
Dealers, WardsAuto (Nov. 6, 2020) ......................... 6
H.R. Rep. No. 89-899 (1965) ........................................ 19
H.R. Rep. No. 90-728 (1967) .................................. 19, 31
John Mizerak, Counties’ Suit Against VW Could
Complicate Emissions Regs, Law360
(May 18, 2021) .......................................................... 21
S. Rep. No. 90-403 (1967) ............................................. 11
In the Supreme Court of the United States
No.
VOLKSWAGEN AKTIENGESELLSCHAFT, ET AL.,
PETITIONERS
v.
STATE OF OHIO EX REL. DAVE YOST, ATTORNEY
GENERAL, RESPONDENT.
ON PETITION FOR A WRIT OF CERTIORARI
TO THE SUPREME COURT OF OHIO
PETITION FOR A WRIT OF CERTIORARI
OPINIONS BELOW
The opinion of the Ohio Supreme Court (App., infra,
1a-26a) has been designated for publication but is not yet
reported. It is available at Slip Op. No. 2021-Ohio-2121
(“Ohio”). The opinion of the Ohio Court of Appeals (App.,
infra, 27a-46a) is reported at 137 N.E.3d 1267. The opinion of the Ohio Court of Common Pleas (App., infra, 47a69a) is available at 2018 WL 8951077.
JURISDICTION
The judgment of the Ohio Supreme Court was entered
on June 29, 2021. The jurisdiction of this Court is invoked
under 28 U.S.C. § 1257(a).
(1)
2
PROVISIONS INVOLVED
Pertinent statutory provisions are reproduced in the
appendix to this petition. App., infra, 70a-85a. Section
209(a) of the CAA, 42 U.S.C. § 7543(a), provides in relevant part:
No State or any political subdivision thereof shall
adopt or attempt to enforce any standard relating to
the control of emissions from new motor vehicles or
new motor vehicle engines subject to this part.
Section 209(d) of the CAA, 42 U.S.C. § 7543(d), provides:
Nothing in this part shall preclude or deny to any
State or political subdivision thereof the right otherwise to control, regulate, or restrict the use, operation,
or movement of registered or licensed motor vehicles.
Section 202(a)(1) of the CAA, 42 U.S.C. § 7521(a)(1),
provides in relevant part:
The Administrator shall by regulation prescribe (and
from time to time revise) in accordance with the provisions of this section, standards applicable to the emission of any air pollutant from any class or classes of
new motor vehicles or new motor vehicle engines,
which in his judgment cause, or contribute to, air pollution which may reasonably be anticipated to endanger public health or welfare. Such standards shall be
applicable to such vehicles and engines for their useful
life (as determined under subsection (d), relating to
useful life of vehicles for purposes of certification),
whether such vehicles and engines are designed as
3
complete systems or incorporate devices to prevent or
control such pollution.
Section 207(h)(2) of the CAA, 42 U.S.C. § 7541(h)(2),
provides:
Nothing in section 7543(a) of this title shall be construed to prohibit a State from testing, or requiring
testing of, a motor vehicle after the date of sale of such
vehicle to the ultimate purchaser (except that no new
motor vehicle manufacturer or dealer may be required
to conduct testing under this paragraph).
STATEMENT
This case concerns a question of critical importance to
the automobile industry that continues to divide courts
across the country: whether Congress, when vesting
EPA with the exclusive authority to set emissions standards and enforce manufacturers’ compliance with those
standards for vehicles during their entire useful life, also
intended to allow all 50 states and thousands of local governments to regulate separately any post-sale updates
those manufacturers make to their vehicles’ emission systems on a nationwide basis. In a split decision, a majority
of the Ohio Supreme Court followed the Ninth Circuit in
recognizing such state and local authority for the first
time in the more than 50 years since Congress directed
EPA to regulate auto emissions. See Ohio, App., infra,
16a; In re Volkswagen “Clean Diesel” Mktg., Sales Pracs.,
& Prods. Liab. Litig., 959 F.3d 1201 (9th Cir. 2020), cert.
pending (“Counties”). Volkswagen has sought review by
this Court of the Ninth Circuit’s decision, and this Court
has requested the Solicitor General’s views in that case.
See Volkswagen Group of America, Inc. v. EPC of Hillsborough Cty., No. 20-994 (Apr. 26, 2021). This Court’s review is warranted for several reasons.
4
First, there is a deepening split on the question presented. The Ohio and Counties decisions squarely conflict
with final decisions of the Alabama Supreme Court and
intermediate courts of appeals in Minnesota and Tennessee, which held that the CAA preempts state and local
governments from challenging manufacturers’ post-sale
emissions updates. See State v. Volkswagen AG, 279 So.
3d 1109 (Ala. 2018) (“Alabama”); State ex rel. Slatery v.
Volkswagen Aktiengesellschaft, 2019 WL 1220836 (Tenn.
Ct. App. Mar. 13, 2019) (“Tennessee”); State ex rel. Swanson v. Volkswagen Aktiengesellschaft, 2018 WL 6273103
(Minn. Ct. App. Dec. 3, 2018) (“Minnesota”). Those
courts addressed this legal question on the same set of allegations brought against the same defendants, yet
reached the exact opposite conclusion from the Ohio Supreme Court and the Ninth Circuit. Moreover, the Ohio
decision itself was divided—four justices joined the majority opinion, two concurred in judgment only, and one
dissented. Of the 33 judges and justices that have now
addressed the question presented, 16 have found the
claims preempted. This case presents the ideal vehicle to
resolve this conflict.
Second, this issue is of national importance. Respondent admitted as much when joining in petitioners’ request
that the Ohio Supreme Court grant discretionary review
in this case, stating that the case “involves a substantial
question” that is “being litigated nationwide.” Ohio Juris.
Mem., Ohio S.C. Dkt., at 1, 6 (Feb. 14, 2020). And in granting discretionary review, the Ohio Supreme Court likewise found that the case was one of “public or great general interest.” Ohio Const., Art. IV, § 2(B)(2)(e). This issue is of urgent significance to the automobile industry,
which contributes 2.1% to the U.S. Gross Domestic Product and supplies products to 90% of U.S. households. And
numerous amici have already urged this Court to grant
5
review in the Counties case. See Volkswagen Group of
America, Inc. v. EPC of Hillsborough Cty., No. 20-994.
Since 1967, EPA has exclusively regulated manufacturers’ post-sale changes, such as software updates, to
their cars’ emission control systems. The decision below
(like the Ninth Circuit’s decision in Counties) upends that
longstanding history by concluding that all 50 states and
thousands of localities can separately regulate such manufacturer updates.
Permitting thousands of governments to regulate
post-sale, nationwide updates will undermine EPA’s ability to regulate manufacturers and lead to conflicting regulation. EPA’s evaluation of emissions updates involves a
highly technical exercise of judgment regarding numerous potential tradeoffs, such as weighing one type of pollutant against another and balancing emissions reductions
against the potential for engine or vehicle damage. Under
the Ohio Supreme Court’s decision, however, if any state
or locality reaches a different conclusion from EPA, then
manufacturers could face significant liability from state
and local enforcement actions. This threat will discourage
manufacturers from making beneficial post-sale modifications to emission systems.
This is not a theoretical concern: respondent, for example, explicitly claimed that it has the authority to challenge EPA-approved updates. See infra at 21. And Hillsborough County, Florida has already brought an analogous lawsuit against Daimler AG seeking relief that conflicts with the careful balance that EPA struck in its resolution with Daimler over the same conduct. See infra at
22-23.
Technological developments in the 50 years since Congress directed EPA to regulate manufacturers have only
heightened the chaos that the Ohio Supreme Court’s de-
6
cision will cause. Emission control systems are now computer-operated, leading to the need for more frequent updates to such emission systems: manufacturers apply
post-sale updates to, on average, six million cars every
year under EPA oversight. EPA, 2014-2017 Progress Report: Vehicle & Engine Compliance Activities (Apr.
2019), at 7 (“EPA Recall Report”), https://tinyurl.com/EPARecallReport (manufacturer recalls affected over 24 million cars between 2014 and 2017). And
recalls are now increasingly accomplished through “overthe-air” software updates that are delivered wirelessly to
vehicles without “requir[ing] customers to bring their vehicles to a dealership’s service department.” Doug Newcomb, The Upsides and Downside of Over-the-Air Software Updates for Automobile Dealers, WardsAuto (Nov.
6, 2020), https://tinyurl.com/WardsAuto.
Third, the Ohio Supreme Court’s decision is wrong.
Congress enacted Title II of the CAA to avoid exposing
auto manufacturers to an “anarchic patchwork” of federal,
state, and local regulation, which would needlessly increase the cost of vehicles to consumers. Engine Mfrs.
Assn. v. EPA, 88 F.3d 1075, 1079 (D.C. Cir. 1996) (quotation omitted). Congress included a sweeping express
preemption provision in § 209(a) of the CAA, which provides that “[n]o State or any political subdivision thereof
shall adopt or attempt to enforce any standard relating to
the control of emissions from new motor vehicles or new
motor vehicle engines subject to this part.” 42 U.S.C.
§ 7543(a) (emphases added). 1
1
Congress gave California an exception from preemption and
allowed other states to adopt and enforce California’s EPA-approved
standards. 42 U.S.C. §§ 7543(b), 7507. This exception is not relevant
here because Ohio has not adopted California’s standards.
7
The Ohio Supreme Court misinterpreted that provision, literally reading the phrase “relating to” out of the
statute: “[T]he Clean Air Act expressly preempts only
state and local laws regulating or setting vehicle-emissions standards for new motor vehicles and new motorvehicle engines.” App., infra, 9a (emphasis added). See
Morales v. Trans World Airlines, Inc., 504 U.S. 374, 385
(1992) (rejecting interpretation that “simply reads the
words ‘relating to’ out of the statute”). In doing so, the
court ignored that “relating to” is an expansive phrase
that this Court has recognized “indicates Congress’ intent
to pre-empt a large area of state law,” Altria Group, Inc.
v. Good, 555 U.S. 70, 85 (2008), and to bar state regulation
with any “connection with or reference to” the relevant
subject matter, Rutledge v. Pharm. Care Mgmt. Assn.,
141 S. Ct. 474, 479 (2020) (quotation omitted); see infra at
24-25. The Ohio Supreme Court’s erasure of the term “relating to” led it to adopt the same erroneous, bright-line
rule as the Ninth Circuit: that § 209(a) preemption “no
longer applies” after a vehicle “is first sold.” See infra at
15, 24. That interpretation has long been rejected by
other federal courts and EPA, which have interpreted
§ 209(a) to preempt state and local regulation of post-sale
conduct that “relates back” to the original design of a motor vehicle. The post-sale updates here necessarily meet
that criteria, because they simply modified the cars’ original (noncompliant) software.
Moreover, the Ohio majority did not follow this
Court’s instruction in Engine Manufacturers Association
v. South Coast Air Quality Management District to examine how Congress directed EPA to enforce CAA standards to identify the “standard-enforcement efforts that
are proscribed by § 209.” 541 U.S. 246, 253 (2004). Congress did not provide that EPA’s enforcement of the CAA
8
new-vehicle emission standards would cease once a vehicle is sold. Instead, Congress directed EPA, through multiple enforcement provisions that expressly apply postsale, to ensure that manufacturers maintain and update
their cars in compliance with those CAA new-vehicle
standards for their cars’ full “useful life.” 42 U.S.C.
§ 7521(a)(1), (d)(1). Ohio’s action impermissibly seeks to
duplicate this post-sale enforcement authority Congress
gave exclusively to EPA, in contravention of § 209(a).
Further confirming this interpretation, the CAA expressly bars states from even requiring emissions testing
by manufacturers, an essential tool for enforcing emission
compliance. 42 U.S.C. § 7541(h)(2).
Finally, as the dissenting justice below explained, the
majority erred in finding no implied preemption. The
comprehensive structure of the CAA demonstrates Congress’s intent that EPA exclusively regulate manufacturers’ emissions compliance before and after vehicles are
sold. Multiple interrelated CAA provisions grant EPA
alone the authority to regulate every aspect of manufacturers’ nationwide conduct throughout the “useful life” of
their cars, including by setting federal emission standards, requiring manufacturers to conduct testing of in-use
vehicles, overseeing manufacturers’ post-sale warranty
obligations, administering post-sale recalls, and penalizing manufacturers’ post-sale CAA violations. See infra at
9-10. Overlapping regulation by states and localities
would conflict with that clear congressional purpose.
Likewise, as the dissent correctly recognized, the Ohio
majority’s analysis would undermine EPA’s ability to
achieve expedient, nationwide resolutions of future CAA
violations, as manufacturers will know that settling with
EPA could trigger copycat state and local government actions, as occurred here. Congress instructed EPA to consider specific factors in assessing penalties, and EPA has
9
promulgated a comprehensive policy for doing so. The potential for innumerable state and local follow-on actions
will make it impossible for EPA to discharge that mandate. That respondent seeks substantial penalties for conduct that EPA comprehensively penalized vividly illustrates this conflict. See infra at 31-32.
This Court should grant the petition.
A. Background
1. In the CAA, Congress allocated responsibility for
air pollution differently based on the source of emissions.
Title I governs stationary sources, like power plants,
which are subject to “federally encouraged state control.”
Engine Mfrs. Assn., 88 F.3d at 1079-1080. Title II governs mobile sources, like cars, and provides that “the
EPA, and with the EPA’s permission California, are responsible for regulating emissions from motor vehicles
and other mobile sources.” Nat. Assn. of Home Builders
v. San Joaquin Valley Unified Air Pollution Control
Dist., 627 F.3d 730, 733 (9th Cir. 2010). Thus, pursuant to
Title II, EPA has been the exclusive regulator of auto
manufacturers’ compliance with emission control laws for
more than 50 years.
2. Congress directed EPA to regulate manufacturers’
emissions-related conduct both before and after those vehicles are sold:
•
Manufacturers must certify to EPA that their cars
will comply with federal standards throughout
their “useful life” (10 years or 120,000 miles).
42 U.S.C. § 7521(a)(1), (d)(1); 40 C.F.R. § 86.180504(a).
•
Manufacturers must provide EPA-specified warranties for emission controls and bear the cost of
10
fixing them for years after sale.
§ 7541(a)(1), (a)(3), (b)(2)(C).
42 U.S.C.
•
EPA has “establish[ed] . . . methods and procedures” to test “whether, when in actual use,” cars
“compl[y] with . . . emission standards.” 42 U.S.C.
§ 7541(b). EPA requires manufacturers to conduct
“in-use verification testing,” including of “high
mileage” post-sale cars. 40 C.F.R. §§ 86.1845-04,
86.1846-01(a)(1).
•
Manufacturers must “establish and maintain records” of in-use emissions testing on post-sale cars
during their useful life and “make reports and provide information [EPA] may reasonably require.”
42 U.S.C. § 7542.
•
If EPA “determines that a substantial number of
any class or category of vehicles or engines” in use
do not conform to EPA standards at any point during their “useful life,” EPA may order a nationwide
recall. 42 U.S.C. § 7541(c)(1).
3. To protect EPA’s exclusive authority, Congress enacted a sweeping express preemption provision: “No
State or any political subdivision thereof shall adopt or attempt to enforce any standard relating to the control of
emissions from new motor vehicles or new motor vehicle
engines subject to this part.” 42 U.S.C. § 7543(a) (emphasis added). 2 Congress also barred states from requiring
In § 209(d), Congress preserved states’ and localities’ authority
“otherwise to control, regulate, or restrict the use, operation, or
movement of registered or licensed motor vehicles.” 42 U.S.C.
§ 7543(d) (emphases added). This provision contemplates state regulation of drivers’ local conduct that does not intrude on EPA’s author2
11
emissions testing by auto manufacturers “after the date
of sale.” 42 U.S.C. § 7541(h)(2).
4. Congress specifically authorized EPA to regulate
manufacturers’ unlawful changes to emission controls on
vehicles that have been sold. Pub. L. No. 91-604, 84 Stat.
1676, 1693 § 7(a)(3) (1970) (making it unlawful “for any
manufacturer or dealer” to tamper with emission controls
“after such sale and delivery to the ultimate purchaser”),
codified as amended at 42 U.S.C. § 7522(a)(3)(A); see also
42 U.S.C. § 7523(b). Congress imposed specific penalties
for tampering violations by manufacturers of up to
$25,000 per violation. 42 U.S.C. § 7524(a). Congress further directed EPA to balance statutory factors in assessing penalties for such violations—including the “gravity of the violation,” “the economic benefit or savings (if
any) resulting from the violation,” and “the effect of the
penalty on the violator’s ability to continue in business.”
42 U.S.C. § 7524(c)(2).
Starting in 1975, EPA has promulgated guidance outlining how manufacturers may modify emission systems
after sale without violating the CAA’s tampering prohibition. EPA, Field Fixes Related to Emission Control-Related Components, MSAPC Advisory Circular No. 2B, at
1 (Mar. 17, 1975), https://tinyurl.com/FieldFixGuidance.
Unsurprisingly, no state or locality has attempted to provide any such guidance to manufacturers. EPA has also
promulgated a detailed Civil Penalty Policy establishing a
framework to apply the CAA’s statutory penalty factors.
ity, such as through “carpool lanes, restrictions on car use in downtown areas, and programs to control extended idling of vehicles.” Engine Mfrs. Assn., 88 F.3d at 1094; see also S. Rep. No. 90-403, p. 34
(1967) (Congress enacted § 209(d) to encourage states to pursue “reduction in air pollution” through measures that “control [the] movement of vehicles” and encourage “alternative methods of transportation”).
12
EPA, Clean Air Act Title II Vehicle & Engine Civil Penalty Policy (Jan. 18, 2021), https://tinyurl.com/2021EPAPenaltyPolicy.
5. As amici representing U.S. and global automakers
and dealers explained in a brief supporting Volkswagen’s
petition in Counties, post-sale updates have become
“more common today than ever” as cars have grown increasingly computerized. Brief of Amici Curiae for Alliance for Automotive Innovation et al. in Counties (“Alliance Counties Br.”), at 8-9. Manufacturers now conduct
dozens of emissions recalls affecting, on average, six million cars annually. EPA Recall Report, at 7. Field fixes
(post-sale updates conducted outside of a recall) are even
more frequent. Manufacturers perform these post-sale
updates under EPA oversight to fulfill their CAA obligations, including to ensure that their cars meet—throughout their “useful life”—the emission standards that they
are certified to meet when they were new.
These updates raise technical questions requiring scientific expertise and balancing of competing regulatory
objectives, whereby the update “reduc[es] some types of
emissions while increasing others.” Alliance Counties
Br., at 3. For example, updates may require accepting
emissions increases under certain conditions to prevent
vehicle or engine damage. Id. at 3-4. Manufacturers work
closely with EPA to address these tradeoffs. See id. at 3;
EPA Recall Report, at 62.
B. Facts and Procedural History
1. In 2015, EPA issued notices of violation alleging
that Volkswagen installed software “defeat devices” in
new diesel cars that allowed them to emit higher levels of
nitrogen oxides (“NOx”) than allowed under EPA regula-
13
tions. EPA, Notice of Violation (Sept. 18, 2015), https://tinyurl.com/SeptemberNOV; EPA, Notice of Violation
(Nov. 2, 2015), https://tinyurl.com/NovemberNOV.
In its civil enforcement action, EPA alleged that during an EPA-overseen recall, Volkswagen also implemented software updates to refine (without disclosing)
the factory-installed defeat device. EPA Am. Compl., In
re: Volkswagen “Clean Diesel” Mktg., Sales Pracs., &
Prods. Liab. Litig. (“VW MDL”), No. 15-md-2672, Dkt.
No. 2009-3, ¶¶ 115-116, 136-141 (N.D. Cal. Oct. 7, 2016).
Volkswagen installed these software updates in new vehicles still in production and in post-sale vehicles during nationwide recalls conducted under EPA oversight. Id.
¶¶ 115-116. EPA’s testing showed that these updates reduced NOx emissions, although not enough to bring the
cars into compliance with the originally certified emissions standards. Id. ¶ 141.
Volkswagen acknowledged its wrongdoing and, in
three consent decrees with EPA, agreed to: (i) establish
a $2.925 billion trust for use by all states for environmental mitigation initiatives, which EPA determined will
“fully mitigate” any environmental harm caused nationwide by the affected vehicles; (ii) pay a $1.45 billion civil
penalty; (iii) pay up to $14 billion to compensate owners
and buy back or repair affected vehicles nationwide;
(iv) invest an additional $2 billion in zero-emissions-vehicle technology; and (v) retain an independent compliance
auditor. See VW MDL, Dkt. Nos. 2103-1, at 12-18, Apps.
A-B, App. C, at 1 & App. D; 3155 ¶¶ 9, 27-29; and 3228-1
at 5, 14-17, Apps. A-B & Initial 3.0 Liter Mitigation Allocation App. Volkswagen AG also pled guilty and paid a
$2.8 billion criminal penalty. Ohio Supp., Ohio S.C. Dkt.,
at S-123 (Aug. 10, 2020). In sum, Volkswagen bought
back, or installed EPA-approved updates in, nearly all affected vehicles and agreed to pay more than $23 billion,
14
including more than $343 million for Ohio and its residents.
2. EPA’s notices of violation triggered a flood of lawsuits, including novel claims brought by ten states and 35
counties. Parroting EPA’s allegations, respondent sued
under its state anti-tampering laws, challenging the factory installation of the defeat device. After another state’s
analogous claims were dismissed as preempted, respondent amended its complaint to add separate claims challenging the post-sale updates to that factory-installed defeat device. App., infra, 50a-51a. Respondent seeks daily
penalties of $25,000 per affected car per day, totaling $350
million per day for roughly 14,000 cars. Id. at 65a.
3. The trial court dismissed respondent’s claims as
preempted by federal law. First, the trial court held that
respondent’s claims targeting pre-sale conduct were expressly preempted under § 209(a). Id. at 60a.
Second, the trial court held that respondent’s claims
targeting post-sale conduct were impliedly preempted,
reasoning that the claims were “an attempt to enforce vehicle emission standards on a model-wide basis,” which
“Congress intended for only the EPA to regulate.” Id. at
67a.
4. Respondent appealed only the dismissal of its
claims targeting post-sale conduct. The Ohio Court of Appeals held that respondent’s claims targeting post-sale
software updates were not preempted by federal law. The
Court of Appeals summarily held that § 209(a) “does not
address the regulation of emissions of in-use motor vehicles” but rather solely “relates to the manufacturing of vehicles before they are sold and placed on the roads.” Id.
at 37a. It also concluded that the CAA does not reflect
“clear and manifest congressional intent to preempt state
law regarding post-sale tampering conduct of manufacturers.” Id. at 44a.
15
5. Petitioners asked the Ohio Supreme Court to “consider whether the federal Clean Air Act either expressly
or impliedly preempts state-law claims against a manufacturer for post-sale emissions control tampering,” id. at 4a,
and respondent “agree[d] that th[e] case [was] proper for
the Court’s jurisdiction.” Ohio Juris. Mem., Ohio S.C.
Dkt., at 6 (Feb. 14, 2020). The Ohio Supreme Court affirmed the Ohio Court of Appeals in an opinion by four of
its seven justices, with two justices concurring in the judgment only, and one justice dissenting. See App., infra,
16a. Relying exclusively on the phrase “new motor vehicles,” the majority held that “after a new motor vehicle or
new motor-vehicle engine is first sold, the expresspreemption clause in 42 U.S.C. 7543(a) no longer applies.”
Id. at 8a-9a. The majority further concluded that “the
Clean Air Act does not suggest that Congress intended to
shield vehicle manufacturers from state-law emissionscontrol-tampering liability.” Id. at 14a. The dissenting
opinion would have held that respondent’s claims were impliedly preempted because Ohio’s attempt to obtain significant penalties “for a local portion of that same misconduct [that EPA redressed] conflicts both with the EPA’s
immediate authority and the longer-term goals underlying the federal law.” Id. at 22a.
The Ohio Supreme Court granted petitioners’ motion
to stay the mandate pending this Court’s review. Entry,
Ohio S.C. Dkt. (Aug. 18, 2021).
REASONS FOR GRANTING THE PETITION
I. THE DECISION BELOW DEEPENS THE EXISTING SPLIT AMONG FEDERAL AND STATE
COURTS ON THE QUESTION PRESENTED.
1. The Ohio Supreme Court’s decision deepens the direct conflict described in Volkswagen’s Counties petition
16
(No. 20-994), with respect to which this Court has requested the views of the United States.
Like respondent, the states of Alabama, Tennessee,
and Minnesota sued Volkswagen under their own antitampering laws, seeking penalties for the same post-sale
updates at issue in this case. Those states’ courts correctly held that the CAA preempts such claims.
The Supreme Court of Alabama dismissed as
preempted the claims brought by the state of Alabama,
concluding that those claims “would stand as an obstacle
to the accomplishment and execution of the full purposes
and objectives of Congress.” Alabama, 279 So. 3d at 1129.
Similarly, the Minnesota Court of Appeals dismissed
the state of Minnesota’s claims as preempted, reasoning
that “Congress, by enacting the CAA, provided that the
federal government—rather than state or local governments—regulate the conduct at issue here.” Minnesota,
2018 WL 6273103, at *10. Minnesota’s petition for further
review of this decision was rejected as untimely. Dkt.,
Minnesota v. Volkswagen Aktiengesellschaft, Case No.
A18-0544 (Minn. Ct. App. Jan. 4, 2019).
The Tennessee Court of Appeals likewise dismissed
Tennessee’s claims as preempted, reasoning that Congress created the federal CAA regime in part to “avoid
the problems that would result if automobile manufacturers had to answer to a number of different regulators enforcing the same standard.” Tennessee, 2019 WL
1220836, at *8 n.9. Tennessee did not appeal this decision.
By contrast, in a case brought by two counties asserting parallel claims against Volkswagen, the Ninth Circuit
considered the identical legal question, involving the same
defendants and conduct, but reached the opposite conclusion. Counties, 959 F.3d at 1225.
The Ohio majority agreed with the Ninth Circuit’s
analysis. App., infra, 9a, 14a. Unlike the dissent, the Ohio
17
majority did not acknowledge (much less attempt to reconcile) the contrary state court opinions in its decision.
As a consequence, respondents and state and local
governments within Ohio and the Ninth Circuit may regulate manufacturers’ nationwide, post-sale updates to
their vehicles’ emission control software, whereas state
and local governments in Alabama, Tennessee, and Minnesota may not. A conflict between a federal court of appeals and a state supreme court, on the one hand, and another state supreme court and two intermediate appellate
courts, on the other, warrants this Court’s review under
Rule 10. See Hillman v. Maretta, 569 U.S. 483, 489-490
(2013). 3
2. Including non-final and trial-court decisions, five
courts have found analogous claims against Volkswagen
to be preempted; four courts, including the decision below, have held the opposite. 4 Because the issue has been
The fact that two additional decisions were from intermediate state appellate courts does not make this Court’s review any less
warranted. See DIRECTV, Inc. v. Imburgia, 577 U.S. 47, 53 (2015)
(resolving conflict between Ninth Circuit and intermediate California
appellate court); Riley v. California, 573 U.S. 373, 378-381 (2014) (resolving conflict between First Circuit and intermediate California appellate court); Carchman v. Nash, 473 U.S. 716, 723-724 & n.3 (1985)
(resolving conflict involving intermediate appellate courts).
3
Compare Alabama, 279 So. 3d at 1129 (claims preempted; final); Tennessee, 2019 WL 1220836, at *13-14 (same); Minnesota, 2018
WL 6273103, at *10 (same); State v. Volkswagen Aktiengesellschaft,
2018 WL 3349094, at *3 (Mo. Cir. Ct. June 26, 2018) (same); and People v. Volkswagen Aktiengesellschaft, 2018 WL 3384883, at *19-20 (Ill.
Cir. Ct. June 5, 2018) (“Illinois”) (claims preempted, appeal pending);
with App., infra, 30a-46a; Counties, 959 F.3d 1201 (claims not
preempted; petition for certiorari pending); Order, Montana Dept. of
Env. Quality v. Volkswagen Aktiengesellschaft, Cause No. DDV2016-1045 (Mont. Dist. Ct. Feb. 21, 2020) (declining to dismiss analogous claims as preempted in a non-final decision); and Order, In re
4
18
sharply defined and briefed extensively in these courts,
including with input from industry associations and former senior EPA, Department of Justice (“DOJ”), and California Air Resources Board (“CARB”) officials as amici,
further percolation is unnecessary.
II. THE QUESTION PRESENTED IS EXCEPTIONALLY IMPORTANT.
A. National Uniformity in the Regulation of Emission Systems Has Been of Critical Importance
for Decades.
1. This case presents a critically important question affecting EPA’s nationwide regulation of automobiles,
which play a central role in American life. More than 90%
of U.S. households have access to a car. Census Bur.,
Household Size by Vehicles Available, https://tinyurl.com/VehicleAccess. Tens of millions of people rely
on cars to travel to work and fulfill other basic needs. Approximately 4.3 million Americans work in the auto industry, including more than 900,000 in auto manufacturing,
see Bur. of Labor Statistics, Automotive Industry,
https://tinyurl.com/AutoEEs, which constitutes 2.1% of
U.S. Gross Domestic Product, see Bur. of Economic Analysis, Value Added by Industry as a Percentage of Gross
Domestic
Product,
https://tinyurl.com/PercentGDP
ValueAdded (choose “Value added by Industry as a Percentage of Gross Domestic Product (A)(Q)”) (lines 21 and
36).
The importance of the question presented is confirmed
by the numerous amici—seven organizations representing U.S. and global automakers, part suppliers, dealers,
and other manufacturers, as well as four former senior
Volkswagen Clean Diesel Litig., Cause No. D-1-GN-16-000370 (Tex.
Dist. Ct. Feb. 21, 2018) (same).
19
EPA, CARB, and DOJ officials—that have urged this
Court to grant review of a pending petition presenting the
identical preemption question. See Counties, No. 20-994.
Moreover, respondent itself urged the Ohio Supreme
Court to accept discretionary review of this case on the
basis that it “involve[d] a substantial question of federal
preemption” that is “being litigated nationwide.” Ohio Juris. Mem., Ohio S.C. Dkt., at 1, 6 (Feb. 14, 2020). And by
accepting review, the Ohio Supreme Court agreed that
the appeal presented a question of “public or great general interest,” as required by the Ohio Constitution. Ohio
Const., Art. IV, § 2(B)(2)(e).
More than 50 years ago, Congress recognized that the
tens of millions of cars on the road require “motor vehicle
exhaust control standards on a national scale.” H.R. Rep.
No. 89-899, p. 5 (1965). But because cars are mass-produced and “readily move across state boundaries,” Congress recognized the need for uniform, nationwide regulation. Engine Mfrs. Assn., 88 F.3d at 1079. Congress
found that “[t]he ability of those engaged in the manufacture of automobiles to obtain clear and consistent answers
concerning emission controls and standards is of considerable importance,” recognizing that even “identical Federal and State standards, separately administered, would
be difficult for the industry to meet since different administration could easily lead to different answers to identical
questions.” H.R. Rep. No. 90-728, pp. 21-22 (1967). Overlapping state and local regulation of manufacturers, on
the other hand, would “lead to increased costs to consumers nationwide, with benefit only to those in one section of
the country.” Ibid. Accordingly, Congress entrusted
EPA with exclusive power to regulate manufacturers’
20
emission compliance throughout the useful life of their vehicles.
EPA’s authority includes the power to mandate and
supervise post-sale manufacturer recalls like those at issue here. 42 U.S.C. § 7541(c)(1). Recalls are a “critical
component[] of compliance” with emission standards, and
manufacturers conduct dozens of recalls affecting, on average, six million cars every year, all coordinated with
EPA. See EPA Recall Report, at 7.
As EPA has explained, “[i]n-use testing is an important aspect of EPA’s light-duty vehicle compliance
program, identifying emissions concerns and resolving
them.” EPA Recall Report, at 58. Because “[l]ight-duty
emission standards are the most stringent of any sector
and light-duty vehicles have the most sophisticated and
complex emission control systems,” there is “a greater opportunity for defects to occur.” Id. at 7. Like many computerized products, emission controls often can be fixed
(or improved) by a software update.
2. The Ohio Supreme Court’s decision threatens to
throw one of America’s largest industries into regulatory
chaos, to the detriment of manufacturers, dealers, consumers, and the environment. For decades, auto manufacturers have relied on exclusive EPA regulation in making updates to their vehicles. But the Ohio Supreme
Court’s decision would allow all 50 states and 3,000 counties to separately regulate these updates according to
their own local policies, priorities, and preferences, and to
sue manufacturers for billions of dollars for supposed violations of local anti-tampering laws. Every state and locality could second-guess EPA’s expert determinations in
this complex, highly technical area.
For example, as part of EPA’s settlement with
Volkswagen, EPA allowed Volkswagen to substantially
reduce NOx emissions of affected cars, even if not by
21
enough to meet the originally certified standards, as long
as Volkswagen also offered to buy back those cars. In re:
Volkswagen “Clean Diesel” Mktg., Sales Practices, &
Prods. Liab. Litig., 310 F. Supp. 3d 1030, 1046 n.7 (N.D.
Cal. 2018). EPA’s expert judgment was that removing all
affected vehicles from use, even if customers wanted to
keep their cars, would cause “undue waste and potential
environmental harm.” Ibid. (quotation omitted). The
Ohio Supreme Court’s decision, however, would allow
states and localities to penalize these EPA-approved modifications. Indeed, Ohio’s complaint expressly seeks such
penalties. See First Am. Compl. ¶¶ 25 n.1, 109-110, VW
Supp., Ohio S.C. Dkt., at 33, 53 (June 22, 2020) (seeking
“civil penalties of up to twenty-five thousand dollars
($25,000.00) for each day of each violation” from “2008
through the present,” and “not . . . conced[ing] that Defendants corrected their violations at any time” (emphases added)).
Given these enormous risks created by the decision
below, the entire auto industry—and likely states, counties, and private law firms—are closely watching how this
Court rules on these issues. See, e.g., John Mizerak,
Counties’ Suit Against VW Could Complicate Emissions
Regs, Law360 (May 18, 2021), https://tinyurl.com/MizerakArticle (opining that, if the Ninth Circuit is not reversed, manufacturers “may be forced to change their
practices—such as by generating a more defined record
to defend any particular change, or seeking assurances
from additional regulatory bodies” to avoid suit). If the
Ohio Supreme Court and Ninth Circuit’s analyses are
adopted broadly, manufacturers may face lawsuits from
states and counties seeking to penalize the nationwide,
post-sale updates that manufacturers frequently make to
fulfill their CAA obligations—previously, subject only to
22
EPA oversight. Faced with such exposure, manufacturers would take enormous risk by implementing a post-sale
update based on approval from EPA alone, as has been
done efficiently and effectively for 50 years. Manufacturers thus may need to take the entirely impractical step of
seeking the approval of all 50 states and thousands of localities before implementing post-sale, nationwide updates. As a result, manufacturers may be forced either to
avoid maintaining or improving their cars’ emission control systems after sale (and resist EPA’s requests that
they do so voluntarily)—to the detriment of the environment and Congress’s objectives—or pass on the substantial increased costs to consumers. And it will not be feasible for manufacturers to implement software updates that
conform to inevitably conflicting federal-, state-, and locality-specific instructions across all of their vehicles.
3. Further, as explained below, CAA preemption safeguards the important enforcement powers that Congress
granted to EPA, such as its statutory role to set appropriate penalties for CAA violations and its ability to achieve
expedient resolutions and remediation of future harms.
See infra at 31-32.
B. This Issue Has Already Arisen for Another Auto
Manufacturer and Is Likely to Arise Repeatedly
Going Forward.
After the Ninth Circuit’s decision, Hillsborough
County’s outside counsel—a private law firm operating on
a contingent-fee basis—“informed [Hillsborough County]
that additional automotive companies have tampered
and/or altered software to pass emission tests in its [sic]
vehicles that operate in Hillsborough County.” Hillsborough Cty. Env. Protection Comm’n, Comm’n Agenda,
at 15 (Sept. 24, 2020), https://tinyurl.com/Hillsborough-
23
CtyAgenda. Seizing on the Ninth Circuit’s decision, Hillsborough County sued Daimler and other defendants,
based on their consent decree with EPA in connection
with their alleged installation of defeat devices that
caused emissions to exceed legal limits. EPA, Daimler AG
and Mercedes-Benz USA, LLC Clean Air Act Civil Settlement (Sept. 14, 2020) (“Daimler Civil Settlement”),
https://tinyurl.com/EPADaimler. As it did in the Counties
case (and as respondent did here), Hillsborough County
seeks its own penalties from Daimler for both the alleged
installation of defeat devices and post-sale tampering
“through a program of newly created field fixes and recall
campaigns.” Env. Prot. Comm’n of Hillsborough Cty. v.
Mercedes-Benz USA, LLC, No. 20-cv-2238, Dkt. No. 7,
¶¶ 64-68, 90 (M.D. Fla. Sept. 25, 2020).
In addition to massive penalties, Hillsborough County
seeks an order requiring defendants to “completely repair” the affected vehicles. Id. ¶ 95. Such relief would
upset the careful balance that EPA struck in the consent
decree, which required Daimler to bring all affected vehicles into compliance but recognized that might not be possible: “Daimler will be liable for stipulated penalties in
the unlikely event that one or more AEMs do not meet the
applicable emission standards . . . .” Daimler Civil Settlement; see also United States v. Daimler AG, No. 20-cv2564, Dkt. No. 7-1, ¶ 53(c)(ii) (D.D.C. Dec. 17, 2020).
Hillsborough County has publicly stated that it also
may bring similar claims against Fiat Chrysler Automobiles and General Motors. Hillsborough Cty. Env. Protection Comm’n, Comm’n Agenda, at 15 (Sept. 24, 2020),
https://tinyurl.com/HillsboroughCtyAgenda (requesting
“authorization for future related actions . . . (e.g. -Fiat
Chrysler Automobiles, GM, etc.)”).
The Ohio Supreme Court’s uncritical adoption of the
Ninth Circuit’s decision will likely lead additional states
24
and counties to bring similar claims, especially if these decisions become final. This Court’s resolution of the scope
of preemption regarding the six million vehicles updated
every year is imminently needed.
III. THE DECISION BELOW IS INCORRECT.
The Ohio Supreme Court’s holding contravenes decades of precedent making clear that the CAA preempts
respondent’s claims. “[T]he purpose of Congress is the
ultimate touchstone” in determining whether federal law
preempts state and local law. Altria, 555 U.S. at 76 (quotation omitted). All forms of preemption, “‘conflict,’ ‘express,’ and ‘field,’ . . . work in the same way.” Murphy v.
Nat. Collegiate Athletic Assn., 138 S. Ct. 1461, 1480
(2018). Where “Congress enacts a law that imposes restrictions or confers rights on private actors[ and] a state
law confers rights or imposes restrictions that conflict
with the federal law . . . the federal law takes precedence
and the state law is preempted.” Ibid.
A. The Ohio Majority’s Interpretation of the CAA’s
Express Preemption Clause is Incorrect.
The majority incorrectly interpreted CAA § 209(a),
which broadly prohibits states and localities from
“adopt[ing] or attempt[ing] to enforce any standard relating to the control of emissions from new motor vehicles.”
42 U.S.C. § 7543(a) (emphases added).
1. Citing with approval the Ninth Circuit’s erroneous
interpretation, the Ohio majority adopted a “pre- and
post-sale distinction” for purposes of preemption. App.,
infra, 10a. This analysis focused exclusively on the phrase
“new motor vehicles,” and gave no effect to the broad
phrase “relating to.” But as this Court has recognized,
the phrase “relating to”—which means any “connection
25
with or reference to,” Rutledge, 141 S. Ct. at 479 (quotation omitted)—“express[es] a broad pre-emptive purpose,” Morales, 504 U.S. at 383, and “indicates Congress’
intent to pre-empt a large area of state law,” Altria, 555
U.S. at 85. Contrary to this instruction, the majority
simply read the words “relating to” out of § 209(a) by
holding that the CAA “expressly preempts only state and
local laws regulating or setting vehicle-emissions standards for new motor vehicles and new motor-vehicle engines.” App., infra, 9a (emphasis added); see Morales,
504 U.S. at 385 (rejecting an interpretation that “simply
reads the words ‘relating to’ out of the statute.”).
This interpretation conflicts with longstanding authority recognizing that preemption under § 209(a) continues past the point of initial sale. The seminal case of
Allway Taxi, Inc. v. City of New York, 340 F. Supp. 1120,
1124 (S.D.N.Y.), aff’d, 468 F.2d 624 (2d Cir. 1972), held
that preemption must extend post-sale to avoid an illogical interpretation of the CAA in which states and localities
can freely regulate emission control standards the “moment after a new car is bought”—an “obvious circumvention of the [CAA].” State and local regulation of vehicles
post-sale is permissible notwithstanding § 209(a) when it
is “directed primarily to intrastate activities” and places
“the burden of compliance . . . on individual owners and
not on manufacturers and distributors.” Ibid.; see Engine
Mfrs. Assn., 88 F.3d at 1086 (endorsing “Allway Taxi interpretation” of § 209(a), under which “the burden of compliance [may] not fall on the manufacturer”); see also
Rutledge, 141 S. Ct. at 480 (construing ERISA’s express
preemption clause by looking to “ERISA’s objectives ‘as
a guide to the scope of the state law that Congress understood would survive’” (citation omitted)).
EPA has long endorsed Allway Taxi and interpreted
§ 209(a) preemption as extending beyond initial sale:
26
“certain state regulations that may be characterized as
‘in-use’ regulations may be preempted” if they “amount to
a standard relating back to the original design of the engine by the original engine manufacturer.” 59 Fed. Reg.
31,306, 31,313, 31,331 (June 17, 1994).
The Ohio majority acknowledged Allway Taxi but
read that decision as only “drawing a distinction between
pre- and post-sale emissions regulations.” App., infra,
10a. This reading ignores Allway Taxi’s core holding that
state and local post-sale regulation must be limited to conduct that affects intrastate activities and does not “place
the burden of compliance on manufacturers.” 340 F.
Supp. at 1124.
2. Respondent’s claims targeting manufacturers’
post-sale, nationwide software updates necessarily
“relat[e] back to the original design,” just as updates to a
smartphone’s operating system necessarily relate back to
the original software. EPA viewed petitioners’ updates as
inherently related to the pre-sale vehicle design when the
agency tested those updates by comparing emissions from
post-update cars to emissions from those cars as manufactured.
See EPA Am. Compl., United States v.
Volkswagen AG, No. 16-cv-295, Dkt. 32-3, ¶ 141 (N.D. Cal.
Oct. 7, 2016) (finding a “limited reduction in the rates of
emission of NOx”).
Because the post-sale updates reduced emissions—albeit not enough to comply with the certified emission
standards—the only basis for penalizing the updates is
that they did not fully remedy the excess emissions caused
by the factory-installed software. Respondent’s claims
thus rest on the fact that, as manufactured, the vehicles
violated CAA new-vehicle emission standards.
3. The Ohio majority also did not heed this Court’s
instruction in South Coast that courts, when interpreting
§ 209(a), should examine how EPA enforces the CAA’s
27
new-vehicle standards to identify the “standard-enforcement efforts that are proscribed by § 209.” 541 U.S. at
253. EPA’s enforcement of those standards is not limited
to pre-sale conduct. Instead, Congress directed EPA to
regulate comprehensively manufacturers’ emissions-related conduct throughout their cars’ useful life—from initial certification to in-use testing, defect reporting, warranty compliance, and recalls, as well as the authority to
punish post-sale tampering, see supra at 9-11. The CAA
also explicitly bars states from requiring manufacturers
to test vehicle emissions, 42 U.S.C. § 7541(h)(2)—the most
fundamental regulatory tool. Through the broad language of § 209(a), Congress barred states and localities
from effectively duplicating EPA’s enforcement of manufacturers’ emissions-related conduct, whether that conduct occurs in the process of initially designing the emissions controls or ensuring their effectiveness for the full
“useful-life” period required by Congress. Accordingly,
states and localities may not penalize manufacturers for
making impermissible changes to their certified emissions
controls.
Confirming this interpretation, EPA itself has understood § 209(a) to preempt states from requiring manufacturers to conduct post-sale recall programs:
In-use . . . recall programs . . . ensure compliance with standards required to be met by manufacturers at the time of certification of the engine. Because these in-use standards relate to
the original manufacture of the engine and
place the burden of compliance upon the manufacturer, they are deemed to be standards affecting a new motor vehicle.
59 Fed. Reg. 36,969, 36,973 n.15 (July 20, 1994); see also
49 Fed. Reg. 43,502, 43,503 (Oct. 29, 1984) (“[D]etermin[ing] that CARB’s emission-related defects reporting,
28
in-use vehicle recall and in-use vehicle enforcement testing regulations and procedures are included within the
scope of waivers of Federal preemption.” (emphases
added)). In other words, EPA recognized that nationwide, post-sale recalls are how manufacturers ensure that
cars on the road continue to meet new motor vehicle emission standards throughout their “useful life” and, consistent with South Coast and Allway Taxi, regulation of
such recalls thus “relat[es] to the control of emissions
from new motor vehicles.”
4. Apparently as an additional basis for finding no
preemption, the Ohio majority erroneously concluded
that Ohio’s anti-tampering statute falls outside of § 209(a)
because it “does not create or adopt any emissions-control
standards.” App., infra, 9a. But this Court has broadly
interpreted “standard[s]” under § 209(a) to encompass
not just “numerical” emissions limits, but also any requirement that a vehicle “must be equipped with a certain
type of pollution-control device, or must have some other
design feature related to the control of emissions.” South
Coast, 541 U.S. at 253. A prohibition on installing or updating a defeat device squarely fits within this definition.
Other than the Ohio majority, every court to consider this
issue—including the Ninth Circuit—has agreed that
when a state or county brings a tampering claim against a
manufacturer, that state or county is “attempt[ing] to enforce [a] ‘standard’” within the meaning of § 209(a). Counties, 959 F.3d at 1218 (quotation omitted); see also, e.g., In
re: Volkswagen “Clean Diesel” Mktg., Sales Pracs., &
Prod. Liab. Litig., 264 F. Supp. 3d 1040, 1052 (N.D. Cal.
2017); Tennessee, 2019 WL 1220836, at *9.
5. The Ohio majority was wrong to conclude that
Volkswagen’s interpretation of § 209(a) means that states
and localities are preempted “from regulating anything
relating to a vehicle’s emissions-control system in any
29
way . . . .” App., infra, 8a (emphasis added). That is not
correct. For example, post-sale tampering with emission
controls by mechanics and consumers within a state or locality does not “relat[e] to the control of emissions from
new motor vehicles” because such conduct does not place
the “burden of compliance” on the manufacturer or otherwise seek to duplicate EPA’s regulator role with respect
to manufacturers’ emissions-related conduct. Engine
Mfrs. Assn., 88 F.3d at 1086 & n.39 (citing Allway Taxi,
340 F. Supp. at 1124).
B. The Ohio Majority’s Implied Preemption Analysis Is Incorrect.
State law is conflict preempted when, “under the circumstances of th[e] particular case [it] stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress.” Geier v. Am. Honda
Motor Co., 529 U.S. 861, 873 (2000) (quotation omitted).
The dissent below correctly recognized that respondent’s
claims are impliedly preempted by the CAA. App., infra,
18a.
1. Congress granted EPA alone the tools to regulate
manufacturers’ conduct both pre- and post-sale, see supra
at 9-10, yet prohibited states from employing even the
most fundamental among them—emissions testing.
42 U.S.C. § 7541(h)(2). These statutory provisions confirm that permitting 50 states and 3,000 counties to regulate manufacturers’ post-sale updates would contravene
“Congress’s inten[tion] for EPA and the states and local
governments to serve specific and separate functions in
regulating emissions from in-use vehicles.” App., infra,
63a.
2. According to the Ohio majority, “as long as
Volkswagen complies with, rather than circumvents, federal law it will have nothing to worry about in Ohio.” App.,
30
infra, 13a. But even if this comment correctly states current Ohio law (contrary to Ohio’s claims, see supra at 21),
nothing in the Ohio majority’s CAA analysis—which
holds that CAA preemption simply does not apply after
sale—would bar states and localities from penalizing even
modifications that EPA already approved. As the court
recognized in Tennessee, these and other updates conducted under EPA oversight could be challenged and penalized by states and localities, even if (like here), those
updates reduce emissions. See 2019 WL 1220836, at *13
(if state’s claims could proceed, Volkswagen would continue to owe penalties for “vehicles with EPA-approved
modifications”).
The Ohio Supreme Court majority incorrectly asserted that “Volkswagen’s fears that it will be punished
for actions taken in response to EPA guidelines or for
modifications approved by the EPA are unfounded.”
App., infra, 13a. But even if compliance with federal
guidelines is a defense under Ohio law, that will not avoid
regulatory chaos for several reasons.
First, such a rule would simply invite a fight over the
validity of EPA approval, or a manufacturer’s understanding of EPA guidelines: a manufacturer would be required to prove to a court that any given software update
was “taken for the purpose of repair or replacement of the
emission control system” or “results in the system’s compliance with the ‘Clean Air Act Amendments.’” Ohio Rev.
Code § 3704.16(E)(1). Any state or locality that dislikes
an update could embroil a manufacturer in costly and
time-consuming litigation over whether the manufacturer’s disclosures to EPA were sufficient, or whether the
vehicles complied with federal emissions standards or
EPA guidelines.
Second, environmental laws of all 50 states (and thousands of localities) are far from uniform. By allowing each
31
of those jurisdictions to insist on compliance with its own
law, the Ohio majority creates a rule that would cause
complete chaos for manufacturers installing software updates in nationwide recalls.
Third, as Congress recognized, even “identical Federal and State standards, separately administered, would
be difficult for the industry to meet since different administration could easily lead to different answers to identical
questions.” H.R. Rep. No. 90-728, pp. 21-22. That is why
the Eleventh Circuit recognized that “any standard” in
§ 209(a) means any standard whether “federal or state,”
not solely “new or conflicting standards,” and invalidated
a state statute that merely required “compl[iance] with
the [CAA].” Sims v. Fla. Dept. of Hwy. Safety & Motor
Vehicles, 862 F.2d 1449, 1455 (11th Cir. 1989).
3. The threat of duplicative state and local government claims will make it impossible for EPA to discharge
its statutory mandate to quantify penalties. The CAA
prohibits post-sale tampering by manufacturers and establishes a penalty framework for such violations. See supra at 11-12. The CAA directs EPA to consider specified
factors in determining penalties for CAA violations, and
EPA’s detailed Civil Penalty Policy governs its exercise
of that authority. As the dissent correctly recognized, in
this case “the EPA carefully crafted a multibillion-dollar
penalty that balanced a variety of financial and environmental factors pursuant to 42 U.S.C. 7524.” App., infra,
18a. This comprehensive framework is meaningless if
states and localities may, after an EPA resolution, pursue
additional penalties based upon EPA’s own enforcement
work. Allowing such pile-on claims “threatens to undermine the enforcement power of the EPA and thereby the
efficacy of the entire federal scheme,” ibid., and therefore
conflicts with congressional intent, see Alabama, 279 So.
3d at 1126 (such a result “would seriously undermine the
32
congressional calibration of force for tampering by vehicle
manufacturers”); see also Arizona v. United States,
567 U.S. 387, 402 (2012) (“Permitting the State to impose
its own penalties . . . would conflict with the careful framework Congress adopted.”).
This concern is compounded by the massive penalties
authorized by state and local anti-tampering statutes. Respondent alone seeks up to $25,000 for “[e]ach day of each
violation,” for each of the “approximately 14,000” cars allegedly registered in Ohio, which, as the dissent recognized, conflicts both with the EPA’s immediate authority
and the longer-term goals underlying the” CAA. App., infra, 18a, 22a.
4. Permitting such state and local government claims
also will likely prevent EPA from securing prompt and
comprehensive resolution and remediation of future environmental harms. As the dissent emphasized, “if states
and municipalities are permitted to sue motor-vehicle
manufacturers based on admissions made when settling
civil actions with the EPA, manufacturers will be deterred
from making such admissions,” which would “severely reduce[]” the “efficacy of the EPA’s rulemaking and enforcement powers. . . .” App., infra, 21a.
In addition, as a result of the Ohio Supreme Court’s
decision, manufacturers may be unwilling to settle with
EPA without coordinating that settlement with every
state and local regulator that could try to second-guess
the settlement. Manufacturers would need either to
(i) obtain releases from every state and locality (a nearly
insurmountable task), or (ii) litigate with EPA while polluting cars remain on the road—even if the pollution could
be abated with a post-sale update. Either outcome would
undermine EPA’s ability to achieve quickly the type of nationwide environmental remediation it did here. As this
Court explained in Atlantic Richfield Co. v. Christian, 140
33
S. Ct. 1335, 1356 (2020), state-law claims “would interfere
with [EPA’s resolution]” and could “trigger a lack of cooperation between EPA and [manufacturers].”
The majority reasoned that “despite the likelihood of
subsequent actions by states and local governments here,
the federal EPA was tellingly able to resolve its case
against Volkswagen.” App., infra, 15a. But this ignores
that at the time of that nationwide settlement, the only
state or county claims filed against Volkswagen were
based on pre-sale conduct. Every court has agreed that
the CAA preempts such original manufacturing claims.
But with a path for all 50 states and thousands of localities
to escape preemption for post-sale claims, manufacturers
will be far less willing to entertain settlements with EPA.
5. Finally, respondent’s claims are also impliedly
preempted because they in essence reduce to allegations
of fraud on EPA, which is the agency’s—not state or local
governments’—responsibility to address. See Buckman
Co. v. Plaintiffs’ Legal Comm., 531 U.S. 341, 346-352
(2001). In Buckman, this Court dismissed state-law tort
claims against a medical-device manufacturer based on
misrepresentations to the FDA as impliedly preempted.
Id. at 348. This Court explained that “the FDA . . . has at
its disposal a variety of enforcement options,” and that allowing “[s]tate-law fraud-on-the-FDA claims [would] inevitably conflict with the FDA’s responsibility to police
fraud consistently with the Administration’s judgment
and objectives.” Id. at 349-350.
That is precisely the nature of respondent’s claims
here; as the dissent noted, respondent “is seeking to penalize Volkswagen for its fraud against the” EPA. App.,
infra, 18a. Indeed, in its briefing before the Ohio Supreme Court, respondent admits that “the whole purpose
of the second round of cheating” by Volkswagen “was to
cover up the first round.” Appellee’s Br., Ohio S.C. Dkt.,
34
at 38 (Aug. 10, 2020). In other words, respondent alleges
that Volkswagen misled a federal agency with broad enforcement powers and now respondent seeks to secondguess the penalty EPA already deemed appropriate. This
Court should confirm, as it did in Buckman, that it is
EPA’s responsibility alone to address that conduct.
CONCLUSION
The petition for a writ of certiorari should be granted.
35
Respectfully submitted.
JOSEPH EISERT
KING & SPALDING LLP
1700 Pennsylvania Ave.,
N.W. Ste. 200
Washington, D.C. 20006
L. BRADFIELD HUGHES
ELIZABETH L. MOYO
PORTER, WRIGHT, MORRIS &
ARTHUR LLP
41 S. High Street, 29th Floor
Columbus, OH 43215
Counsel for Petitioners Dr. Ing. h.c.
F. Porsche AG, and Porsche Cars
North America, Inc.
ROBERT J. GIUFFRA, JR.
Counsel of Record
DAVID M.J. REIN
MATTHEW A. SCHWARTZ
SULLIVAN & CROMWELL LLP
125 Broad Street
New York, NY 10004
(212) 558-4000
giuffrar@sullcrom.com
MICHAEL H. STEINBERG
SULLIVAN & CROMWELL LLP
1888 Century Park East
Los Angeles, CA 90067
JUDSON O. LITTLETON
SULLIVAN & CROMWELL LLP
1700 New York Ave., N.W.
Washington, DC 20006
HUGH J. BODE
JACKIE M. JEWELL
REMINGER CO. L.P.A.
101 West Prospect Ave.,
Ste. 1400
Cleveland, OH 44115-1093
Counsel for Petitioners
Volkswagen Aktiengesellschaft,
Audi Aktiengesellschaft,
Volkswagen Group of America,
Inc., and Audi of America,
LLC
AUGUST 2021
This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.