The Safer Affordable Fuel-Efficient (SAFE) Vehicles Rule Part One: One National Program

Federal RegisterSep 27, 2019

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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Parts 85 and 86

DEPARTMENT OF TRANSPORTATION

National Highway Traffic Safety Administration

49 CFR Parts 531 and 533

[NHTSA-2018-0067; EPA-HQ-OAR-2018-0283; FRL 10000-45-OAR]

RIN 2127-AL76; 2060-AU09

The Safer Affordable Fuel-Efficient (SAFE) Vehicles Rule Part One: One National Program

AGENCY:

Environmental Protection Agency and National Highway Traffic Safety Administration, Department of Transportation.

ACTION:

Withdrawal of waiver; final rule.

SUMMARY:

On August 24, 2018, the Environmental Protection Agency (EPA) and the Department of Transportation's National Highway Traffic Safety Administration (NHTSA) jointly published in the

Federal Register

a notice of proposed rulemaking entitled, “The Safer Affordable Fuel-Efficient (SAFE) Vehicles Rule for Model Years 2021-2026 Passenger Cars and Light Trucks.” In the NPRM, the agencies proposed new and amended greenhouse gas (GHG) and Corporate Average Fuel Economy (CAFE) standards for model year 2021 to 2026 light duty vehicles. EPA also proposed to withdraw the waiver it had previously provided to California for that State's GHG and ZEV programs under section 209 of the Clean Air Act. NHTSA also proposed regulatory text implementing its statutory authority to set nationally applicable fuel economy standards that made explicit that those State programs would also be preempted under NHTSA's authorities. In this action, the agencies finalize the two actions related to the waiver and preemption. Accordingly, in this document: EPA announces its decision to withdraw the waiver; and NHTSA finalizes regulatory text related to preemption. The agencies anticipate issuing a final rule on standards proposed in the NPRM in the near future.

DATES:

This joint action is effective November 26, 2019.

Judicial Review:

Pursuant to Clean Air Act section 307(b), any petitions for judicial review of this action must be filed in the United States Court of Appeals for the D.C. Circuit by November 26, 2019. Given the inherent relationship between the agencies' actions, any challenges to NHTSA's regulation should also be filed in the United States Court of Appeals for the D.C. Circuit.

see also

74 FR 32744, 32783 (July 8, 2009) (“EPA takes no position regarding whether or not California's GHG standards are preempted under EPCA.”).

After President Obama announced the agreement, NHTSA and EPA subsequently adopted CAFE and greenhouse gas emissions standards through rulemaking.

See

75 FR 25324 (May 7, 2010).

NHTSA confirms its view, stated in the proposal on preemption, that the agencies' consideration in 2012 of California's “deemed to comply”

regulatory provision as obviating NHTSA's consideration of preemption was erroneous.

This, too, was part of the negotiated agreement described above.

Under California's regulatory provision, California deemed manufacturers to be in compliance with certain of California's requirements if they complied with EPA's standards.

However, EPCA explicitly provides that all State requirements “related to” fuel economy standards, even those that may be identical or equivalent to Federal requirements are preempted by EPCA.

Moreover, as discussed in additional detail below, California recently changed its regulations so that it has no such “deemed to comply” provision should the forthcoming SAFE final rule adopt any regulatory alternative other than the no action alternative.

This change sets up a direct conflict between Federal and State requirements, exacerbating the conflict that exists even now.

See id.;

77 FR 62624, 62637 (Oct. 15, 2012).

See

75 FR 25324, 25328 (May 7, 2010).

83 FR 42986, 43233 (Aug. 24, 2018).

See id.

at 43233-34.

See

83 FR 42986, 42990 tbl. I-4 (Aug. 24, 2018); Cal. Code Regs. tit. 13, sec. 1961.3(c). California changed its regulation following issuance of NHTSA and EPA's proposed rule.

See

State of Cal., Office of Admin. Law, Notice of Approval of Regulatory Action (Dec. 12, 2018),

https://www.arb.ca.gov/regact/2018/leviii2018/form400dtc.pdf

. NHTSA recognized the potential for such a change in the proposal. 83 FR 42986, 43233 n.495 (Aug. 24, 2018).

Congress's intent to provide for uniform national fuel economy standards is frustrated when State and local actors regulate in this area. In the proposal, NHTSA explained that the need for regulatory certainty, along with the clear prospect of disharmony, required it to address preemption.

NHTSA also explained its desire to seek comments on this important issue from State and local officials, along with other interested members of the public.

NHTSA in fact received many comments from State and local governments, NGOs, industry, and others concerning preemption.

This comment process helped ensure that the agency considered all facets of this significant issue before reaching a final determination in this rule.

83 FR 42986, 43233 (Aug. 24, 2018).

Id.

See, e.g.,

California Air Resources Board (CARB), Docket No. NHTSA-2018-0067-11873; Alliance of Automobile Manufacturers, Docket No. NHTSA-2018-0067-12073; Joint Submission from the States of California et al. and the Cities of Oakland et al., Docket No. NHTSA-2018-0067-11735.

NHTSA also discussed the broad and clear text of EPCA's express preemption provision.

As NHTSA explained in the proposal, unlike the Clean Air Act, there is no set of circumstances under EPCA in which it would be appropriate or permissible for NHTSA to waive preemption or allow States or local governments to adopt or enforce identical or equivalent requirements.

EPCA does not provide NHTSA with any waiver authority whatsoever. To ensure Federal primacy over this area, EPCA broadly preempts all State and local laws “related to” fuel economy standards or average fuel economy standards.

NHTSA reiterates, consistent with the proposal, that in this rulemaking NHTSA is concluding that State and local requirements that relate to fuel economy standards by directly or substantially affecting corporate average fuel economy levels are preempted.

83 FR 42986, 43233-34 (Aug. 24, 2018).

Id.

at 43233.

49 U.S.C. 32919(a).

83 FR 42986, 43233 (Aug. 24, 2018).

NHTSA also described Supreme Court precedent interpreting the meaning of “related to.”

In addition to the plain language of the statute, NHTSA applied to EPCA the guidance from Supreme Court case law to consider both the objectives of the statute and the effect of the State laws on the Federal standards.

As NHTSA explained, the primacy of a single national fuel economy standard, set by the Federal government, was an important objective of Congress in enacting EPCA.

Id.

at 43233-34.

In adopting EISA, Congress did not repeal or amend EPCA's express preemption provision.

While Congress included in EISA a savings provision preventing EISA from limiting preexisting authority or responsibility conferred by any law, or from authorizing violation of any law,

the savings clause did not purport to expand either EPA's or NHTSA's preexisting authority or responsibility.

NHTSA recognized that during debate on the floor, some Members of Congress made statements about the savings provision's impact on California's ability to set tailpipe greenhouse gas emissions standards.

NHTSA affirms its view, consistent with Supreme Court precedent, that such legislative history does not alter the plain text of the statute.

In the end, Congress did not change EPCA's preemption provision when it adopted EISA, despite clearly having the opportunity to do so.

Because States lacked preexisting authority to set tailpipe greenhouse gas emissions standards, as a result of EPCA's preemption provision, EISA's savings clause did not give them that authority.

See

EISA, Public Law 110-140 (2007).

42 U.S.C. 17002.

See id.

83 FR 42986, 43234 (Aug. 24, 2018).

See Food Mktg. Inst.

Argus Leader Media,

139 S. Ct. 2356, 2364 (2019) (“In statutory interpretation disputes, a court's proper starting point lies in a careful examination of the ordinary meaning and structure of the law itself. Where, as here, that examination yields a clear answer, judges must stop. Even those of us who sometimes consult legislative history will never allow it to be used to `muddy' the meaning of `clear statutory language.' ”) (internal citations omitted).

See

EISA, Public Law 110-140 (2007); 83 FR 42986, 43234 (Aug. 24, 2018).

In the proposal, NHTSA also described in detail the reasons that tailpipe carbon dioxide emissions regulations or prohibitions are “related to” fuel economy standards.

NHTSA explained that carbon dioxide emissions are a necessary and inevitable byproduct of burning gasoline: The more fuel a vehicle burns or consumes, the more carbon dioxide it emits.

Based on the physical and mathematically measurable relationship between carbon dioxide emissions and fuel economy, EPCA has always specified that compliance with fuel economy standards is determined through tests and calculation procedures established by EPA.

Specifically, compliance with fuel economy standards is based almost entirely on carbon dioxide emission rates.

As NHTSA noted, it is significant that in enacting EPCA, Congress both adopted test procedures reliant on the direct relationship between carbon dioxide emissions and fuel economy, and preempted State and local governments from adopting requirements related to fuel economy standards in the same law.

83 FR 42986, 43234 (Aug. 24, 2018).

Id.

49 U.S.C. 32904(c).

See

83 FR 42986, 43234 (Aug. 24, 2018).

Id.

NHTSA affirms in this final rule that a State or local requirement limiting tailpipe carbon dioxide emissions from automobiles has the direct and substantial effect of regulating fuel consumption and, thus, is “related to” fuel economy standards. Likewise, since carbon dioxide emissions constitute the overwhelming majority of tailpipe carbon emissions, a State regulation of all tailpipe greenhouse gas emissions from automobiles or prohibiting all tailpipe emissions is also “related to” fuel economy standards and preempted by EPCA.

NHTSA is also finalizing its conclusion that EPCA does not preempt all potential State or local regulation of greenhouse gas emissions from vehicles. As NHTSA explained in the proposal,

some greenhouse gas emissions from vehicles are not related to fuel economy because they have either no effect on fuel economy, or only an insignificant effect on fuel economy.

NHTSA provided an example of a requirement with no bearing on fuel economy: a State regulation of vehicular refrigerant leakage.

NHTSA also explained that State safety requirements that have only an incidental impact on fuel economy, such as a requirement to use child seats, is not preempted because it does not sufficiently relate to fuel economy standards.

NHTSA also confirms its view that, if preempted requirements are combined with requirements not related to fuel economy, ECPA would void only the preempted portion of the law.

Id.

at 43234-35.

Id.

at 43235.

Id.

In addition, NHTSA and EPA are confirming their determination, in this joint final action, that a Clean Air Act waiver does not waive EPCA preemption. As explained in the proposal, a State or local law or regulation related to automobile fuel economy standards is void

ab initio

under the preemptive force of EPCA.

As support, the proposal cited longstanding Supreme Court case law concerning the Supremacy Clause and action in violation of a statutory prohibition.

In sum, “[i]t is basic to this constitutional command [in the Supremacy Clause] that all conflicting state provisions be without effect.”

Id.

Maryland

Louisiana,

451 U.S. 725, 746 (1981) (citing

McCulloch

Maryland,

4 Wheat. 316,

427 (1819)).

As explained in the proposal, avoiding preemption under one Federal law has no necessary bearing on another Federal law's preemptive effect.

For purposes of the present rule, this conclusion is confirmed by Section 209 of the Clean Air Act, which explicitly states that a waiver of preemption pursuant to that provision of the Clean Air Act only relieves “application of this section.”

NHTSA also confirms its view that a Clean Air Act waiver does not “federalize” State or local requirements preempted by EPCA.

83 FR 42986, 43235 (Aug. 24, 2018).

42 U.S.C. 7543(b)(1).

NHTSA and EPA also explained in the proposal their disagreement with decisions from district courts in California and Vermont that held that EPCA did not preempt State tailpipe greenhouse gas emissions standards.

The agencies particularly disagree with those district courts' characterization of the “related to” language in EPCA's preemption provision as narrow, their reliance on California's application for a Clean Air Act waiver, and the courts' implied preemption analyses.

As the proposal explained, these decisions are legally flawed, and NHTSA is not barred from proceeding with its preemption determination here.

83 FR 42986, 43232-38 (Aug. 24, 2018);

see Green Mountain Chrysler

Crombie,

508 F. Supp. 2d 295 (D. Vt. 2007);

Cent. Valley Chrysler-Jeep, Inc.

Goldstene,

529 F. Supp. 2d 1151 (E.D. Cal. 2007), as corrected (Mar. 26, 2008).

83 FR 42986, 43232-38 (Aug. 24, 2018).

See id.

at 43235.

NHTSA also reaffirms its views on implied preemption, as described in the proposal.

State or local limitations or prohibitions on tailpipe carbon dioxide emissions from automobiles directly conflict with the objectives of EPCA. NHTSA balances statutory factors in setting CAFE standards at “the maximum feasible average fuel economy level that the Secretary decides the manufacturers can achieve in that model year” (49 U.S.C. 32902(a)).

State requirements, made based on State-specific determinations unbound by the considerations in EPCA, frustrate NHTSA's statutory role. If one or more States may issue competing or overlapping requirements affecting fuel economy standards, industry must also apply resources and effort at meeting standards applicable only to discrete parts of the country in addition to those spent to comply with the Federal standards. In accordance with EPCA, manufacturers' “average fuel economy” is calculated based on specific statutory requirements. 49 U.S.C. 32901(a)(5), 32904. Manufacturers earn credits for exceeding average fuel economy standards. 49 U.S.C. 32903. This statutory compliance structure is impeded when States or local governments attempt to set or enforce their own requirements, which necessarily apply to manufacturers at a State or local level. This interferes with the national “average fuel economy” program. The broad preemption provision adopted by Congress in EPCA clearly demonstrates the intention for a single national set of standards that consider, among other things, economic feasibility and consumer choice. Indeed, the entire purpose of a balanced standard is defeated if a State can place its thumb on the scale. Likewise, separate State or local requirements interfere with the compliance regime under EPCA of performance determined based on nationwide fleet averages, which determine manufacturers' credits or shortfalls.

See

49 U.S.C. 32903.

See id.

at 43237-38.

49 U.S.C. 32902(f).

NHTSA also finalizes the view, as discussed in the proposal, that ZEV mandates are preempted by EPCA.

Such laws, which require that a certain number or percentage of vehicles sold or delivered in a State by a manufacturer meet ZEV requirements, directly and substantially affect fuel economy standards by requiring manufacturers to eliminate fossil fuel use in a portion of their fleet. Like State or local tailpipe GHG emissions standards, ZEV mandates require the application of additional efforts and resources beyond those needed to comply with Federal standards. ZEV mandates also directly conflict with the goals of EPCA as they apply irrespective of the Federal statutory factors the Secretary of Transportation (through NHTSA) is required to consider in setting fuel economy standards, including technological feasibility and economic practicability. In the proposal, NHTSA described, as an example, California's ZEV mandate, which manufacturers must comply with individually for each State adopting California's mandate.

This regime of State mandates forces manufacturers to expend scarce resources on specific technology regardless of consumer demand, and regardless of what the Secretary has determined in her judgment to be the appropriate expenditure of resources necessary to comply with fuel economy standards set in accordance with the balancing required by EPCA.

See id.

at 43238-39.

Id.

NHTSA also confirms its view that the preemption portion of this joint final action is a statement of what Federal law requires and is effective without regard to any particular model year of vehicles and without regard to the details of the fuel economy and greenhouse gas emissions standards the agencies have set previously or set in the future.

In other words, NHTSA's regulation concerning EPCA preemption is independent of and severable from the specific standards it ultimately adopts for model year 2021 through 2026 automobiles. Given the need for clarity on this issue, NHTSA has decided to issue this as a separate final rule and will later finalize the standards for model year 2021 through 2026 automobiles. NHTSA's preemption regulation formalizes its longstanding position on preemption and incorporates that position into the Code of Federal Regulations provisions concerning passenger automobile

average fuel economy standards at 49 CFR 531.7 and 49 CFR part 531, appendix B, and light truck fuel economy standards at 49 CFR 533.7 and 49 CFR part 533, appendix B. These portions of the regulations are operable without regard to any specific Federal standards and requirements in 49 CFR parts 531 and 533 or other parts of the Code of Federal Regulations. Likewise, NHTSA's determination that a State or local law or regulation of tailpipe greenhouse gas emissions from automobiles is related to fuel economy standards is severable from NHTSA's determination that State or local ZEV mandates are related to fuel economy standards.

See id.

at 43239.

B. Scientific Relationship Between Tailpipe Carbon Dioxide Emissions and Fuel Economy Standards

NHTSA is finalizing its conclusion that State requirements regulating tailpipe carbon dioxide emissions from automobiles are related to fuel economy standards. The relationship between fuel economy standards and regulations that limit or prohibit tailpipe carbon dioxide emissions from automobiles is a matter of science and mathematics. Commenters did not and cannot dispute the direct scientific link between tailpipe carbon dioxide emissions from automobiles and fuel economy. Thus, State and local laws and regulations that regulate such tailpipe emissions are preempted under EPCA.

The relationship between carbon dioxide and fuel economy is described in several statements in an appendix to parts 531 and 533 that NHTSA is finalizing in this document.

First, “[a]utomobile fuel economy is directly and substantially related to automobile tailpipe emissions of carbon dioxide.” 49 CFR part 531, appx. B, section (a)(1)(A); 49 CFR part 533, appx. B, section (a)(1)(A).

No commenters disputed or otherwise specifically commented on this statement.

83 FR 42986, 43489 (Aug. 24, 2018).

Second, “[c]arbon dioxide is the natural byproduct of automobile fuel consumption.” 49 CFR part 531, appx. B, section (a)(1)(B); 49 CFR part 533, appx. B, section (a)(1)(B).

One comment identified this as a correct statement,

and another highlighted this fact in noting NHTSA's longstanding and consistent view on preemption.

No commenters disagreed with this factual statement.

Id.

Walter Kreucher, Docket No. NHTSA-2018-0067-0444.

Association of Global Automakers, Docket No. NHTSA-2018-0067-12032.

Third, “[t]he most significant and controlling factor in making the measurements necessary to determine the compliance of automobiles with the fuel economy standards in this part [531 and 533] is their rate of tailpipe carbon dioxide emissions.” 49 CFR part 531, appx. B, section (a)(1)(C); 49 CFR part 533, appx. B, section (a)(1)(C).

The Alliance of Automobile Manufacturers similarly stated that the measurements for CAFE compliance involved “the same tests, vehicles, sales data, and emissions measurements that the EPA uses to measure carbon dioxide and tailpipe GHG emissions.”

Fiat Chrysler Automobiles (FCA) also reiterated this point from the Alliance's comments,

and the Competitive Enterprise Institute highlighted NHTSA's discussion of compliance measurement in agreeing that fuel economy standards and greenhouse gas emissions standards are inherently related.

CARB did not dispute this factual statement, but pointed out that carbon dioxide emissions are only one part of the compliance testing regime Congress approved—a fact that NHTSA had already recognized in its proposal.

As NHTSA explained in the proposal, as specified by EPCA, compliance with the CAFE standards is and has always been based on the rates of emission of carbon dioxide, carbon monoxide, and hydrocarbons from covered vehicles, but primarily on the emission rates of carbon dioxide.

The role of carbon dioxide is approximately 100 times greater than the combined role of the other two relevant carbon exhaust gases.

83 FR 42986, 43489 (Aug. 24, 2018).

Alliance of Automobile Manufacturers, Docket No. NHTSA-2018-0067-12073.

Fiat Chrysler Automobiles (FCA), Docket No. NHTSA-2018-0067-11943.

Competitive Enterprise Institute, Docket No. NHTSA-2018-0067-12015.

See

California Air Resources Board (CARB), Docket No. NHTSA-2018-0067-11873; 83 FR 42986, 43234 (Aug. 24, 2018).

See

83 FR 42986, 43234 (Aug. 24, 2018).

71 FR 17566, 17655-56 (Apr. 6, 2006); 83 FR 42986, 43234 (Aug. 24, 2018).

Fourth, “[a]lmost all technologically feasible reduction of tailpipe emissions of carbon dioxide is achievable through improving fuel economy, thereby reducing both the consumption of fuel and the creation and emission of carbon dioxide.” 49 CFR part 531, appx. B, section (a)(1)(D); 49 CFR part 533, appx. B, section (a)(1)(D).

The South Coast Air Quality Management District (South Coast) commented that NHTSA previously proposed, in 2008, adopting similar regulatory text that used the word “most” instead of “almost all.”

South Coast asserts that the 2008 proposal shows that NHTSA “strains to exaggerate” the overlap between greenhouse gas emissions standards and fuel economy standards.

NHTSA disagrees. While South Coast points to hybrid electric vehicles and ZEVs, it offers no evidence to refute the fact that almost all technologically feasible reduction of tailpipe emissions of carbon dioxide is achievable through improving the fuel economy levels of the vehicles in question.

83 FR 42986, 43489 (Aug. 24, 2018).

South Coast Air Quality Management District, Docket No. NHTSA-2018-0067-11813.

Id.

Fifth, “as a practical matter, regulating fuel economy controls the amount of tailpipe emissions of carbon dioxide, and regulating the tailpipe emissions of carbon dioxide controls fuel economy.” 49 CFR part 531, appx. B, section (a)(1)(E); 49 CFR part 533, appx. B, section (a)(1)(E).

No commenter disputed this statement. The National Automobile Dealers Association agreed, putting it this way: “the physics and chemistry involved with fuel economy and GHG emissions standards are such that controlling fuel economy controls GHGs and controlling GHGs controls fuel economy.”

It is also worth noting that technology cannot reduce the amount of carbon dioxide produced by combusting one gallon of gas. Instead, only technology that reduces the amount of gas needed to drive one mile (fuel economy) will reduce the amount of carbon dioxide generated per mile.

83 FR 42986, 43489 (Aug. 24, 2018).

National Automobile Dealers Association, Docket No. NHTSA-2018-0067-12064.

These statements in the regulatory appendix concerning the scientific relationship between automobile carbon dioxide emissions and fuel economy provide the foundation for NHTSA's preemption analysis. Due to this scientific relationship, which no commenter refuted, a regulation of tailpipe carbon dioxide emissions from automobiles that does not explicitly state that it is regulating fuel economy nevertheless has the effect of doing so. The label a State chooses to put on its regulations certainly is not dispositive in a preemption analysis.

See, e.g., Nat'l Meat Ass'n.

Harris,

565 U.S. 452, 464 (2012). One comment, from the Northeast States for Coordinated Air Use Management (NESCAUM), asserted that “California's GHG standards do not mention fuel economy or attempt to

regulate fuel economy.”

To such comments, the agencies must ask ourselves the age-old question: “What's in a name?” and conclude “[t]hat which we call a rose by any other name would smell as sweet.”

Arguments focused on form, or worse—labels—over substance are not persuasive. Moreover, it is indisputable that EPCA preemption reaches beyond explicit regulations of fuel economy and into regulations “related to” fuel economy. The words “related to” cannot be read out of the statute or narrowed in a way that undermines Congress's broad preemption intent.

Northeast States for Coordinated Air Use Management (NESCAUM), Docket No. NHTSA-2018-0067-11691.

W. Shakespeare, Romeo & Juliet, II, ii (47-48) (1597).

It is a matter of undisputed fact that the more fuel a vehicle burns or consumes, the more carbon dioxide it emits. There is a necessary relation between the regulation of one side of this equation and the regulation of the other. In other words, improving fuel economy has two inherently related benefits: Reducing fuel consumption and reducing carbon dioxide emissions. State and local governments cannot evade the preemptive sweep of EPCA by emphasizing only one side of these benefits and downplaying or ignoring the other when describing their regulations.

To further illustrate the situation, consider types of regulations for a swimming pool. If the pool has a hose on one side that is filling the pool and a hose on the other side that is draining the pool, you can regulate the water level in the pool by controlling either hose. Limiting the amount of water released by the inflow hose, is not itself a regulation of the outflow hose. But it is nonsensical to say that regulating the pool's inflow is not related to regulating its outflow. A regulation of either hose necessarily affects the level of water in the same pool. The Supreme Court has recognized preemption should appropriately apply in such contexts.

See Rowe

N.H. Motor Transp. Ass'n,

552 U.S. 364, 368, 72 (2008) (looking at effect of regulation to determine it was preempted even though “it tells

shippers

what to choose rather than

carriers

what to do” where Federal law preempted State laws “related to a price, route, or service of any motor carrier . . . with respect to the transportation of property”);

Engine Mfrs. Ass'n.

South Coast Air Quality Mgmt. Dist.,

541 U.S. 246, 255 (2004) (explaining that it “would make no sense” to allow a State regulation to evade preemption simply because it addressed the purchase, rather than manufacture, of a federally regulated product).

C. Importance of One National Standard

To ensure uniform national fuel economy standards, Congress determined that it was appropriate to preempt States and local governments from adopting or enforcing laws or regulations related to the Federal standards. Effectuating Congress's goal requires NHTSA to address preemption. Preemption is necessary to the effectiveness of NHTSA's existing and forthcoming fuel economy standards and regulatory certainty into the future, specifically, one set of national standards. Congress made clear, through the required comprehensive balancing of factors and underlined by its inclusion of an express preemption provision, that State and local requirements impede the national fuel economy program. Thus, NHTSA is exercising its authority in this document, under 49 U.S.C. 32901 through 32903, to promulgate regulations to protect the integrity of the national program. This confirms the clear preemptive nature of NHTSA's standards, as stated in 49 U.S.C. 329219 and provides additional clarity on the scope of preemption, to carry out NHTSA's statutory authority to set nationally applicable standards.

A consistent refrain throughout many of the comments NHTSA received on its preemption proposal was the need for one national standard.

Preemption provides for just that uniformity. Indeed, that was the very purpose for Congress's including the express preemption provision in EPCA.

See, e.g.,

Alliance of Automobile Manufacturers, Docket No. NHTSA-2018-0067-12073; Association of Global Automakers, Docket No. NHTSA-2018-0067-12032.

In enacting EPCA's preemption provision, Congress explicitly recognized the need to avoid a patchwork of requirements related to fuel economy standards, and gave NHTSA the exclusive authority to set and enforce fuel economy standards with discrete and limited exceptions as set forth in 49 U.S.C. 32919. NHTSA's exclusive authority is exercised through joint rulemaking with EPA for the very reason that tailpipe carbon dioxide emissions standards are directly and substantially related to fuel economy standards and apply concurrently to the same fleet of vehicles. This joint action enables the Federal government to administer its overlapping obligations while avoiding inconsistency.

See Massachusetts

EPA,

549 U.S. 497, 532 (2007).

Recent developments in California provide good examples of the need for a national standard and the problem that Congress sought to address in enacting EPCA's preemption provision. After the agencies published the proposal, California amended its regulations such that manufacturers are bound to comply with requirements consistent with the no action alternative for model years 2021 through 2026,

regardless of what the Federal standards are ultimately adopted. Moreover, even as to the existing Federal standard, California's regulations are impermissible under EPCA because only a Federal standard can apply nationally. State or local standards necessarily apply at the State and local level, and therefore are inherently inconsistent with the nationwide average standards pursuant to EPCA.

See

49 U.S.C. 32901(a)(5)-(6), (13). Likewise, State and local compliance regimes interfere with the national program of credits and shortfalls for nationwide fleet performance by making compliance across the country inordinately complicated, inefficient, and expensive.

See id.

32903.

83 FR 42986, 42990 tbl. I-4 (Aug. 24, 2018).

Despite a widespread shared belief in the importance of one national standard, NHTSA's proposal on preemption received a mix of support and opposition in comments. Some commenters weighed in on preemption largely only to emphasize the importance of having a national standard.

Other commenters that supported the substance of the proposal agreed with NHTSA's analysis of both express and implied preemption, as well as the conclusion that both State laws that limit and State laws that prohibit carbon dioxide tailpipe emissions from automobiles, or have the direct or substantial effect of doing so, are preempted.

On the other hand, those commenters that opposed the substance of the proposal asked NHTSA to withdraw and not finalize any regulatory text concerning preemption.

Doing so would ignore the very purpose of EPCA's fuel economy provisions and NHTSA's statutory obligation under EPCA: To balance statutory factors in order to

establish standards that are “the maximum feasible average fuel economy level that the Secretary decides the manufacturers can achieve in that model year.”

NHTSA disagrees with the comments that ask it to withdraw its proposal and not finalize any regulatory text on preemption. Given the present circumstances, failing to address this issue amounts to ignoring the existence of EPCA's preemption provision, and allowing for State and local requirements that interfere with NHTSA's statutory duty to set nationally consistent fuel economy standards.

See, e.g.,

Toyota Motor North America, Docket No. NHTSA-2018-0067-12150.

See, e.g.,

Alliance of Automobile Manufacturers, Docket No. NHTSA-2018-0067-12073; Competitive Enterprise Institute, Docket No. NHTSA-2018-0067-12015.

See, e.g.,

Joint Submission from the States of California et al. and the Cities of Oakland et al., Docket No. NHTSA-2018-0067-11735.

49 U.S.C. 32902(a), (f).

The rule NHTSA is adopting in this document, under its authority to implement a national automobile fuel economy program in 49 U.S.C. 32901 through 32903, will ultimately provide needed certainty concerning preemption into the future. While EPCA's preemption provision has been in place for decades, the present circumstances demonstrate the need for greater clarity on this issue.

NHTSA's statutory role is to set nationwide standards based on a reasoned balancing of statutory factors. State and local requirements—unbound by these considerations—undermine NHTSA's ability to set standards applicable across the entire country. NHTSA is obliged to set standards at “the maximum feasible average fuel economy level that the Secretary decides the manufacturers can achieve in that model year.” 49 U.S.C. 32902(a). The regulation NHTSA is finalizing in this document implements that authority in 49 U.S.C. 32902 by clarifying the State requirements that impermissibly interfere with its statutory role to set nationally applicable standards. As explained in the proposal, as a practical matter, State and local actors would generally only set requirements that have the effect of requiring a

higher

level of average fuel economy (lest their standards lack impact).

That supposition has now been demonstrated by California's preemptive action to effectively set higher standards than the Federal standards, should the forthcoming final SAFE rule finalize anything lower than the no action alternative described in the NPRM for model years 2021 through 2026. This state of regulatory inconsistency—and even the potential for such inconsistency—is anathema to the express terms and purposes of EPCA, which does not even permit States to set fuel economy standards identical to those set by NHTSA in accordance with the statutory requirements.

Even identical standards interfere with the national program by imposing requirements not applicable to nationwide fleets and impose compliance regimes inconsistent with EPCA.

See, e.g.,

49 U.S.C. 32903 (establishing specific requirements for earning and using credits based on nationwide average fuel economy performance).

83 FR 42986, 43238 (Aug. 24, 2018).

See

49 U.S.C. 32902(a), 32919(a).

California's recent action also demonstrates disregard for NHTSA's mandate to set standards in no more than 5 model year increments.

To avoid inconsistent State standards, California's regulatory change would require NHTSA to adopt the most stringent of nine regulatory alternatives it considered in the proposal.

NHTSA did not bind itself in any way to that regulatory alternative in its 2012 final rule, and to do so would have been contrary to law.

See id.

32902(a), (b)(3)(B).

See

Cal. Code Regs. tit. 13, section 1961.3(c);

see

83 FR 42986, 42990 tbl. I-4 (Aug. 24, 2018) (listing augural standards as baseline/no action alternative, and eight other alternatives under consideration).

See

49 U.S.C. 32902(b)(3)(B); 77 FR 62624, 62627 (Oct. 15, 2012).

Automakers must comply with the Federal fuel economy and GHG emissions requirements, and do so at significant cost. States like California that do not abide by the constraints of Federal law, and instead set inconsistent or even duplicative requirements related to fuel economy standards unjustifiably increase manufacturers' compliance costs, which must be either passed along to consumers or absorbed by the industry. Clarity on preemption is therefore essential to ensure the industry has the ability to efficiently expend its resources to comply with the nationally applicable standards determined by the Federal government in light of the Federal statutory factors that must be balanced, without the need to separately account for or comply with State or local requirements.

While it is of course ideal for States to independently abide by the constraints of Federal law, this does not reflect the current state of affairs. NHTSA's awareness of laws and regulations already in place, as well as the public comments it received in response to its proposal, confirm the need for additional clarity on the boundaries of EPCA preemption. Wrongly decided decisions by district courts in California and Vermont (appeals of which were abandoned as a condition of the negotiated agreement prior to the 2012 rulemaking), as well as NHTSA's own silence on this issue in recent years, are sowing confusion, emphasizing the need for the clarity provided by this final rule affirmatively establishing One National Program.

As described in the proposal, NHTSA's views on preemption are longstanding. However, NHTSA has not directly addressed preemption in its most recent CAFE rulemakings. South Coast disputes that NHTSA's views on preemption are longstanding, pointing to legal and factual developments since. South Coast Air Quality Management District, Docket No. NHTSA-2018-0067-11813. That NHTSA has not opined on developments does not mean that its views have changed. South Coast also points to some wording changes to argue that NHTSA has shifted positions. NHTSA disagrees. It has consistently held the position that State regulation of tailpipe greenhouse gas emissions from automobiles is preempted, and South Coast has not identified any statements to the contrary. In any event, the fact that NHTSA has not addressed EPCA preemption in its most recent rulemakings highlights the need to address the issue without further delay.

D. NHTSA's Final Rule Provides Clarity and Certainty on EPCA Preemption

This final rule provides needed clarity on the scope of EPCA preemption. NHTSA is adopting regulatory text, including a detailed appendix, in addition to discussing this issue in the preamble to the rule, specifically to provide clarity on EPCA's preemption provision.

NHTSA rejects the assertion advanced in one comment that NHTSA did not provide notice and a fair opportunity to comment on its interpretation of EPCA preemption.

Any such suggestion is negated by the host of commenters that addressed the issue of preemption in response to the proposal. NHTSA proposed codifying its preemption interpretation in parts 531 and 533, and all commenters were explicitly asked to comment on the specific proposed regulatory text as well as on the explanation of NHTSA's interpretation set out in the preamble to the NPRM.

Joint Submission from the States of California et al. and the Cities of Oakland et al., Docket No. NHTSA-2018-0067-11735.

NHTSA also disagrees with a comment from the California Air Resources Board (CARB) that asserted the proposal was not clear on the scope of preemption.

The regulatory text articulates the boundaries of both express and implied preemption, with appropriate limitation to State or local laws or regulations that: (1) Regulate or prohibit tailpipe carbon dioxide emissions from automobiles, or (2) have the direct or substantial effect of regulating or prohibiting tailpipe carbon

dioxide emissions from automobiles or automobile fuel economy. In the proposal, NHTSA provided examples of laws that would not be preempted.

CARB did not identify any examples of laws where additional clarity was needed.

California Air Resources Board (CARB), Docket No. NHTSA-2018-0067-11873; Joint Submission from the States of California et al. and the Cities of Oakland et al., Docket No. NHTSA-2018-0067-11735.

83 FR 42986, 43235 (Aug. 24, 2018).

It should not be difficult for States or local governments to ascertain whether their laws or regulations regulate or prohibit tailpipe carbon dioxide emissions. As NHTSA explained in the proposal and reiterates in this document, both requirements specific to tailpipe carbon dioxide emissions from automobiles and those that address all tailpipe greenhouse gas emissions from automobiles are preempted, given that carbon dioxide emissions constitute the overwhelming majority of those emissions.

Likewise, ZEV mandates are also preempted.

Id.

at 43234.

See id.

at 43238-39.

NHTSA also does not believe it should be difficult for States or local governments to determine if their laws or regulations have the direct or substantial effect of regulating or prohibiting tailpipe carbon dioxide emissions from automobiles or automobile fuel economy.

To aid in this effort, in the proposal, NHTSA described requirements that would not be preempted because they have only incidental impact on fuel economy or carbon dioxide emissions.

The examples NHTSA provided were child seat mandates and laws governing vehicular refrigerant leakage.

South Coast argued that EPCA preemption would not reach possible State and local requirements concerning lease arrangements or requirements for used vehicles. South Coast Air Quality Management District, Docket No. NHTSA-2018-0067-11813. NHTSA does not agree. EPCA preempts requirements related to fuel economy standards or average fuel economy standards for automobiles covered by an average fuel economy standard under EPCA. If a State requirement falls within this scope, it is preempted. For example, a State could not prohibit dealers from leasing automobiles or selling used automobiles unless they meet a fuel economy standard.

83 FR 42986, 43235 (Aug. 24, 2018).

Id.

Moreover, contrary to assertions in some comments, NHTSA's adoption of regulatory text does provide a limiting principle

and is not overbroad.

100

Congress set the extraordinarily broad boundaries of preemption in EPCA, where it specified that State and local laws “related to fuel economy standards” are preempted. The words “related to” have meaning and cannot be read out of the statute. To the extent that questions of interpretation remain about the scope of preemption, that is a consequence of the statute, and is far from unique—particularly with respect to the “related to” language, which Congress has used in multiple contexts.

101

The Supreme Court has opined on the meaning of similar terms. However, NHTSA recognizes the concerns about the appropriate limitations of preemption. Notwithstanding the broad sweep of EPCA preemption, NHTSA intends to assert preemption only over State or local requirements that directly or substantially affect corporate average fuel economy standards.

Joint Submission from the States of California et al. and the Cities of Oakland et al., Docket No. NHTSA-2018-0067-11735.

100

Id.;

California Air Resources Board (CARB), Docket No. NHTSA-2018-0067-11873; South Coast Air Quality Management District, Docket No. NHTSA-2018-0067-11813.

101

See Rowe

N.H. Motor Transp. Ass'n,

552 U.S. 364, 370-73 (2008);

Am. Airlines

Wolens,

513 U.S. 219, 226-27 (1995);

Shaw

Delta Airlines, Inc.,

463 U.S. 85, 97 (1983).

Through its adoption of specific regulatory text in this document, NHTSA is providing guidance on the boundary set by Congress, as well as under principles of implied preemption. Notably, NHTSA has not concluded that implied preemption broadens the scope of preemption established by Congress. As NHTSA recognized in its proposal, some greenhouse gas emissions from automobiles have no relation to fuel economy and therefore may be regulated by States or local governments without running afoul of EPCA preemption. NHTSA provided examples of State or local requirements that are not preempted. It also specifically invited comment on the extent to which State or local requirements can have some incidental impact on fuel economy or carbon dioxide emissions without being related to fuel economy standards, and thus are not preempted. NHTSA did not receive any directly responsive comments regarding this issue, including from State and local government commenters, suggesting that they do not currently have questions about how preemption would apply to their laws or regulations.

102

Some commenters did assert that California's greenhouse gas emissions standards or ZEV mandates have only an incidental impact on fuel economy, or that NHTSA was not clear why those requirements have more than an incidental impact on fuel economy. California Air Resources Board (CARB), Docket No. NHTSA-2018-0067-11873; Northeast States for Coordinated Air Use Management (NESCAUM), Docket No. NHTSA-2018-0067-11691; South Coast Air Quality Management District, Docket No. NHTSA-2018-0067-11813. NHTSA disagrees. It discussed these issues in detail in parts b, f, and g of the preemption discussion of the proposed rule and incorporates those discussions here. 83 FR 42986, 43234, 37-39 (Aug. 24, 2018).

As an additional limiting principle, NHTSA reiterates the statement in its proposal that only a portion of a law or regulation would be preempted, where possible. This would be the case if the law or regulation combined multiple severable elements that were allowable and not allowable, such as with a regulation of both vehicular refrigerant leakage and tailpipe carbon dioxide emissions—refrigerant leakage requirements could remain in place while tailpipe carbon dioxide emissions regulations would necessarily be preempted.

NHTSA rejects the argument made by certain commenters that the presumption against preemption applies in this context.

103

The presumption is not appropriate given EPCA's express statutory preemption provision.

See Puerto Rico

Franklin Cal. Tax-Free Trust,

136 S. Ct. 1938, 1946 (2016) (explaining that “because the statute `contains an express pre-emption clause,' we do not invoke any presumption against pre-emption but instead `focus on the plain wording of the clause, which necessarily contains the best evidence of Congress' pre-emptive intent.' ”) (quoting

Chamber of Commerce of United States of Am.

Whiting,

563 U.S. 582, 594 (2011)).

103

See

California Air Resources Board (CARB), Docket No. NHTSA-2018-0067-11873; Center for Biological Diversity et al., Docket No. NHTSA-2018-0067-12000; South Coast Air Quality Management District, Docket No. NHTSA-2018-0067-11813.

NHTSA reaffirms the view that EPCA's express preemption provision is broad and clear. NHTSA's review and assessment of comments has not changed its view. Some comments noted that the statute specifically preempts laws or regulations related to fuel economy

standards.

104

They assert that States and local governments are unconstrained by EPCA preemption in regulating future model year vehicles, before they are covered by a fuel economy standard issued by NHTSA. NHTSA disagrees.

104

South Coast Air Quality Management District, Docket No. NHTSA-2018-0067-11813;

see also

Joint Submission from the States of California et al. and the Cities of Oakland et al., Docket No. NHTSA-2018-0067-11735.

EPCA preempts State and local laws and regulations that relate to: (1) Fuel economy standards,

(2) average fuel economy standards for automobiles covered by an average fuel economy standard under 49 U.S.C. Chapter 329. Currently, automobiles through model year 2021 are covered by an average fuel economy standard under Chapter 329.

105

NHTSA will continue setting standards for future model years, pursuant to the mandate in 49 U.S.C. 32902(a) that “[a]t least 18 months

before the beginning of

each

model year, the Secretary of Transportation shall prescribe by regulation average fuel economy standards for automobiles manufactured by a manufacturer in that model year.”

106

NHTSA prescribes “average fuel economy standards for at least 1, but not more than 5, model years.” 49 U.S.C. 32902(b)(3)(B). State and local requirements that address automobiles beyond model year 2026 are therefore preempted if they relate to “fuel economy standards” that NHTSA is required to establish in the future. To conclude otherwise would be to make the impermissible assumption that NHTSA will not carry out Congress's command.

105

See

77 FR 62624, 62637 (Oct. 15, 2012).

106

49 U.S.C. 32902(a) (emphasis added).

The regulation NHTSA is finalizing in this document implements that authority in 49 U.S.C. 32902 by making clear that State and local requirements that relate to fuel economy standards for future model year vehicles conflict with NHTSA's ability to set nationally applicable standards for those vehicles in the future and thus are impliedly preempted. Manufacturers make design decisions well in advance of production, as Congress recognized by adding “lead time” provisions to the statute. State and local requirements for automobiles not yet covered by a NHTSA standard could force manufacturers into plans that are not economically practical or otherwise inconsistent with EPCA's statutory factors—since States and local governments are not bound by those considerations. By the time future model year vehicles are produced, they will be covered by a NHTSA standard. If States or local governments were permitted to issue regulations related to fuel economy for future model year vehicles, manufacturers would at least act at risk of running afoul of those non-Federal regulations. At least some manufacturers would undoubtedly feel compelled to conform with such non-Federal regulations until the Federal government sets its own standards. Even if non-Federal regulations are not ultimately enforceable as to produced vehicles (since a Federal fuel economy standard will be adopted, in time), they clearly conflict with the congressionally imposed constraint of issuing standards for not more than 5 model years. Such far-reaching regulations are based on predictions about the future that are inevitably less reliable the further in time they reach. Manufacturers are therefore put in an untenable position of either planning towards State and local regulations based on potentially outdated or unrealistic expectations about the future, or ignoring them before knowing the Federal standards that will eventually apply and acting at risk of enforcement by non-Federal actors. Moreover, different States could impose different and conflicting fuel economy requirements on manufacturers for future model years, a result directly at odds with the single national standard established by EPCA. Any of these scenarios demonstrates that the position that EPCA preemption does not reach regulation of model year vehicles not currently covered by a NHTSA standard is flawed. State or local requirements related to fuel economy standards for any model year automobiles are preempted.

The regulatory text and preamble discussion clearly articulates NHTSA's views on the meaning of “related to” in EPCA's express preemption provision, which are confirmed following NHTSA's review and assessment of comments. As discussed in the proposal, EPCA is not unique in using the phrase “related to” to set the scope of preemption.

107

NHTSA described prior Supreme Court case law interpreting this phrase as broad and including such conceptual relationships as having an “association with” or “connection to.” In its comments, South Coast asserted that NHTSA's discussion was “legally erroneous” because it did not include “discussion and analysis” of a line of Supreme Court cases that began with

New York State Conference of Blue Cross

Travelers Ins. Co.,

514 U.S. 645 (1995).

108

South Coast's criticism is unfounded; NHTSA directly recognized the

Travelers

line of cases which look to the objectives of the statute as a guide to the scope of preemption.

See Travelers,

514 U.S. at 656. In the proposal, NHTSA specifically applied this analysis to the CAFE context and cited a 1997 case quoting

Travelers.

109

The

Travelers

line of cases supports NHTSA's position on preemption. As NHTSA explained in the proposal, EPCA's preemption provision demonstrates that one of Congress's objectives was to create a single set of national fuel economy standards. The language Congress enacted preempts all State and local laws and regulations that relate to fuel economy standards, and does not exempt even State requirements that are identical to Federal requirements. Moreover, NHTSA's proposal was not intended as a comprehensive recitation of all case law addressing the use of “related to” in statutory preemption provisions. There are many Supreme Court decisions that support the breadth of that language beyond those specifically cited in the proposal.

110

For example, in

Rowe,

the Court recognized that a State statute that forbid certain retailers from employing a delivery service unless it followed certain delivery procedures was preempted by the Federal Aviation Administration Authorization Act, which preempted States from enacting or enforcing laws “related to a price, route, or service of any motor carrier.”

Rowe,

552 U.S. at 368, 71-73. The Court recognized that the State law was directed at shippers rather than carriers, but found that the

effect

of the requirements impacted carriers.

Id.

at 372. The Court explained that State laws “whose `effect' is `forbidden' under federal law are those with a `

significant

impact' on carrier rates, routes or services.”

Id.

at 375 (emphasis in original). Likewise, here, regulation of tailpipe carbon dioxide emissions has a direct and undeniably substantial effect on fuel economy.

107

83 FR 42986, 43233 (Aug. 24, 2018).

108

South Coast Air Quality Management District, Docket No. NHTSA-2018-0067-11813.

109

83 FR 42986, 43233 (Aug. 24, 2018).

110

See, e.g.,

Rowe

N.H. Motor Transp. Ass'n,

552 U.S. 364, 367-72 (2008).

However, NHTSA, of course, agrees that “related to” is not unlimited.

111

NHTSA specifically discussed the limitations of preemption in its proposal, which only seeks to preempt State or local requirements that directly or substantially affect corporate average fuel economy. NHTSA also provided specific examples of State laws and regulations that would not be preempted, as well as clearly articulating some that are preempted. As discussed above, the regulatory text NHTSA is adopting in this document is appropriately limited and consistent with the scope of preemption established by Congress.

111

As the Supreme Court has stated, “the breadth of the words `related to' does not mean the sky is the limit.”

Dan's City Used Cars, Inc.

Pelkey,

569 U.S. 251, 260 (2013).

With respect to implied preemption, NHTSA agrees with comments that assert it is a fact-driven analysis.

112

However, NHTSA disagrees that there was an insufficient factual record for it to evaluate the conflict either at the time of the proposal or now.

113

NHTSA is well aware of State regulations of tailpipe greenhouse gas emissions (including carbon dioxide) and ZEV mandates, and described several of these in the proposal. The foundational

factual analysis involves the scientific relationship between automobile fuel economy and automobile tailpipe emissions of carbon dioxide. NHTSA discussed this scientific relationship in detail. No commenter contested the scientific and mathematical relationship between them.

112

California Air Resources Board (CARB), Docket No. NHTSA-2018-0067-11873; Joint Submission from the States of California et al. and the Cities of Oakland et al., Docket No. NHTSA-2018-0067-11735.

113

California Air Resources Board (CARB), Docket No. NHTSA-2018-0067-11873.

Contrary to CARB's contention in its comments, the fact that NHTSA acknowledged that some State requirements that incidentally affect greenhouse gas emissions are not preempted does not demonstrate that there is an insufficient record for finding that other laws do pose a conflict to NHTSA's statutory role to set nationwide fuel economy standards for automobiles.

114

To the contrary, NHTSA carefully considered and acknowledged the limitations of EPCA preemption by discussing a variety of types of laws, and providing specific examples.

114

Id.

NHTSA also disagrees with the claim made in some comments that it does not have delegated authority to issue a regulation on this topic, and is not owed deference or weight for its regulation implementing EPCA's express preemption provision or the conflict resulting from State or local laws or regulations.

115

Congress gave the Secretary of Transportation express authorization to prescribe regulations to carry out her duties and powers. 49 U.S.C. 322(a).

116

NHTSA has delegated authority to carry out the Secretary's authority under Chapter 329 of Title 49, which encompasses EPCA's preemption provision, as well as EISA.

117

NHTSA therefore has clear authority to issue this regulation under 49 U.S.C. 32901 through 32903 to effectuate a national automobile fuel economy program unimpeded by prohibited State and local requirements. As explained here, the statute is clear on the question of preemption, and NHTSA must carry it out.

See Coventry Health Care of Missouri, Inc.

Nevils,

137 S. Ct. 1190, 1193 n.3 (2017) (holding that preemption applies and “the statute alone resolves this dispute”). However, to the extent there is any ambiguity, NHTSA is the expert agency and its regulation adopted in this document is entitled to deference.

118

As explained in the proposal, NHTSA is the expert agency given authority to administer the Federal fuel economy program and has expert authority to interpret and apply the requirements of EPCA, including preemption.

See Medtronic, Inc.

Lohr,

518 U.S. 470 (1996) (“Because the FDA is the federal agency to which Congress has delegated its authority to implement the provisions of the Act, the agency is uniquely qualified to determine whether a particular form of state law `stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress,'

Hines

Davidowitz,

312 U.S. 52, 67, 61 S. Ct. 399, 404, 85 L. Ed. 581 (1941), and, therefore, whether it should be pre-empted.”);

see also Nat'l Rifle Ass'n

Reno,

216 F.3d 122 (D.C. Cir. 2000) (rejecting argument that Attorney General lacked authority to issue regulation that she described as clarifying that certain State requirements were not preempted by Federal law). This is particularly true given the scientific nature of the relationship between fuel economy and greenhouse gas emissions.

See Geier

Am. Honda Motor Co., Inc.,

529 U.S. 861 (2000) (“Congress has delegated to DOT authority to implement the statute; the subject matter is technical; and the relevant history and background are complex and extensive. The agency is likely to have a thorough understanding of its own regulation and its objectives and is `uniquely qualified' to comprehend the likely impact of state requirements.”).

115

Id.; Center for Biological Diversity et al.,

Docket No. NHTSA-2018-0067-12000; Joint Submission from the States of California et al. and the Cities of Oakland et al., Docket No. NHTSA-2018-0067-11735; South Coast Air Quality Management District, Docket No. NHTSA-2018-0067-11813.

116

49 U.S.C. 322(a) specifically states: “The Secretary of Transportation may prescribe regulations to carry out the duties and powers of the Secretary. An officer of the Department of Transportation may prescribe regulations to carry out the duties and powers of the officer.”

117

49 CFR 1.95(a), (j).

118

See, e.g., Chevron USA, Inc.

Nat'l Res. Defense Council, Inc.,

467 U.S. 837, 843-45 (1984).

NHTSA is also finalizing its view that its regulation concerning EPCA preemption is independent and severable from any particular CAFE standards adopted by NHTSA. NHTSA's implementation of its authority to set nationally applicable fuel economy standards under 49 U.S.C. 32902, by clarifying the scope of preemption, is separate from its decision on the appropriate standards for any given model years. No commenter disagreed that this portion of the proposed rule is severable. The Alliance of Automobile Manufacturers agreed, noting case law stating that whether a regulation is severable depends on the agency's intent and whether the remainder of the regulation may still function sensibly.

119

Both these considerations support severability here. Given the lack of any comments to the contrary, NHTSA is finalizing its conclusion that the standards for model year 2021 through 2026 automobiles are independent of and severable from the decision NHTSA is finalizing in this document on EPCA preemption. Moreover, given the need for clarity on preemption, and in order to give effect to existing standards established pursuant to 49 U.S.C. 32902, NHTSA is issuing this final rule now before making a final determination on the standards portion of the proposal.

119

Alliance of Automobile Manufacturers, Docket No. NHTSA-2018-0067-12073.

E. Direct and Substantial Relationship Between ZEV Mandates and Fuel Economy Standards

NHTSA is also finalizing its conclusion that a State law or regulation that either explicitly prohibits tailpipe carbon dioxide emissions from automobiles or has the direct or substantial effect of doing so is preempted, both pursuant to the express preemption provision in 49 U.S.C. 32919 and implied preemption, as an obstacle to NHTSA's national program pursuant to 49 U.S.C. 32901-32903.

As explained in greater detail in the proposal, carbon dioxide emissions constitute the overwhelming majority of tailpipe carbon emissions.

120

The only feasible way of eliminating tailpipe carbon dioxide emissions altogether is to eliminate the use of fossil fuel. Thus, regulations that require a certain number or percentage of a manufacturer's fleet of vehicles sold in a State to be ZEVs that produce no carbon dioxide tailpipe emissions necessarily affect the fuel economy achieved by the manufacturer's fleet as well as the manufacturer's strategy to comply with applicable standards, and are therefore preempted under EPCA. These regulations therefore have just as a direct and substantial impact on corporate average fuel economy as regulations that explicitly eliminate carbon dioxide emissions, and are therefore preempted. NHTSA described types of ZEV mandates in detail in its proposal, including California's ZEV mandate, which has been adopted by ten other States.

121

120

83 FR 42986, 43234 (Aug. 24, 2018).

121

See id.

at 43239. At the time of the proposal, nine States had adopted California's ZEV mandate. Since that time, a tenth State—Colorado—has also done so.

https://www.colorado.gov/pacific/cdphe/aqcc

(indicating that ZEV standards were adopted on August 16, 2019).

ZEV mandates force the development and commercial deployment of ZEVs, irrespective of the technological feasibility or economic practicability of doing so. The Alliance of Automobile Manufacturers commented that this interference with NHTSA's balancing of

statutory factors and forced adoption of specific design approaches are grounds for finding ZEV mandates preempted.

122

NHTSA agrees.

122

Alliance of Automobile Manufacturers, Docket No. NHTSA-2018-0067-12073.

In setting fuel economy standards, among the factors that NHTSA must consider are technological feasibility and economic practicability. 49 U.S.C. 32902(f). NHTSA is also required to set performance-based standards, and not design mandates.

123

See

49 U.S.C. 32902(b)(2). These considerations are at odds with ZEV mandates.

123

South Coast asserts that ZEV mandates are performance based because any vehicle meeting the requirements can be certified as a ZEV. South Coast Air Quality Management District, Docket No. NHTSA-2018-0067-11813. But, it is inherent that the requirements—ZEV means zero-emissions vehicle—dictate a particular design. In any event, for the reasons described above, ZEV mandates are related to fuel economy standards however framed.

NHTSA disagrees with comments that expressed the view that ZEV mandates are not related to fuel economy standards because ZEVs emit no criteria pollutants or greenhouse gases.

124

Just as a State may not require a specific level of tailpipe carbon dioxide emissions from automobiles, since doing so effectively sets a specific level of fuel economy, a State may not prohibit tailpipe carbon dioxide emissions from automobiles. That is the equivalent of setting a specific emissions level—zero, which also prohibits the use of fossil fuel. In fuel economy terms, that is akin to requiring a vehicle to having the maximum conceivable level of fuel economy. A prohibition on ozone-forming emissions has the same effect, since the only vehicles capable of emitting no ozone-forming emissions are vehicles that do not use fossil fuels. As NHTSA explained, this type of regulation poses a direct conflict with EPCA, particularly as it relates to requiring a percentage of technological fleet penetration—represented by credits or actual vehicles—that an automaker must distribute into a State. ZEV mandates force investment in specific technology (battery electric and fuel cell technology) rather than allowing manufacturers to improve fuel economy by whatever technological path they choose, allowing them to pursue more cost-effective technologies that better reflect consumer demand, as is the case under the CAFE program. ZEV mandates also create an even more fractured regulatory regime. As NHTSA explained in the proposal, manufacturers must satisfy ZEV mandates in

each

State individually.

125

124

South Coast Air Quality Management District, Docket No. NHTSA-2018-0067-11813.

125

83 FR 42986, 43239 (Aug. 24, 2018);

see

Competitive Enterprise Institute, Docket No. NHTSA-2018-0067-12015.

NHTSA also disagrees with a comment that argued ZEV mandates are not preempted because the definition of fuel economy in EPCA is in reference to gasoline or equivalent fuel.

126

EPCA preempts State and local requirements related to fuel economy standards. That ZEV mandates are not themselves expressed as mile-per-gallon standards for fossil-fuel powered vehicles is not dispositive. NHTSA explained the relationship between ZEV mandates and fuel economy standards in detail in the proposal and reiterates that discussion here.

127

126

California Air Resources Board (CARB), Docket No. NHTSA-2018-0067-11873.

127

See

83 FR 42986, 43238-39 (Aug. 24, 2018).

Many commenters expressed support for ZEV mandates as matter of policy.

128

NHTSA does not take issue with those policy objectives to the extent they do not conflict with EPCA or otherwise impermissibly interfere with the Federal regulation of fuel economy. NHTSA notes that States and local governments are able to continue to encourage ZEVs in many different ways, such as through investments in infrastructure and appropriately tailored incentives.

129

States and local governments cannot adopt or enforce regulations related to fuel economy standards, which include ZEV mandates, but they are able to pursue their policy preferences, as long as the manner in which they do so does not conflict with Federal law.

128

National Coalition for Advanced Transportation (NCAT), Docket No. NHTSA-2018-0067-11969; Union of Concerned Scientists, Docket No. NHTSA-2018-0067-12039.

129

Certain incentives are preempted by EPCA.

See Metro. Taxicab Bd. of Trade

City of New York,

615 F.3d 152 (2d Cir. 2010) (holding that New York City rule that incentivized hybrid taxis by allowing taxi owners to charge more for the lease of hybrid vehicles were “based expressly on the fuel economy of a leased vehicle, [and] plainly fall within the scope of the EPCA preemption provision.”).

F. EISA Did Not Narrow or Otherwise Alter EPCA Preemption

NHTSA reiterates, as it discussed in the proposal, that EISA did not narrow the express preemption clause in 49 U.S.C. 32919. In fact, EISA did not alter EPCA's express preemption clause in any way. As a factual matter, Congress neither amended or nor repealed EPCA's preemption clause with the enactment of EISA. EISA's savings clause did not amend EPCA. The savings clause, codified at 42 U.S.C. 17002, states: “Except to the extent expressly provided in this Act or an amendment made by this Act, nothing in this Act or an amendment made by this Act supersedes, limits the authority provided or responsibility conferred by, or authorizes any violation of any provision of law (including a regulation), including any energy or environmental law or regulation.”

130

One commenter pointed out that the proposal did not include the clause before the first comma when it quoted the language of the savings provision. South Coast Air Quality Management District, Docket No. NHTSA-2018-0067-11813. However, NHTSA disagrees with the commenter that the introductory clause has a substantive impact on this issue. That clause states: “Except to the extent expressly provided in this Act or an amendment made by this Act . . .” But, EISA did not expressly authorize States to regulate or prohibit tailpipe greenhouse gas emissions from automobiles.

As described in the proposal, EISA's savings clause does not expand any pre-existing authority. Instead, the clause expressly states that it did not impose a new limitation on such authority. By its plain text, EISA also does not authorize any violation of any provision of law. This includes EPCA's express preemption clause. Thus, activities prohibited by the express preemption clause before EISA, such as State laws related to fuel economy standards, continued to be prohibited after EISA.

The text of the savings clause is what controls its meaning, not statements by individual Members of Congress. South Coast claims that NHTSA did not discuss such statements in detail, including statements by Senator Feinstein.

131

NHTSA did recognize in the proposal that the Congressional Record contains statements by certain Members of Congress about their individual views, but explained that such statements lack authority. As NHTSA explained in the proposal, such statements cannot expand the scope of the savings clause or clarify it. Individual Members, even those who may have played a lead role in drafting a particular bill, cannot speak for the body of Congress as a whole.

132

NHTSA interprets the statutory language based on the words actually adopted by both Houses and signed by the President.

131

South Coast Air Quality Management District, Docket No. NHTSA-2018-0067-11813.

132

N.L.R.B.

SW Gen., Inc.,

137 S. Ct. 929, 942-43 (2017) (“Passing a law often requires compromise, where even the most firm public demands bend to competing interests. What Congress ultimately agrees on is the text that it enacts, not the preferences expressed by certain legislators. . . .[F]loor statements by individual legislators rank among the least illuminating forms of legislative history.” (citations omitted)).

NHTSA likewise does not find persuasive the argument that Congress did not enact additional statutory language in EISA preempting California from regulating tailpipe greenhouse gas

emissions from automobiles. A comment from three Senators provides documents related to potential proposals to do so.

133

There are many reasons for Congress not to adopt proposals set forward by one interest group or another, including, of course, because they were unnecessary. That is the case here where EPCA's preemption provision already prevented States from adopting and enforcing requirements related to fuel economy standards.

133

U.S. Senators Tom Carper, Diane Feinstein and Edward J. Markey, Docket No. NHTSA-2018-0067-11938

Given the words of the savings clause, NHTSA rejects the argument made by South Coast that the “EISA saving provision designedly narrows EPCA's express preemption provision, and Congress intended this result.”

134

The savings clause did not amend the preemption provision in EPCA. Moreover, what the savings clause actually says is that it does

not

limit authority. If a regulation is preempted by EPCA, a State has no authority to enforce it, and EISA did not change that status quo. If Congress wanted to amend the broad and clear express preemption provision in EPCA, it could have and would have done so. It did not.

134

South Coast Air Quality Management District, Docket No. NHTSA-2018-0067-11813.

Because NHTSA disagrees that States could permissibly regulate tailpipe greenhouse gas emissions from automobiles prior to EISA, it also disagrees with comments that argue that Congress “preserved” the ability of States to do so through the savings clause (or, alternatively, that efforts to “revoke” such preexisting authority failed).

135

Joint Submission from the States of California et al. and the Cities of Oakland et al., Docket No. NHTSA-2018-0067-11735.

NHTSA also disagrees with a comment by South Coast that argues that EISA's savings provision forecloses implied preemption.

136

The specific words that South Coast points to are the opening clause: “Except to the extent expressly provided in this Act or an amendment made by this Act.” This language does not address preemption under EPCA. That introductory clause merely modifies the remainder of the savings provision, which goes on to say that “nothing in this Act or an amendment made by this Act . . . limits the authority provided . . . or authorizes any violation of any provision of law . . . .” This statutory language prevents EISA from limiting preexisting authority or responsibility conferred by any law or from authorizing violation of any law. States and local governments had no preexisting authority or responsibility to set requirements related to fuel economy standards. Such requirements are void

ab initio.

The savings provision also does not purport to expand pre-existing authority or responsibility, nor did Congress amend in any way the broad express preemption provision in EPCA when it enacted EISA. Moreover, implied preemption as applied here is not a limitation based in EISA or the Clean Air Act. Implied preemption is instead based on the Secretary of Transportation's preexisting responsibility under EPCA to balance statutory factors in setting nationwide fuel economy standards for automobiles.

136

South Coast Air Quality Management District, Docket No. NHTSA-2018-0067-11813.

The provision in EISA concerning minimum requirements for Federal government vehicles also does not change NHTSA's view. Several comments referenced this provision, which states that the EPA “Administrator shall take into account the most stringent standards for vehicle greenhouse gas emissions applicable to and enforceable against motor vehicle manufacturers for vehicles sold anywhere in the United States” in identifying vehicles for the Federal government fleet. 42 U.S.C. 13212(f)(3)(B).

137

Commenters argued that the phrase “the most stringent standards” would be superfluous if only EPA were allowed to set standards and, in addition, if EPA had not set any such standards at the time EISA was enacted. On the contrary, this provision is fully consistent with NHTSA's view of preemption, based on the plain text of EPCA's express preemption provision. The language in the EISA provision specifically indicates that it applies only to “the most stringent standards . . .

enforceable

against motor vehicle manufacturers.”

138

This means that EPA could consider only otherwise lawful standards. States and local governments are not permitted to enforce standards preempted by EPCA. 49 U.S.C. 32919(a).

137

California Air Resources Board (CARB), Docket No. NHTSA-2018-0067-11873; Joint Submission from the States of California et al. and the Cities of Oakland et al., Docket No. NHTSA-2018-0067-11735.

138

42 U.S.C. 13212(f)(3)(B) (emphasis added).

However, EPCA

does

specifically permit a State or local government to “prescribe requirements for fuel economy for automobiles obtained for its own use.” 49 U.S.C. 32919(c). It is logical that the Federal government would consider the requirements for States and local government vehicle fleets in evaluating vehicles for its own Federal government fleet. Such requirements would be applicable to and could be enforced against manufacturers in contractual procurement relationships with States or local governments. In any event, this provision concerning a limited set of vehicles (Federal government vehicles) is not grounds for undoing the uniform national fuel economy standards applicable to all light vehicles as prescribed by Congress in EPCA.

In enacting this provision in EISA, Congress required the EPA Administrator to “issue guidance identifying the makes and model number of vehicles that are low greenhouse gas emitting vehicles” to aid in identifying vehicles for the Federal government's own fleet. 42 U.S.C. 13212(f)(3)(A). The provision requiring the Administrator to “take into account the most stringent standards for vehicles greenhouse gas emissions” provides a consideration for that guidance.

Id.

13212(f)(3)(B). It is not plausible that Congress intended this limited provision concerning guidance on Federal government procurement to disrupt the longstanding express preemption provision in EPCA.

Further, to read this procurement-related provision as somehow showing that Congress intended to allow California to establish laws related to fuel economy standards is unreasonable, as doing so would put California in an unequal setting vis-a-vis other states, and that would not make sense in this context. “The Act also differentiates between the States, despite our historic tradition that all the States enjoy `equal sovereignty.' ”

Northwest Austin Municipal Utility District Number One

Holder,

557 U.S. 193, 203 (2009). A “departure from the fundamental principal of equal sovereignty requires a showing that a statute's disparate geographic coverage is sufficiently related to the problem that it targets.”

Id.

Congress rejected any such prospect in the area of fuel economy by adding an unwaivable preemption clause in EPCA. NHTSA does not presume that Congress, when adopting EISA, impliedly discarded the equal application of EPCA to the States without a clear statement of intent to do so and a recitation of the “extraordinary conditions” permitting California special authority related to fuel economy.

Id.

at 211. “Congress . . . does not alter the fundamental details of a regulatory scheme in vague terms or ancillary provisions—it does not, one might say, hide elephants in mouseholes.”

139

Whitman

Am. Trucking Ass'ns,

531 U.S. 457, 468 (2001).

G. Prior Case Law Does Not Preclude Preemption

Certain comments opposed to NHTSA's proposal rely upon the Supreme Court's decision in

Massachusetts

EPA

to argue that regulation of tailpipe emissions is separate and distinct from regulation of fuel economy.

140

NHTSA disagrees with attempts to stretch the holding of this decision well beyond the issues addressed by the Court. The Court did not address EPCA preemption in

Massachusetts

EPA,

or State regulations pursuant to a Clean Air Act waiver. The Court addressed only EPA's own statutory obligations, which have no bearing on EPCA preemption.

140

California Air Resources Board (CARB), Docket No. NHTSA-2018-0067-11873;

see

Northeast States for Coordinated Air Use Management (NESCAUM), Docket No. NHTSA-2018-0067-11691.

Moreover, as discussed above, NHTSA and EPA conduct joint rulemaking consistent with the Supreme Court's decision. The Court acknowledged that NHTSA and EPA's statutory obligations may overlap, but that the agencies may both administer those obligations while avoiding inconsistency.

141

NHTSA therefore disagrees with the comment's assertion that regulations of tailpipe greenhouse gas emissions and fuel economy are truly separate and distinct. The agencies issue joint rules precisely because of the unavoidable scientific relationship between the two.

141

Massachusetts

EPA,

549 U.S. 497, 532 (2007).

A number of comments also rely on the prior district court decisions in California and Vermont in opposing NHTSA's proposal on preemption.

142

As NHTSA discussed in the proposal, those courts previously concluded that State tailpipe greenhouse gas emissions standards were not preempted by EPCA.

143

NHTSA continues to disagree with both of these district court decisions, as described in detail in the proposal.

144

This includes the California district court's erroneous view of the requirement in EPCA for NHTSA to consider “other standards” in setting fuel economy standards.

145

In reaching its conclusion, the court misconstrued a separate provision of EPCA that, by its explicit terms, has had no effect for decades. Importantly, neither district court considered NHTSA's views on preemption in construing the statute NHTSA administers.

146

Although the United States filed an amicus brief opposing the Vermont court's decision in the Second Circuit, that appeal was not decided on the merits due to the automotive industry's withdrawal of the appeal as a part of a negotiated agreement connected to the national framework. In its brief, the United States specifically raised the district court's failure to consider NHTSA's views concerning preemption, let alone give them weight.

147

Withdrawal of appeals was expressly part of the agreement to establish the national framework.

142

Joint Submission from the States of California et al. and the Cities of Oakland et al., Docket No. NHTSA-2018-0067-11735; South Coast Air Quality Management District, Docket No. NHTSA-2018-0067-11813.

143

83 FR 42986, 43235 (Aug. 24, 2018).

144

Id.

at 43235-38.

145

Id.

at 43236-37.

146

Id.

at 43236; Proof Brief for the United States as Amicus Curiae, 07-4342-cv (2d Cir. filed Apr. 16, 2008).

147

See

Proof Brief for the United States as Amicus Curiae, 07-4342-cv (2d Cir. filed Apr. 16, 2008). NHTSA also was not a litigant in the district court cases and, therefore, did not have a full opportunity to raise its views.

The Vermont district court also attempted to reconcile EPCA and the Clean Air Act by asserting that a Clean Air Act waiver converts State requirements to “other motor vehicle standards” that NHTSA must consider in setting fuel economy standards. As NHTSA noted in the proposal, even the California district court found that there was no legal foundation for the view that a State regulation pursuant to a Clean Air Act waiver becomes the equivalent of a Federal regulation.

148

This is an erroneous finding not based on precedent and is unsupported by applicable law.

148

83 FR 42986, 43236 (Aug. 24, 2018).

As described in the proposal, NHTSA also disagrees with the California and Vermont district courts' implied preemption analyses.

149

NHTSA does not believe those courts fully considered the conflict posed by State regulations and, in one case, even went so far as to assert erroneously that NHTSA could simply defer to California in revising its standards.

150

Those decisions are not binding on NHTSA.

149

Id.

at 43238.

150

Cent. Valley Chrysler-Jeep, Inc.,

529 F. Supp. 2d at 1179. NHTSA has a statutory obligation to set standards at “the maximum feasible average fuel economy level that the Secretary decides the manufacturers can achieve in that model year,” in accordance with the statutory considerations. 49 U.S.C. 32902(a), (f). Thus, NHTSA cannot simply defer to a State. For example, the only standards that California would permit to satisfy California requirements for model years 2021 through 2025 are the augural standards.

See

Cal. Code Regs. tit. 13, § 1961.3(c). If NHTSA finalizes a determination that the augural standards are not “maximum feasible,” as discussed in the proposal, then it would be contrary to law for NHTSA to nevertheless adopt them in deference to California.

Given NHTSA's previously stated views on those decisions, arguments that rely on the decisions are not persuasive. Commenters did not provide any new information or analysis of those district court decisions that caused the agency to change its view on the decisions.

151

NHTSA incorporates the prior discussion of those decisions from the proposal here.

151

As noted by a commenter, the appeals were dismissed before decision as a practical matter, and despite strong arguments on the merits. Fiat Chrysler Automobiles (FCA), Docket No. NHTSA-2018-0067-11943.

While NHTSA need not belabor its views again here, it is worth emphasizing, as did commenters, that both district courts ignored NHTSA's published prior statements on preemption in rendering their decisions.

152

Some comments seem to suggest that this failure to address NHTSA's views represents a substantive rejection of those views.

153

NHTSA disagrees. The district courts simply entirely failed to consider the agency's views; they did not consider and reject them or even find that they were not due any weight. This is among the reasons that NHTSA is formalizing its views in a regulation. As the expert agency charged with administering EPCA, NHTSA is tasked with balancing the four statutory factors in determining the “maximum feasible average fuel economy standards” for each model year.

154

In doing so, NHTSA has the unique ability to determine whether State or local regulations would undermine this balancing.

155

NHTSA's views on preemption certainly should be considered by any court evaluating this issue. This is particularly true given that the relationship between fuel economy standards and greenhouse gas emissions is a matter of science.

152

83 FR 42986, 43236 (Aug. 24, 2018).

153

See

California Air Resources Board (CARB), Docket No. NHTSA-2018-0067-11873.

154

49 U.S.C. 32902(f).

155

See id.

One commenter also erroneously asserts that collateral estoppel will bar the Department of Justice from defending a final rule that asserts State greenhouse gas emissions regulations are preempted by EPCA.

156

Nonmutual offensive collateral estoppel does not apply to the United States.

United States

Mendoza,

464 U.S. 154, 162 (1984). Moreover, the Federal government was not even a party to the prior litigation involving EPCA preemption. The assertion that the Department of Justice would be barred from defending this final rule lacks merit.

156

See

South Coast Air Quality Management District, Docket No. NHTSA-2018-0067-11813.

H. A Clean Air Act Waiver and SIP Approvals Do Not Foreclose EPCA Preemption

Both agencies are finalizing their tentative conclusion from the proposal that a Clean Air Act waiver does not also foreclose EPCA preemption. EPCA does not provide for a waiver of preemption, either by NHTSA or by another Federal agency. EPA, like NHTSA, does not have the authority to waive EPCA preemption. Therefore, its grant of a Clean Air Act waiver cannot operate to waive EPCA preemption. NHTSA discussed the basis for its view that a Clean Air Act waiver does not “federalize” EPCA-preempted State requirements in detail in its proposal. NHTSA reaffirms that discussion.

Several comments recited the district court's holding in

Green Mountain Chrysler

that it need not consider EPCA preemption due to the EPA waiver.

157

NHTSA discussed in detail in the proposal its reasons for disagreeing with that decision and commenters did not identify any new information that caused NHTSA to change its view. NHTSA agrees with commenters that reject the flawed reasoning of the district court.

158

As one commenter explained, the argument that an EPA waiver federalizes State requirements renders the EPCA preemption provision a nullity.

159

As the commenter noted, this incorrect interpretation would enable States to even issue explicit fuel economy requirements so long as they were under cover of a waiver from EPA. EPA does not have authority to waive any aspect of EPCA preemption, nor does NHTSA.

157

See, e.g.,

California Air Resources Board (CARB), Docket No. NHTSA-2018-0067-11873; Class of 85 Regulatory Response Group, Docket No. NHTSA-2018-0067-12070; Joint Submission from the States of California et al. and the Cities of Oakland et al., Docket No. NHTSA-2018-0067-11735.

158

See, e.g.,

American Fuel & Petrochemical Manufacturers, Docket No. NHTSA-2018-0067-12078.

159

Competitive Enterprise Institute, Docket No. NHTSA-2018-0067-12015.

NHTSA also finalizes its view that preempted standards are void

ab initio.

No commenters presented information that altered NHTSA's view, which is based on longstanding Supreme Court case law, as cited by the proposal.

NHTSA agrees with South Coast, which suggested in its comments that EPCA does not outweigh the Clean Air Act.

160

Likewise, the Clean Air Act does not outweigh EPCA. Just as manufacturers must comply with requirements under both statutes, both statutes apply to State and local governments as well. Moreover, EPCA's preemption provision is fully consistent with the Clean Air Act. EPCA's preemption provision does not implicitly repeal parts of Section 209(b), contrary to the assertion in one comment.

161

States must simply act in accordance with both statutes.

Cf. Massachusetts

EPA,

549 U.S. 497, 532 (2007) (finding no inconsistency between obligations of EPA under Clean Air Act and NHTSA under EPCA).

160

See

South Coast Air Quality Management District, Docket No. NHTSA-2018-0067-11813.

161

Joint Submission from the States of California et al. and the Cities of Oakland et al., Docket No. NHTSA-2018-0067-11735.

NHTSA has rejected the argument that a Clean Air Act waiver renders EPCA preemption inapplicable, and likewise rejects the even more attenuated argument concerning EPA's approval of preempted State requirements as a part of a State Implementation Plan (SIP) submission for areas that do not meet National Ambient Air Quality Standards (NAAQS). A State has no authority to adopt or enforce a requirement that falls within the scope of EPCA preemption. 49 U.S.C. 32919(a). This is true even if adopting the unlawfully enacted requirement would assist the State in coming into compliance with the NAAQS. The inclusion of an invalid fuel economy requirement in an air quality SIP does not render the requirement suddenly valid.

162

NHTSA therefore disagrees with comments that suggest that EPCA preemption no longer applies simply because an unauthorized requirement is included in a SIP that is subsequently approved.

163

It is inappropriate for a State to take action unauthorized and rendered void by one statutory scheme to meet the requirements of a different statutory scheme.

162

SIPs must include “enforceable emission limitations.” 42 U.S.C. 7410(a)(2)(A). An EPCA preempted requirement is not enforceable. 49 U.S.C. 32919(a).

163

See

South Coast Air Quality Management District, Docket No. NHTSA-2018-0067-11813.

Moreover, EPCA preemption applies directly to States and local governments which are obliged to adhere to the constraints of the Supremacy Clause. EPCA explicitly prohibits States and local governments from adopting or enforcing a law or regulation related to fuel economy standards. It is unreasonable for States to expect a Federal agency (EPA) acting under one statutory scheme (the Clean Air Act) to analyze whether the State has adopted preempted regulations in contravention of an entirely separate statute (EPCA) administered by a different Federal agency (NHTSA). In fact, as noted above, historically EPA has declined to address questions unrelated to CAA section 209, such as preemption analysis, in its waiver decisions. NHTSA strongly disagrees with the assertion that EPA's approval of a SIP silently acts as an implied waiver of EPCA preemption. This suggestion is particularly hollow given that neither EPA nor NHTSA has the authority to waive EPCA preemption.

NHTSA agrees with the general principle that an approved SIP is enforceable as a matter of Federal law.

164

However, the case law does not support the argument made by CARB and South Coast's comments. The case law explains that a SIP approved by EPA creates binding obligations, pursuant to the Clean Air Act.

165

There is no indication that Congress intended to permit one agency to legitimize an otherwise EPCA-preempted State provision by “federalizing” it. As an analogy, the IRS requires individuals to report and pay taxes on money earned from illegal activity, such as dealing drugs.

166

A drug dealer who complies with Federal tax law is not relieved of the prohibitions on possessing and selling drugs that apply under other Federal laws.

164

See

California Air Resources Board (CARB), Docket No. NHTSA-2018-0067-11873; South Coast Air Quality Management District, Docket No. NHTSA-2018-0067-11813.

165

See, e.g., Safe Air for Everyone

United States Envt'l Prot. Agency,

488 F.3d 1088, 1091 (9th Cir. 2007).

166

Internal Revenue Service, Publication 525: Taxable and Nontaxable Income 32 (Mar. 8, 2019),

https://www.irs.gov/pub/irs-pdf/p525.pdf.

Since SIPs are binding on States, the agencies recognize that certain States may need to work with EPA to revise their SIPs in light of this final action.

167

As stated in the proposal, EPA may subsequently consider whether to employ the appropriate provisions of the Clean Air Act to identify provisions of States' SIPs that may need review because they include preempted ZEV mandates or greenhouse gas emissions standards.

168

However, this practical consideration is not grounds for ignoring EPCA's limitations on State action. SIPs are not written in stone. They are subject to revision, including based on changed circumstances. The Clean Air Act allows SIPs to be revised for various reasons, including that part of the plan was approved in error, that the plan is “substantially inadequate,” or that the State is suspending or

revoking a program included in a plan. 42 U.S.C. 7410(a)(5)(iii), (k)(5)-(6).

167

EPA explains below that it will consider whether and how to address SIP implications of this action, to the extent that they exist, in separate actions; EPA believes that it is not necessary to resolve those implications in the course of this action.

168

83 FR 42986, 43244 (Aug. 24, 2018).

I. NHTSA Has Appropriately Considered the Views of States and Local Governments Consistent With Law

NHTSA considers the views of all interested stakeholders—including States and local governments—in carrying out its statutory obligation to set nationally applicable fuel economy standards. However, EPCA does not permit States or local governments to act as co-regulators with NHTSA in the process of setting fuel economy standards. Indeed, EPCA precludes them from doing so, with the sole exception of information disclosure requirements identical to Federal requirements, and for requirements for fuel economy for automobiles obtained for a State or local governments' own use. A number of commenters urged NHTSA to work cooperatively with California, and to negotiate with and reach a compromise with California.

169

NHTSA appreciates such comments, and seeks to foster a collaborative regulatory approach to the extent possible. That said, California is not permitted by Federal law to have its own separate laws or regulations relating to fuel economy standards. 49 U.S.C. 32902 makes clear that NHTSA sets nationally applicable fuel economy standards, and NHTSA is implementing its authority to do so through this regulation clarifying the preemptive effect of its standards consistent with the express preemption provision in 49 U.S.C. 32919.

169

See, e.g.,

American Honda Motor Company, Inc., Docket No. NHTSA-2018-0067-11818; Sen. T. Carper, United States Senate, Docket No. NHTSA-2018-0067-11910; Maryland Department of the Environment, Docket No. NHTSA-2018-0067-12044; Joint Submission from the States of California et al. and the Cities of Oakland et al., Docket No. NHTSA-2018-0067-11735; Manufacturers of Emission Controls Association, Docket No. NHTSA-2018-0067-11994; North Carolina Department of Environmental Quality, Docket No. NHTSA-2018-0067-12025.

The very limited exceptions to preemption set forth in EPCA—covering vehicles for a government's own use, and for disclosure requirements that are identical to Federal requirements—only confirm the breadth of preemption.

See

49 U.S.C. 32919(b)-(c). States or localities cannot adopt or enforce requirements related to fuel economy standards unless they fall into one of these two discrete exceptions. This means requirements related to fuel economy standards for automobiles for use by a State's citizens, and not merely the State itself, are not permitted. Since States are not permitted to adopt or enforce requirements related to fuel economy standards for vehicles sold or delivered to the public, Federal law does not allow California (or any other State or local government) to regulate in this area.

For California, or any other State or local government, to regulate in this area would require NHTSA to waive EPCA preemption, but commenters did not and cannot identify any statutory authorization for NHTSA to do so and no such authority exists, either expressly or impliedly. The Clean Air Act requires EPA to waive Clean Air Act preemption under a specific section of that statute unless it makes certain findings. But because EPCA does not enable NHTSA to issue a waiver of preemption, it also does not set forth terms upon which a waiver would be appropriate.

170

Thus, NHTSA lacks a legal basis for approving of or consenting to State or local requirements related to fuel economy standards.

170

EPA also does not have authority to waive EPCA preemption, under the Clean Air Act or otherwise.

Absent the affirmative authority to approve of or consent to State or locality's requirements related to fuel economy standards, commenters appear to ask NHTSA to simply to look aside. That is inconsistent with NHTSA's legal responsibility to set nationally applicable standards. It is also inconsistent with the self-executing nature of EPCA preemption, meaning that State or local requirements related to fuel economy standards are void

ab initio.

Even if NHTSA wanted to do so, it cannot breathe life into an expressly preempted State law. And doing so would effectively result in NHTSA's purporting to rewrite a statute, which is beyond the power of a regulatory agency.

NHTSA also disagrees that it is appropriate to ignore EPCA preemption as a strategy to avoid litigation over this issue, a strategy strongly suggested by a large number of commenters. NHTSA understands the concerns of such commenters who hope to avoid prolonged litigation.

171

However, NHTSA believes that long-term certainty is best achieved by applying the law as written. NHTSA agrees with commenters who acknowledge the disruption to the automotive marketplace that would come if preempted standards remained in place.

172

Addressing preemption directly, as NHTSA has done through its adoption of regulatory text in this document, will ultimately provide the needed regulatory certainty into the future.

171

American Honda Motor Company, Inc., Docket No. NHTSA-2018-0067-11818; Ford Motor Company, Docket No. NHTSA-2018-0067-11928.

172

Fiat Chrysler Automobiles (FCA), Docket No. NHTSA-2018-0067-11943.

Those commenters that ask NHTSA to negotiate with California demonstrate the nature of the problem.

173

The underlying reason commenters are concerned about the absence of a compromise resolution is because of the conflict that will result if States proceed with regulations that are inconsistent with Federal requirements.

174

Such commenters, appropriately, have recognized the disruptive effect of continuing to tolerate multiple regulators in this area. Moreover, as discussed in additional detail below, a negotiated resolution is inconsistent with the APA's notice and comment rulemaking process. NHTSA has no basis in law to ignore the substantive comments received on its proposal from many stakeholders and instead determine an outcome through negotiation with a regulatory agency in California. NHTSA is a safety agency with different priorities than CARB, with a different set of factors to balance, including safety implications.

173

See, e.g.,

American Honda Motor Company, Inc., Docket No. NHTSA-2018-0067-11818; Sen. T. Carper, United States Senate, Docket No. NHTSA-2018-0067-11910; Manufacturers of Emission Controls Association, Docket No. NHTSA-2018-0067-11994.

174

See

Cal. Code Regs. tit. 13, section 1961.3(c).

As discussed above, many comments emphasized a desire for maintaining a National Program. Neither California nor any other State, of course, has the authority to set national standards in any area. If California were to adopt and enforce requirements related to fuel economy standards, there could only be uniform standards applicable throughout the country if California agrees with the standards set by NHTSA or vice versa. But EPCA requires that “[e]ach standard shall be the maximum feasible average fuel economy level that the Secretary”—not a regulatory agency in the State of California—“decides that the manufacturers can achieve in that model year.”

175

49 U.S.C. 32902(a).

175

As NHTSA explained in the proposal, it disagrees with the implication of the district court's statement in

Central Valley

that “NHTSA is empowered to revise its standards” to take into account California's regulations. 83 FR 42986, 43238 (Aug. 24, 2018);

see Cent. Valley Chrysler-Jeep, Inc.,

529 F. Supp. 2d at 1179. NHTSA's duty under EPCA is to balance the statutory factors, not to acquiesce to the views of one State (which by its own assertion is attempting to address State-specific concerns, including the geography of its population centers).

See, e.g.,

California Air Resources Board (CARB), Docket No. NHTSA-2018-0067-11873 (stating that California's “population continues to live predominantly in basins bounded by mountains, in which air quality is poor”).

Moreover, a faithful application of EPCA requires more than just avoiding inconsistency. For that reason, it is unavailing that CARB has previously implemented its program purportedly consistent with the Federal government.

176

EPCA requires NHTSA to set nationally applicably standards. EPCA does not permit States or local governments to adopt or enforce even identical or equivalent standards.

177

EPCA allows for only a single regulator—NHTSA—to set fuel economy standards. Moreover, it is now clear it does not intend to do so for model year 2021 through 2026 vehicles, should the forthcoming final SAFE rule finalize standards other than the no action alternative as described in the NPRM.

178

And even consistent programs subject manufacturers to duplicative enforcement regimes, in conflict with EPCA.

179

State standards that are identical or equivalent standards to the Federal standards manufacturers nevertheless obligate manufacturers to meet more onerous requirements. That is because States, of course, lack authority to set nationwide requirements. Therefore, manufacturers must meet State standards within

each

State that has adopted them. Since fuel economy standards are

fleetwide average

standards, it is more difficult to achieve a standard in a particular State, averaged across a smaller pool of vehicles, than it is to achieve the Federal standard, averaged across the pool of vehicles for all States.

176

California Air Resources Board (CARB), Docket No. NHTSA-2018-0067-11873.

177

EPCA does allow States or local governments to adopt identical requirements for disclosure of fuel economy or fuel operating costs, but did not allow identical requirements in other areas related to fuel economy.

See

49 U.S.C. 32919(b).

178

See

Cal. Code Regs. tit. 13, section 1961.3(c).

179

EPCA has an unusual civil penalty provision for violations of fuel economy standards that enables various compliance flexibilities, including use of banked credits, credit plans, credit transfers, and credit trades.

See

49 U.S.C. 32912. EPCA also requires specific procedures and findings before the Secretary of Transportation may increase the civil penalty rate applicable to violations of fuel economy standards. 49 U.S.C. 32912(c). State and local enforcement of even identical or equivalent requirements interferes with this enforcement structure.

In addition, there is no legal basis in EPCA or the APA for California or any other State to receive preferential treatment for their views in this statutory scheme or rulemaking process.

180

Nor is California, or any other State, entitled to negotiate the appropriate standards with NHTSA. Commenters appear to suggest closed-door negotiations, and not an alternative rulemaking process (such as negotiated rulemaking), that would ensure procedural fairness.

181

NHTSA disagrees that negotiation is the appropriate mechanism to set nationally applicable policy with billions of dollars of impacts. The notice-and-comment rulemaking process used by the agencies is the appropriate mechanism for setting standards under EPCA and the Clean Air Act, with due consideration to the views of all interested parties and transparency. NHTSA certainly would prefer a result that is satisfactory to all interested stakeholders, but it may not set aside its own considered views on the appropriate standards to reach a negotiated resolution, nor may it set aside Congress's commands in EPCA.

180

See Nw. Austin Mun. Util. Dist. No. One

Holder,

557 U.S. 193, 203 (2009) (stating that “a departure from the fundamental principle of equal sovereignty requires a showing that a statute's disparate geographic coverage is sufficiently related to the problem that it targets”).

181

One comment noted that prior negotiations were “closed-door, `put nothing in writing, ever' negotiations.” Competitive Enterprise Institute, Docket No. NHTSA-2018-0067-12015;

see also

Sen. Phil Berger & Rep. Tim Moore, North Carolina General Assembly, Docket No. NHTSA-2018-0067-11961.

While States or local governments may not adopt or enforce requirements related to fuel economy standards, NHTSA, of course, is considering their views in setting appropriate standards. Many State and local governments commented at great length on both the preemption and standard setting portions of NHTSA's proposal.

182

NHTSA has taken their views into account in finalizing this rule, along with those of other commenters. States and local governments have had and will continue to have a say in the adoption of fuel economy standards, consistent with the APA. Indeed, many of the technical comments provided by California and other State and local governments and agencies are being considered to improve the analysis regarding the appropriate standards. In an area with express preemption, this APA process is the appropriate means by which the Federal government should consider the views of States and local governments.

182

See, e.g.,

California Air Resources Board (CARB), Docket No. NHTSA-2018-0067-11873; Joint Submission from Governors of Texas, et al., Docket No. NHTSA-2018-0067-11935; Joint Submission from the States of California et al. and the Cities of Oakland et al., Docket No. NHTSA-2018-0067-11735; Maryland Department of the Environment, Docket No. NHTSA-2018-0067-12044; Minnesota Pollution Control Agency (MPCA), the Minnesota Department of Transportation (MnDOT), and the Minnesota Department of Health (MDH), Docket No. NHTSA-2018-0067-11706; North Carolina Department of Environmental Quality, Docket No. NHTSA-2018-0067-12025; Pennsylvania Department of Environmental Protection, Docket No. NHTSA-2018-0067-11956; Washington State Department of Ecology, Docket No. NHTSA-2018-0067-11926.

NHTSA also disagrees with the view expressed by some commenters that there is not a direct conflict between State regulation of tailpipe carbon dioxide emissions from automobiles issued pursuant to a Clean Air Act waiver and NHTSA's ability to set fuel economy standards under EPCA. South Coast argues that when there are inconsistent standards, automakers can avoid a conflict by complying with the more stringent standard.

183

South Coast Air Quality Management District, Docket No. NHTSA-2018-0067-11813.

NHTSA disagrees that this situation does not pose a conflict. Higher standards than those NHTSA has determined are “maximum feasible” after balancing the statutory factors negates the agency's judgment in setting national standards, including traffic safety. NHTSA addressed this conflict in detail in the proposal and reiterates that discussion here.

184

NHTSA also disagrees that all manufacturers should simply comply with a higher standard than the standards set by the Federal government based on statutory considerations. It may not be technically feasible for manufacturers to comply with higher standards or the higher standards may not be economically practicable. These are factors that NHTSA must carefully assess and balance in setting standards under EPCA, and the notion that a State has the unilateral ability to veto or undermine NHTSA's determination by setting higher standards directly conflicts with EPCA.

184

See section f of the proposal's preemption discussion. 83 FR 42986, 43237-38 (Aug. 24, 2018).

South Coast also asserted in its comments that there is no direct conflict between the purpose of EPCA to reduce fuel consumption by increasing fuel economy and the purpose of the Clean Air Act to protect public health from air pollution, including by allowing California to establish motor vehicle standards if it meets the criteria for a waiver.

185

While it is true that there need not be a conflict between EPCA and the Clean Air Act, this statement is irrelevant to the determination of whether State standards are preempted by EPCA. NHTSA and EPA conduct joint rulemaking in this area

because

EPA's greenhouse gas emissions standards are inherently related to NHTSA's fuel economy standards. This inherent linkage was recognized by the Supreme Court in

Massachusetts

EPA.

186

California and other States have, for many years, regulated ozone-forming emissions from vehicles pursuant to a Clean Air Act waiver without posing a conflict with NHTSA's regulation of fuel economy. It is when States regulate the emission of greenhouse gases, especially carbon dioxide, that the conflict arises because of the direct and substantial relationship between tailpipe emissions of carbon dioxide and fuel economy. Regulation in this area is related to NHTSA's fuel economy standards and impedes NHTSA's ability to set nationally applicable fuel economy standards.

185

South Coast Air Quality Management District, Docket No. NHTSA-2018-0067-11813.

186

See Massachusetts

EPA,

549 U.S. 497, 532 (2007).

NHTSA also disagrees with comments that assert it did not properly consider federalism concerns. Specifically, South Coast claimed that NHTSA violated the executive order on federalism, Executive Order 13132, although South Coast acknowledges the Executive Order does not create an enforceable right or benefit.

187

Setting aside the Executive Order's non-justiciability for the moment, NHTSA's action complies with Executive Order 13132. Contrary to South Coast's assertion, the executive order recognizes both express preemption and conflict preemption, and it does not bar the application of conflict preemption where a statute contains an express preemption provision.

188

The provisions concerning express preemption and conflict preemption are in separate paragraphs, which are not mutually exclusive.

See

E.O. 13132 section 4(a)-(b).

187

E.O. 13132 section 11; South Coast Air Quality Management District, Docket No. NHTSA-2018-0067-11813. South Coast also states that NHTSA did not mention the Tenth Amendment in its proposal. South Coast Air Quality Management District, Docket No. NHTSA-2018-0067-11813. However, South Coast does not assert that this action violates the Tenth Amendment, which is fully consistent with Federal preemption.

See

Constitution, Article VI.

188

South Coast Air Quality Management District, Docket No. NHTSA-2018-0067-11813.

Moreover, the executive order supports NHTSA's action in construing preemption through rulemaking.

See id.

The executive order explicitly supports the process NHTSA used here to consider the views of States and local governments, stating that: “When an agency proposes to act through adjudication or rulemaking to preempt State law, the agency shall provide all affected State and local officials notice and an opportunity for appropriate participation in the proceedings.” E.O. 13132 section 4(e). NHTSA cited to Executive Order 13132 in the preemption portion of its proposal,

189

and specifically solicited comments from State and local officials, as well as other members of the public. As discussed above, NHTSA has considered the extensive comments from State and local governments.

189

83 FR 42986, 43233 n.496 (Aug. 24, 2018).

EPCA preemption also does not improperly impinge on the rights of States. Several commenters argued for allowing States to regulate in this area due to asserted benefits of State regulation.

190

CARB's comments went into extensive detail on its history of regulating vehicles.

191

It also asserted that there is industry support for its regulation in this area,

192

and argued that it has reliance interests in its regulations.

193

CARB also argued that NHTSA's proposal would adversely impact its police power and ability to protect its citizens.

194

In addition, it claimed that NHTSA's proposal would impact its State-imposed mandate for emissions reductions by 2030, given the transportation sector's contributions to California's greenhouse gas emissions.

195

190

See, e.g.,

California Air Resources Board (CARB), Docket No. NHTSA-2018-0067-11873.

191

California Air Resources Board (CARB), Docket No. NHTSA-2018-0067-11873.

192

Id.

193

Id.

194

Id.; see also

Joint Submission from the States of California et al. and the Cities of Oakland et al., Docket No. NHTSA-2018-0067-11735.

195

California Air Resources Board (CARB), Docket No. NHTSA-2018-0067-11873.

Notwithstanding these asserted interests of policy, Congress determined that NHTSA should have exclusive authority to set fuel economy standards and that States are not authorized to adopt or enforce regulations related to those standards, with limited exceptions described above. No commenter argued that EPCA's preemption provision is unconstitutional. Some commenters, however, have argued that special treatment afforded to the California is problematic.

196

Just as States have no valid police power to set fuel economy standards directly, neither are they permitted under EPCA and the Supremacy Clause to set standards related to fuel economy standards. States do have input into the Federal fuel economy standards established by NHTSA (as well as EPA's related greenhouse gas emissions standards) through the notice-and-comment process, and the interests of California's citizens as well as the citizens of the other 49 States are protected by the standards set by the Federal agencies.

196

E.g.,

Sen. Phil Berger & Rep. Tim Moore, North Carolina General Assembly, Docket No. NHTSA-2018-0067-11961; Rep. M. Turzai, Pennsylvania House of Representatives, Docket No. NHTSA-2018-0067-11839.

NHTSA recognizes that California may have different policy views, as do many interested parties, including both those who expressed views in favor of and in opposition to the proposal. However, Congress gave NHTSA the duty to balance competing considerations. NHTSA also rejects the notion that California has valid reliance interests in regulations that are void

ab initio.

Indeed, even in the run-up to the 2012 rulemaking, California itself reserved its rights to go in a different direction and recognized that the Federal Government may assert preemption at a later date.

197

The extent to which all or part of industry does or does not support California's ability to regulate in this area is also not a relevant consideration to whether California is legally authorized to do so. NHTSA also notes that industry has expressed a strong preference for one national standard, which is the purpose of EPCA's preemption provision.

198

California has now made clear that it will not accept manufacturers' compliance with Federal standards, unless the agencies adopt the no action alternative from the proposal.

199

EPCA preemption ensures that such State regulations are unenforceable and that one set of national standards (the Federal standards) will control. Not even identical standards are permissible.

197

See

Letter from M. Nichols, CARB to R. LaHood, DOT & L. Jackson, EPA (July 28, 2011),

available at https://www.epa.gov/sites/production/files/2016-10/documents/carb-commitment-ltr.pdf

(last visited Sept. 15, 2019) (making certain commitments for a National Program, conditioned on certain events including EPA's grant of a waiver of Clean Air Act preemption, vehicle manufacturers not challenging California's standards on the basis of EPCA preemption, and indicating that “California reserves all rights to contest final actions taken or not taken by EPA or NHTSA as part of or in response to the mid-term evaluation”).

198

See

Alliance of Automobile Manufacturers, Docket No. NHTSA-2018-0067-12073; American Honda Motor Company, Inc., Docket No. NHTSA-2018-0067-11818; Association of Global Automakers, Docket No. NHTSA-2018-0067-12032; Fiat Chrysler Automobiles (FCA), Docket No. NHTSA-2018-0067-11943; Ford Motor Company, Docket No. NHTSA-2018-0067-11928; General Motors LLC, Docket No. NHTSA-2018-0067-11858; Jaguar Land Rover, Docket No. NHTSA-2018-0067-11916; Mazda Motor Company, Docket No. NHTSA-2018-0067-11727; Mitsubishi Motors RD of America, Inc. (MRDA), Docket No. NHTSA-2018-0067-12056; Subaru, Docket No. NHTSA-2018-0067-12020; Toyota Motor North America, Docket No. NHTSA-2018-0067-12150; Volkswagen Group of America, Docket No. NHTSA-2017-0069-0583.

199

See

Cal. Code Regs. tit. 13, section 1961.3(c).

J. Clarifying Changes to Final Rule Text

No commenter offered alternative regulatory text for consideration by the

agency on preemption. Because NHTSA is finalizing its views on preemption, it is adopting the proposed regulatory text, including an appendix. However, based on its review of comments, NHTSA is adopting a few minor, clarifying changes.

While not advocating for a change to the regulatory text, comments from South Coast and CARB persuaded us to make changes to ensure consistency with EPCA's express preemption provision, as was NHTSA's intention.

200

South Coast specifically pointed out that two provisions of the proposed regulatory text (appendix B, sections (a)(3) and (b)(3)) did not include the word “automobiles.”

201

Contrary to South Coast's suggestion, NHTSA's intention was not to reach beyond the statutory text. Most of the proposed regulatory text explicitly addressed automobiles. In the two provisions identified by South Coast as omitting that term, NHTSA addressed tailpipe carbon dioxide emissions and fuel economy. In context, these references address automobile emissions and automobile fuel economy. However, for clarity and consistency, NHTSA has added explicit reference to automobiles to these two provisions.

200

South Coast and CARB asked NHTSA to withdraw its proposal on preemption, rather than to change the text of the proposed rule. California Air Resources Board (CARB), Docket No. NHTSA-2018-0067-11873; South Coast Air Quality Management District, Docket No. NHTSA-2018-0067-11813. NHTSA declines to do so for the reasons discussed in this final rule.

201

South Coast Air Quality Management District, Docket No. NHTSA-2018-0067-11813.

CARB also pointed out in its comments that the statute preempts laws or regulations “related to fuel economy

standards,”

not simply those related to fuel economy.

202

While other provisions of the proposed rule used the phrases “relates to fuel economy standards” or “related to fuel economy standards,” the word “standards” was inadvertently omitted from section (a)(3) of the appendix. In the final rule, NHTSA has added that word for clarity.

202

California Air Resources Board (CARB), Docket No. NHTSA-2018-0067-11873;

see also

Joint Submission from the States of California et al. and the Cities of Oakland et al., Docket No. NHTSA-2018-0067-11735.

In addition, to ensure consistency throughout the regulatory text and with the preamble discussion, NHTSA is clarifying that a State law or regulations having either a direct or substantial effect of regulating or prohibiting tailpipe carbon dioxide emissions or fuel economy is a law or regulation related to fuel economy. The proposal included this statement in the proposed regulatory text: “Automobile fuel economy is directly and substantially related to automobile tailpipe emissions of carbon dioxide.” This provides the foundation for NHTSA's express and implied preemption analysis. NHTSA is therefore clarifying that requirements directly or substantially related to fuel economy are preempted by adding “or substantially” to two places in the regulatory text. This is consistent with the proposal, which explained that requirements with no bearing on fuel economy or those with only an incidental impact on fuel economy are not preempted.

203

Requirements with more than an incidental impact,

i.e.

those requirements that directly or substantially affect fuel economy are related to fuel economy and thus preempted. Therefore, this change in the regulatory text of the final rule provides additional clarity on the scope of preemption.

203

83 FR 42986, 43235 (Aug. 24, 2018). It is also consistent with the Supreme Court case law interpreting “related to” in preemption provisions, as discussed both in the proposal and this final rule.

See, e.g., Rowe,

552 U.S. at 375.

In addition, several references throughout the proposed regulatory text addressed a “state law or regulation.” Consistent with EPCA and the discussion in the notice of proposed rulemaking, NHTSA intended to address laws and regulations of States and their political subdivisions. For clarity, NHTSA revised all references in its regulatory text to cover States and their political subdivisions.

Specifically, in the rule NHTSA is finalizing in this document, appendix B, section (a)(3) reads: “A law or regulation

of a State or political subdivision of a State

having the direct

or substantial

effect of regulating or prohibiting tailpipe carbon dioxide emissions from

automobiles

automobile

fuel economy is a law or regulation related to fuel economy

standards

and expressly preempted under 49 U.S.C. 32919.”

204

Appendix B, section (b)(3) reads: “A law or regulation

of a State or political subdivision of a State

having the direct

or substantial

effect of regulating or prohibiting tailpipe carbon dioxide emissions from

automobiles

automobile

fuel economy is impliedly preempted under 49 U.S.C. Chapter 329.”

205

204

Emphases added.

205

Emphases added.

Finally, NHTSA also added clarifying language to 49 CFR 531.7(b) and 533.7(b) to indicate that the references to “section 32908” are to section 32908 of title 49 of the United States Code.

These clarifying changes are consistent with the discussion in the preamble to NHTSA's proposed rule.

III. EPA's Withdrawal of Aspects of the January 2013 Waiver of CAA section 209(b) Preemption of the State of California's Advanced Clean Car Program

In this section of this joint action, EPA is finalizing its August 2018 proposal to withdraw aspects of its January 2013 waiver of Clean Air Act (CAA) section 209 preemption of the State of California's Advanced Clean Car (ACC) program.

First,

subsection A provides background regarding the ACC program.

Second,

subsection B finalizes EPA's proposed determination that it has the authority to reconsider and withdraw previously granted waivers.

Third,

subsection C finalizes EPA's proposed determination that, in light of NHTSA's determinations finalized elsewhere in this joint action regarding the preemptive effect of EPCA on state GHG and ZEV programs, EPA's January 2013 grant of a waiver of CAA preemption for those provisions of California's program was invalid, null, and void; that waiver is hereby withdrawn on that basis, effective on the effective date of this joint action.

Fourth,

subsection D, separate and apart from the determinations in subsection C with regard to the effect of EPCA preemption on the January 2013 waiver, finalizes EPA's reconsideration of, and its proposed determination that it is appropriate to withdraw, its January 2013 grant of a waiver of CAA preemption for the GHG and ZEV standards in California's ACC program for model years 2021 through 2025, based on a determination that California “does not need [those] standards to meet compelling and extraordinary conditions” within the meaning of CAA section 209(b)(1)(B).

Fifth,

subsection E sets forth and specifies the terms of the waiver withdrawal.

Sixth,

subsection F finalizes EPA's proposed determination that, separate and apart from the findings and determinations described above, states other than California cannot use CAA section 177 to adopt California's GHG standards.

Seventh and finally,

subsection G sets forth EPA's understanding and intention with regard to severability of, and the appropriate venue for judicial review of, this action.

A. Background

On January 9, 2013, EPA granted California's request for a waiver of preemption to enforce its Advanced Clean Car (ACC) program regulations under CAA section 209(b)(1).

206

78 FR

2112. On August 24, 2018, EPA proposed to withdraw this waiver of preemption with regard to the GHG and ZEV standards of its Advanced Clean Car (ACC) program for MY 2021-2025. 83 FR 43240. In the SAFE proposal, EPA provided extensive background on the history of CAA section 209 and waivers granted thereunder, as well as on the specific waiver which California sought for the ACC program which is at issue here, in the SAFE proposal.

207

83 FR 43240-43242.

206

As in the proposal, this final action uses “California” and “California Air Resources Board” (or “CARB”) interchangeably.

207

A complete description of the ACC program, as it existed at the time that CARB applied for the 2013 waiver, can be found in CARB's waiver request, located in the docket for the January 2013 waiver action, Docket No. EPA-HQ-OAR- 2012-0562.

Since publication of the SAFE proposal, California has clarified its “deemed to comply” provision, under which manufacturers are afforded the option of complying with CARB's GHG standards by showing that they comply with the applicable federal GHG standards. As amended, CARB's “deemed to comply” provision now provides that compliance with CARB's GHG standards can be satisfied only by complying with the federal standards as those standards were promulgated in 2012. In other words, while the content of CARB's GHG standards has never been identical to the corresponding Federal standards, the “deemed to comply” provision as originally designed, and as it existed when EPA issued the January 2013 waiver, would have shielded automobile manufacturers from having to comply with two conflicting sets of standards unless they chose to do so. After the December 2018 amendment, however, CARB's regulations now contain within them a mechanism which will automatically impose that state of affairs the moment that the Federal government should exercise its authority to revise its standards. California has further recently announced a “voluntary agreement” with four automobile manufacturers that, among other things, requires the automobile manufacturers to refrain from challenging California's GHG and ZEV programs. This “voluntary agreement” further provides that California will accept automobile manufacturer compliance with a less stringent standard (and one that extends the phase-in of the GHG standard from 2025 to 2026) than either the California program that was the subject of the 2013 waiver or the Federal standards as promulgated in 2012. Neither California's amendment of its “deemed to comply” provision, nor its more recent announcement of the new “voluntary agreement,” constitute a necessary part of the basis for the waiver withdrawal and other actions that EPA finalizes in this document, and EPA would be taking the same actions that it takes in this document even in their absence. Nevertheless, EPA does not believe it appropriate to ignore these recent actions and announcements on the State's part, and, as discussed below, believes that they confirm that this action is appropriate.

208

EPA does not take any position at this point on what effect California's December 2018 amendment to its “deemed to comply” provision, or its July 2019 “framework” announcement, may of their own force have had on the continued validity of the January 2013 waiver. EPA may address that issue in a separate, future action.

On January 9, 2013, EPA granted CARB's request for a waiver of preemption to enforce its ACC program regulations pursuant to CAA section 209(b). 78 FR 2112. The ACC program comprises regulations for ZEV, tailpipe GHG emissions standards, and low-emission vehicles (LEV) regulations

209

for new passenger cars, light-duty trucks, medium-duty passenger vehicles, and certain heavy-duty vehicles, for MY 2015 through 2025. Thus, in terms of the scope of coverage of the respective state and federal programs, the ACC program is comparable to the combined Federal Tier 3 Motor Vehicle Emissions Standards and the 2017 and later MY Light-duty Vehicle GHG Standards, with an additional mandate to force the development and deployment of non-internal-combustion-engine technology. According to CARB, the ACC program was intended to address California's near and long-term ozone issues as well as certain specific GHG emission reduction goals.

210

78 FR 2114. See also 78 FR 2122, 2130-2131. The ACC program regulations impose multiple and varying complex compliance obligations that have simultaneous, and sometimes overlapping, deadlines with each standard. These deadlines began in 2015 and are scheduled to be phased in through 2025. For example, compliance with the GHG requirements began in 2017 and will be phased in through 2025.

211

The implementation schedule and the interrelationship of regulatory provisions with each of the three standards together demonstrates that CARB intended that at least the GHG and ZEV standards, if not also the LEV standards, would be implemented as a cohesive program. For example, in its ACC waiver request, CARB stated that the “ZEV regulation must be considered in conjunction with the proposed LEV III amendments. Vehicles produced as a result of the ZEV regulation are part of a manufacturer's light-duty fleet and are therefore included when calculating fleet averages for compliance with the LEV III GHG amendments.” CARB's Initial Statement of Reasons at 62-63.

212

CARB also noted “[b]ecause the ZEVs have ultra-low GHG emission levels that are far lower than non-ZEV technology, they are a critical component of automakers' LEV III GHG standard compliance strategies.”

Id.

CARB further explained that “the ultra-low GHG ZEV technology is a major component of compliance with the LEV III GHG fleet standards for the overall light duty fleet.”

Id.

CARB's request also repeatedly touted the GHG emissions benefits of the ACC program. Up until the ACC program waiver request, CARB had relied on the ZEV requirements as a compliance option for reducing criteria pollutants. Specifically, California first included the ZEV requirement as part of its first LEV program, which was then known as LEV I, that mandated a ZEV sales requirement that phased-in starting with the 1998 MY through 2003 MY. EPA issued a waiver of preemption for these regulations on January 13, 1993 (58 FR 4166 (January 13, 1993). Since this initial waiver of preemption, California has amended the ZEV requirements multiple times and EPA has

subsequently granted waivers for those amendments. Notably, however, in the ACC program waiver request, California also included a waiver of preemption request for ZEV amendments that related to 2012 MY through 2017 MY and new requirements for 2018 MY through 2025 MY (78 FR 2118-9). Regarding the ACC program ZEV requirements, CARB's waiver request noted that there was no criteria emissions benefit in terms of vehicle (tank-to-wheel—TTW) emissions because its LEV III criteria pollutant fleet standard was responsible for those emission reductions.

213

CARB further noted that its ZEV regulation was intended to focus primarily on zero emission drive—that is, battery electric (BEVs), plug-in hybrid electric vehicles (PHEVs), and hydrogen fuel cell vehicles (FCVs)—in order to move advanced, low GHG vehicles from demonstration phase to commercialization (78 FR 2122, 2130- 31). Specifically, for 2018 MY through 2025 MY, the ACC program ZEV requirements mandate use of technologies such as BEVs, PHEVs and FCVs, in up to 15% of a manufacturer's California fleet by MY 2025 (78 FR 2114). Additionally, the ACC program regulations provide various compliance flexibilities allowing for substitution of compliance with one program requirement for another. For instance, manufacturers may opt to over-comply with the GHG fleet standard in order to offset a portion of their ZEV compliance requirement for MY 2018 through 2021. Further, until MY 2018, sales of BEVs (since MY 2018, limited to FCVs)

214

in California count toward a manufacturer's ZEV credit requirement in CAA section 177 States. This is known as the “travel provision” (78 FR 2120).

215

For their part, the GHG emission regulations include an optional compliance provision that allows manufacturers to demonstrate compliance with CARB's GHG standards by complying with applicable Federal GHG standards. This is known as the “deemed to comply” provision. Since proposal, California has amended its regulations to provide that the “deemed to comply” provision only applies to the standards originally agreed to by California, the federal government, and automakers in 2012. In other words, automobile manufacturers would not be able to rely on the “deemed to comply” provision for any revision to those 2012 standards. California has further entered into a voluntary agreement with four automobile manufacturers that amongst other things, requires the automobile manufacturers to refrain from challenging California's GHG and ZEV programs, and provides that California will accept automobile manufacturer compliance with a less stringent standard than either the California program that was the subject of the 2013 waiver or the Federal standards as promulgated in 2012.

209

The LEV regulations in question include standards for both GHG and criteria pollutants (including ozone and PM).

210

“Th

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