Auto Week at D.C. Circuit Raises ‘Major Questions’ for EPA

September 11, 2023

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by Lesley Clark (E&E News Climatewire) A powerful federal appeals court will hear arguments this week in three challenges to the Biden administration’s efforts to curb the largest source of planet-warming pollution in the United States — and the battles have the potential to go all the way to the nation’s highest bench.

The cases before the U.S. Court of Appeals for the District of Columbia Circuit target both historic and contemporary efforts to clean up car and truck exhaust. They will test a 1960s-era waiver that allows California to impose stricter pollution controls than the federal government, and they’ll wield a new legal tool — used by the Supreme Court last year to constrain EPA control of power plant emissions — against a Biden administration initiative to reduce vehicle emissions.

“It certainly is the case that ‘major questions’ is the flavor of the day and that many practitioners are raising the doctrine,” said Jonathan Brightbill, a partner at the law firm Winston & Strawn LLP. The major questions doctrine says that Congress must clearly authorize agencies to regulate financially and politically consequential matters.

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Still, environmental attorneys say the cases could eventually land at the Supreme Court amid a conservative push to challenge the limits of the executive branch.

They pointed to recent environmental decisions by the conservative-dominated high court, including the power plant emissions ruling, West Virginia v. EPA, and Sackett v. EPA, in which the justices erased protections for most U.S. wetlands.

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The first challenge the D.C. Circuit will hear Thursday — Texas v. EPA — targets the clean car rule that the Biden administration finalized in 2021.

The regulation — which applies to vehicles that are already on the road through 2026 — sought to reverse a Trump-era rollback and cut greenhouse gas emissions. Ken Paxton of Texas and 14 other Republican attorneys general say that their states would suffer “pocketbook injury” because the rule would reduce oil extraction, and they depend on revenue from fossil fuel development.

The states argue that EPA lacks “authority to take the comparably consequential action of substantially restructuring the American automobile market.”

They charge that the new rule presents a “major question” because it would “undermine both electric grid reliability and national security.”

But EPA argues that the major questions doctrine does not apply because its car rule broke no new legal ground.

Todd Kim, assistant attorney general for DOJ’s Environment and Natural Resources Division, has argued that the vehicle emissions rule “hews to the regulatory approach blessed” by the Supreme Court in West Virginia. The major questions doctrine, Kim wrote, “is reserved for a handful of ‘extraordinary’ cases.”

“That is not this case,” Kim said of the car rules. “Far from doing something unexpected or novel, EPA merely tightened existing standards.”

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The other case on the D.C. Circuit’s Thursday docket is a consolidated challenge to the National Highway Traffic Safety Administration’s tailpipe emissions standards for cars built from 2024 through 2026.

Opponents in the case — Natural Resources Defense Council v. NHTSA — include the American Fuel & Petrochemical Manufacturers, which argues that the rules are invalid in part because the agency relied on state-level emissions standards in California. Conservative states also argue that their tax revenues will suffer as a result of California’s zero-emissions vehicle standards, while environmental groups contend that the requirements are too lenient.

EPA’s clean car regulations apply to vehicles and model years that have already been sold or are being rolled out soon. But car companies could still benefit from a ruling that weakens those regulations because they typically comply by averaging their emissions and mileage over several years.

If the cases make it up to the Supreme Court and the justices uphold the rules, it would solidify the federal government’s authority to control vehicle pollution in future years, said Peter Huffman, an attorney at the Natural Resources Defense Council.

California waiver

The D.C. Circuit on Friday will hear arguments from Ohio Attorney General Dave Yost, legal officers in 16 other Republican-led states and industry groups that California’s authority to set strict tailpipe emissions rules violates the Constitution, which conservative challengers say should treat all states equally.

California has regulated vehicle emissions since the 1950s, before Congress introduced a federal program in 1965. Since that time, California has enjoyed a waiver from the program under the Clean Air Act, which allows the state to set stronger protections. The Trump administration revoked California’s exemption, but President Joe Biden reinstated it.

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A ruling against EPA in the case would ripple across the country and the U.S. auto market: More than 15 states have adopted California’s standards, representing nearly 40 percent of the market.

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Five of the world’s largest automakers sided with EPA in a brief last year, arguing that upholding California’s waiver would “promote stability and regulatory certainty while the industry goes electric.”

The outcome of the case could have “far-reaching consequences beyond the particular issues before the court,” Daniel Corbett, a Jones Day attorney, wrote in a post on JD Supra.

He noted that a decision in favor of Ohio and other challengers “could effectively invalidate many more of California’s current and planned vehicle emission and climate change programs.” READ MORE

Court decisions could upend Biden's electric vehicle agenda -- The EPA and DOT rules are stepping stones to even more aggressive regulations currently in the works that will cover new cars through the early 2030s. (Politico Pro)

Three electric vehicle fights to watch today (Washington Post)

Environmentalists Broaden Legal Attack On RFS ‘Set,’ Citing Climate Harm (Inside EPA)

RFS Faces Legal Challenges From Environmental and Fossil Fuel Groups (AgWeb)

Judges seem to favor Biden rule that curbs emissions and boosts EVs -- The D.C. Circuit panel seemed skeptical that the rules violate the "major questions" doctrine — but Biden's efforts could still be defeated by the Supreme Court. (Politico Pro Climatewire)

Judges seem to favor Biden rule that curbs emissions and boosts EVs (E&E News)

ConservAmerica Releases Statement on Court Cases Aimed at Auto Emissions (ConservAmerica)

Excerpt from Inside EPA: Environmentalists are broadening their attack against EPA’s “set” rule that established biofuel blending volumes under the renewable fuel standard (RFS) through 2025, targeting the program’s alleged climate harm and other negative environmental impacts, in an expansion of initial litigation that focused on endangered species issues. In a Sept. 11 petition for judicial review, the National Wildlife Federation (NWF) joins existing litigation over the July 12 rule in the U.S. Court of Appeals for the District of Columbia Circuit, where refiners,... READ MORE

Excerpt from E&E News: An effort by the Biden administration to curb tailpipe emissions — the largest source of planet-warming pollution in the country — seems likely to withstand review by a federal appeals court.

But another Biden initiative to boost fuel economy standards came in for a rockier reception during arguments Thursday before the U.S. Court of Appeals for the District of Columbia Circuit.

The two lawsuits — along with a third challenge set to be argued Friday — come as the Biden administration stakes much of its climate ambitions on bolstering electric vehicles. That’s sparked opposition from Republican-led states and the oil and gas industry, which accuse federal regulators of overstepping their authority.

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Judges of the D.C. Circuit seemed unconvinced, questioning whether EPA — which has set similar standards for years — was using its power in a new way. West Virginia, said Judge Gregory Katsas, dealt with an EPA rule that redesigned the regulatory scheme for power plants.

In the case of the vehicle emissions standards, Katsas said, the Biden administration has simply increased the strength of the regulations.

“They’re turning the knob up from a four to an eight,” said the judge, a Trump appointee. “That’s very costly, but it’s not a sharp difference in kind.”

Judge Florence Pan said she read flexibility in the standard, noting at least one automaker — Subaru Corp. — does not have EVs but has said that it can comply with the Biden administration’s standards.

“There’s evidence that you can comply with it without electrification,” said Pan, a Biden appointee.

Wall (Jeffrey Wall, a partner with Sullivan & Cromwell LLP) argued that EPA is wielding power so as to force the transition to electric vehicles. But he said lawmakers have not granted the agency that level of authority.

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Chief Judge Sri Srinivasan noted, however, that it’s not clear that the challengers have legal standing to contest the rules because they did not raise their concerns during the rulemaking process.

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If they are unsuccessful at the D.C. Circuit, conservative challengers are largely expected to take the cases all the way to the Supreme Court.

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Sue Chen, a Justice Department attorney representing EPA, argued that the rule does not require automakers to switch to EVs.

“What EPA is mandating is more emission-control technology,” she said. “It’s agnostic as to what kind it is.”

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Texas Attorney General Ken Paxton (R) brought the case, and his Principal Deputy Solicitor General Lanora Pettit argued that forcing the industry to transition to electric cars meets the Supreme Court’s definition of a “major question” because it will affect the nation’s power grid, as well as oil companies.

“Balancing that is a fundamental legislative task that Congress hasn’t done yet,” she said, arguing that the court in West Virginia said agencies cannot circumvent the legislative process.

Fuel economy rules

The D.C. Circuit appeared more skeptical of the Biden administration’s position in the second case — a challenge to fuel economy standards for vehicles built between 2024 and 2026.

Eric McArthur, an attorney for the American Fuel & Petrochemical Manufacturers, told the court the regulation represented “another of the administration’s strategy to outflank Congress on a major policy question.”

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But McArthur argued that NHTSA is not allowed to take EVs into account and that the standards “cannot be met by a fleet of conventional gas-powered vehicles as Congress required.”

He said the provisions were enacted by a Congress that wanted to encourage use of alternative-fuel vehicles.

Joshua Koppel, a DOJ attorney representing NHTSA, said the agency sets its standards to a level that manufacturers can feasibly reach.

Srinivasan, the chief judge and an Obama appointee, said Koppel’s response was “totally coherent” but asked whether it was consistent with the language of the law.

Koppel asked the judges — if they were to rule against NHTSA — to avoid scrapping the standard, but allow the regulation to remain in place while the agency revises it.

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‘Congress and the courts’

The D.C. Circuit arguments came as House Republicans on Thursday advanced legislation that would end California’s — and any other state’s — ability to phase out internal combustion engines.

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Next up: California waiver

Threats to the Biden administration’s plans to tackle vehicle pollution resume Friday with a lawsuit that challenges EPA’s reinstatement of a decision to grant California the authority to set tailpipe emissions that are stricter than the rest of the country.

Ohio Attorney General Dave Yost, legal officers in 16 other Republican-led states and industry groups say California’s Clean Air Act waiver violates the Constitution, which they say should treat all states equally. EPA has countered that waivers for states are not uncommon.

Ahead of the D.C. Circuit arguments, Yost rejected environmentalists’ claims that the lawsuit is an attack on clean air standards.

In a post on X, the social media site formerly known as Twitter, Yost said the case is a “*defense* of the democratic process which is under attack by the Biden Administration’s habitual and flagrant abuse of executive power.”

Legal observers have described the case as “SCOTUS bait” — aimed at capturing the interest of the high court’s conservative majority. But challengers may be “overestimating” the Supreme Court’s appetite for such arguments, said Dan Farber, faculty director at the Center for Law, Energy & the Environment at the University of California, Berkeley. READ MORE