Central Valle Chrysler-Jeep v. Witherspoon

Citation456 F.Supp.2d 1160
Decision Date25 September 2006
Docket NumberNo. CV F 04-6663 AWI LJO.,CV F 04-6663 AWI LJO.
CourtU.S. District Court — Eastern District of California
PartiesCENTRAL VALLEY CHRYSLER-JEEP, et al., Plaintiffs, v. Catherine E. WITHERSPOON,, in her official capacity as Executive Director of the California Air Resources Board, et al., Defendants.

Andrew Brian Clubok—Pro Hac Vice, Derek Sterling Bentsen, Lucas Rames Blocher—Pro Hac Vice, Michael Edward Scoville—Pro Hac Vice, Stacey L. Bennett— Pro Hac Vice, Stuart A.C. Drake—Pro Hac Vice, Kirkland & Ellis LLP, Washington, DC, Timothy Jones, Sagaser, Jones & Hahesy, Fresno, CA, for Plaintiffs.

Raymond B. Ludwiszewski, Pro Hac Vice, Charles H. Haake, Gibson, Dunn & Crutcher, LLP, Washington, DC, Jon Wallace Upton, Kimble, MacMichael & Upton, Fresno, CA, for Association of International Automobile Manufacturers.

David Bookbinder, Sierra Club, Washington, DC, Ellen Peter, California Attorney General Office, Caryn Leigh Craig, California Dept. of JusticeOffice of the Attorney General, Linda Lea Berg, Office of the Attorney General, State of California, Sacramento, CA, Marc Nathaniel Melnick, California Attorney General's Office, Oakland, CA, Kathleen A. Kenealy, Office of the California Attorney Genenal, Los Angeles, CA, for Defendants.


ISHII, District Judge.

This case concerns the legality of environmental regulations imposed by a state administrative agency. Plaintiffs seek declaratory and injunctive relief on the basis that the regulations violate and are preempted by federal law. This court has federal question jurisdiction pursuant to 28 U.S.C. § 1331.

A. California Health and Safety Code § 43018.5

In 2002, the California Legislature enacted Assembly Bill Number 1493, codified at California Health and Safety Code § 43018.5. Section 43018.5(a) required the California Air Resources Board ("CARB") to "develop and adopt regulations that achieve the maximum feasible and costeffective reduction of greenhouse gas emissions from motor vehicles." Section 43018.5 only authorizes regulations that apply to vehicles manufactured in the 2009 model year or after. Cal. Health & Safety Code § 43018.5(b)(1). "Maximum feasible and cost-effective reduction of greenhouse gas emissions" refers to reductions that are "[c]apable of being successfully accomplished within the time provided by this section, taking into account environmental, economic, social, and technological factors" and are "[e]conomical to an owner or operator of a vehicle, taking into account the full life-cycle costs of a vehicle." Cal. Health & Safety Code § 43018.5(i)(2).

At a public hearing in September 2004, CARB approved regulatory amendments ("California regulations" or "regulations") adding greenhouse gas emission standards to California's existing motor vehicle standards. See FAC Ex. A. CARB, through its normal process, ultimately adopted the regulatory language in its Resolution 04-28. Id.

CARB made factual findings to support its adoption of the regulations. CARB found that "[o]ver the past century the temperatures in the northern hemisphere have changed at a rate faster than at any other time over the last millennium, and that change is because human activities are altering the chemical composition of the atmosphere through the buildup of greenhouse gases and other pollutants." FAC Ex. A at 9. CARB further noted that "the global climate is changing at a rate unmatched in the past one thousand years" and climate change is affecting California. Id. CARB found that the proposed standards would significantly reduce greenhouse gas emissions. FAC Ex. A at 14.

The regulations addressed four greenhouse gases: carbon dioxide, methane, nitrous oxide, and hydrofluorocarbons. Cal. Code Regs. tit. 13, § 1961.1(e)(4). The regulations weight the emission of each gas based on its "global warming potential." Cal.Code Regs. tit. 13, § 1961.1(e)(6). Compliance with the regulations is based on "fleet average" greenhouse gas emissions. Cal.Code Regs. tit. 13, § 1961.1(a)(1)(A). The average is defined separately for two categories of vehicles: (1) passenger cars and light duty trucks under 3,750 pounds, and (2) light duty trucks over 3,750 pounds and medium duty passenger vehicles. Id. The standards set emissions limits beginning in model year 2009 that become more stringent each year through 2016. Id. Manufacturers who fail to comply face civil penalties. See Cal. Health & Safety Code § 43211.

Manufacturers that meet the standards for model year 2009 or surpass the standards in any later year will accrue credits. Cal.Code Regs. tit. 13, § 1961.1(b)(1). These credits may be used to offset that manufacturer's emissions in a later year, may be transferred between vehicle categories, or may be sold to another manufacturer. Id. A manufacturer who does not meet the standards may avoid the civil penalty for noncompliance by offsetting their failures within a five-year period. Cal.Code Regs. tit. 13, § 1961.1(b)(3). Manufacturers can also comply by earning credits for using alternative fuels that produce lower greenhouse gas emissions. Cal.Code Regs. tit. 13, § 1961.1(a)(1)(B).

B. The Clean Air Act

In 1963, Congress expanded its role in addressing air pollution by enacting the Clean Air Act. Pub.L. No. 88-206, 77 Stat. 392 (1963). Section 209(a) of the Clean Air Act, codified at 42 U.S.C. § 7543(a),1 generally preempts state regulation of motor vehicle emissions. Section 209(b) provides an exemption to 209(a) for rules adopted by the State of California that receive a waiver from the Environmental Protection Agency ("EPA"). 42 U.S.C. § 7543(b)(1);2 see Engine Mfrs. Ass'n v. EPA, 88 F.3d 1075, 1080 (D.C.Cir.1996) (noting that, under the terms of section 209(b), "California is the only state that qualifies for the waiver, because it was the only state that had adopted emissions control standards prior to March 30, 1966"). In order to receive such a waiver, the state standards must be, "in the aggregate," at least as protective as federal standards. 42 U.S.C § 7543(b)(1). The EPA may deny a waiver if it finds that the state's determination is "arbitrary and capricious," that the state standards are not needed to meet "compelling and extraordinary conditions," or that the state standards are not consistent with 42 U.S.C. § 7521(a). Id. Though only California's regulations may receive a waiver, other states may elect to adopt such California standards under Clean Air Act section 177, rather than being governed by the federal scheme. 42 U.S.C. § 7507.

On September 8, 2003, the EPA concluded that "in light of the language, history, structure and context of the [Clean Air Act] and Congress' [s] decision to give DOT authority to regulate fuel economy under EPCA, it is clear that EPA does not have authority to regulate motor vehicle emissions of CO[2] and other [greenhouse gases] under the [Clean Air Act]." Control of Emissions from New Highway Vehicles and Engines, 68 Fed.Reg. 52,922, 52,929 (September 8, 2003). The District of Columbia Circuit upheld the EPA's decision, and the case is currently before the Supreme Court. See Massachusetts v. EPA, 415 F.3d 50 (D.C.Cir.2005), cert. granted, ___ U.S. ___, 126 S.Ct. 2960, 165 L.Ed.2d 949 (2006).

On December 21, 2005, CARB requested that the EPA grant the California regulations a section 209(b) waiver, which the EPA has yet to provide. Defs.' RJN Ex. C.

C. The Energy Policy and Conservation Act

Enacted in 1975, the Energy Policy and Conservation Act ("EPCA") established federal fuel economy standards for new vehicles. Pub.L. No. 94-163, 89 Stat. 871 (1975). The EPCA authorizes the National Highway Traffic Safety Administration3 ("NHTSA") to set a minimum corporate average fuel economy ("CAFE") for a manufacturer's fleet of new vehicles. 49 U.S.C. §§ 32902(a), 32902(c).

The EPCA provides that the CAFE standards must be set at the "maximum feasible average fuel economy level." 49 U.S.C. §§ 32902(a), 32902(c). In setting the maximum feasible level, NHTSA "shall consider technological feasibility, economic practicability, the effect of other motor vehicle standards of the Government on fuel economy, and the need of the United States to conserve energy." 49 U.S.C. § 32902(f). This requires NHTSA to consider the effect on fuel economy of state regulations that receive an EPA waiver under Clean Air Act section 209: EPCA § 301, 89 Stat. at 905; see Light Truck Average Fuel Economy Standard, Model Year 2004, 67 Fed.Reg. 16,052, 16,057 (April 4, 2002) (to be codified at 49 C.F.R. pt. 533) (considering the effect of California's low emission vehicle regulations in setting CAFE standard). The EPCA contains an express preemption provision:

When an average fuel economy standard prescribed under this chapter is in effect, a State or a political subdivision of a State may not adopt or enforce a law or regulation related to fuel economy standards or average fuel economy standards for automobiles covered by an average fuel economy standard under this chapter.

49 U.S.C. § 32919.

D. This Lawsuit

On December 7, 2004, Plaintiffs4 filed suit against Catherine E. Witherspoon CARB's executive director, to prevent enforcement of the California regulations.5 In their first amended complaint ("FAC"), filed February 16; 2005, Plaintiffs seek declaratory and injunctive relief on the following claims:

1. Count I—Preemption under the Energy Policy and Conservation Act of 1975 ("EPCA"), 49 U.S.C. §§ 32902-32919.

Count II—Preemption under § 209(a) of the Federal Clean Air Act, 42 U.S.C. § 7543(a).

Count III—Preemption under the foreign policy of the United States and the foreign affairs powers of the Federal Government.

Count IV—Violation of the Dormant Commerce Clause, of the ...

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    ...the federal statute reserving fuel efficiency standards to the federal government. See Cent. Valley Chrysler-Jeep v. Witherspoon, 456 F. Supp. 2d 1160, 1167, 1174 (E.D. Cal. 2006) (holding that automobile manufacturers state a claim challenging California's regulations under the EPCA) (citi......

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