Thursday, December 20, 2007

The New Politics of Delay

In what probably should be chalked into the ‘not too surprising’ column, the Bush administration last night rejected California’s request for permission to regulate cars as sources of greenhouse gas (GHG) emissions under Clean Air Act Section 209. Under 209, states are preempted from regulating cars as sources of pollution with one exception. CA can do so if it gets a waiver from EPA (CA petitioned for the waiver in December 2005). The process is laid out in Section 209(b) of the Clean Air Act. The conventional wisdom was that EPA had little room to deny the waiver in this case. Under the Act, it was free to do so if (A) anything in the CA petition was “arbitrary and capricious” (the California Air Resources Board actually put together pretty solid arguments); (B) CA did not need State standards to meet “compelling and extraordinary conditions” (more on this below); or (C) the CA standards and accompanying enforcement procedures were not “consistent” with the federal regulation of cars as sources of pollution (anything that is “more stringent than” is, at least in principle, normally “consistent with”).

Of course the denial came just a few days after a district court in California held that the waiver request was viable at least in principle because the Clean Air Act reaches greenhouse gases as “pollutants.” And it came only a day after the signing of new federal fuel economy standards. The CA rules and waiver request would subject the car companies to a quicker phasing in of GHG emission controls (2009-16 phase in) as compared to the new federal schedule in the energy bill passed on Tuesday (2012-2020 phase in). In auto industry years, that difference could be very significant.

Either way EPA went here, more litigation over fuel economy was certain. But I’d like to draw attention to the specific legal grounds for denying CA’s petition. If EPA’s press release is any indication of what it will say in its formal denial of the petition, it looks like it is going to bungle this as badly it did the petition at issue in Massachusetts v. EPA (a request that EPA make federal rules on fuel economy under the Act’s Section 202). EPA’s press release was titled “America Receives a National Solution for Vehicle Greenhouse Gas Emissions.” In it and in remarks quoted in the press, EPA Administrator Steve Johnson says that federal uniformity is the reason for rejecting CA’s petition. A “patchwork” of state laws on the matter would be bad for the country and, in any event, the federal standards will apply to “all 50 states.” That is a non sequitur, though.

I’ll grant that CA might not be able to prove under Section 209(b)(1)(B) that it is uniquely vulnerable to climate change among the states (although they make a pretty good case). But even CA admits that: it has always maintained that it is acting out of both vulnerability to climate change and a sense of burden sharing: CA contributes disproportionately to US GHG emissions and transportation accounts for over half of its emissions. CA as contributor of GHGs was looking to move now through all available channels. If anything in its approach was “inconsistent” with the federal rules or was less stringent, EPA could easily have identified it and rejected the petition for that reason alone. Some 17 other states had said that they would utilize their authority under 209(c) to require the CA cars if and when EPA granted CA its waiver. So there would be a significant number of states requiring exactly the same thing as CA, but that isn’t a “patchwork.” It’s a real incentive to car makers to meet the more stringent standard and only have to retool once.

Federal preemption here doesn’t provide a “solution” to anything because there is no single solution to this crisis. To deny the petition by raising the Damocles sword of a “patchwork” is to seriously skew the analysis the statute requires. The question is not whether the nation’s economy as a whole will work better with a single (more distant in time) requirement (which American car companies can "fine tune" through wormy tactics and influence in Washington). The question is whether CA’s petition fails on any of the listed statutory factors. Incidentally, CA and its partners have vowed to sue.

Posted by Jamie Colburn