The Nickel Report

Last week, among many actions taken by the Biden-Harris Administration on Earth Day 2021, one may have flown under the proverbial radar, though it does have significant legal implications for greenhouse gas regulation and the whole-of-government(s) approach:  the U.S. Department of Transportation’s (DOT) National Highway Traffic Safety Administration (NHTSA) notice proposing to repeal the preemption portions of NHTSA’s 2019 rule entitled “The Safer Affordable Fuel-Efficient (SAFE) Vehicles Rule Part One: One National Program,” 84 Fed. Reg. 51,310 (Sept. 27, 2019) (SAFE I Rule).  NHTSA, “Corporate Average Fuel Economy (CAFE) Preemption; Notice of Proposed Rulemaking (signed Apr. 24, 2021) (Proposed Rule).

DOT’s Press Release states that the move “aggressively” responds to President Biden’s January 20^th Executive Order (EO) 13990 on “Protecting Public Health and the Environment and Restoring Science to Tackle the Climate Crisis,” which explicitly called out NHTSA and EPA to consider publishing a proposed rule “suspending, revising, or rescinding the SAFE I Rule by April 2021.”  NHTSA’s Acting Administrator is quoted as saying that “States have been leading the way, especially over the last four years, when it comes to cleaning up pollution and addressing climate change,” and that the “proposed rule would remove unnecessary barriers to state leadership in regulating greenhouse gases and other air pollutants that spew from the tailpipes of cars.”

In the 2019 SAFE I Rule (jointly issued by NHTSA and EPA), EPA announced its decision to withdraw California’s Clean Air Act Section 209 waiver to enforce state Greenhouse Gas (GHG) and Zero Emissions Vehicle (ZEV) programs.  At that time, NHTSA announced its interpretation of preemption language in the Energy Policy and Conservation Act (EPCA), which it found to preclude the California waiver.  The current proposal is focused on the findings that NHTSA made regarding the preemptive effect of EPCA in 2019.  It seeks to undo the regulatory action that made explicit that State programs also would be preempted under NHTSA’s authorities for nationally applicable fuel economy standards.

The notice is remarkable for several reasons:

First, it speaks to a topic that is hotly debated, regardless of Administration – preemption of state action, in which only federal law can govern and state laws cannot be imposed.  Whether in the environmental arena or elsewhere, claims by private or public entities that a state law is preempted are complex and are judged by differing standards.  Due to the heightened scrutiny and the general view of a limited federal government from many conservative judges, it is hard to predict reliably how courts will rule on a preemption claim.  Here, the situation is complicated by the interplay of the two statutes governing, EPCA and the Clean Air Act, and the Clean Air Act’s express waiver of preemption for California when certain conditions are satisfied.

Second, the notice proposes to repeal the prior Administration’s regulatory language on preemption, on the grounds that Congress did not grant NHTSA authority to issue regulations that explicate the scope of statutory preemption.  The proposal states repeatedly that this is NHTSA’s “tentative conclusion” and “tentative view” and that NHTSA has “substantial doubts” about the “validity of the conclusion” reached by the last Administration that Congress provided rulemaking authority to further codify preemption requirements beyond the statutory language itself.

Third, it provisionally rejects NHTSA’s prior invocation of general rulemaking authority to issue the preemption regulations, stating that the agency proposes that a general delegation of authority to the Secretary to “carry out” his “duties and powers” would be insufficient to support a legislative rulemaking that expressly administers the relevant statutory preemption provision.  The issue of agency ability to invoke general rulemaking provisions (often called housekeeping provisions) for substantive law is one that could have implications for regulations in a number of areas that the new Administration may want to move forward, but for which there is not explicit statutory authorization.

Fourth, it painstakingly explains that the proposal is to repeal not just regulatory language but rather, all associated preamble and other rationale that supported the final regulatory language that may have been contained in a proposed or final rule preamble or supporting document.

Specifically, th[e] notice proposes to repeal the regulatory text and appendices contained in 49 CFR Parts 531 and 533, which were originally intended to more specifically define the preemptive effect of 49 U.S.C. 32919 on actions of states or political subdivisions of states that limit or prohibit tailpipe Greenhouse Gas (GHG) Emissions or establish Zero Emissions Vehicle (ZEV) mandates.  In addition, this document proposes to repeal and withdraw the interpretative statements made by the Agency in the SAFE I Rule preamble, including those regarding the preemption of particular state GHG standards or ZEV mandates [including positions on California’s programs].

Proposed Rule at 1-2.  This approach is largely unprecedented.

Though the proposal seeks comment on these issues and does not state a definitive interpretation of the preemption provisions, it does suggest forcefully that NHTSA will leave to the courts to decide preemptive effect of EPCA rather than adopt regulations to do.  Such court decisions may be expected to play out in the context of NHTSA allowing state regulations to be issued and ruling on claims by private parties that seek to effectuate the preemptive language through lawsuits based on those anticipated agency actions.

* * * * * *

This proposal, which provides for a 30-day comment period once published in the Federal Register, is perhaps best viewed as clearing the underbrush for future action in California and the other states that may seek to opt into California’s standards.