Farmers Sue Minnesota on Zero Emissions

March 15, 2023

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by Todd Neeley (DTN Progressive Farmer) Minnesota Ag Interests Sue State on Adoption of California Zero-Emission Mandate -- Agriculture, biofuels and convenience store groups allege the state of Minnesota violated the Constitution and federal law in adopting California's zero-emissions vehicles mandate, in a new lawsuit filed in federal court Monday.

California regulators drew a lot of attention when the California Air Resources Board approved a rule to require 100% of new light- and medium-duty vehicles sold in the state to be zero-emission vehicles by 2035.

In 2021, Minnesota adopted California's emissions standards to force automakers to make more zero-emission electric vehicles available to dealers beginning with model year 2025.

The lawsuit filed in U.S. District Court for the District of Minnesota by the Minnesota Soybean Growers Association, the Clean Fuels Development Coalition, ethanol plant developer ICM Inc., the National Association of Convenience Stores, and the Minnesota Service Station and Convenience Store Association, alleges the scheme violates the Constitution's equal sovereignty doctrine because it grants California a "greater degree" of sovereignty and capacity for self-government than all other states.

Bob Worth, president of the Minnesota Soybean Growers Association, said in a news release that soybean farmers in the state eventually will lose their biodiesel market if the state rules stand.

"Having Minnesota blindly follow California's rules gives up our ability to make our own decisions and would sabotage our own growers and producers of liquid fuels in the heartland," he said. "Minnesota consumers know better than California politicians what is best for their own lives."

In Minnesota, about $1.7 billion of the state's gross domestic product comes from the biodiesel industry, and biodiesel supports nearly 5,400 jobs in the state and 65,000 jobs in the U.S., according to the MSGA. Every 100 million gallons of production supports about 3,200 jobs, the group said, and biodiesel adds more than $1 to every bushel of soybeans.

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The lawsuit contends the federal Energy Policy and Conservation Act, or EPCA, creates a uniform national standard for vehicle fuel efficiency and prohibits states from adopting policies on federal fuel-economy standards.

EPCA says that a "State or a political subdivision of a State" cannot "adopt or enforce a law or regulation related to fuel economy standards or average fuel economy standards."

The groups argue in the lawsuit that in EPCA, Congress disallowed the National Highway Safety Administration from considering the fuel economy of vehicles that run on "alternative fuels" (such as electricity) in setting fuel-economy standards.

The suit also challenges Congress' decision to grant only California authority to adopt its own motor-vehicle emission standards different from those set by the U.S. government.

The Minnesota Pollution Control Agency issued new rules governing carbon-dioxide emissions. The rules require automakers to increase fuel economy in their fleets. The rules also mandate a sales quota on zero-emissions vehicles.

"Instead, MPCA 'incorporated by reference' over 45 provisions of the California code of regulations that regulate vehicle emissions, simply noting that the term 'Minnesota' should be 'substituted' for 'California.' Federal law and the Constitution stand in the way of this scheme. In short, state regulations of tailpipe carbon-dioxide emissions are not just 'related to' fuel-economy standards -- they are a de facto regulation of fuel economy. As such, they are expressly preempted by EPCA."

Last year, 17 states, agriculture and fuel interests sued the EPA, alleging the agency's March 2022 decision to reinstate California's legal authority to implement zero-emissions vehicle sales mandate and greenhouse gas emissions standards as a backdoor way to move the entire country away from gasoline-powered vehicles. That case is pending in the U.S. Court of Appeals for the District of Columbia Circuit, https://www.dtnpf.com/….

On March 9, 2022, EPA Administrator Michael Regan announced the agency rescinded a Trump administration action turning down California's request.

Since then, 17 states and the District of Columbia have adopted California's greenhouse-gas emissions standards and zero-emissions-vehicle mandate.

For the first time in 2005, California sought a waiver from the EPA to establish its own emissions standards for greenhouse gases. EPA denied that request in 2008, arguing the Clean Air Act does not authorize California to tackle national and international emissions problems.

The agency changed course under a new administration, granting California the waiver in 2013. The EPA again withdrew the waiver in 2019. READ MORE

Minnesota appeals court upholds 'clean cars' plan after dealership pushback (MPR News)

This Region Has the Fewest Electric Vehicles. Here’s Why. (PEW Trusts)

Minnesota auto dealers lose court fight with state pollution regulators over 'clean car' rule -- Industry group likely to ask state Supreme Court to hear the case. (Star Tribune)

Ag Concerns About Clean Fuel Law in MN -- Minnesota Ag, Biofuels Groups Say Proposed Standard Favors Electric Vehicles (DTN Progressive Farmer)

Farmers Join Fight Against MN “Clean Cars” Mandate (Energy.AgWired.com)

Ag, biofuels and retail groups sue state over Minnesota's zero-emissions mandate (AgWeek)

MSGA joins lawsuit challenging state’s zero-emission vehicle mandate (Minnesota Soybean Growers)

Excerpt from PEW Trusts: Minnesota’s “clean cars” plan is set to take effect in 2024. But in August, California upped the ante: It approved new rules requiring all new cars sold in the state to be either electric or hydrogen powered by 2035. Minnesota and other states must choose whether to follow those more stringent auto sales rules or observe federal standards, which don’t include a zero-emissions deadline. The Minnesota Pollution Control Agency has until 2026 to decide whether the state should follow California again.

Opposition to the original California standards united auto dealers, farmers and conservative politicians. The new rules will be even a tougher sell.

“If I have to stock electric and low-emission vehicles, it will reduce my capacity to stock the trucks and SUVs my customers want,” wrote Steve Whitaker, owner of car dealership Whitaker Buick GMC in Forest Lake, Minnesota, in a seven-page public comment filing. “Reducing my stock of SUVs and trucks to take the required electric vehicles will put my business in a tenuous financial position.”

EV proponents contend the adoption of EVs in the region is hindered because dealers limit the models available.

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Industry groups, such as the Renewable Fuel Association, argue that biofuels can be more climate friendly than electric. Minnesota is the nation’s fifth-leading producer of ethanol.

Decisions Ahead

Across the region, difficult political decisions lie ahead as sales accelerate and states build out their EV policies.

Some incentivize EV ownership with state rebates or tax credits, on top of those offered by the federal government. Kansas, for example, gives a $2,500 tax credit to EV buyers. In Minnesota, the Democratic-controlled legislature is considering $2,500 rebates for EV purchases. It also offers some EV buyers a one-time toll pass credit. In the Dakotas, Iowa and Nebraska, meanwhile, incentives favor development of the ethanol/biofuels industry over boosting EV sales.

The differences also arise in how states will use their shares of the $7.5 billion in federal funds set aside for charging infrastructure. Idaho, Montana, North Dakota, South Dakota and Wyoming — all large, rural states with long stretches of remote highways — joined in a comment to federal regulators, noting the difficulties complying with the requirements, E&E News reported.

Wyoming drew a line in the high prairie sand, offering its own plan for placing charging stations in tourism areas outside the federal guidelines that prioritize interstates. “The State will not proceed if our plan is not approved,” it said. READ MORE

Excerpt from Star Tribune: The Minnesota Court of Appeals has upheld the state's "clean car" rulemaking, backing the authority of the state's pollution regulator to try to get more zero-emission vehicles onto sales lots in the fight against climate change.

The decision, released Monday (January 30, 2023), is a loss for the Minnesota Automobile Dealers Association, which has been challenging the Minnesota Pollution Control Agency (MPCA) over the rulemaking. The industry group has characterized it as unnecessary regulatory overreach.

Doug Seaton, who heads the Upper Midwest Law Center in Minneapolis and works with the auto dealers group, said they were disappointed and will likely petition the state Supreme Court to hear the case.

"We think it's the wrong decision," Seaton said. "We knew from the outset this would potentially take going to the Supreme Court."

Minnesotans for Clean Cars, a coalition of environmental groups, issued a news release applauding the decision as a win. Transportation has been the state's biggest source of heat-trapping greenhouse gases, particularly with regard to passenger vehicles.

Joy Anderson, supervising attorney for the Minnesota Center for Environmental Advocacy, said in the release that Minnesotans want more opportunities to buy electric vehicles, which automakers have been sending to other states with strict emissions standards.

"The Court of Appeals confirmed that the MPCA had the authority to adopt the Clean Cars Rule to clean up air pollution and reduce Minnesota's greenhouse gas emissions," Anderson said. READ MORE

Excerpt from AgWeek: The Minnesota Automobile Dealers Association fought the requirements but lost at the Court of Appeals last year, and petitioned the state Supreme Court to hear the case.

Lance Klatt, executive director of the MSSA, said the California mandate is bad for Minnesota consumers, businesses and the state economy.

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The MSSA was founded in 1966 to represent independent retailers in the auto and petroleum industry in legal and legislative opportunities, said Klatt, and it currently represents around 300 stations today.

"A lot of our retailers have adopted E15, E85, E30, and are all bought biofuels, and they've spent some money on infrastructure for biofuels," Klatt said. "They're concerned about all the money they put into the infrastructure, and then to see our governor adopt California Air Resources Board's (CARB) tailpipe emissions standards is just uncomfortable for them."

Klatt said many of the retail members of MSSA were among the first to offer E15.

"When you look at all the gallons sold in Minnesota of E15, sometimes I'd like to think that if it wasn't for members of my association, I'm not sure how far E15 would be here today," Klatt said.

Klatt served on the Governor's Biofuels Council for two years, and said he listened to Minnesota Gov. Tim Walz tout his plan to increase biofuels in the state.

"How do you do that when you adopt CARB's tailpipe emission standards, when CARB doesn't recognize E15 as a fuel today in California," Klatt said.

He said he has little confidence in the Walz administration stepping back Minnesota's pledge to adopt California’s mandate.

"That's why we've decided to go with this lawsuit, because it just doesn't make sense to have Minnesota blindly follow California's rules, and it gives up our ability to make our own decisions," Klatt said.

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“With profit margins being so close, if we lose our biodiesel market, it would be a serious matter for soybean farmers to face,” said Worth, who helped advocate for the passage of the original biodiesel law that Minnesota passed in 2002.

The lawsuit contends that Minnesota's adoption of the mandate violates the U.S. Constitution’s equal sovereignty doctrine because it grants California a greater degree of sovereignty and capacity for self-government than all other states. READ MORE