American Auto Mfrs. v. Com'R, Environ. Protect.

• Decision Date: 15 October 1997
• Docket Number: No. 93-10799-ADM.,93-10799-ADM.
• Citation: 998 F.Supp. 10
• Parties: AMERICAN AUTOMOBILE MANUFACTURERS ASSOCIATION, Association of International Automobile Manufacturers, Inc. and Massachusetts State Automobile Dealers Association, Inc., Plaintiffs, v. COMMISSIONER, MASSACHUSETTS DEPARTMENT OF ENVIRONMENTAL PROTECTION, Defendant.
• Court: U.S. District Court — District of Massachusetts

998 F.Supp. 10

AMERICAN AUTOMOBILE MANUFACTURERS ASSOCIATION, Association of International Automobile Manufacturers, Inc. and Massachusetts State Automobile Dealers Association, Inc., Plaintiffs, v. COMMISSIONER, MASSACHUSETTS DEPARTMENT OF ENVIRONMENTAL PROTECTION, Defendant.

No. 93-10799-ADM.

United States District Court, D. Massachusetts.

October 15, 1997.

COPYRIGHT MATERIAL OMITTED

Edward W. Warren, Daniel F. Attridge, Gary E. Marchant, Stuart A.C. Drake, Kirkland & Ellis, Washington, DC, Robert F. Sylvia, Hinckley, Allen & Snyder, Boston, MA, for Plaintiffs.

William L. Pardee, Atty. General's Office, Boston, MA, for Massachusetts Dept. of Environmental Protection, Daniel S. Greenbaum.

William H. Lewis, Hunter L. Prillman, Morgan, Lewis & Bockius, Washington, DC, Paul F. Ware, Goodwin, Procter & Hoar, Boston, MA, Michael J. Meagher, Burns & Levinson, Boston, MA, Scott L. Robertson, Washington, DC, for American Petroleum Institute.

MEMORANDUM AND ORDER

MAZZONE, District Judge.

The pending cross motions for summary judgment present the next episode in this case, the parties seeking the latest defining application of the Clean Air Act ("CAA").¹ 42 U.S.C. § 7507 et seq. The CAA is the federal statutory scheme governing emissions from gasoline-powered engines, a source of air pollution. A brief outline of that scheme and the present posture of this case will serve as the backdrop against which these motions are considered.

I. Background

A. The Clean Air Act

The CAA directs the Environmental Protection Agency (EPA) to establish and enforce national ambient air quality standards ("NAAQS") for pollutants that "cause or contribute to air pollution which may reasonably be anticipated to endanger public health or welfare." 42 U.S.C. § 7408(a). To achieve and maintain these NAAQS by regulating sources of air pollution, each state is required to submit a "state implementation plan" ("SIP") to the EPA for approval. CAA § 110, 42 U.S.C. § 7410(a)(1).

However, states may not promulgate individual motor vehicle emission standards to attain the NAAQS set by the EPA. Section 209(a) expressly preempts all state regulation of motor vehicle emissions. According to § 209(a),

No State or any political subdivision thereof shall adopt or attempt to enforce any standard relating to the control of emissions from new motor vehicles or new motor vehicle engines.... No State shall require certification, inspection, or any other approval relating to the control of emissions from any new motor vehicle or new motor vehicle engine as condition precedent to the initial retail sale, titling (if any), or registration of such motor vehicle, motor vehicle engine, or equipment.

CAA § 209(a), 42 U.S.C. § 7543. Congress preempted the field of vehicle emission regulation for two reasons: "to ensure uniformity throughout the nation, and to avoid the undue burden on motor vehicle manufacturers which would result from different state standards." Motor Vehicles Mfrs. Ass'n of U.S Inc. v. New York State Dep't. of Envtl. Conservation, 810 F.Supp. 1331, 1337 (N.D.N.Y. 1993) ("MVMA I"), modified on other grounds, 831 F.Supp. 57 (N.D.N.Y.1993) ("MVMA II"), aff'd in part, rev'd in part, 17 F.3d 521 (2d Cir.1994) ("MVMA III"), on remand, 869 F.Supp. 1012 (N.D.N.Y.1994) ("MVMA IV"), order aff'd, 79 F.3d 1298 (2d Cir.1996) ("MVMA V").

There is one exception to the § 209(a) preemption: California is allowed to adopt standards that "will be, in the aggregate, at least as protective of public health and welfare as applicable Federal standards." CAA § 209(b); 42 U.S.C. § 7543(b)(1). Congress provided California with this unique exception to federal preemption because of its extraordinary air pollution problems and because of its pioneering role in the field of emissions control. MVMA III, 17 F.3d at 525. Congress, however, did not wholly insulate California from federal preemption. Section 209(b) prevents California from enforcing regulations under this exception until granted a waiver of federal preemption by the EPA.²

Prior to 1977, states other than California were limited in the means available to meet the NAAQS. In 1977, however, Congress added § 177 to the CAA, which allows states to adopt the California vehicle emission standards in lieu of the less restrictive federal standards. CAA § 177, 42 U.S.C. § 7507; see Virginia v. EPA, 108 F.3d 1397, 1401 (D.C.Cir.1997) (describing California standards as "considerably more restrictive than the federal standards"). Section 177 provides:

Notwithstanding [§ 209(a)], any State ... may adopt and enforce for any model year standards relating to the control of emissions from new motor vehicles or new motor vehicle engines ... if—(1) such standards are identical to the California standards for which a waiver has been granted for such model year, and (2) California and such State adopt such standards at least two years before commencement of such model year (as determined by regulations of the Administrator).

CAA § 177, 42 U.S.C. § 7507 (1995). Congress restricted states to duplicating either federal or California standards in order "to protect motor vehicle manufacturers from the undue burden of complying with more than two different regulatory schemes." MVMA I, 810 F.Supp. at 1339. In short, there can only be two types of cars in this country: "California" cars or "federal" cars. States cannot adopt any other standards which would require automakers to create a "third" car. CAA § 177, 42 U.S.C. § 7507.

B. The California ZEV regulations

The California Air Resources Board ("CARB") is the agency responsible for adopting and administering motor vehicle emissions regulations for the state of California. MVMA I, 810 F.Supp. at 1339. Pursuant to its authority under § 209(b), CARB adopted new low emission vehicle (LEV) and clean fuel (CF) regulations ("LEV/CF regulations") in September 1991. The LEV program set forth increasingly stringent emission standards for five types of vehicles: California Tier I vehicles; Transitional Low Emission Vehicles (TLEVs); Low Emission Vehicles (LEVs); Ultra-Low Emission Vehicles (ULEVs); and Zero Emission Vehicles (ZEVs). The California ZEV mandate required the seven largest automobile manufacturers (General Motors, Ford, Toyota, Honda, Nissan, Chrysler and Mazda) to deliver a sales fleet of new vehicles containing at least two percent ZEVs in model year 1998, five percent ZEVs in model year 2001, and ten percent ZEVs in model year 2003. Cal.Code Regs. tit. 13 § 1960.1(g)(2). On January 7, 1993, the EPA approved the LEV program and granted California a waiver of federal preemption under § 209(b) of the CAA.

In 1995, CARB created an independent panel of battery experts (the "Battery Panel") to explore the readiness of electronic battery technology to meet the ZEV mandate for 1998. In its report, issued in December 1995, the Battery Panel stated that most auto manufacturers would attempt to comply with the California ZEV mandate by producing ZEVs with lead-acid batteries. Performance and Availability of Batteries for Electric Vehicles: A Report of the Battery Technical Advisory Panel (Dec. 11, 1995) (Plaintiffs' Exh. 12). The Battery Panel explained that lead-acid batteries imposed range and cost limitations that would severely restrict the marketability of ZEVs. According to the report, (1) a successful market for ZEVs requires the use of "advanced technology" batteries rather than lead-acid batteries, and (2) the earliest availability of ZEVs using "advanced technology" batteries would be between 2000 and 2001.

On March 29, 1996, CARB repealed the California ZEV mandate for model years 1998 through 2002. Prior to repeal, in late 1995 and early 1996, CARB held several hearings at which public comment was received. DEP followed CARB's process closely. A DEP representative attended the hearings and was in contact with CARB personnel thereafter. As amended, the California LEV regulations require no ZEVs until model year 2003, when ten percent of the vehicles delivered for sale or lease in California must be ZEVs. CARB submitted the amended standards to the EPA on February 26, 1997. According to the plaintiffs, CARB eliminated the ZEV mandate for model years 1998 through 2002 because of the limitations of both technological development and consumer acceptance. It concluded that the unavailability of "advanced technology" batteries prevented the launching of a successful market for ZEVs.

Having repealed its ZEV mandate for the years 1998 through 2002, CARB then entered into private memoranda of agreement ("MOAs") with the same seven major automakers. See e.g., Memorandum of Agreement between CARB and General Motors Corp. (Aug. 13, 1996) (Plaintiffs' Exh. 20). CARB felt that electric vehicles were not ready for the marketplace as a general matter and thus, imposed no regulatory requirement for commercially available ZEVs prior to 2003, but to satisfy what market demand might be present, CARB obtained the automakers' commitment in the MOAs to meeting that demand. For the years 1998 through 2000, the MOAs required each signatory automaker to place into service in California urban areas a specified number of ZEVs. This number represented a pro rata share of the total number of ZEVs to be produced by the seven automakers collectively.

The MOAs also set forth the automakers' agreement to promote ZEVs, fund battery research, and initiate a Technology Demonstration Project in California. In addition, the MOAs contained enforcement mechanisms and penalties in the event the automakers failed to attain the production of ZEV vehicles required under the agreements. Under specified circumstances, CARB may pursue liquidated damages from the automakers, and CARB explicitly retained the right to take regulatory action including reinstatement of the percentage ZEV requirements previously repealed.

On the other hand, CARB also undertook certain obligations and incentives to demonstrate...