California State Motor Vehicle Pollution Control Standards; Advanced Clean Car Program; Reconsideration of a Previous Withdrawal of a Waiver of Preemption; Notice of Decision
| Published date | 14 March 2022 |
| Citation | 87 FR 14332 |
| Record Number | 2022-05227 |
| Section | Notices |
| Court | Environmental Protection Agency |
Federal Register, Volume 87 Issue 49 (Monday, March 14, 2022)
[Federal Register Volume 87, Number 49 (Monday, March 14, 2022)]
[Notices]
[Pages 14332-14379]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-05227]
[[Page 14331]]
Vol. 87
Monday,
No. 49
March 14, 2022
Part IIEnvironmental Protection Agency-----------------------------------------------------------------------California State Motor Vehicle Pollution Control Standards; Advanced
Clean Car Program; Reconsideration of a Previous Withdrawal of a Waiver
of Preemption; Notice of Decision; Notice
Federal Register / Vol. 87 , No. 49 / Monday, March 14, 2022 /
Notices
[[Page 14332]]
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ENVIRONMENTAL PROTECTION AGENCY
[EPA-HQ-OAR-2021-0257; FRL-9325-01-OAR]
California State Motor Vehicle Pollution Control Standards;
Advanced Clean Car Program; Reconsideration of a Previous Withdrawal of
a Waiver of Preemption; Notice of Decision
AGENCY: Environmental Protection Agency.
ACTION: Notice of decision.
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SUMMARY: The Environmental Protection Agency (EPA) has completed the
reconsideration of its 2019 action withdrawing a 2013 Clean Air Act
(CAA) waiver of preemption for California's greenhouse gas (GHG)
emission standards and zero emission vehicle (ZEV) sale mandate, which
are part of California's Advanced Clean Car (ACC) program. This
decision rescinds EPA's 2019 waiver withdrawal, thus bringing back into
force the 2013 ACC program waiver, including a waiver of preemption for
California's ZEV sales mandate and GHG emissions standards. In
addition, EPA is withdrawing the interpretive view of CAA section 177
included in its 2019 action, that States may not adopt California's GHG
standards pursuant to section 177 even if EPA has granted California a
waiver for such standards. Accordingly, other States may continue to
adopt and enforce California's GHG standards under section 177 so long
as they meet the requirements of that section.
DATES: Petitions for review must be filed by May 13, 2022.
ADDRESSES: EPA has established a docket for this action under Docket ID
EPA-HQ-OAR-2021-0257. All documents relied upon in making this
decision, including those submitted to EPA by CARB, are contained in
the public docket. Publicly available docket materials are available
electronically through www.regulations.gov. After opening the
www.regulations.gov website, enter EPA-HQ-OAR-2021-0257 in the ``Enter
Keyword or ID'' fill-in box to view documents in the record. Although a
part of the official docket, the public docket does not include
Confidential Business Information (CBI) or other information whose
disclosure is restricted by statute. EPA's Office of Transportation and
Air Quality (OTAQ) maintains a web page that contains general
information on its review of California waiver and authorization
requests. Included on that page are links to prior waiver Federal
Register notices, some of which are cited in this notice; the page can
be accessed at https://www.epa.gov/state-and-local-transportation/vehicle-emissions-california-waivers-and-authorizations.
FOR FURTHER INFORMATION CONTACT: David Dickinson, Office of
Transportation and Air Quality, U.S. Environmental Protection Agency,
1200 Pennsylvania Ave. NW. Telephone: (202) 343-9256. Email:
[email protected] or Kayla Steinberg, Office of Transportation
and Air Quality, U.S. Environmental Protection Agency, 1200
Pennsylvania Ave. NW. Telephone: (202) 564-7658. Email:
[email protected].
SUPPLEMENTARY INFORMATION:
Table of Contents
I. Executive Summary
II. Background
A. California's Advanced Clean Car (ACC) Program and EPA's 2013
Waiver
B. Prior Waivers for GHG Standards
C. SAFE 1 Decision
D. Petitions for Reconsideration
III. Principles Governing This Review
A. Scope of Preemption and Waiver Criteria Under the Clean Air
Act
B. Deference to California
C. Standard and Burden of Proof
IV. EPA did not Appropriately Exercise Its Limited Authority To
Reconsider the ACC Program Waiver in SAFE 1
A. Comments Received
B. Analysis: EPA Inappropriately Exercised Its Limited Authority
To Reconsider
C. Conclusion
V. The SAFE 1 Interpretation of Section 209(b)(1)(B) was
Inappropriate and, in any Event, California met Its Requirements
A. Historical Practice
B. Notice of Reconsideration of SAFE 1 and Request for Comment
C. Comments Received
D. Analysis: California Needs the ACC Program GHG Standards and
ZEV Sales Mandate to Address Compelling and Extraordinary Conditions
Under Section 209(b)(1)(B)
1. EPA is Withdrawing the SAFE 1 Section 209(b)(1)(B)
Interpretation
2. California Needs the GHG Standards and ZEV Sales Mandate Even
Under the SAFE 1 Interpretation
a. GHG Standards and ZEV Sales Mandates Have Criteria Emission
Benefits
b. California Needs Its Standards To Address the Impacts of
Climate Change in California
3. California's ZEV Sales Mandate as Motor Vehicle Control
Technology Development
E. Conclusion
VI. EPA Inappropriately Considered Preemption Under the Energy and
Policy Conservation Act (EPCA) in Its Waiver Decision
A. Historical Practice and Legislative History
B. Notice of Reconsideration of SAFE 1 and Request for Comment
C. Comments Received
D. Analysis: EPA is Rescinding its SAFE 1 Actions Related to
Preemption Under EPCA
1. NHTSA Has Since Repealed Its Findings of Preemption Made in
SAFE 1
2. EPA Improperly Deviated From its Historical Practice of
Limiting its Review to Section 209(b) Criteria
E. Conclusion
VII. EPA Inappropriately set Forth an Interpretive View of Section
177 in SAFE 1
A. SAFE 1 Interpretation
B. Notice of Reconsideration of SAFE 1 and Request for Comment
C. Comments Received
D. Analysis: EPA Is Rescinding SAFE 1's Interpretive Views of
Section 177
E. Conclusion
VIII. Other Issues
A. Equal Sovereignty
B. CARB's Deemed-to-Comply Provision
IX. Decision
X. Statutory and Executive Order Reviews
I. Executive Summary
CAA section 209(a) generally preempts states from adopting emission
control standards for new motor vehicles. But Congress created an
important exception from preemption. Under CAA section 209(b), the
State of California \1\ may seek a waiver of preemption, and EPA must
grant it unless the Agency makes one of three statutory findings.
California's waiver of preemption for its motor vehicle emissions
standards allows other States to adopt and enforce identical standards
pursuant to CAA section 177. Since the CAA was enacted, EPA has granted
California dozens of waivers of preemption, permitting California to
enforce its own motor vehicle emission standards.
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\1\ The CAA section 209(b) waiver is limited ``to any State
which has adopted standards . . . for the control of emissions from
new motor vehicles or new motor vehicle engines prior to March 30,
1966,'' and California is the only State that had standards in place
before that date. ``California'' and ``California Air Resources
Board'' (CARB) are used interchangeably in certain instances in this
notice when referring to the waiver process under section 209(b).
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Of particular relevance to this action, in 2013, EPA granted
California's waiver request for the state's Advanced Clean Car (ACC)
program (ACC program waiver).\2\ California's ACC program includes both
a Low Emission Vehicle (LEV) program, which regulates criteria
pollutants and greenhouse gas (GHG) emissions, as well as a Zero
Emission Vehicle (ZEV) sales mandate. These two requirements are
designed to control smog- and soot-causing pollutants and GHG emissions
in a single coordinated package of requirements for passenger cars,
light-duty trucks, and medium-duty passenger vehicles (as well as
[[Page 14333]]
limited requirements related to heavy-duty vehicles). Between 2013 and
2019, twelve other States adopted one or both of California's standards
as their own. But in 2019, EPA partially withdrew this waiver as part
of a final action entitled ``The Safer Affordable Fuel-Efficient (SAFE)
Vehicles Rule Part One: One National Program'' (SAFE 1), marking the
first time the agency withdrew a previously granted waiver.\3\ In
addition, in the context of SAFE 1, EPA provided an interpretive view
of CAA section 177 asserting that other states were precluded from
adopting California's GHG standards.
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\2\ 78 FR 2111 (January 9, 2013).
\3\ 84 FR 51310 (September 27, 2019).
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As Administrator of the Environmental Protection Agency (EPA), I am
now rescinding EPA's 2019 actions in SAFE 1 that partially withdrew the
ACC program waiver for California's ACC program. I am rescinding these
actions because (1) EPA's reconsideration of the waiver under the
particular facts and circumstances of this case was improper; (2) EPA's
reconsideration was based on a flawed interpretation of CAA section
209(b); (3) even under that flawed interpretation, EPA misapplied the
facts and inappropriately withdrew the waiver; (4) EPA erred in looking
beyond the statutory factors in CAA 209(b) to action taken by another
agency under another statute to justify withdrawing the waiver; (5)
that agency has also since withdrawn the action EPA relied on in any
event; and (6) EPA inappropriately provided an interpretive view of
section 177.
As a result of this action, EPA's 2013 waiver for the ACC program,
specifically the waiver for California's GHG emission standards and ZEV
sales mandate requirements for model years (MYs) 2017 through 2025,
comes back into force.\4\ I am also rescinding the interpretive view
set forth in SAFE 1 that States may not adopt California's GHG
standards pursuant to CAA section 177 even if EPA has granted
California a section 209 waiver for such standards. Accordingly, States
may now adopt and enforce California's GHG standards so long as they
meet the requirements of Section 177, and EPA will evaluate any State's
request to include those provisions in a SIP through a separate notice
and comment process.
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\4\ In SAFE 1, EPA did not withdraw the entire 2013 waiver, but
instead only withdrew the waiver as it related to California's GHG
emission standards and the ZEV sales mandate. The waiver for the
low-emission vehicle (LEV III) criteria pollutant standards in the
ACC program remained in place. EPA's reconsideration of SAFE 1 and
the impact on the ACC waiver therefore relates only to the GHG
emission standards and the ZEV sales mandate, although ``ACC program
waiver'' is used in this document. This action rescinds the waiver
withdrawal in SAFE 1. In this decision, the Agency takes no position
on any impacts this decision may have on state law matters regarding
implementation.
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Section II of this action contains a detailed history of EPA's
waiver adjudications leading up to this action. In summary, in 2012,
CARB submitted the ACC waiver request to EPA, which included ample
evidence of the criteria pollution benefits of the GHG standards and
the ZEV sales mandate. As it had in all prior waiver decisions with two
exceptions (including SAFE 1), in considering the request EPA relied on
its ``traditional'' interpretation of section 209(b)(1)(B), which
examines whether California needs a separate motor vehicle program as a
whole--not specific standards--to address the state's compelling and
extraordinary conditions. In 2013, EPA granted California's waiver
request for its ACC program in full. In 2018, however, EPA proposed to
withdraw portions of its waiver granted in 2013 based on a new
interpretation of section 209(b)(1)(B) that looked at whether the
specific standards (the GHG standards and ZEV sales mandate), as
opposed to the program as a whole, continued to meet the second and
third waiver prongs (found in sections 209(b)(1)(B) and (C)).\5\ In
addition, EPA proposed to look beyond the section 209(b) criteria to
consider the promulgation of a NHTSA regulation and pronouncements in
SAFE 1 that declared state GHG emission standards and ZEV sales
mandates preempted under EPCA. In 2019, after granting CARB a waiver
for its ACC program in 2013 and after 12 states had adopted all or part
of the California standards under section 177, EPA withdrew portions of
the waiver for CARB's GHG emission standards and ZEV sales mandates. In
SAFE 1, EPA cited changed circumstances and was based on a new
interpretation of the CAA and the agency's reliance on an action by
NHTSA that has now been repealed.\6\
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\5\ EPA's 2018 proposal was jointly issued with the National
Highway Traffic Safety Administration (NHTSA). 83 FR 42986 (August
24, 2018) (the ``SAFE proposal''). In addition to partially
withdrawing the waiver, that proposal proposed to set less stringent
greenhouse gas and CAFE standards for model years 2021-2026. NHTSA
also proposed to make findings related to preemption under the
Energy Policy and Conservation Act (EPCA) and its relationship to
state and local GHG emission standards and ZEV sales mandates.
\6\ 84 FR 51310. In SAFE 1, NHTSA also finalized its action
related to preemption under EPCA. NHTSA's action included both
regulatory text and well as pronouncements within the preamble of
SAFE 1. In 2020, EPA finalized its amended and less stringent carbon
dioxide standards for the 2021-2026 model years in an action titled
``The Safer Affordable Fuel-Efficient (SAFE) Vehicles Rule for Model
Years 2021-2026 Passenger Cars and Light Trucks'' (SAFE 2). 85 FR
24174 (April 30, 2020).
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On January 20, 2021, President Biden issued Executive Order 13990,
directing the Federal Agencies to ``immediately review'' SAFE 1 and to
consider action ``suspending, revising, or rescinding'' that action by
April 2021. On April 28, 2021, EPA announced its Notice of
Reconsideration, including a public hearing and an opportunity for
public comment.\7\ The Agency stated its belief that there were
significant issues regarding whether SAFE 1 was a valid and appropriate
exercise of Agency authority, including the amount of time that had
passed since EPA's ACC program waiver decision, the approach and legal
interpretations used in SAFE 1, whether EPA took proper account of the
environmental conditions (e.g., local climate and topography, number of
motor vehicles, and local and regional air quality) in California, and
the environmental consequences from the waiver withdrawal in SAFE 1.
Further, EPA stated it would be addressing issues raised in the related
petitions for reconsideration of EPA's SAFE 1 action. In the meantime,
having reconsidered its own action, and also in response to Executive
Order 13990, NHTSA repealed its conclusion that state and local laws
related to fuel economy standards, including GHG standards and ZEV
sales mandates, were preempted under EPCA,\8\ and EPA revised and made
more stringent the Federal GHG emission standards for light-duty
vehicles for 2023 and later model years, under section 202(a).\9\
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\7\ ``California State Motor Vehicle Pollution Control
Standards; Advanced Clean Car Program; Reconsideration of a Previous
Withdrawal of a Waiver of Preemption; Opportunity for Public Hearing
and Public Comment.'' 86 FR 22421 (April 28, 2021).
\8\ 86 FR 74236 (December 29, 2021).
\9\ 86 FR 74434 (December 30, 2021).
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Section III of this action outlines the principles that govern
waiver reconsiderations. It sets forth the statutory background and
context for the CAA preemption of new motor vehicle emission standards,
the criteria for granting a waiver of preemption, and the ability of
other States to adopt and enforce California's new motor vehicle
emission standards where a waiver has been issued if certain CAA
criteria are met. In brief, CAA section 209(a) generally preempts all
States or political subdivisions from adopting and enforcing any
standard relating to the control of emissions from new motor vehicles
or new motor vehicle engines. But section 209(b) contains an important
exception that allows only
[[Page 14334]]
California to submit a request to waive preemption for its standards.
Importantly, EPA must grant the waiver unless the Administrator makes
at least one of three findings: (1) That California's determination
that its standards will be, in the aggregate, at least as protective of
public health and welfare as applicable Federal standards, is arbitrary
and capricious (the ``first waiver prong,'' under section
209(b)(1)(A)); (2) that California does not need such State standards
to meet compelling and extraordinary conditions (the ``second waiver
prong,'' under section 209(b)(1)(B)); or (3) that California standards
are not consistent with section 202(a), which contains EPA's authority
to regulate motor vehicles (the ``third waiver prong,'' under section
209(b)(1)(C)). In the 1977 amendments to the CAA, section 177 was added
to allow other States that may be facing their own air quality concerns
to adopt and enforce the California new motor vehicle emission
standards for which California has been granted a waiver under section
209(b) if certain criteria are met.
Section III also provides more context to indicate that Congress
intended that, when reviewing a request for a waiver, EPA treat with
deference the policy judgments on which California's vehicle emission
standards are based. It discusses the history of Congress allowing
states to adopt more stringent standards. Ultimately, Congress built a
structure in section 209(b) that grants California authority to address
its air quality problems, and also acknowledges the needs of other
states to address their air quality problems through section 177.
Lastly, Section III describes the burden and standard of proof for
waiver decisions.
Section IV of this action then discusses EPA's first basis for
rescinding the SAFE 1 waiver withdrawal: That EPA did not appropriately
exercise its limited authority to withdraw a waiver once granted.
Section 209 does not provide EPA with express authority to reconsider
and withdraw a waiver previously granted to California. EPA's authority
thus stems from its inherent reconsideration authority. In the context
of reconsidering a waiver grant, that authority may only be exercised
sparingly. EPA believes its inherent authority to reconsider a waiver
decision is constrained by the three waiver criteria that must be
considered before granting or denying a waiver request under section
209(b). EPA's reconsideration may not be broader than the limits
Congress placed on its ability to deny a waiver in the first place. EPA
notes further support for limiting its exercise of reconsideration
authority, relevant in the context of a waiver withdrawal, is evidenced
by Congress's creation of a state and federal regulatory framework to
drive motor vehicle emissions reduction and technology innovation that
depends for its success on the stable market signal of the waiver
grant--automobile manufacturers must be able to depend reliably on the
continuing validity of the waiver grant in order to justify the
necessary investments in cleaner vehicle technology. Accordingly, EPA
now believes it may only reconsider a previously granted waiver to
address a clerical or factual error or mistake, or where information
shows that factual circumstances or conditions related to the waiver
criteria evaluated when the waiver was granted have changed so
significantly that the propriety of the waiver grant is called into
doubt. Even then, as with other adjudicatory actions, when choosing to
undertake such a reconsideration EPA believes it should exercise its
limited authority within a reasonable timeframe and be mindful of
reliance interests. EPA expects such occurrences will be rare. The
Agency's waiver withdrawal in SAFE 1 was not an appropriate exercise of
EPA's limited authority; there was no clerical error or factual error
in the ACC program waiver, and SAFE 1 did not point to any factual
circumstances or conditions related to the three waiver prongs that
have changed so significantly that the propriety of the waiver grant is
called into doubt. Rather, the 2019 waiver withdrawal was based on a
change in EPA's statutory interpretation, an incomplete assessment of
the record, and another agency's action beyond the confines of section
209(b). EPA erred in reconsidering a previously granted waiver on these
bases. Accordingly, EPA is rescinding its 2019 withdrawal of its 2013
ACC program waiver.
Sections V and VI further explain why, even if SAFE 1 were an
appropriate exercise of EPA's limited authority to reconsider its
previously-granted waiver, the Agency would still now rescind its
waiver withdrawal.
As discussed in Section V, the Agency's reinterpretation of the
second waiver prong in SAFE 1 was flawed. While EPA has traditionally
interpreted the second waiver prong, section 209(b)(1)(B), to require a
waiver unless the Agency demonstrates that California does not need its
own motor vehicle emissions program, to meet compelling and
extraordinary conditions, the SAFE 1 waiver withdrawal decision was
based on a statutory interpretation that calls for an examination of
the need for the specific standard at issue. Section V explains why EPA
believes that its traditional interpretation is, at least, the better
interpretation of the second waiver prong because it is most consistent
with the statutory language and supported by the legislative history.
Accordingly, we reaffirm the traditional interpretation--in which EPA
reviews the need for California's motor vehicle program--in this
action.
Additionally, Section V explains why even if the focus is on the
specific standards, when looking at the record before it, EPA erred in
SAFE 1 in concluding that California does not have a compelling need
for the specific standards at issue--the GHG emission standards and ZEV
sales mandate. In particular, in SAFE 1, the Agency failed to take
proper account of the nature and magnitude of California's serious air
quality problems, including the interrelationship between criteria and
GHG pollution.\10\ Section V further discusses EPA's improper
substitution in SAFE 1 of its own policy preferences for California's,
and discusses the importance of deferring to California's judgment on
``ambiguous and controversial matters of public policy'' that relate to
the health and welfare of its citizens.\11\ Based on a complete review
of the record in this action, EPA now believes that, even under the
SAFE 1 interpretation, California needs the ZEV sales mandate and GHG
standards at issue to address compelling and extraordinary air quality
conditions in the state. EPA's findings in SAFE 1, which were based on
the Agency's inaccurate belief that these standards were either not
intended to or did not result in criteria emission reductions to
address California's National Ambient Air Quality Standard (NAAQS)
obligations, are withdrawn.
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\10\ As explained herein, the requirements in the ACC program
were designed to work together in terms of the technologies that
would be used to both lower criteria emissions and GHG emissions.
The standards, including the ZEV sales mandate and the GHG emission
standards, were designed to address the short- and long-term air
quality goals in California in terms of the criteria emission
reductions (including upstream reductions) along GHG emission
reductions. The air quality issues and pollutants addressed in the
ACC program are interconnected in terms of the impacts of climate
change on such local air quality concerns such as ozone exacerbation
and climate effects on wildfires that affect local air quality.
\11\ 40 FR 23102, 23104 (May 28, 1975); 58 FR 4166 (January 13,
1993).
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Section VI discusses SAFE 1's other basis for withdrawing the ACC
program waiver, EPCA. In SAFE 1, EPA reached beyond the waiver criteria
in section 209(b)(1) and considered NHTSA's regulations in SAFE 1 that
state or local regulation of carbon dioxide emission from new motor
vehicles (including
[[Page 14335]]
California's ZEV sales mandate and GHG standards) are related to fuel
economy and as such are preempted under EPCA. NHTSA has since issued a
final rule that repeals all regulatory text and additional
pronouncements regarding preemption under EPCA set forth in SAFE 1.\12\
This action by NHTSA effectively removes the underpinning and any
possible reasoned basis for EPA's withdrawal decision based on
preemption under EPCA in SAFE 1. Additionally, the Agency has
historically refrained from consideration of factors beyond the scope
of the waiver criteria in section 209(b)(1) and the 2013 ACC program
waiver decision was undertaken consistent with this practice. EPA
believes that the consideration of EPCA preemption in SAFE 1 led the
Agency to improperly withdraw the ACC program waiver on this non-CAA
basis. EPA's explanation that withdrawal on this basis was justified
because SAFE 1 was a joint action, and its announcement that this would
be a single occurrence, does not justify the ACC waiver withdrawal.
Thus, EPA is rescinding the withdrawal of those aspects of the ACC
program waiver that were based on NHTSA's actions in SAFE 1.
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\12\ 86 FR 74236.
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Section VII addresses SAFE 1's interpretive view of section 177
that States adopting California's new motor vehicle emission standards
could not adopt California's GHG standards.\13\ EPA believes it was
both unnecessary and inappropriate in a waiver proceeding to provide an
interpretive view of the authority of states to adopt California
standards when section 177 does not assign EPA any approval role in
states' adoption of the standards. Therefore, as more fully explained
in Section VII, the Agency is rescinding the interpretive view on
section 177 set out in SAFE 1. Section VIII discusses certain other
considerations, including the equal sovereignty doctrine and
California's deemed-to-comply provision, and concludes that they do not
disturb EPA's decision to rescind the 2019 waiver withdrawal action.
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\13\ 84 FR at 51310, 51350.
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Section IX contains the final decision to rescind the withdrawal of
the 2013 ACC program waiver. In summary, I find that although EPA has
inherent authority to reconsider its prior waiver decisions, that
authority to reconsider is limited and may be exercised only when EPA
has made a clerical or factual error or mistake, or where information
shows that factual circumstances or conditions related to the waiver
criteria evaluated when the waiver was granted have changed so
significantly that the propriety of the waiver grant is called into
doubt. Further, EPA's reconsideration may not be broader than the
limits Congress placed on its ability to deny a waiver in the first
place. Even where those conditions are met, I believe that any waiver
withdrawal decision should consider other factors such as the length of
time since the initial decision and California and others' reliance on
the initial decision. Because there were no factual or clerical errors
or such significantly changed factual circumstances or conditions
necessary to trigger EPA's authority to reconsider its previously
granted waiver during the SAFE 1 proceeding, I believe SAFE 1 was not
an appropriate exercise of EPA's authority to reconsider. In addition,
even if it were an appropriate exercise, EPA should not have departed
from its traditional interpretation of the second waiver prong (section
209(b)(1)(B)), which is properly focused on California's need for a
separate motor vehicle emission program--not specific standards--to
meet compelling and extraordinary conditions. And even under EPA's SAFE
1 interpretation of the second waiver prong, a complete review of the
factual record demonstrates that California does need the GHG emission
standards and ZEV sales mandate to meet compelling and extraordinary
conditions in the State. Therefore, EPA should not have withdrawn the
ACC program waiver based upon the second waiver prong in SAFE 1 and
recission of the withdrawal is warranted. Additionally, I find that EPA
inappropriately relied on NHTSA's finding of preemption, now withdrawn,
to support its waiver withdrawal, and rescind the waiver withdrawal on
that basis as well. Finally, independently in this action, I am
rescinding the interpretive views of section 177 that were set forth in
SAFE 1, because it was inappropriate to include those views as part of
this waiver proceeding.
For these reasons, I am rescinding EPA's part of SAFE 1 related to
the CAA preemption of California's standards. This recission has the
effect of bringing the ACC program waiver back into force.
II. Background
This section provides background information needed to understand
EPA's decision process in SAFE 1, and this decision. This context
includes: A summary of California's ACC program including the record on
the criteria pollutant benefits of its ZEV sales mandate and GHG
emission standards; a review of the prior GHG emission standards
waivers in order to explain EPA's historical evaluation of the second
waiver prong; an overview of the SAFE 1 decision; a review of the
petitions for reconsideration filed subsequent to SAFE 1; and a
description of the bases and scope of EPA's reconsideration of SAFE 1.
EPA's sole purpose in soliciting public comment on its reconsideration
was to determine whether SAFE 1 was a valid and appropriate exercise of
the Agency's authority. In the Notice of Reconsideration, EPA therefore
noted that reconsideration was limited to SAFE 1 and that the Agency
was not reopening the ACC program waiver decision.
A. California's Advanced Clean Car (ACC) Program and EPA's 2013 Waiver
On June 27, 2012, CARB notified EPA of its adoption of the ACC
program regulatory package that contained amendments to its LEV III and
ZEV sales mandate, and requested a waiver of preemption under section
209(b) to enforce regulations pertaining to this program.\14\ The ACC
program combined the control of smog- and soot-causing pollutants and
GHG emissions into a single coordinated package of requirements for
passenger cars, light-duty trucks, and medium-duty passenger vehicles
(as well as limited requirements related to heavy-duty vehicles for
certain model years).\15\
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\14\ 2012 Waiver Request, EPA-HQ-OAR-2012-0562-0004 (2012 Waiver
Request) at 1, 3-6. CARB's LEV III standards include both its
criteria emission standards and its GHG emission standards. SAFE 1
did not address the LEV III criteria emission standards and as such
the ACC program waiver remained in place. SAFE 1 did address CARB's
GHG emission standards and ZEV sales mandate and this action
addresses these two standards as well. As noted in CARB's 2012
Waiver Request, these three standards are interrelated and
comprehensive in order to address the State's serious air quality
problems including its criteria pollutants and climate change
challenges.
\15\ As noted in CARB's waiver request, ``[a]t the December 2009
hearing, the Board adopted Resolution 09-66, reaffirming its
commitment to meeting California's long term air quality and climate
change reduction goals through commercialization of ZEV
technologies. The Board further directed staff to consider shifting
the focus of the ZEV regulation to both GHG and criteria pollutant
emission reductions, commercializing ZEVs and PHEVs in order to meet
the 2050 goals, and to take into consideration the new LEV fleet
standards and propose revisions to the ZEV regulation accordingly.''
2012 Waiver Request at 2 (emphasis added). EPA stated in SAFE 1 that
California's ZEV standard initially targeted only criteria
pollutants. 84 FR at 51329. See also 78 FR at 2118.
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In its 2012 waiver request, CARB noted that the 2012 ZEV amendments
would also result in additional criteria pollutant benefits in
California in comparison to the earlier ZEV regulations and would
likely provide benefits beyond those achieved by
[[Page 14336]]
complying with the LEV III criteria pollutant standard for conventional
vehicles only. CARB attributed these benefits not to vehicle emissions
reductions specifically, but to increased electricity and hydrogen use
that would be more than offset by decreased gasoline production and
refinery emissions.\16\ CARB's waiver request attributed the criteria
emissions benefits to its LEV III criteria pollutant fleet standard and
did not include similar benefits from its ZEV sales mandate. According
to the request, the fleet would become cleaner regardless of the ZEV
sales mandate because the ZEV sales mandate is a way to comply with the
LEV III standards and, regardless of the ZEV sales mandate,
manufacturers might adjust their compliance response to the standard by
making less polluting conventional vehicles. CARB further explained
that because upstream criteria and PM emissions are not captured in the
LEV III criteria pollutant standard, net upstream emissions are reduced
through the increased use of electricity and concomitant reductions in
fuel production.\17\
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\16\ 2012 Waiver Request at 6.
\17\ Id. at 15-16.
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On August 31, 2012, EPA issued a notice of opportunity for public
hearing and written comment on CARB's request and solicited comment on
all aspects of a full waiver analysis for such request under the
criteria of section 209(b).\18\ Commenters opposing the waiver asked
EPA to deny the waiver under the second waiver prong, section
209(b)(1)(B), as it applied to the GHG provisions in the ACC Program,
calling on EPA to adopt an alternative interpretation of that provision
focusing on California's need for the specific standards. Following
public notice and comment and based on its traditional interpretation
of section 209(b), on January 9, 2013, EPA granted California's request
for a waiver of preemption to enforce the ACC program regulations.\19\
The traditional interpretation, which EPA stated is the better
interpretation of section 209(b)(1)(B), calls for evaluating
California's need for a separate motor vehicle emission program to meet
compelling and extraordinary conditions.\20\ As explained, EPA must
grant a waiver to California unless the Administrator makes at least
one of the three statutorily-prescribed findings in section 209(b)(1).
Concluding that opponents of the waiver did not meet their burden of
proof to demonstrate that California does not have such need, EPA found
that it could not deny the waiver under the second waiver prong.\21\
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\18\ 77 FR 53119 (August 31, 2012).
\19\ Set forth in the ACC program waiver decision is a summary
discussion of EPA's earlier decision to depart from its traditional
interpretation of section 209(b)(1)(B) (the second waiver prong) in
the 2008 waiver denial for CARB's initial GHG standards for certain
earlier model years along with EPA's return to the traditional
interpretation of the second prong in the waiver issued in 2009. 78
FR at 2125-31. These interpretations are discussed more fully in
Section III.
\20\ Id. at 2128 (``The better interpretation of the text and
legislative history of this provision is that Congress did not
intend this criterion to limit California's discretion to a certain
category of air pollution problems, to the exclusion of others. In
this context it is important to note that air pollution problems,
including local or regional air pollution problems, do not occur in
isolation. Ozone and PM air pollution, traditionally seen as local
or regional air pollution problems, occur in a context that to some
extent can involve long range transport of this air pollution or its
precursors. This long range or global aspect of ozone and PM can
have an impact on local or regional levels, as part of the
background in which the local or regional air pollution problem
occurs.'').
\21\ Because EPA received comment on this issue during the ACC
program waiver proceeding, as it pertained to both CARB's GHG
emission standards and ZEV sales mandate, the Agency recounted the
interpretive history associated with standards for both GHG
emissions and criteria air pollutants to explain EPA's belief that
section 209(b)(1)(B) should be interpreted the same way for all air
pollutants. Id. at 2125-31 (``As discussed above, EPA believes that
the better interpretation of the section 209(b)(1)(B) criterion is
the traditional approach of evaluating California's need for a
separate motor vehicle emission program to meet compelling and
extraordinary conditions. Applying this approach with the reasoning
noted above, with due deference to California, I cannot deny the
waiver.'').
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Without adopting the alternative interpretation, EPA noted that, to
the extent that it was appropriate to examine the need for CARB's
specific GHG standards to meet compelling and extraordinary conditions,
EPA had explained at length in its earlier 2009 GHG waiver decision
that California does have compelling and extraordinary conditions
directly related to regulation of GHGs. This conclusion was supported
by additional evidence submitted by CARB in the ACC program waiver
proceeding, including reports that demonstrate record-setting
wildfires, deadly heat waves, destructive storm surges, and loss of
winter snowpack. Many of these extreme weather events and other
conditions have the potential to dramatically affect human health and
well-being.\22\ Similarly, to the extent that it was appropriate to
examine the need for CARB's ZEV sales mandate, EPA noted that the ZEV
sales mandate in the ACC program enables California to meet both its
air quality and climate goals into the future. EPA recognized that
CARB's coordinated strategies reflected in the ACC program for
addressing both criteria pollutants and GHGs and the magnitude of the
technology and energy transformation needed to meet such goals.\23\
Therefore, EPA determined that, to the extent the second waiver prong
should be interpreted to mean a need for the specific standards at
issue, CARB's GHG emission standards and ZEV sales mandate satisfy such
a finding.
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\22\ Id. at 2126-29. Within the 2009 GHG waiver, and again in
the 2013 ACC program waiver, EPA explained that the traditional
approach does not make section 209(b)(1)(B) a nullity, as EPA must
still determine whether California does not need its motor vehicle
program to meet compelling and extraordinary conditions as discussed
in the legislative history. Conditions in California may one day
improve such that it may no longer have a need for its motor vehicle
program.
\23\ Id. at 2131 (``Whether or not the ZEV standards achieve
additional reductions by themselves above and beyond the LEV III GHG
and criteria pollutant standards, the LEV III program overall does
achieve such reductions, and EPA defers to California's policy
choice of the appropriate technology path to pursue to achieve these
emissions reductions. The ZEV standards are a reasonable pathway to
reach the LEV III goals, in the context of California's longer-term
goals.'').
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In the context of assessing the need for the specific ZEV sales
mandate in the ACC program waiver, EPA noted CARB's intent in the
redesign of the ZEV regulation of addressing both criteria pollutants
and GHG emissions, and CARB's demonstration of ``the magnitude of the
technology and energy transformation needed from the transportation
sector and associated energy production to meet . . . the goals set
forth by California's climate change requirements'' and found that the
ZEV standards would help California achieve those ``long term emission
benefits as well as . . . some [short-term] reduction in criteria
pollutant emissions.'' \24\
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\24\ Id. at 2130-31. See also 2012 Waiver Request at 15-16);
CARB Supplemental Comments, EPA-HQ-OAR-2012-0562-0373 at 4
(submitted November 14, 2012).
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B. Prior Waivers for GHG Standards
For over fifty years, EPA has evaluated California's requests for
waivers of preemption under section 209(b), primarily considering
CARB's motor vehicle emission program for criteria pollutants.\25\ More
recently, the Agency has worked to determine how
[[Page 14337]]
section 209(b)(1)(B) should be interpreted and applied to GHG
standards, including consideration of the relationship of GHG standards
to California's historical air quality problems, the public health
impacts of GHG emissions on NAAQS pollutants, and the direct impacts of
GHG emissions and climate change on California and its inhabitants.
While the SAFE 1 withdrawal and revocation of the waiver for CARB's ACC
program represents a singular snapshot of this task, it is important to
examine EPA's long-standing and consistent waiver practice in general,
including EPA's interpretations in prior waiver decisions pertaining to
CARB's GHG emission standards, in order to determine whether EPA
properly applied the waiver criterion in section 209(b)(1)(B) in SAFE
1.\26\
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\25\ EPA notes that the 1990 amendments to the CAA added
subsection (e) to section 209. Subsection (e) addresses the
preemption of State or political subdivision regulation of emissions
from nonroad engines or vehicles. Section 209(e)(2)(A) sets forth
language similar to section 209(b) in terms of the criteria
associated with EPA waiving preemption, in this instance for
California nonroad vehicle and engine emission standards. Congress
directed EPA to implement subsection (e). See 40 CFR part 1074. EPA
review of CARB requests submitted under section 209(e)(2)(A)(ii)
includes consideration of whether CARB needs its nonroad vehicle and
engine program to meet compelling and extraordinary conditions. See
78 FR 58090 (September 20, 2013).
\26\ EPA notes that, in the history of EPA waiver decisions, it
has only denied a waiver once (in 2008) and withdrawn a waiver once
(in 2019). Each instance was under this second waiver prong in
section 209(b)(1)(B).
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Historically, EPA has consistently interpreted and applied the
second waiver prong by considering whether California needed a separate
motor vehicle emission program as compared to the specific standards at
issue to meet compelling and extraordinary conditions.\27\ At the same
time, in response to commenters that have argued that EPA is required
to examine the specific standards at issue in the waiver request, EPA's
practice has been to nevertheless review the specific standards to
determine whether California needs those individual standards to meet
compelling and extraordinary conditions.\28\ This does not mean that
EPA has adopted an ``alternative approach'' and required a
demonstration for the need for specific standards; rather, this
additional Agency review has been afforded to address commenters'
concerns and this secondary analysis has been done to support the
Agency's primary assessment. For example, EPA granted an authorization
for CARB's In-use Off-road Diesel Standards (Fleet Requirements) that
included an analysis under both approaches.\29\ The only two departures
from this traditional approach occurred first in 2008 when EPA adopted
an ``alternative approach'' to the second waiver prong and second in
2019 when EPA adopted the ``SAFE 1 interpretation'' of the second
waiver criterion.
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\27\ 49 FR 18887, 18890 (May 3, 1984).
\28\ For example, in EPA's 2009 GHG waiver that reconsidered the
2008 GHG waiver denial, the Agency noted that ``Given the comments
submitted, however, EPA has also considered an alternative
interpretation, which would evaluate whether the program or
standards has a rational relationship to contributing to
amelioration of the air pollution problems in California. Even under
this approach, EPA's inquiry would end there. California's policy
judgment that an incremental, directional improvement will occur and
is worth pursuing is entitled, in EPA's judgment, to great
deference. EPA's consistent view is that it should give deference to
California's policy judgments, as it has in past waiver decisions,
on California's choice of mechanism used to address air pollution
problems. EPA does not second-guess the wisdom or efficacy of
California's standards. EPA has also considered this approach with
respect to the specific GHG standards themselves, as well as
California's motor vehicle emissions program.'' 74 FR at 32766
(citing to Motor & Equip. Mfrs. Ass'n, Inc. v. EPA, 627 F.2d 1095,
1110-11 (D.C. Cir. 1979)).
\29\ 78 FR at 58090. The United States Court of Appeals for the
Ninth Circuit reviewed EPA's grant of a waiver of preemption under
the traditional approach, and because of comments seeking an
alternative interpretation, an assessment of the need for the
standards contained in California's request. Dalton Trucking v. EPA,
No. 13-74019 (9th Cir. 2021) (finding that EPA was not arbitrary in
granting the waiver of preemption under either approach). The court
opinion noted that ``[t]his disposition is not appropriate for
publication and is not precedent except as provided by Ninth Circuit
Rule 36-3.''
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EPA's task of interpreting and applying section 209(b)(1)(B) to
California's GHG standards and consideration of the State's historical
air quality problems that now include the public health and welfare
challenge of climate change began in 2005, with CARB's waiver request
for 2009 and subsequent model years' GHG emission standards. On March
6, 2008, EPA denied the waiver request based on a new interpretive
finding that section 209(b) was intended for California to enforce new
motor vehicle emission standards that address local or regional air
pollution problems, and an Agency belief that California could not
demonstrate a ``need'' under section 209(b)(1)(B) for standards
intended to address global climate change problems. EPA also employed
this new alternative interpretation to state a belief that the effects
of climate change in California are not compelling and extraordinary in
comparison with the rest of the country. Therefore, in the 2008 waiver
denial, EPA did not evaluate whether California had a need for its
motor vehicle emission program to meet compelling and extraordinary
conditions (the traditional interpretation) but rather focused on the
specific GHG emission standard in isolation and not in conjunction with
the other motor vehicle emission standards for criteria pollutants.
In 2009, EPA initiated a reconsideration of the 2008 waiver denial.
The reconsideration resulted in granting CARB a waiver for its GHG
emission standards commencing in the 2009 model year.\30\ In granting
the waiver, EPA rejected the Agency's alternative interpretation of the
second waiver prong announced in the 2008 waiver denial. Instead, EPA
returned to its traditional approach of evaluating California's need
for a separate motor vehicle emission program to meet compelling and
extraordinary conditions because the Agency viewed it as the better
interpretation of the second waiver prong. Under the traditional
interpretation, EPA found that the opponents of the waiver had not met
their burden of proof to demonstrate that California did not need its
motor vehicle emission program to meet compelling and extraordinary
conditions. In responding to comments on this issue, EPA also
determined that, even if the alternative interpretation were to be
applied, the opponents of the waiver had not demonstrated that
California did not need its GHG emissions standards to meet compelling
and extraordinary conditions.\31\
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\30\ 74 FR 32743, 32745 (July 8, 2009).
\31\ 74 FR at 32759-67. For example, EPA noted that the analysis
of the need for CARB's GHG standards in the 2008 waiver denial
failed to consider that although the factors that cause ozone are
primarily local in nature and that ozone is a local or regional air
pollution problem, the impacts of global climate change can
nevertheless exacerbate this local air pollution problem. EPA noted
that California had made a case that its greenhouse gas standards
are linked to amelioration of its smog problems. See also 76 FR
34693 (June 14, 2011).
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Since EPA's 2009 GHG waiver decision and before SAFE 1 the Agency
applied the traditional interpretation of the second waiver prong in
its GHG-related waiver proceedings, including the on-going review of
California's GHG emission standards for vehicles. In the first
instance, in 2009, CARB adopted amendments to its certification
requirements that would accept demonstration to the Federal GHG
standards as compliance with CARB's GHG program. This provision is
known as a ``deemed-to-comply'' provision.\32\ In 2011, EPA determined
that this deemed-to-comply provision was within-the-scope of the waiver
issued in July 2009, relying on the traditional interpretation of the
second waiver prong.\33\ As such, in the June 14, 2011
[[Page 14338]]
within-the-scope decision EPA determined that CARB's 2009 amendments
did not affect or undermine the Agency's prior determination made in
the 2009 GHG waiver decision, including the technological feasibility
findings in section 209(b)(1)(C).\34\ EPA also acted on two requests
for waivers of preemption for CARB's heavy-duty (HD) tractor-trailer
GHG emission standards.\35\ Once again, EPA relied upon its traditional
approach of evaluating California's need for a separate motor vehicle
emission program to meet compelling and extraordinary conditions and
found that no evidence had been submitted to demonstrate that
California no longer needed its motor vehicle emission program to meet
compelling and extraordinary conditions.\36\ EPA's second waiver for
the HD GHG emission standards made a similar finding that California's
compelling and extraordinary conditions continue to exist under the
traditional approach for the interpretation of the second waiver
criterion.\37\
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\32\ California Code of Regulations, Title 13 1961(a)(1)(B).
Under this provision, automakers could comply with the California
GHG standards for model years 2017-2025 by meeting Federal GHG
standards for the same model years.
\33\ 76 FR 34693. EPA's ``within-the-scope'' decisions are
generally performed when CARB has amended its regulations that were
previously waived by EPA under section 209(b)(1) and include an
analysis of whether EPA's prior evaluation of the waiver criteria
has been undermined by CARB's amendments. EPA received comment
during the reconsideration of SAFE 1 that questioned whether CARB
needed its GHG standards if it was otherwise accepting compliance
with the Federal GHG standards. EPA addressed the issue in its final
decision (76 FR at 34696-98) and continues to believe EPA's analysis
applies. The existence of federal emission standards that CARB may
choose to harmonize with or deem as compliance with its own State
standards (or that CARB may choose to set more stringent standards)
does not on its own render California's as not needed. CARB
continues to administer an integrated and comprehensive motor
vehicle emission program (including its ZEV sales mandate and GHG
emission standards and other applicable emission standards for
light-duty vehicles) and this program continues to evolve to address
California's serious air quality issues. CARB's decision to select
some federal emission standards as sufficient to comply with its own
State emission standards does not negate the overall design and
purpose of section 209 of the CAA. In the within-the-scope decision
issued in 2011, EPA agreed with Global Automakers comment that the
deemed-to-comply provision renders emission benefits equally
protective as between California and Federal programs. Id. at 34696.
\34\ Id. at 34696-97.
\35\ The first HD GHG emissions standard waiver related to
certain new 2011 and subsequent model year tractor-trailers. 79 FR
46256 (August 7, 2014). In this waiver decision EPA responded to
comments regarding whether CARB had quantified how the GHG
regulations would contribute to attainment of ozone or particulate
matter standards by noting that nothing in section 209(b)(1)(B)
calls for California to quantify specifically how its regulations
would affect attainment of the NAAQS in the State. Rather, EPA
noted, the relevant question is whether California needs its own
motor vehicle emission program and not whether there is a need for
specific standards. The second HD GHG emissions standard waiver
related to CARB's ``Phase I'' regulation for 2014 and subsequent
model year tractor-trailers. 81 FR 95982 (December 29, 2016).
\36\ Relatedly, California explained the need for these
standards based on projected ``reductions in NOX
emissions of 3.1 tons per day in 2014 and one ton per day in 2020
due to the HD GHG Regulations. California state[d] that these
emissions reductions will help California in its efforts to attain
applicable air quality standards. California further projects that
the HD GHG Regulations will reduce GHG emissions in California by
approximately 0.7 million metric tons (MMT) of carbon dioxide
equivalent emissions (CO2e) by 2020.'' 79 FR at 46261.
See also 81 FR at 95982.
\37\ 81 FR at 95987. At the time of CARB's Board adoption of the
HD Phase I GHG regulation, CARB determined in Resolution 13-50 that
California continues to need its own motor vehicle program to meet
serious ongoing air pollution problems. CARB asserted that ``[t]he
geographical and climatic conditions and the tremendous growth in
vehicle population and use that moved Congress to authorize
California to establish vehicle standards in 1967 still exist today.
EPA has long confirmed CARB's judgment, on behalf of the State of
California, on this matter.'' See EPA Air Docket at regulations.gov
at EPA-HQ-OAR-2016-0179- 0012. In enacting the California Global
Warming Solutions Act of 2006, the Legislature found and declared
that ``Global warming poses a serious threat to the economic well-
being, public health, natural resources, and the environment of
California. The potential adverse impacts of global warming include
the exacerbation of air quality problems, a reduction in the quality
and supply of water to the state from the Sierra snowpack, a rise in
sea levels resulting in the displacement of thousands of coastal
businesses and residences, damage to the marine ecosystems and the
natural environment, and an increase in the incidences of infectious
diseases, asthma, and other health-related problems.''
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C. SAFE 1 Decision
In 2018, NHTSA issued a proposal for new Corporate Average Fuel
Economy (CAFE) standards that must be achieved by each manufacturer for
its car and light-duty truck fleet while EPA revisited its light-duty
vehicle GHG emissions standards for certain model years in the SAFE
Proposal.\38\ EPA also proposed to withdraw the waiver for the ACC
program GHG emission standards and ZEV sales mandate, referencing both
sections 209(b)(1)(B) and (C). EPA posited that since the grant of the
initial waiver a reassessment of California's need for its GHG
standards and ZEV sales mandate under the second waiver prong, section
209(b)(1)(B), was appropriate. EPA further posited that its own Federal
GHG rulemaking in the SAFE proposal raised questions about the
feasibility of CARB's standards under the third waiver prong, section
209(b)(1)(C).\39\ In addition, EPA reasoned that the SAFE proposal
presented a unique situation that required EPA to consider the
implications of NHTSA's proposed conclusion that California's GHG
emission standards and ZEV sales mandate were preempted by EPCA.\40\
EPA thus also posited that state standards preempted under EPCA cannot
be afforded a valid section 209(b) waiver and then proposed that it
would be necessary to withdraw the waiver separate and apart from
section 209(b)(1)(B) and (C) if NHTSA finalized its interpretation
regarding preemption under EPCA.
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\38\ The Safer Affordable Fuel-Efficient (SAFE) Vehicles Rule
for Model Years 2021-2026 Passenger Cars and Light Trucks, 83 FR at
42986.
\39\ As explained below, EPA did not make a determination
regarding section 209(b)(1)(C) in SAFE 1.
\40\ ``To the extent that NHTSA has determined that these
standards are void ab initio because EPCA preempts standards that
relate to fuel economy, that determination presents an independent
basis for EPA to consider the validity of the initial grant of a
waiver for these standards, separate and apart from EPA's analysis
under the criteria that invalidate a waiver request.'' 84 FR at
51338.
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During the SAFE 1 proceeding, EPA received additional information
demonstrating that the ZEV sales mandate plays a role in reducing
criteria pollution, including CARB's comments that EPA's prior findings
in the ACC program waiver were correct. As noted by a number of States
and Cities, ``[f]or example, CARB modeled the consequences of the
actions proposed in SAFE, which included withdrawing California's
waiver for its GHG and ZEV standards and freezing the federal GHG
standards at MY 2020 levels. CARB concluded these actions, which would
eliminate California's ZEV and GHG standards and leave in place only
federal GHG standards at MY 2020 levels, would increase NOx emissions
in the South Coast air basin alone by 1.24 tons per day.'' \41\ The
SAFE 1 record also includes information that demonstrates that
California is ``one of the most climate challenged'' regions of North
America, and that it is home to some of the country's hottest and
driest areas, which are particularly threatened by record-breaking
heatwaves, sustained droughts, and wildfire, as a result of GHG
emissions.\42\ This record also includes information from the United
States Fourth National Climate Assessment that documents the impact of
climate change in exacerbating California's record-breaking fires
seasons, multi-year drought, heat waves, and flood risk, and notes that
California faces a particular threat from sea-level rise and ocean
acidification and that the State has ``the most valuable ocean-based
economy in the country.'' \43\ EPA
[[Page 14339]]
received information during the SAFE 1 public comment period regarding
the criteria emission benefits of CARB's ZEV sales mandate and GHG
emission standards.\44\
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\41\ States and Cities in Support of EPA Reversing Its SAFE 1
Actions (States and Cities), Docket No. EPA-HQ-OAR-2021-0257-0132 at
10 (citing CARB, Docket No. NHTSA-2018-0067-11873 at 287-88, 290-91
(upstream emission impacts), 308).
\42\ States and Cities at 43-47 (citing EPA-HQ-OAR-2018-0283-
5481, EPA-HQ-OAR-2018-0283-5683, and EPA-HQ-OAR-2018-0283-5054).
\43\ Id. at 45 (EPA-HQ-OAR-2018-0283-7447--U.S. Global Research
Program, Impacts, Risks, and Adaptation in the United States: Fourth
National Climate Assessment, Volume II, Chapter 25., 2018). (E.g.,
``The California coast extends 3,400 miles (5,500 km), 8 with
200,000 people living 3 feet (0.9 m) or less above sea level.9 The
seaports of Long Beach and Oakland, several international airports,
many homes, and high-value infrastructure lie along the coast. In
addition, much of the Sacramento-San Joaquin River Delta is near sea
level. California has the most valuable ocean-based economy in the
country, employing over half a million people and generating $20
billion in wages and $42 billion in economic production in 2014.10
Coastal wetlands buffer against storms, protect water quality,
provide habitat for plants and wildlife, and supply nutrients to
fisheries. Sea level rise, storm surges, ocean warming, and ocean
acidification are altering the coastal shoreline and ecosystems.''
\44\ During the current reconsideration proceeding, EPA received
additional comment regarding the criteria pollution benefits of
California's GHG and ZEV standards. The States and Cities at 10-11.
Likewise, CARB notes this connection in comments on the SAFE
proposal. Multi-State SAFE Comments, EPA-HQ-OAR-2018-0283-5481 at
24. The States and Cities provided supplemental information in
response to the Notice of Reconsideration by submitting California's
latest analyses of the criteria pollutant benefits of its GHG
standards. For example, CARB estimated those benefits for calendar
years by which the South Coast air basin must meet increasingly
stringent NAAQS for ozone: 2023, 2031, and 2037. States and Cities
app. A at 2-4, app. C at 8-9.
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On September 27, 2019, EPA and NHTSA published the final SAFE 1
action that promulgated preemption regulations which supported NHTSA's
conclusion that EPCA preempted California's GHG standards and ZEV sales
mandate. In the same action, EPA withdrew the waiver of preemption for
California to enforce the ACC program GHG and ZEV sales mandate on two
grounds.\45\
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\45\ 84 FR at 51328-29. Parties subsequently brought litigation
against EPA on its SAFE 1 decision. See generally Union of Concerned
Scientists, et al. v. NHTSA, et al., No. 19-1230 (D.C. Cir. filed
Oct. 28, 2019) (on February 8, 2021, the D.C. Circuit granted the
Agencies' motion to hold the case in abeyance in light of the
reconsideration of the SAFE 1 action). EPA also received three
petitions for reconsideration of this waiver withdrawal.
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First, in SAFE 1 the Agency posited that standards preempted under
EPCA could not be afforded a valid waiver of preemption under section
209(b). EPA explained that Agency pronouncements in the ACC program
waiver decision on the historical practice of disregarding the
preemptive effect of EPCA in the context of evaluating California's
waiver applications were ``inappropriately broad, to the extent it
suggested that EPA is categorically forbidden from ever determining
that a waiver is inappropriate due to consideration of anything other
than the `criteria' or `prongs' at section 209(b)(1)(B)(A)-(C).'' \46\
EPA further explained that those pronouncements were made in waiver
proceedings where the Agency was acting solely on its own in contrast
to a joint action with NHTSA such as SAFE 1. Additionally, EPA
expressed its intention not to consider factors other than statutory
criteria set out in section 209(b)(1)(A)-(C) in future waiver
proceedings, explaining that addressing the preemptive effect of EPCA
and its implications for EPA's waiver for California's GHG standards
and ZEV sales mandate was uniquely called for in SAFE 1 because EPA and
NHTSA were coordinating regulatory actions in a single notice.\47\
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\46\ 84 FR at 51338.
\47\ Id.
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Second, EPA withdrew the waiver for the GHG standards and ZEV sales
mandate under the second waiver prong, section 209(b)(1)(B), on two
alternative grounds. Specifically, EPA determined first that California
does not need the GHG standards ``to meet compelling and extraordinary
conditions,'' under section 209(b)(1)(B), and second, even if
California does have compelling and extraordinary conditions in the
context of global climate change, California does not ``need'' the
specific GHG standards under section 209(b)(1)(B) because they will not
meaningfully address global air pollution problems of the type
associated with GHG emissions.\48\ EPA also reasoned that because CARB
had characterized the ZEV sales mandate as a compliance mechanism for
GHG standards, both were ``closely interrelated'' given the overlapping
compliance regimes for the ACC program, and as a result the ZEV sales
mandate was inextricably interconnected with CARB's GHG standards.\49\
In support of its overall determination that the ZEV sales mandate was
not needed to meet compelling and extraordinary conditions, EPA relied
on a single statement in the ACC program waiver support document where
CARB did not attribute criteria emission reductions to the ZEV sales
mandate, but rather noted its LEV III criteria pollutant fleet standard
was responsible for those emission reductions.\50\ Relying on this
reasoning, EPA also withdrew the waiver for the ZEV sales mandate under
the second waiver prong finding that California had no ``need'' for its
own ZEV sales mandate.
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\48\ Id. at 51341-42.
\49\ Id. at 51337.
\50\ Id. at 51330.
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In withdrawing the waiver, EPA relied on an alternative view of the
scope of the Agency's analysis of California waiver requests and
posited that reading ``such State standards'' as requiring EPA to only
and always consider California's entire motor vehicle program would
limit the application of this waiver prong in a way that EPA did not
believe Congress intended.\51\ EPA further noted that the Supreme Court
had found that CAA provisions may apply differently to GHGs than they
do to traditional pollutants in UARG v. EPA, 134 S. Ct. 2427 (2014)
(partially reversing the GHG ``Tailoring'' Rule on grounds that the CAA
section 202(a) endangerment finding for GHG emissions from motor
vehicles did not compel regulation of all sources of GHG emissions
under the Prevention of Significant Deterioration and Title V permit
programs). EPA then interpreted section 209(b)(1)(B) as requiring a
particularized, local nexus between (1) pollutant emissions from
sources, (2) air pollution, and (3) resulting impact on health and
welfare.\52\ Interpreting section 209(b)(1)(C) to be limited to the
specific standards under the waiver, EPA stated that ``such State
standards'' in sections 209(b)(1)(B) and (C) should be read
consistently with each other, which EPA asserted was a departure from
the traditional approach where this phrase in section 209(b)(1)(B) is
read as referring back to ``in the aggregate'' in section
209(b)(1).\53\
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\51\ In other words, EPA asserted that once it determines that
California needed its very first set of submitted standards to meet
extraordinary and compelling conditions, EPA would never have the
discretion to determine that California did not need any subsequent
standards for which it sought a successive waiver. EPA based its
reading also on an assertion of ambiguity in the meaning of ``such
State standards'' in section 209(b)(1)(B).
\52\ Id. at 51339-40.
\53\ Id. at 51344-45.EPA notes that this SAFE 1 position was
taken despite the Agency previously stating in the ACC program
waiver that ``Similarly, although the Dealers might suggest that EPA
only be obligated to determine whether each of CARB's ACC regulatory
components, in isolation, is consistent with section 202(a) we
believe the better approach is to determine the technological
feasibility of each standard in the context of the entire regulatory
program for the particular industry category. In this case, we
believe CARB has in fact recognized the interrelated, integrated
approach the industry must take in order to address the regulatory
components of the ACC program. As noted above, the House Committee
Report explained as part of the 1977 amendments to the Clean Air Act
that California was to be afforded flexibility to adopt a complete
program of motor vehicle emission controls (emphasis added). As
such, EPA believes that Congress intended EPA to afford California
the broadest possible discretion in selecting the best means to
protect the health of its citizens and the public welfare.32 EPA
believes this intent extends to CARB's flexibility in designing its
motor vehicle emission program and evaluating the aggregate effect
of regulations within the program.'' 78 FR at 2217.
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In the SAFE proposal, as an additional basis for the waiver
withdrawal, EPA proposed to find that CARB's ZEV sales mandate and GHG
[[Page 14340]]
standards are not consistent with section 202(a) of the CAA under the
third waiver prong, section 209(b)(1)(C).\54\ However, in the final
SAFE 1 action, EPA and NHTSA explained they were not finalizing the
proposed assessment regarding the technological feasibility of the
Federal GHG and CAFE standards for MY 2021 through 2025 in SAFE 1, and
thus EPA did not finalize any determination with respect to section
209(b)(1)(C).\55\
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\54\ 83 FR at 43240.
\55\ 84 FR at 51350. EPA explained that it may make a
determination in connection with a future final action with regard
to Federal standards. EPA's subsequent regulation to issue Federal
standards did not address this issue. 85 FR 24174.
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In justifying the withdrawal action in SAFE 1, EPA opined that the
text, structure, and context of section 209(b) supported EPA's
authority to reconsider prior waiver grants. Specifically, EPA asserted
that the Agency's authority to reconsider the grant of ACC program
waiver was implicit in section 209(b) given that revocation of a waiver
is implied in the authority to grant a waiver. The Agency noted that
further support for the authority to reconsider could be found in a
single sentence in the 1967 legislative history of provisions now
codified in sections 209(a) and (b) and the judicial principle that
agencies possess inherent authority to reconsider their decisions.
According to the Senate report from the 1967 CAA amendments, the
Administrator has ``the right . . . to withdraw the waiver at any time
[if] after notice and an opportunity for public hearing he finds that
the State of California no longer complies with the conditions of the
waiver.'' \56\ EPA also noted that, subject to certain limitations,
administrative agencies possess inherent authority to reconsider their
decisions in response to changed circumstances: ``It is well settled
that EPA has inherent authority to reconsider, revise, or repeal past
decisions to the extent permitted by law so long as the Agency provides
a reasoned explanation.'' \57\ This authority exists in part because
EPA's interpretations of the statutes it administers ``are not carved
in stone.'' \58\
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\56\ 84 FR at 51332 (citing S. Rep. No. 90-403, at 34 (1967)).
\57\ Id. at 51333.
\58\ Chevron U.S.A. Inc. v. NRDC, Inc., 467 U.S. 837, 863
(1984).
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Finally, in SAFE 1, EPA provided an interpretive view of section
177 as not authorizing other states to adopt California's GHG standards
for which EPA had granted a waiver of preemption under section 209(b).
Although section 177 does not require states that adopt California's
emission standards to submit such regulations for EPA review and
provides no statutory role for EPA in states' decision to adopt
California's standards, EPA chose to nevertheless provide an
interpretation that this provision is available only to states with
approved nonattainment plans. EPA stated that nonattainment
designations exist only as to criteria pollutants and GHGs are not
criteria pollutants; therefore, states could not adopt GHG standards
under section 177. Notably, California in previous waiver requests
addressed the criteria pollutant benefits of GHG emissions reductions,
specifically related to ground level ozone.
D. Petitions for Reconsideration
After issuing SAFE 1, EPA received three petitions for
reconsideration urging the Agency to reconsider the waiver withdrawal
of the ACC program's GHG standards and ZEV sales mandate and to rescind
part or all of the SAFE 1 action.\59\ The first Petition for
Clarification/Reconsideration was submitted by the State of California
and a number of States and Cities on October 9, 2019 (California
Petition for Clarification).\60\ These Petitioners sought both
clarification and reconsideration of the scope of SAFE 1. Citing
somewhat contradictory statements in the action, they claimed that SAFE
1 created confusion regarding which model years of the ACC program were
affected by the waiver withdrawal.\61\ They based their request for
reconsideration of the withdrawal on the grounds that the SAFE 1 action
relied on analyses and justifications not presented at proposal and,
thus, was beyond the scope of the proposal.
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\59\ The California Petition for Clarification only sought
reconsideration of SAFE 1 to the extent it withdrew the ACC program
waiver for model years outside those proposed. The other two
petitions sought reconsideration of the full SAFE 1 action.
\60\ EPA-OAR-2021-0257-0015.
\61\ The California Petition for Clarification notes that,
``[i]n the Final Actions, EPA makes statements that are creating
confusion, and, indeed, appear contradictory, concerning the
temporal scope of its action(s)--specifically, which model years are
covered by the purported withdrawal of California's waiver for its
GHG and ZEV standards. In some places, EPA's statements indicate
that it has limited its action(s) to the model years for which it
proposed to withdraw and for which it now claims to have authority
to withdraw--namely model years 2021 through 2025. In other places,
however, EPA's statements suggest action(s) with a broader scope--
one that would include earlier model years.'' Id. at 2. In SAFE 1,
EPA withdrew the waiver for California's GHG and ZEV standards for
model years 2017-2025 on the basis of EPCA preemption and for model
years 2021-2025 on the basis of the second waiver prong.
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A second Petition for Reconsideration was submitted by several non-
governmental organizations on November 25, 2019 (NGOs' Petition).\62\
These Petitioners claimed that EPA's reconsideration of the ACC program
waiver was not a proper exercise of agency authority because the Agency
failed to consider comments submitted after the formal comment period--
which they charged as inadequate--and because the EPA's rationale was a
pretextual cover for the Administration's political animosity towards
California and the oil industry's influence. The late comments
summarized in the Petition address SAFE 1's EPCA preemption and second
waiver prong arguments. On EPCA preemption, the summarized comments
asserted that EPCA does not preempt GHG standards because GHG emission
standards are not the ``functional equivalent'' of fuel economy
standards, as SAFE 1 claimed. On the second waiver prong, the
summarized comments asserted both that GHG and ZEV standards do have
criteria pollutant benefits, and that the threat of climate change is
compelling and extraordinary and will have California-specific impacts.
In addition to objections to SAFE 1's EPCA preemption and second waiver
prong arguments, the summarized comments asserted that ZEV standards
play a key role in SIPs, which were disrupted by SAFE 1. This
disruption, Petitioners claimed, violated ``conformity'' rules
prohibiting federal actions from undermining state's air quality
plans.\63\
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\62\ EPA-HQ-OAR-2021-0257-0014. This Petition was joined by The
Center for Biological Diversity, Chesapeake Bay Foundation,
Environment America, Environmental Defense Fund, Environmental Law &
Policy Center, Natural Resources Defense Council, Public Citizen,
Inc., Sierra Club, and the Union of Concerned Scientists.
\63\ These ``late comments'' can be found in the ``Appendix of
Exhibits'' attached to the Petition for Reconsideration. These
comments are considered part of EPA's record for purposes of the
reconsideration of SAFE 1.
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A third Petition for Reconsideration was submitted by several
states and cities on November 26, 2019 (States and Cities'
Petition).\64\ These Petitioners sought reconsideration of the
withdrawal on the grounds that EPA failed to provide an opportunity to
comment on various rationales and determinations, in particular on its
authority to revoke argument, flawed re-interpretation and application
of the second waiver prong, its flawed new
[[Page 14341]]
rationale for considering factors outside section 209(b) (namely, EPCA
preemption), and its determination that states cannot adopt
California's GHG standards under section 177. For example, these
Petitioners claimed they did not have an adequate opportunity to
comment on EPA's use of equal sovereignty or the endangerment finding
as rationales for its new ``particularized nexus'' interpretation of
the second waiver prong. These Petitioners also claimed that EPA's
statements concerning the burden of proof applicable to a waiver
revocation were either unclear or inaccurate, particularly whether the
Agency bears the burden of proof in withdrawing a previously granted
waiver and, if not, how and why this burden of proof is different from
the burden of proof for denying a waiver request.\65\ Finally, these
Petitioners asserted that the Agency failed to consider comments,
submitted after the formal comment period, that challenged EPA's
interpretation of the second waiver prong, including new evidence of
California's need for its GHG emission standards and ZEV sales mandate,
and alleged that EPA's rationale was pretextual and based on the
Administration's political animosity towards California and on the oil
industry's influence.
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\64\ See EPA-HQ-OAR-2021-0257-0029. This Petition was joined by
the States of California, Colorado, Connecticut, Delaware, Hawaii,
Illinois, Maine, Maryland, Minnesota, Nevada, New Jersey, New
Mexico, New York, North Carolina, Oregon, Rhode Island, Vermont,
Washington, Wisconsin, Michigan, the Commonwealths of Massachusetts,
Pennsylvania, and Virginia, the District of Columbia, and the Cities
of Los Angeles, New York, San Francisco, and San Jose.
\65\ The applicable burden of proof for a waiver withdrawal is
discussed in Section III of this decision.
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EPA notified the petitioners in the above-noted Petitions for
Reconsideration that the Agency would be considering issues raised in
their petitions as part of the proceeding to reconsider SAFE 1. This
action addresses these petitions in the broader context of EPA's
adjudicatory reconsideration of SAFE 1 commenced in response to a
number of significant issues with SAFE 1.
III. Principles Governing This Review
The CAA has been a paradigmatic example of cooperative federalism,
under which ``States and the Federal Government [are] partners in the
struggle against air pollution.'' \66\ In Title II, Congress authorized
EPA to promulgate emission standards for mobile sources and generally
preempted states from adopting their own standards.\67\ At the same
time, Congress created an important exception for the State of
California.
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\66\ General Motors Corp. v. United States, 496 U.S. 530, 532
(1990).
\67\ ``The regulatory difference [between Titles I and II] is
explained in part by the difficulty of subjecting motor vehicles,
which readily move across state boundaries, to control by individual
states.'' Engine Mfrs. Ass'n v. EPA, 88 F.3d 1075, 1079 (D.C. Cir.
1996). Congress also asserted federal control in this area to avoid
``the specter of an anarchic patchwork of federal and state
regulatory programs'' nationwide. See Motor & Equip. Mfrs. Ass'n,
Inc. v. EPA, 627 F.2d 1095, 1109 (D.C. Cir. 1979) (MEMA I).
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A. Scope of Preemption and Waiver Criteria Under the Clean Air Act
The legal framework for this decision stems from the waiver
provision first adopted by Congress in 1967, and subsequent amendments.
In Title II of the CAA, Congress established only two programs for
control of emissions from new motor vehicles--EPA emission standards
adopted under the CAA and California emission standards adopted under
its state law. Congress accomplished this by preempting all state and
local governments from adopting or enforcing emission standards for new
motor vehicles, while at the same time providing that California could
receive a waiver of preemption for its emission standards and
enforcement procedures in keeping with its prior experience regulating
motor vehicles and its serious air quality problems. Accordingly,
section 209(a) preempts states or political subdivisions from adopting
or attempting to enforce any standard relating to the control of
emissions from new motor vehicles.\68\ Under the terms of section
209(b)(1), after notice and opportunity for public hearing, EPA must
waive the application of section 209(a) to California unless the
Administrator finds at least one of three criteria to deny a waiver in
section 209(b)(1)(A)-(C) has been met.\69\ EPA may thus deny a waiver
only if it makes at least one of these three findings based on evidence
in the record, including arguments that opponents of the waiver have
provided. This framework struck an important balance that protected
manufacturers from multiple and different state emission standards and
preserved a pivotal role for California in the control of emissions
from new motor vehicles. Congress intentionally structured this waiver
provision to restrict and limit EPA's ability to deny a waiver and did
this to ensure that California had broad discretion in selecting the
means it determined best to protect the health and welfare of its
citizens in recognition of both the harsh reality of California's air
pollution and to allow California to serve as a pioneer and a
laboratory for the nation in setting new motor vehicle emission
standards and developing control technology.\70\ Accordingly, section
209(b) specifies that EPA must grant California a waiver if California
determines that its standards are, in the aggregate, at least as
protective of the public health and welfare as applicable Federal
standards.
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\68\ 42 U.S.C. 7543(a)-(a) Prohibition 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 subject to this part. 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.
\69\ 42 U.S.C. 7543(b)(1):
(1) The Administrator shall, after notice and opportunity for
public hearing, waive application of this section to any State which
has adopted standards (other than crankcase emission standards) for
the control of emissions from new motor vehicles or new motor
vehicle engines prior to March 30, 1966, if the State determines
that the State standards will be, in the aggregate, at least as
protective of public health and welfare as applicable Federal
standards. No such waiver shall be granted if the Administrator
finds that--
(A) the determination of the State is arbitrary and capricious,
(B) such State does not need such State standards to meet
compelling and extraordinary conditions, or
(C) such State standards and accompanying enforcement procedures
are not consistent with section 7521(a) of this title.
\70\ See, e.g., S. Rep. No. 403, 90th Cong., 1st Sess. 33 (1967)
(The waiver of preemption is for California's ``unique problems and
pioneering efforts.''); 113 Cong. Rec. 30950, 32478 (``[T]he State
will act as a testing agent for various types of controls and the
country as a whole will be the beneficiary of this research.'')
(Statement of Sen. Murphy); MEMA I, 627 F.2d 1095, 1111 (D.C. Cir.
1979).
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EPA has consistently interpreted the waiver provision as placing
the burden on the opponents of a waiver and EPA to demonstrate that one
of the criteria for a denial has been met. In this context, since 1970,
EPA has recognized its limited discretion in reviewing California
waiver requests. For over fifty years, therefore, EPA's role upon
receiving a request for waiver of preemption from California has been
limited and remains only to determine whether it is appropriate to make
any of the three findings specified by the CAA. If the Agency cannot
make at least one of the three findings, then the waiver must be
granted. The three waiver criteria are also properly seen as criteria
for a denial. This reversal of the normal statutory structure embodies
and is consistent with the congressional intent of providing deference
to California to maintain its own new motor vehicle emission program.
The 1970 CAA Amendments strengthened EPA's authority to regulate
vehicular ``emission[s] of any air pollutant,'' while reaffirming the
corresponding breadth of California's entitlement to regulate those
emissions (amending CAA section 202 and recodifying the waiver
provision as section 209(b), respectively). Congress also established
the NAAQS program,
[[Page 14342]]
under which EPA issues air quality criteria and sets standards for so-
called ``criteria'' pollutants, and states with regions that have not
``attained'' those federal standards must submit SIPs indicating how
they plan to attain the NAAQS (which is often a multi-year,
comprehensive plan). With the CAA Amendments of 1977, Congress allowed
California to consider the protectiveness of its standards ``in the
aggregate,'' rather than requiring that each standard proposed by the
State be as or more stringent than its federal counterpart.\71\
Congress also approved EPA's interpretation of the waiver provision as
providing appropriate deference to California's policy goals and
consistent with Congress's intent ``to permit California to proceed
with its own regulatory program'' for new motor vehicle emissions.\72\
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\71\ 42 U.S.C. 7543(b)(1).
\72\ H.R. Rep. No. 95-294, at 301 (1977).
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In previous waiver decisions, EPA has noted that the statute
specifies particular and limited grounds for rejecting a waiver and has
therefore limited its review to those grounds. EPA has also noted that
the structure Congress established for reviewing California's decision-
making is deliberately narrow, which further supports this approach.
This has led EPA to reject arguments that are not specified in the
statute as grounds for denying a waiver:
The law makes it clear that the waiver requests cannot be denied
unless the specific findings designated in the statute can properly
be made. The issue of whether a proposed California requirement is
likely to result in only marginal improvement in air quality not
commensurate with its cost or is otherwise an arguably unwise
exercise of regulatory power is not legally pertinent to my decision
under section 209, so long as the California requirement is
consistent with section 202(a) and is more stringent than applicable
Federal requirements in the sense that it may result in some further
reduction in air pollution in California. Thus, my consideration of
all the evidence submitted concerning a waiver decision is
circumscribed by its relevance to those questions that I may
consider under section 209(b).\73\
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\73\ 78 FR at 2115 (footnote omitted).
Given the text, legislative history, and judicial precedent, EPA
has consistently interpreted section 209(b) as requiring it to grant a
waiver unless opponents of a waiver can demonstrate that one of the
criteria for a denial has been met.\74\
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\74\ MEMA I, 627 F.2d at 1120-21 (``The language of the statute
and its legislative history indicate that California's regulations,
and California's determination that they comply with the statute,
when presented to the Administrator are presumed to satisfy the
waiver requirements and that the burden of proving otherwise is on
whoever attacks them.''); Motor & Equip. Mfrs. Ass'n, Inc. v.
Nichols, 142 F.3d 449, 462 (D.C. Cir. 1998) (MEMA II) (``[S]ection
209(b) sets forth the only waiver standards with which California
must comply. . . . If EPA concludes that California's standards pass
this test, it is obligated to approve California's waiver
application.'').
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The 1977 CAA Amendments additionally demonstrated the significance
of California's standards to the Nation as a whole with Congress'
adoption of a new section 177. Section 177 permits other states
addressing their own air pollution problems to adopt and enforce
California new motor vehicle standards ``for which a waiver has been
granted if certain criteria are met.'' \75\ Also known as the ``opt-
in'' provision, section 177 of the Act, 42 U.S.C. 7507, provides:
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\75\ This provision was intended to continue the balance,
carefully drawn in 1967, between states' need to meet increasingly
stringent federal air pollution limits and the burden of compliance
on auto-manufacturers. See, e.g., H.R. Rep. No. 294, 95th Cong., 1st
Sess. 309-10 (1977) (``[S]ection 221 of the bill broadens State
authority, so that a State other than California . . . is authorized
to adopt and enforce new motor vehicle emission standards which are
identical to California's standards. Here again, however, strict
limits are applied . . . . This new State authority should not place
an undue burden on vehicle manufacturers . . . .''); Motor Vehicle
Mfrs. Ass'n v. NYS Dep't of Env't Conservation, 17 F.3d 521, 527 (2d
Cir. 1994) (``Many states, including New York, are in danger of not
meeting increasingly stringent federal air pollution limits . . . .
It was in an effort to assist those states struggling to meet
federal pollution standards that Congress, as noted earlier,
directed in 1977 that other states could promulgate regulations
requiring vehicles sold in their state to be in compliance with
California's emission standards or to ``piggyback'' onto
California's preemption exemption. This opt-in authority, set forth
in Sec. 177 of the Act, 42 U.S.C. 7507, is carefully circumscribed
to avoid placing an undue burden on the automobile manufacturing
industry.'').
Notwithstanding section 7543(a) of this title, any State which
has plan provisions approved under this part may adopt and enforce
for any model year standards relating to control of emissions from
new motor vehicles or new motor vehicle engines and take such other
actions as are referred to in section 7543(a) of this title
respecting such vehicles 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).
Nothing in this section or in Subchapter II of this chapter
shall be construed as authorizing any such State to prohibit or
limit, directly or indirectly, the manufacture or sale of a new
motor vehicle or motor vehicle engine that is certified in
California as meeting California standards, or to take any action of
any kind to create, or have the effect of creating, a motor vehicle
or motor vehicle engine different that a motor vehicle or engine
certified in California under California standards (a ``third
vehicle'') or otherwise create such a ``third vehicle.''
Any state with qualifying SIP provisions may exercise this option
and become a ``Section 177 State,'' without first seeking the approval
from EPA.\76\ Thus, over time, Congress has recognized the important
state role, for example, by making it easier (by allowing California to
consider its standards ``in the aggregate'') and by expanding the
opportunity (via section 177) for states to adopt standards different
from EPA's standards.\77\
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\76\ In 1990 Congress amended the CAA by adding section 209(e)
to section 209. Section 209(e) sets forth the terms of CAA
preemption for nonroad engines and vehicles and the ability of
States to adopt California emissions standards for such vehicles and
engines if certain criteria are met. 42 U.S.C. 7543(e)(2)(B) (``Any
State other than California which has plan provisions approved under
part D of subchapter I may adopt and enforce, after notice to the
Administrator, for any period, standards relating to control of
emissions from nonroad vehicles or engines . . . if (i) such
standards and implementation and enforcement are identical, for the
period concerned, to the California standards . . . .''). Courts
have interpreted these amendments as reinforcing the important role
Congress assigned to California. See Engine Mfrs. Ass'n v. EPA, 88
F.3d 1075, 1090 (``Given the indications before Congress that
California's regulatory proposals for nonroad sources were ahead of
the EPA's development of its own proposals and the Congressional
history of permitting California to enjoy coordinated regulatory
authority over mobile sources with the EPA, the decision to identify
California as the lead state is comprehensible. California has
served for almost 30 years as a `laboratory' for motor vehicle
regulation.''); MEMA I, 627 F.2d 1095, 1110 (D.C. Cir. 1979) (``Its
severe air pollution problems, diverse industrial and agricultural
base, and variety of climatic and geographical conditions suit it
well for a similar role with respect to nonroad sources.'').
\77\ 40 FR at 23104; see also LEV I waiver at 58 FR 4166,
Decision Document at 64.
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B. Deference to California
EPA has consistently noted that the text, structure, and history of
the California waiver provision clearly indicate both congressional
intent and appropriate EPA practice of leaving the decision on
``ambiguous and controversial matters of public policy'' to
California's judgment. In waiver decisions, EPA has thus recognized
that congressional intent in creating a limited review of California
waiver requests based on the section 209(b)(1) criteria was to ensure
that the federal government did not second-guess the wisdom of state
policy. In an early waiver decision EPA highlighted this deference:
It is worth noting * * * I would feel constrained to approve a
California approach to the problem which I might also feel unable to
adopt at the federal level in my own capacity as a regulator. The
whole approach of the Clean Air Act is to force the development of
new types of emission
[[Page 14343]]
control technology where that is needed by compelling the industry
to ``catch up'' to some degree with newly promulgated standards.
Such an approach * * * may be attended with costs, in the shape of
reduced product offering, or price or fuel economy penalties, and by
risks that a wider number of vehicle classes may not be able to
complete their development work in time. Since a balancing of these
risks and costs against the potential benefits from reduced
emissions is a central policy decision for any regulatory agency
under the statutory scheme outlined above, I believe I am required
to give very substantial deference to California's judgments on this
score.\78\
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\78\ 40 FR at 223104.
As noted above, Congress amended the CAA in 1977. Within these
amendments, Congress had the opportunity to reexamine the waiver
provision and elected to expand California's flexibility to adopt a
complete program of motor vehicle emission controls. The House
Committee Report explained that ``[t]he amendment is intended to ratify
and strengthen the California waiver provision and to affirm the
underlying intent of that provision, i.e., to afford California the
broadest possible discretion in selecting the best means to protect the
health of its citizens and the public welfare.'' \79\
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\79\ MEMA I, 627 F.2d at 1110 (citing H.R. Rep. No. 294, 95th
Cong., 1st Sess. 301-02 (1977)). Congress amended section
209(b)(1)(A) regarding California's determination that its standards
are as at least as protective as applicable Federal standards so
that such determination may be done ``in the aggregate'' looking at
the summation of the standards within the vehicle program.
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SAFE 1 was a departure from congressional intent and EPA's typical
practice of deference to California on matters of state public policy
regarding how best to address its serious air quality problems. In SAFE
1, EPA adopted a new interpretation of section 209(b)(1)(B) more than
five years after the initial grant of the ACC program waiver and
applied it to CARB's GHG standards and ZEV sales mandate. Specifically,
EPA premised its finding on a consideration of California's ``need''
for the specific standards, instead of the ``need'' for a separate
motor vehicle emission program to meet compelling and extraordinary
conditions, stating that ``such State standards'' in section
209(b)(1)(B) was ambiguous with respect to the scope of the Agency's
analysis. EPA further determined that California did not need the ZEV
sales mandate to meet compelling and extraordinary conditions by
relying on a single statement in the ACC program waiver support
document taken out of context, where it noted that the ZEV sales
mandate had no criteria emissions benefits in terms of vehicle
emissions and its LEV III criteria pollutant fleet standard was
responsible for those emission reductions. In response to the SAFE 1
proposal, California had provided further context and additional data
on net upstream emissions benefits of the ZEV sales mandate, but EPA
did not consider them in arriving at the findings and conclusions in
SAFE 1. The final decision in SAFE 1 was not based on the third waiver
prong.\80\ EPA also explained in SAFE 1 that the task of interpreting
section 209(b)(1)(B) required no deference to California.\81\
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\80\ 84 FR at 51322-33. EPA notes that when reviewing
California's standards under the third waiver prong, the Agency may
grant a waiver to California for standards that EPA may choose not
to adopt at the federal level due to different considerations. See
78 FR at 2133.
\81\ 84 FR at 51339-40.
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C. Standard and Burden of Proof
In Motor and Equipment Manufacturers' Association v. EPA, 627 F.2d
1095 (D.C. Cir. 1979) (MEMA I), the U.S. Court of Appeals for the
District of Columbia stated, with regard to the standard and burden of
proof, that the Administrator's role in a section 209 proceeding is to
``consider all evidence that passes the threshold test of materiality
and . . . thereafter assess such material evidence against a standard
of proof to determine whether the parties favoring a denial of the
waiver have shown that the factual circumstances exist in which
Congress intended a denial of the waiver.'' \82\ The court in MEMA I
considered the standards of proof under section 209 for the two
findings necessary to grant a waiver for an ``accompanying enforcement
procedure'' (as opposed to the standards themselves): (1)
Protectiveness in the aggregate and (2) consistency with CAA section
202(a) findings. The court instructed that ``the standard of proof must
take account of the nature of the risk of error involved in any given
decision, and it therefore varies with the finding involved. We need
not decide how this standard operates in every waiver decision.'' \83\
The court upheld the Administrator's position that to deny a waiver,
there must be clear and compelling evidence to show that the proposed
procedures undermine the protectiveness of California's standards. The
court noted that this standard of proof also accords with the
congressional intent to provide California with the broadest possible
discretion in setting regulations it finds protective of the public
health and welfare.\84\ With respect to the consistency finding, the
court did not articulate a standard of proof applicable to all
proceedings but found that the opponents of the waiver were unable to
meet their burden of proof even if the standard were a mere
preponderance of the evidence.
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\82\ MEMA I, 627 F.2d at 1122.
\83\ Id.
\84\ Id.
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Although MEMA I did not explicitly consider the standards of proof
under section 209 concerning a waiver request for ``standards,'' as
compared to accompanying enforcement procedures, there is nothing in
the opinion to suggest that the court's analysis would not apply with
equal force to such determinations. EPA's past waiver decisions have
consistently made clear that: ``[E]ven in the two areas concededly
reserved for Federal judgment by this legislation--the existence of
compelling and extraordinary conditions and whether the standards are
technologically feasible--Congress intended that the standard of EPA
review of the State decision to be a narrow one.'' \85\ Although EPA
evaluates whether there are compelling and extraordinary conditions in
California, the Agency nevertheless accords deference to California on
its choices for how best to address such conditions in light of the
legislative history of section 209(b).
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\85\ See, e.g., 40 FR at 23102-03. See also MEMA I, 627 F.2d at
1109 (``Congress had an opportunity to restrict the waiver provision
in making the 1977 amendments, and it instead elected to expand
California's flexibility to adopt a complete program of motor
vehicle emissions control. Under the 1977 amendments, California
need only determine that its standards will be `in the aggregate, at
least as protective of public health and welfare than applicable
Federal standards,' rather than the ``more stringent'' standard
contained in the 1967 Act.'') (citing H.R. Rep. No. 294, 95th Cong.,
1st Sess. 301-02 (1977), U.S. Code Cong. & Admin. News 1977, p.
1380).
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As noted earlier, the burden of proof in a waiver proceeding is on
EPA and the opponents of the waiver. This is clear from the statutory
language stating that EPA ``shall . . . waive'' preemption unless one
of three statutory factors is met. This reading was upheld by the D.C.
Circuit in MEMA I, which concluded that this obligation rests firmly
with opponents of the waiver in a section 209 proceeding, holding that:
``[t]he language of the statute and its legislative history indicate
that California's regulations, and California's determinations that
they must comply with the statute, when presented to the Administrator
are presumed to satisfy the waiver requirements and that the burden of
proving otherwise is on whoever attacks them. California must present
its regulations and findings at
[[Page 14344]]
the hearing and thereafter the parties opposing the waiver request bear
the burden of persuading the Administrator that the waiver request
should be denied.'' \86\
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\86\ MEMA I, 627 F.2d at 1121.
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The Administrator's burden, on the other hand, is to make a
reasonable evaluation of the information in the record in coming to the
waiver decision. As the court in MEMA I stated, ``Here, too, if the
Administrator ignores evidence demonstrating that the waiver should not
be granted, or if he seeks to overcome that evidence with unsupported
assumptions of his own, he runs the risk of having his waiver decision
set aside as `arbitrary and capricious.' '' \87\ Therefore, the
Administrator's burden is to act ``reasonably.'' \88\
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\87\ Id. at 1126.
\88\ Id.
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In this instance, EPA has withdrawn a previously granted waiver and
is now reconsidering whether that withdrawal was an appropriate
exercise of authority, whether the reinterpretation of the second
waiver prong was appropriate, and whether EPA's evaluation and findings
of fact under the second waiver prong meet the applicable burden of
proof in the context of deference to California's policy choices. EPA
believes that the same burden that is applicable to those opposed to an
initial waiver request from CARB (this applies to any party including
the Administrator as explained in MEMA I) is also applicable to EPA's
actions in SAFE 1 (e.g., the burden of proof of whether California does
not need its standards to meet compelling and extraordinary conditions
rests on those opposing a waiver for California).\89\
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\89\ In EPA's 2009 evaluation of the 2008 GHG waiver denial the
Agency applied a similar test. See 74 FR at 32745 (``After a
thorough evaluation of the record, I am withdrawing EPA's March 6,
2008 Denial and have determined that the most appropriate action in
response to California's greenhouse gas waiver request is to grant
that request. I have determined that the waiver opponents have not
met their burden of proof in order for me to deny the waiver under
any of the three criteria in section 209(b)(1).''). In the context
of 2009 GHG waiver that reconsidered the Agency's 2008 GHG waiver
denial, EPA determined it was appropriate to apply the same burden
of proof during the reconsideration as would apply at the time of
the initial waiver evaluation. EPA received comment suggesting that
the entire burden of proof shifts to California in order for the
prior 2008 denial to be reversed. EPA, in response, stated that ``.
. . regardless of the previous waiver denial, once California makes
its protectiveness determination the burden of proof falls on the
opponents of the waiver . . . . This is consistent with the
legislative history, which indicates that Congress intended a narrow
review by EPA and to preserve the broadest possible discretion for
California.'' Id. at 32749. EPA acknowledges that in SAFE 1 the
Agency not only adopted an interpretation of the second waiver prong
which was similar to the previously rejected interpretation, but
that in doing so also questioned its previous position that the
burden of proof in evaluating the need for standards at issue
resides with those that oppose the waiver, including EPA. See 84 FR
at 51344 n.268. In this action, however, EPA now finds that the
historical deference provided to California regarding its policy
choices on how best to address its serious air quality conditions
also requires that the burden of proof should reside in those
seeking to demonstrate that standards are not needed under the
second waiver prong regardless of whether the rationale is
characterized as a new interpretation or not. The language of
section 209(b)(1) requires California to make a protectiveness
finding under the first waiver prong. Moreover, nothing in section
209(b) could be read as support for drawing a distinction between
the burden of proof when the Agency considers an initial waiver
request and one where the Agency reconsiders a waiver decision based
on a new interpretation of the statutory criteria. That burden
properly resides with opponents of the waiver.
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IV. EPA Did Not Appropriately Exercise Its Limited Authority To
Reconsider the ACC Program Waiver in SAFE 1
The first question this final action tackles is whether the agency
properly exercised its reconsideration authority to withdraw its
previously-granted waiver in SAFE 1. EPA concludes that it did not, and
on that independent basis rescinds SAFE 1's waiver withdrawal.
Section 209 does not provide EPA with express authority to
reconsider and withdraw a waiver previously granted to California.
EPA's authority thus stems from its inherent reconsideration authority.
For several reasons, in the context of reconsidering a waiver grant,
that authority may only be exercised sparingly. First, EPA believes its
inherent authority to reconsider a waiver decision is constrained by
the three waiver criteria that must be considered before granting or
denying a waiver request under section 209(b). A contrary approach,
which treats reconsiderations as more broadly appropriate, would
undermine Congress' intent that California be able to exercise its
policy judgments and develop motor vehicle controls programs to address
California's air pollution problems, and make advances which could be
built on by EPA or adopted by other states. Second, EPA believes it may
only reconsider a previously granted waiver to address a clerical or
factual error or mistake, or where information shows that factual
circumstances or conditions related to the waiver criteria evaluated
when the waiver was granted have changed so significantly that the
propriety of the waiver grant is called into doubt. Even when EPA is
acting within the appropriate bounds of its authority to reconsider,
during that reconsideration EPA should exercise its limited authority
within a reasonable timeframe and be mindful of reliance interests.
The Agency's reconsideration in SAFE 1 was not an appropriate
exercise of authority; there was no clerical error or factual error in
the ACC program waiver, and SAFE 1 did not point to any factual
circumstances or conditions related to the three waiver prongs that had
changed so significantly that the propriety of the waiver grant is
called into doubt. Rather, the 2019 waiver withdrawal was based on a
change in EPA's statutory interpretation, an incomplete and inaccurate
assessment of the record, and another agency's action beyond the
confines of section 209(b). EPA erred in reconsidering a previously
granted waiver on these bases. Moreover, in considering the passage of
time between the initial waiver and the SAFE 1 action, and the
development of reliance interests based on the waiver, EPA finds those
factors do not support the reconsideration of the ACC program waiver
that occurred in SAFE 1. Accordingly, as explained in detail below, EPA
is rescinding SAFE 1's withdrawal of its 2013 ACC program waiver
because it was an inappropriate exercise of reconsideration authority.
A. Comments Received
EPA received several comments in the reconsideration proceeding on
the Agency's authority to reconsider waivers. Comments on explicit
authority focused on whether any language in section 209(b)(1), on its
face, permits EPA to reconsider a previously granted waiver. Some of
these commenters also distinguished between the denial of the 2008
waiver and the reconsideration and grant of the GHG waiver in 2009, and
EPA's grant of the ACC program waiver in 2013 and the reconsideration
and withdrawal of the ACC program waiver in 2019.
EPA received comments in support of and against the view that EPA
has inherent authority to reconsider waivers. As support for EPA's
implied authority to reconsider, one commenter cited relevant language
from the Senate Committee Report from 1967 that stated, ``implicit in
[Sec. 209] is the right of [EPA] to withdraw the waiver [if] at any
time after notice and an opportunity for public hearing he finds that
the State of California no longer complies with the conditions of that
waiver.'' \90\ According to the commenter because ``the waiver
authorizes future regulation, which always remains open to change,''
EPA must have the authority to reconsider a
[[Page 14345]]
waiver. Otherwise, EPA would be unable to monitor CARB's continued
compliance with the waiver conditions in light of updated
information.\91\ The same commenter also argued that an agency
generally retains the authority to reconsider and correct any earlier
decision unless Congress acts to displace the authority with a process
to rectify the Agency's mistakes and that explicit statutory authority
to withdraw a waiver is therefore not necessary, because ``the power to
reconsider is inherent in the power to decide.'' \92\ The commenter
claimed that, under Chevron, ``[a]n agency has a `continuing' statutory
obligation to consider the `wisdom of its policy.' '' \93\
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\90\ Urban Air Initiative (Urban Air), Docket No. EPA-HQ-OAR-
2021-0257-0223 at 22 (quoting S. Rep. 90-403, at 34 (1967)).
\91\ Id. at 21 (``A determination that California's state
standards are technologically feasible and appropriate requires
complex technical projections at the frontiers of science, which
must be continually updated `if the actual future course of
technology diverges from expectation.' '' (quoting NRDC Inc. v. EPA,
655 F.2d 318, 329 (D.C. Cir. 1981))).
\92\ Urban Air at 20 (citing Ivy Sports Med., LLC v. Burwell,
767 F.3d 81, 86, 93 (D.C. Cir. 2014)). This commenter also notes
that, in EPA's 2009 action to reconsider its prior denial of a GHG
waiver in 2008, CARB submitted a letter to EPA stating that
``California believes EPA has inherent authority to reconsider the
denial and should do so in order to restore the interpretations and
applications of the Clean Air Act to continue California's
longstanding leadership role in setting emission standards.'' Id.
\93\ Id. at 21.
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In contrast, several commenters maintained that section 209(b)
strongly indicates that EPA's authority to withdraw a previously issued
waiver is, at most, limited. Several commenters argued that, absent
language in a statute, administrative agencies lack inherent authority
to reconsider adjudicatory decisions.\94\ These commenters noted that
courts highly scrutinize administrative revocations and are
``unwilling[ ] to wrest a standardless and open-ended revocation
authority from a silent statute.'' \95\ Instead, these commenters
argued, EPA may act only with the authorities conferred upon it by
Congress, and thus the Agency may only act if the CAA explicitly or
implicitly grants it power to do so.\96\ According to these commenters,
section 209(b) is silent on waiver withdrawal, its text indicates that
EPA may only consider 209(b)'s three factors before either granting or
denying a waiver, and its purpose and structure affords broad deference
to California's standards. ``Taken together, these factors indicate
that EPA may not withdraw a previously-issued waiver based solely upon
a reconsideration of its initial judgment.'' \97\ Commenters suggested
that Congress, by listing the three waiver criteria and directing that
EPA evaluate such criteria prior to granting the waiver, only
authorized EPA to perform the evaluation once and that it ``cannot
later second-guess the wisdom of legal and policy judgments made as
part of that evaluation.'' \98\ Similarly, commenters noted that
section 209 does not textually ``provide'' EPA any authority nor
specify any process by which EPA might revoke the rights given by an
earlier-granted waiver.\99\ In response to SAFE 1's claim of inherent
reconsideration authority and the other commenters' reliance on the
relevant excerpt from the 1967 Senate Report, these commenters argued
that this ``single sentence . . . does not establish any withdrawal
authority,'' either generally or for the SAFE 1 withdrawal
specifically.\100\ That statement, commenters argued, ``predate[s] the
creation of the NAAQS program and Congress's invitations to development
of numerous state reliance interests.'' \101\ Moreover, according to
these commenters, the statement only discusses authority in the case
that ``California no longer complies with the conditions of the
waiver,'' which commenters believe means California's ``compliance with
waiver conditions and, specifically, its cooperation with EPA
concerning enforcement and certification procedures,'' not ``redefined
waiver criteria.'' \102\
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\94\ Institute for Policy Integrity Amicus Brief at 4 (``Lacking
textual support, EPA invokes so-called `inherent authority'--`more
accurate[ly] label[ed] . . . `statutorily implicit' authority,' HTH
Corp. v. NLRB, 823 F.3d 668, 679 (D.C. Cir. 2016)--to justify its
action. 84 FR at 51,331. But this Court is `unwilling[ ] to wrest a
standardless and open-ended revocation authority from a silent
statute,' Am. Methyl, 749 F.2d 826, 837 (D.C. Cir. 1984), and EPA
fails to justify the implicit authority it claims.''); Twelve Public
Interest Organizations app 1 at 32 (citing Am. Methyl for
``rejecting `implied power' as `contrary to the intention of
Congress and the design of' the Act and quoting HTH Corp.'s
statement that agencies, as creatures of statute, lack inherent
authority); States and Cities at 16 (also citing Am. Methyl).
\95\ Institute for Policy Integrity at 1 (citing Am. Methyl).
\96\ States and Cities at 15 (citing HTH Corp. v. NLRB, 823 F.3d
668, 679 (D.C. Cir. 2016)); Twelve Public Interest Organizations,
Docket No. EPA-HQ-OAR-2021-0257-0277 app. 1 at 28 (``The Clean Air
Act preserves state authority to regulate emissions unless expressly
`provided' otherwise. 42 U.S.C. 7416. In statutes like this where
preemption is the exception, only Congress's `precise terms' can
produce preemption. CTS Corp. v. Waldburger, 573 U.S. 1, 12-13
(2014).''); National Coalition for Advanced Transportation (NCAT),
Docket No. EPA-HQ-OAR-2021-0257-0131 at 7-8 ; Institute for Policy
Integrity at New York University School of Law (Institute for Policy
Integrity), Docket No. EPA-HQ-OAR-2021-0257-0115 at 2, citing its
Final Brief of the Institute for Policy Integrity at New York
University School of Law as Amicus Curiae in Support of Petitioners
(Institute for Policy Integrity Amicus Brief) at 4, Union of
Concerned Scientists, et al. v. NHTSA, et al., No. 19-1230 (D.C.
Cir. filed Oct. 28, 2019), reprinted in the Institute's comments on
the 2021 Notice of Reconsideration.
\97\ Institute for Policy Integrity at 2, citing its Amicus
Brief at 6-11.
\98\ Id. at 7. See also Twelve Public Interest Organizations
app. 1 at 28-29 (``Section 209(b)(1)'s precise terms mandate that
EPA ``shall'' grant California a waiver unless EPA finds one of the
three specified bases for denial. This language charges EPA ``with
undertaking a single review in which [the Administrator] applies the
deferential standards set forth in Section 209(b) to California and
either grants or denies a waiver.'' Ford Motor Co. v. EPA, 606 F.2d
1293, 1302 (D.C. Cir. 1979). It evinces no intent to provide EPA
with the different and greater authority to withdraw a previously
granted waiver, thereby arresting the State's ongoing implementation
of its own laws.'')
\99\ See South Coast Air Quality Management District (SCAQMD),
Docket No. EPA-HQ-OAR-2021-0257-0228 at 3. This commenter argued
that section 116 of the CAA (which explicitly references section
209) provides that there needs to be a textual basis for any
exercise of authority to deny California the right (which it
achieved via the 2013 waiver) to enforce its emission standards.
Thus, the commenter continued, because there is no language in
section 209 that gives any authority nor specifies any process for
EPA to revoke the rights/waiver previously granted then EPA may not
do so by the terms of section 116.
\100\ States and Cities at 16. See also Twelve Public Interest
Organizations app. 1 at 33-34.
\101\ States and Cities at 16; See also Twelve Public Interest
Organizations app. 1 at 33-34.
\102\ Twelve Public Interest Organizations app. 1 at 34. See
also States and Cities at 16 (arguing that, although EPA proposed to
withdraw the waiver on multiple grounds, such as the third waiver
prong, ``EPA's final action was based entirely on its own changed
policy positions, namely its interpretation of Section 209(b)(1) to
create a categorical bar against state regulation of vehicular GHG
emissions and its decision to rely on another agency's newly
articulated views of a different statute [EPCA].'').
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In response to the argument made by EPA in SAFE 1 that, given the
``considerable degree of future prediction'' required by the third
waiver prong, ``where circumstances arise that suggest that such
predictions may have been inaccurate, it necessarily follows that EPA
has authority to revisit those predictions,'' \103\ some commenters
claimed that California's standards do not become inconsistent with
federal standards simply because they become more stringent than
federal standards (in other words, a weakening of the federal standards
does not necessarily create an inconsistency). The commenters noted
also that EPA did not in fact revise its section 202(a) standards
between issuing and withdrawing the waiver at issue, nor did EPA in
fact make any final findings under the third waiver prong.\104\
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\103\ 84 FR at 51332.
\104\ Institute for Policy Integrity at 2.
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Many commenters stated that in order to exercise any implied or
inherent authority, an agency must provide a ``detailed justification''
when departing from a policy that has ``engendered serious reliance
interests'' and should not ``rest on mere `policy changes' ''
[[Page 14346]]
alone.\105\ Thus, supporters and opponents of SAFE 1 also provided
comments on whether, assuming EPA did have authority to reconsider the
ACC program waiver--either because of language in the CAA or because of
its inherent authority to reevaluate decisions because of changed
conditions--it was appropriate to exercise that authority in SAFE 1.
Some commenters summarized precedent as requiring that the Agency
consider reliance interests that have attached to its original
decision, that reversals of informal adjudications occur within a
reasonable time after the original decision, and that the reversal is
not for the sole purpose of applying some change in administrative
policy.\106\ Opponents and supporters of SAFE 1 did, however, disagree
on the significance of each of these factors.\107\
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\105\ States and Cities at 21-22 (quoting FCC v. Fox, 556 U.S.
502, 515 (2009)).
\106\ Id.at 17 (citing Am. Methyl, 749 F.2d at 835; Chapman v.
El Paso Nat. Gas Co., 204 F.2d 46, 53-54 (D.C. Cir. 1953); DHS v.
Regents of the Univ. of California, 140 S. Ct. 1891, 1914 (2020);
United States v. Seatrain Lines Inc., 329 U.S. 424, 429 (1947)).
\107\ Urban Air at 21 (arguing that agencies need only provide a
``detailed justification'' to overcome reliance interests);
Competitive Enterprise Institute (CEI), Docket No. EPA-HQ-OAR-2021-
0257-0398 (correction to an earlier comment by the same commenter,
which can be found at Docket No. EPA-HQ-OAR-2021-0257-0140) at 9
(``As for reliance interests, all costly wasteful, or otherwise
defective government programs create reliance interests. Usurpations
of power do as well. If the creation of reliance interests is enough
to legitimize bad or unlawful policies, anything goes.''). Compare
to States and Cities at 17-18 (citing their comments on SAFE 1 at
130-31 and citing Ctr. for Sustainable Econ. v. Jewell, 779 F.3d
588, 595 (D.C. Cir. 2015)) (describing reliance interests as
``weighty,'' stating that ``[t]he Clean Air Act and long-standing
Executive branch policy both place substantial importance on States'
interests in implementing the plans and laws they have determined
best meet the needs of their States''--plans and laws such as SIPs,
which can and do include California standards).
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Commenters who argued that reliance interests were relevant to
EPA's authority to reconsider also offered evidence of reliance
interests that had accrued over the five years the ACC program waiver
had been in effect, with several commenters providing specific details
regarding their reliance on the GHG and ZEV standards. As commenters
noted, California's standards are incorporated into plans and
regulations aimed at achieving state and federal air pollution goals.
These plans can be complex and cannot ``change on a dime.'' \108\
According to one commenter ``[w]ithout the full Waiver, past decision-
making was blighted and planned-for reductions to meet Air District
goals need to be reassessed. The emission reductions are key to
combatting climate change, curbing ozone formation, preventing
additional wildlife impacts, and attaining California [air quality
goals] and [NAAQS].'' \109\ Revoking a waiver and disrupting existing
air quality plans, they argue, also has ``far-reaching ripple effects''
because ``businesses operating in California base their own long-term
plans on the State's policies'' and, if California cannot reduce
emissions from the automobile sector, it will have to ``consider
requiring further reductions from other sectors of the economy.'' \110\
Additionally, they said that by the time of the SAFE proposal, twelve
states had already adopted at least one or both of the California
standards under section 177.\111\ Several of these states submitted
comments attesting to their need for these standards to achieve both
greenhouse gas and criteria emission reductions.\112\ Like the reliance
interests of Californian air districts, several of these section 177
states and other opponents of SAFE 1 claim that ``reliance interests in
State Implementation Plans are particularly acute'' because ``they set
expectations for extended periods of time and for many sectors of the
economy, making it challenging (if not impossible) to change them
quickly.'' \113\ These commenters note that ``planning failures can
carry significant consequences, including the imposition of federal
plans that limit local flexibility and control, as well as penalties
such as loss of highway funds.'' \114\ Some automakers and industry
groups also discussed their reliance interests.\115\ For example, the
National Coalition for Advanced
[[Page 14347]]
Transportation, an industry coalition group, stated ``NCAT members have
invested billions of dollars with the well-founded expectation that
increased demand for electric vehicles would be propelled by California
and the section 177 States' continued ability to drive technology
innovation and emission reductions.'' \116\ EPA also received comment
from CARB, by and through the comments of the States and Cities, that
provided data on manufacturer compliance.\117\
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\108\ Twelve Public Interest Organizations app. 1 at 29.
\109\ Bay Area Air Quality Management District (BAAQMD), Docket
No. EPA-HQ-OAR-2021-0257-0278 at 2.
\110\ Twelve Public Interest Organizations app. 1 at 29.
\111\ States and Cities at 17. With these state adoptions, auto-
manufacturers would then need to meet program requirements in these
states.
\112\ See, e.g., Delaware Department of Natural Resources and
Environmental Control (Delaware), Docket No. EPA-HQ-OAR-2021-0257-
0109 at 1 (``The GHG program allowed by the waiver is vitally
important, as it enables long-term plans and yields critical
emission reductions that will contribute significantly to Delaware's
ability to attain and maintain the health-based National Ambient Air
Quality Standards (NAAQS) for criteria pollutants.''); Connecticut
Department of Transportation and Connecticut Department of Energy
and Environmental Protection (Connecticut), Docket No. EPA-HQ-OAR-
2021-0257-0104 at 2 (``These programs enable long-term planning and
yield critical emission reductions that are critical to meeting
Connecticut's climate goals as well as our statutory obligations to
reach attainment with the ozone NAAQS.''); Minnesota Pollution
Control Agency and Minnesota Department of Transportation
(Minnesota), Docket No. EPA-HQ-OAR-2021-0257-0113 at 2 (``The MPCA
is in the process of adopting the LEV and ZEV standards in Minnesota
as allowed under section 177 of the CAA. These rules are vitally
important in helping our state achieve our GHG emission reduction
goals and reduce other harmful air pollutants. . . .''); Maine
Department of Environmental Protection (Maine), Docket No. EPA-HQ-
OAR-2021-0257-0130 at 1, 3 (``While the LEV program was initially
created to help attain and maintain the health-based [NAAQS] for
criteria pollutants, the California GHG and ZEV standards will
contribute significantly to states' abilities to meet their emission
reduction goals. . . . [T]he transportation sector is the largest
source of ozone forming pollution in Maine . . . and California's
ability to set ZEV standards under the [CAA] is an essential tool
for addressing both criteria pollutants and GHGs.''); Virginia
Department of Environmental Quality (Virginia), Docket No. EPA-HQ-
OAR-2021-0257-0112 at 2 (``These standards provide important and
necessary reductions in both GHG and criteria pollutant emissions
needed to meet state and local air quality goals and address federal
CAA requirements.'')
\113\ Twelve Public Interest Organizations app. 1 at 30;
Delaware at 3 (explaining that, without the California standards,
adopted into Delaware's SIP, the State will not be able to meet air
quality goals). These reliance interests, one commenter argued, are
another reason to doubt the implicit authority of EPA to reconsider
an already granted waiver: ``It would be quite surprising, then, for
EPA to have implicit authority to upend this multi-actor, multi-step
scheme by pulling the rug out from under it after the fact.'' States
and Cities at 16 (citing Am. Methyl, 749 F.2d at 840).
\114\ Twelve Public Interest Organizations app. 1 at 30-31
(citing 42 U.S.C. 7410(c)(1) (establishing triggers for imposition
of federal plan), 7509 (outlining sanctions for state planning
failures)).
\115\ See Ford Motor Company (Ford), Docket No. EPA-HQ-OAR-2021-
0257-0028 at 1 (``Ford supports EPA's rescission of its SAFE I
action, which withdrew California's waiver for zero emission vehicle
(ZEV) mandate and greenhouse gas (GHG) emission standards within
California's Advanced Clean Car (ACC) program. Ford does not believe
this previous action was appropriate. Ford firmly supports
recognition of California's authority to implement ZEV and GHG
standards in support of its air quality targets pursuant to its 2012
waiver application. We have relied on California's actions pursuant
to the waiver and California's related pronouncements in negotiating
and agreeing to the California Framework Agreement, and in the
development of our own product and compliance plans. Ultimately,
Ford considered EPA's and NHTSA's rationales and California's
statements regarding SAFE I and took action in the best interests of
the company and of the environment.''). See also Tesla, Docket No.
EPA-HQ-OAR-2021-0257-0136 at 4 (``Because of the sizeable
investments required to develop alternative fuel and advanced
technology vehicles, regulatory stability is vital for ensuring the
level of manufacturer and investor confidence necessary to
facilitate innovation.'') and at n.5 (quoting comments from several
automakers and auto industry groups about reliance interests on the
waiver from the MTE). See also Toyota, Docket No. EPA-HQ-OAR-2021-
0381 (``Should EPA reinstate California's waiver, we request it be
reinstated as it was originally granted, including the ``deemed-to-
comply'' provision that was so important in establishing One
National Program (ONP) over a decade ago. . . . Reinstatement of
California's waiver for model years 2021 and 2022 poses significant
lead time challenges considering that 2021 model year is well
underway, and 2022 model year vehicles are generally already
designed, sourced, certified to various regulatory requirements, and
ready to begin production. Some manufacturers may have already begun
production of 2022 model year vehicles. As a result, a reinstatement
of California's waiver by EPA should apply prospectively to model
years 2023 and later.'').
\116\ NCAT at 13; Rivian as a member of NCAT (Rivian), Docket
No. EPA-HQ-OAR-2021-0135.
\117\ States and Cities at 55-57, including app. D and app. E.
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According to commenters, these reliance interests were compounded
by the considerable passage of time between the granting of the ACC
program waiver in 2013 and SAFE 1's withdrawal in 2019. Commenters also
remarked that the more than five years that had passed was too long a
delay and well beyond the ``weeks, not years'' sometimes referenced as
guidance for reasonableness.\118\ SAFE 1, they noted ``comes years
after the waiver was granted, years after multiple sovereign States
adopted California's standards, and years into long-term plans States
developed in reliance on anticipated emission reductions from those
standards--including, but not limited to, multiple EPA approved State
Implementation Plans.'' \119\
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\118\ Id. at 17 (citing Mazaleski v. Treusdell, 562 F.2d 701,
720 (D.C. Cir. 1977)). Twelve Public Interest Organizations app. 1
at 73. In addition, this commenter notes that the time period for
seeking judicial review of the ACC program waiver had run long ago
and that no one had sought that review (citing Am. Methyl Corp., 749
F.2d at 835); NCAT at 14-15.
\119\ Twelve Public Interest Organizations app. 1 at 58.
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Other commenters argued that SAFE 1 did not upend reliance
interests and was not untimely. They agreed with the SAFE 1 decision
that the 2018 Mid-Term Evaluation (MTE), which was agreed to in 2013,
prevented any reliance interests from accruing.\120\ Although this MTE
was for the federal GHG standards for MYs 2022-2025, not the California
GHG standards approved under the ACC program waiver, these commenters
argued that the two were linked through the ``deemed to comply''
provision approved in the ACC program waiver, which allowed
manufacturers to comply with the California standards by meeting the
federal standards.\121\ They also noted that California separately
agreed to a 2016 mid-term evaluation of its own state standards for the
same model years.\122\ Therefore, they argued, because the initial
grant of the waiver was contingent on two subsequent mid-term
evaluations, no one could have reasonably believed the ACC program
waiver was ``set in stone.'' Additionally, at least one commenter
argued that California and other states' purported reliance interests
were further undermined because they ``have known for years that
NHTSA's longstanding position is that state carbon dioxide regulations
and zero-emissions vehicle mandates are related to average fuel economy
standards and therefore preempted by CAFE'' and ``could not have
reasonably believed that EPA would continue to ignore NHTSA's view of
the law in perpetuity.\123\
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\120\ America Fuel & Petrochemical Manufacturers, EPA-HQ-OAR-
2021-0257-0139 (AFPM) at 26 (``And no reliance interests derive from
this decision because one could not reasonably expect that the
standards approved in that waiver would remain untouched. As part of
the 2013 waiver decision, EPA and CARB committed to a 2018 mid-term
evaluation of the federal standards for MYs 2022-2025.''); Urban Air
at 22; NADA at 6 (``as discussed at length repeatedly in EPA's 2013
CAA preemption waiver rule, a coordinated mid-term evaluation (MTE)
involving EPA and NHTSA's MY 2022-2025 rules was expected to be
conducted.'').
\121\ AFPM at 26 (``Because California's deemed-to-comply
provision linked those standards to compliance with its own state
program, any change in federal standards from the mid-term review
would have required an equal overhaul of California's emissions
program for those future MYs.''); Urban Air at 22-23 (``The 2018-re-
evaluation is relevant because California's deemed-to-comply
provision allowed a manufacturer to satisfy state GHG standards
simply by complying with federal standards.''); NADA at 6 (``[A]s
noted above, CA's GHG mandates included both a ``deem-to-comply''
rule enabling vehicle manufacturers to meet those mandates by
complying with applicable federal rules, and a commitment on the
part of the state to conduct a mid-term evaluation of its own GHG
standards.'').
\122\ AFPM at 26-27; Urban Air at 22; NADA at 6.
\123\ Urban Air at 23.
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Some commenters also argued that even if reliance interests are
relevant, automakers and industry groups have reliance interests of
their own affected by CARB's 2018 deemed to comply amendments and the
SAFE 1 action itself. One commenter wrote that ``CARB tossed
automakers' reliance interests out the window when it refused to be
bound by the results of the EPA and NHTSA's Mid-Term Evaluation (MTE) .
. . and refused to honor its `deemed to comply' pledge to automakers
unless they complied with the standards set by the EPA in 2012 and
2017.'' \124\ Another commenter noted that ``[w]hatever `reliance
interests' are disturbed when EPA reverses a waiver grant are no more
real, and no more serious for the parties involved, than the reliance
interests upended by reversal of a waiver denial.'' \125\
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\124\ CEI at 9.
\125\ AFPM at 27. See also Urban Air at 20-21 (``And under the
presumption that `an agency retains authority to reconsider and
correct an earlier decision,' the grant of a waiver is as liable to
change as the denial of a waiver. No greater reliance interests
attach to the grant of a waiver authorizing regulation than to the
denial of a waiver preventing regulation, so reliance interests
provide no support for California's ratchet argument.'').
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Some commenters also argued that SAFE 1 was timely, disputing
opponents' claims that a ``reasonable'' amount of time is measured in
``weeks, not years.'' Commenters noted that ``courts have not reached
consensus on the amount of time that is reasonable.'' \126\ Moreover,
one commenter argued that ``timeliness depends on reliance interests''
and, because those could not have accrued prior to the MTE, the time
period at issue is only four months (between the conclusion of the MTE
and the reconsideration of the ACC program waiver, starting in
2018).\127\ This ``short time,'' the commenter claimed, ``lies in the
acceptable range given the intervening events.'' \128\ Another
commenter argued that, if ``time elapsed'' is a factor to be considered
in the appropriateness of an action, it cuts in favor of SAFE 1, as
thirty years passed between EPCA's enactment in 1975 and California's
first request for a ``waiver implicitly authorizing the State to
regulate fuel economy.'' \129\ Even if the time period at issue was
nearly six years between the grant of the ACC program and the final
SAFE 1 action, that commenter wrote, such a length of time is not
unreasonable, since ``[i]f six years locks a policy in place and puts
it beyond revision or repeal by the next administration, elections no
longer matter.'' \130\
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\126\ Urban Air at 23-24.
\127\ Id. at 24. Another commenter disagreed with this
accounting of time, stating that ``timeliness for reconsidering an
adjudication is measured from the date of the agency's decision, not
from the date of activity resulting from that decision. E.g., Am.
Methyl, 749 F.2d at 835 (tethering timeliness to period for appeal
of agency decision).'' Twelve Public Interest Organizations app. 1
at 38.
\128\ Urban Air at 23-24.
\129\ CEI at 8 (calling ``time elapsed'' a ``frivolous
objection.'').
\130\ Id.
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In addition to reliance interests and timeliness, some commenters
claimed that EPA's authority to revoke, if it existed, requires the
Agency to have a purpose other than ``applying some . . . change in
administrative policy.'' \131\ SAFE 1, they argued, did not meet this
requirement. Instead, in SAFE 1, EPA ``chose to sua sponte reconsider
its 2013 Waiver Grant for the sole purpose of applying new policy
determinations,'' specifically ``NHTSA's views of EPCA preemption'' and
``new interpretations
[[Page 14348]]
[of section 209(b)(1)(B)] that served only to categorically bar state
standards that reduce vehicular GHG emissions.'' \132\ Still, another
commenter disagreed, arguing that EPA's reconsideration was an
appropriate reevaluation of the legal interpretation and facts upon
which the initial waiver determination was based because--
``reconsideration determinations do not become `policy' decisions
simply because they address substantive errors.'' \133\
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\131\ States and Cities at 17 (quoting Chapman v. El Paso Nat.
Gas Co., 204 F.2d 46, 53-54 (D.C. Cir. 1953)).
\132\ Id. at 8, 19 (``No statute compelled EPA to reconsider the
2013 waiver at all, let alone to apply new policies to that long-
settled decision rather than to new waiver requests.''); Twelve
Public Interest Organizations app. 1 at 35 (``EPA relied exclusively
on its purported discretion to reinterpret Section 209(b)(1)(B) of
the Clean Air Act . . . and its purported discretion to consider
factors not enumerated in Section 209(b)(1).''). See also SCAQMD at
3 (``Because the 2013 waiver decision was not pending judicial
review in 2019 and was a long-closed matter, the EPA could not
rightfully reopen its adjudication.'').
\133\ Urban Air at 24 (citing Civil Aeronautics Bd. v. Delta Air
Lines, 367 US 316, 321 (1961)).
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EPA also received comment on whether EPA's actions were
inappropriate because the Agency failed to satisfy the ``requirements
of reasoned decision-making.'' Some commenters noted that EPA had taken
the position in SAFE 1 that ``reducing criteria pollution is of
overriding importance'' yet failed to ``consider[ ] the criteria-
pollution and SIP consequences of its Waiver Withdrawal and Section 177
Determination.'' \134\ Similarly, EPA received comments claiming that
the decision to apply a new approach to the ACC program waiver section
209(b)(1)(B) was both unnecessary and unjustified because, as EPA
acknowledged in SAFE 1, the Agency has consistently posited that
section 209(b)(1)(B) calls for determining whether the State needs its
own regulatory program, separate from that of the federal government,
not whether the State needs each specific standard or package of
standards for which it seeks a waiver.\135\ One of these commenters
pointed out that EPA also acknowledged that the phrase ``such State
standards'' could reasonably remain the program-level interpretation
(EPA's traditional interpretation) yet the Agency chose to adopt a new
interpretation and apply it to the more than five-year old ACC program
waiver, impacting expectations and reliance interests.
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\134\ States and Cities at 8-9, 12.
\135\ Id. at 22.
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The Agency also received comments on whether NHTSA's finding of
preemption under EPCA in the joint action granted EPA authority to
reconsider the ACC program waiver. Commenters argued that NHTSA is
charged with interpreting and implementing EPCA and that its finding
``that Congress prohibited California's standards'' in the same action
cannot be ignored.\136\ Still other commenters pointed to the language
of section 209(b)(1) itself, where only three criteria are provided by
which EPA can deny a waiver. As such, they argued, EPA cannot have
broad, implicit authority to revoke a waiver on entirely different
grounds than by which it may deny a waiver.\137\ The commenters also
argued that the joint context of the action did not grant the Agency
special authority to reconsider, explaining that ``[w]hat Congress
directed EPA to consider when it wrote Section 209(b)(1) does not
change depending on whether EPA acts alone or with another agency.''
\138\ Some commenters also pointedly noted that SAFE 1's distinction
between single-agency and joint actions is arbitrary and capricious and
therefore not a valid basis for reconsideration because EPA stated it
``does not intend in future waiver proceedings concerning submissions
of California programs in other subject areas to consider factors
outside the statutory criteria in section 209(b)(1)(A)-(C),'' \139\ and
because NHTSA and EPA now consider SAFE 1 as ``two severable actions.''
\140\
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\136\ See, e.g., CEI at 11.
\137\ States and Cities at 16-17.
\138\ Id. at 20. See also Twelve Public Interest Organizations
app. 1 64-65.
\139\ Northeast States for Coordinated Air Use Management
(NESCAUM), Docket No. EPA-HQ-OAR-2021-0257-0126 at 3; Twelve Public
Interest Organizations app. 1 64-65; States and Cities at 20.
\140\ SCAQMD at 7 (citing 86 FR at 22439 n.40).
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B. Analysis: EPA Inappropriately Exercised Its Limited Authority To
Reconsider
EPA finds it does have authority to reconsider waivers, although
its reconsideration of previously-granted waivers is limited and
circumscribed. In the context of adjudicatory decisions (as contrasted
to rulemakings), administrative law principles and case law support
limited reconsideration authority for waiver proceedings. For example,
in Ivy Sports Med., LLC v. Burwell, 767 F.3d 81, 86, 93 (D.C. Cir.
2014), the D.C. Circuit noted that where a statute ``does not contain
an express provision granting [the agency] authority to reconsider,''
``administrative agencies are assumed to possess at least some inherent
authority to revisit prior decisions, at least if done in a timely
fashion,'' noting the baseline limitations of such inherent authority.
And in Chapman v. El Paso Nat. Gas Co., 204 F.2d 46, 53-54 (D.C. Cir.
1953), the D.C. Circuit made clear that once concluded, an adjudicatory
decision granting a right ``may not be repudiated for the sole purpose
of applying some quirk or change in administrative policy.'' \141\
These precedents suggest that, while agencies do generally possess some
inherent authority to reconsider previous adjudicatory decisions, that
authority is limited in scope.
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\141\ See also Am. Methyl, 749 F.2d 826, 835 (D.C. Cir. 1984)
(``We have held that agencies have an inherent power to correct
their mistakes by reconsidering their decisions within the period
available for taking an appeal.''); Mazaleski v. Treusdell, 562 F.2d
701, 720 (D.C. Cir. 1977) (``We have many times held that an agency
has the inherent power to reconsider and change a decision if it
does so within a reasonable period of time.'') (quoting Gratehouse
v. United States, 512 F.2d 1104, 1109 (Ct. Cl. 1975)); Albertson v.
FCC, 182 F.2d 397, 399 (D.C. Cir. 1950) (``in the absence of any
specific limitation,'' reconsideration available ``within the period
for taking an appeal''). See generally Daniel Bress, Note,
Administrative Reconsideration, 91 VA. L. REV. 1737 (2005).
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Section 209 does not provide EPA with express authority to
reconsider and withdraw a waiver previously granted to California.
EPA's authority thus stems from its inherent reconsideration authority.
The 1967 legislative history provides some indication of congressional
intent to preserve some implied authority for EPA to reconsider
previous waiver decisions, but also to place limitations on it. This
legislative history explains: ``[i]mplicit in this provision is the
right of the [Administrator] to withdraw the waiver at any time [if]
after notice and an opportunity for public hearing he finds that the
State of California no longer complies with the conditions of the
waiver.'' \142\ Thus, from the earliest days of the program it has been
understood that any withdrawal of a waiver should be tied to the
statutory criteria and California's compliance with them. This
legislative history must be taken into account along with Congress's
intent expressed in the 1977 legislative history, which, as discussed
previously, sought to ensure deference to California and to strengthen
that state's role in driving emissions-reducing technological
innovation. Congress was also mindful to ensure the ability of other
states to adopt California's standards.\143\ Ultimately, EPA concludes
it has authority to reconsider previously-granted waivers, but that
this authority may only be exercised sparingly. As discussed below,
there are several considerations that support narrow authority to
reconsider waiver grants.
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\142\ S. Rep. No. 90-403, at 34 (1967).
\143\ See supra Section III.B.
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First and most important, EPA believes its inherent authority to
reconsider a waiver decision is
[[Page 14349]]
constrained by the three waiver criteria that must be considered before
granting or denying a waiver request under section 209(b). It would be
inappropriate and inconsistent with congressional intent for EPA to
reconsider and withdraw a waiver on a ground outside the limited scope
of those which Congress specified for EPA to consider when reviewing a
waiver in the first place.\144\ In the few instances where the Agency
reconsidered prior waiver decisions prior to SAFE 1, EPA focused its
review on the section 209(b) statutory waiver criteria.\145\
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\144\ See MEMA I, 627 F.2d at 1115 (noting that section 209(b)
creates ``a narrowly circumscribed proceeding requiring no broad
policy judgments'').
\145\ EPA initiated reconsideration of certain motor-cycle
standards, under the third waiver prong, section 209(b)(1)(C), in
order to ``vacate that portion of the waiver previously granted
under section 209(b).'' 47 FR 7306, 7309 (February 18, 1982). EPA
affirmed the grant of the waiver in the absence of ``findings
necessary to revoke California's waiver of Federal preemption for
its motorcycle fill-pipe and fuel tank opening regulations.'' Id. at
7310.
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A circumscribed approach to reconsideration of waivers is
consistent with the deference to California's policy judgment that
Congress built into the waiver process.\146\ Congress explicitly
required that EPA ``shall'' grant the waiver unless one of three
limited criteria are met. The use of the word ``shall'' (versus
``may'') was heavily debated by the enacting Congress, with the
successful proponents of ``shall'' explaining that such language would
``guarantee'' that California could regulate with the burden placed on
EPA to demonstrate why California should not be allowed to go beyond
federal limitations.\147\ Congress's legislative enactments since its
creation of the waiver program--including adding section 177 to allow
other states to adopt California's standards in 1977 and section
209(e)(2)(A) to create parallel deference for nonroad engines and
vehicles in 1990--reinforce the important role it envisioned for, and
deference it afforded to, California.\148\
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\146\ See MEMA I, 627 F.2d at 1124-25 (describing Congress's
intent to defer to California's judgments regarding its motor
vehicle program).
\147\ H.R. Rep. No 90-728 (``Are we now to tell California that
we don't quite trust her to run her own program, that big government
should do it instead?'').
\148\ 40 FR 23104; 58 FR 4166.
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In SAFE 1, EPA argued instead that deference to California was not
merited where the Agency was interpreting its ``own statute.'' \149\
But in Title II of the Clean Air Act, Congress envisioned two
standards--California and Federal.\150\ Congress recognized
California's early attempts to address motor vehicle emissions intended
to address its extraordinary environmental conditions as well as being
a laboratory for motor vehicle emissions control.\151\ Congress called
for EPA deference to California in implementing section 209(b) by not
only limiting EPA review of California waiver requests to three
specific criteria but also instructing that EPA is ``to afford
California the broadest possible discretion in selecting the best means
to protect the health of its citizens and the public welfare.'' \152\
Similarly, ``[t]he Administrator, . . . is not to overturn California's
judgment lightly. Nor is he to substitute his judgment for that of the
State.'' \153\ Additionally, the D.C. Circuit has explained that
``Congress consciously chose to permit California to blaze its own
trail with a minimum of federal oversight'' and ``[t]he statute does
not provide for any probing substantive review of the California
standards by federal officials.'' \154\ Further, ``[t]here is no
indication in either the statute or the legislative history that . . .
the Administrator is supposed to determine whether California's
standards are in fact sagacious and beneficial.'' \155\ Thus, early in
the waiver program's history, EPA explained the deference that Congress
intended for the Agency's review of waiver requests by noting that it
would feel constrained to approve a California approach to a problem
that the EPA Administrator might not feel able to adopt at the federal
level as a regulator. EPA explained that the balancing of risks and
costs against potential benefits from reduced emissions is a central
policy decision for any regulatory agency and substantial deference
should be provided to California's judgement on such matters.\156\
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\149\ 84 FR at 51344 n.268.
\150\ Motor vehicles are ``either `federal cars' designed to
meet the EPA's standards or `California cars' designed to meet
California's standards.'' Engine Mfrs. Ass'n v. EPA, 88 F.3d 1075,
1079-80, 1088 (D.C. Cir. 1996) (``Rather than being faced with 51
different standards, as they had feared, or with only one, as they
had sought, manufacturers must cope with two regulatory
standards.'').
\151\ See, e.g., S. Rep. No. 403, 90th Cong., 1st Sess. 33
(1967) (The waiver of preemption is for California's ``unique
problems and pioneering efforts.''); 113 Cong. Rec. 30950, 32478
(``[T]he State will act as a testing agent for various types of
controls and the country as a whole will be the beneficiary of this
research.'') (Statement of Sen. Murphy).
\152\ H.R. Rep. No. 95-294, at 301-02 (1977).
\153\ H.R. Rep. No. 95-294, at 302 (1977), reprinted in 1977
U.S.C.C.A.N. at 1381)).
\154\ Ford Motor Co. v. EPA, 606 F.3d 1293, 1297, 1300 (D.C.
Cir. 1979).
\155\ Id. at 1302.
\156\ 40 FR at 23104.
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In addition, limiting reconsideration of waivers undergirds
Congress' intent that California would be a laboratory for the country
driving emissions-reducing technological innovation when it created the
program in the first place. As the D.C. Circuit explained in MEMA I:
``The history of congressional consideration of the California waiver
provision, from its original enactment up through 1977, indicates that
Congress intended the State to continue and expand its pioneering
efforts at adopting and enforcing motor vehicle emission standards
different from and in large measure more advanced than the
corresponding federal program; in short, to act as a kind of laboratory
for innovation.'' \157\ Indeed, broad authority to reconsider waiver
grants could undermine the very structure that Congress built in Title
II. Specifically, while EPA does not consider section 177 when
reviewing waiver requests under section 209, Congress built a structure
wherein EPA must grant California a waiver under section 209 unless one
of the three statutory criteria are met, and then other states may
adopt California's standards under section 177 as part of their overall
air quality programs. Limited inherent authority to reconsider
previously-granted waivers as described in this action is important to
the success of Congress's structure.
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\157\ MEMA I, 627 F.2d at 110-11.
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Finally, even the sentence in the legislative history that suggests
EPA has inherent reconsideration authority in the first place, and
which SAFE 1 relied on for its assertion of inherent reconsideration
authority, lends weight to the view that this authority is limited.
According to the Senate report from the 1967 CAA amendments, the
Administrator has ``the right . . . to withdraw the waiver at any time
[if] after notice and an opportunity for public hearing he finds that
the State of California no longer complies with the conditions of the
waiver.'' \158\ That specific circumstance--where California does not
comply with the conditions of a waiver--should not be expanded to
include a gaping hole for discretionary administrative policy changes.
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\158\ S. Rep. No. 90-403, at 34 (1967).
---------------------------------------------------------------------------
Given all of the above considerations, several principles emerge.
EPA's authority to reconsider a grant of a waiver, which is an
adjudicatory action by the Administrator, is not open-ended. Any
reconsideration is constrained to the criteria that Congress set out in
section 209(b). Even within those statutory criteria, considering all
of the factors that weigh in favor of a narrow interpretation of the
Agency's authority and the importance of not disrupting Congress's
scheme, EPA believes reconsideration is limited to situations where the
Agency has made
[[Page 14350]]
a clerical or factual error or mistake, or where information shows that
factual circumstances or conditions related to the waiver criteria
evaluated when the waiver was granted have changed so significantly
that the propriety of the waiver grant is called into doubt.
Even if the bases for EPA's reconsideration did satisfy one of the
foregoing conditions such that reconsideration may be appropriate,
during that reconsideration EPA believes it should consider the passage
of time and reliance interests. In the context of CAA waiver grants in
general, and the 2013 ACC program waiver grant in particular,
California is relying on its standards to meet short- and long-term
emission reduction goals.\159\ In addition, by the time the SAFE
proposal was published, twelve states had already adopted at least one
or both of the GHG and ZEV standards.\160\ Several of these states
incorporated these adopted standards into their SIPs.\161\ Several
automakers and industry groups have also indicated reliance on these
standards.\162\
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\159\ States and Cities at 17-18.
\160\ Id. at 17.
\161\ Id. at 10; Wisconsin Department of Natural Resources
(Wisconsin), Docket No. EPA-HQ-OAR-2021-0257-0095 at 1 (``These
standards provide important and necessary reductions in both GHG and
criteria pollutant emissions needed to meet state and local air
quality goals and address federal CAA requirements.''); Connecticut
at 2 (``These programs enable long-term planning and yield critical
emission reductions that are critical to meeting Connecticut's
climate goals as well as our statutory obligations to reach
attainment with the ozone NAAQs.''); Delaware 2 (``Delaware adopted
the California LEV regulation and incorporated the LEV and GHG
standards into the State Implementation Plan. . . . Delaware will
not meet air quality goals without more protective vehicle emission
standards.''); Maine at 1 (``[T]he LEV program was initially created
to help attain and maintain the health-based National Ambient Air
Quality Standards (NAAQS) . . . The California ZEV and GHG programs
enable long-term planning for both the states and the regulated
community and have been drivers of technological change across the
industry.'').
\162\ E.g., Ford at 1; Tesla at n.5, 4; Rivian (as a member of
NCAT) at 13-14.
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Reconsideration thus must carefully consider the factors noted and
should not be undertaken where immense degrees of uncertainty are
introduced in settled expectations of California, other states, and
regulated industry or to allow for the continual questioning of EPA's
decisions, thus impairing needed finality. Such reconsideration could
frustrate congressional intent in designing the waiver program and
ultimately discourage reliance by the recipient of EPA's waiver
decision (CARB), states that may have adopted CARB's regulations under
the terms of section 177 (and are permitted to enforce the regulations
once EPA grants a waiver to California) as well as the regulated
industry.
We now turn to whether the reconsideration in SAFE 1 was a proper
exercise of EPA's inherent reconsideration authority. As an initial
matter, SAFE 1 did not assert that any clerical or factual error or
mistake was made in the 2013 ACC program waiver. Nor did SAFE 1 point
to any evidence showing that factual circumstances or conditions
related to the waiver criteria evaluated when the waiver was granted
have changed so significantly that the propriety of the waiver grant is
called into doubt. For example, SAFE 1 did not assert that California
was not complying with the terms of the waiver. Instead, SAFE 1's
reconsideration was premised on retroactive application of
discretionary policy changes. Therefore, EPA believes it did not
appropriately exercise its inherent authority in SAFE 1 to reconsider
the prior ACC program waiver. Upon reconsideration, and as further
shown in Sections V and VI, EPA now believes that SAFE 1 amounted to an
improper exercise of the Agency's limited inherent authority to
reconsider.\163\
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\163\ EPA acknowledges that, in the SAFE 1 proceedings, it had
noted that at the time of proposal that CARB had given notice that
it was considering amending its ``deemed to comply'' provision and
that by the time of SAFE 1, California had entered into agreements
with several automobile manufacturers to accept less stringent
standards than the California program or the Federal standards as
promulgated in 2012. As noted in SAFE 1, EPA believed that neither
of these matters were necessary for EPA's action in SAFE 1, but that
they provided further support for the action. 84 FR at 51334 n.230.
By this action, EPA finds that neither of these matters amounted to
a change in circumstances or conditions associated with the three
waiver criteria and EPA's evaluation of the criteria in the ACC
program waiver. EPA did not predicate its ACC program waiver on
CARB's deemed-to-comply provision or any changes to the deemed-to-
comply provision. (EPA does not take a position as to whether that
provision has changed in its purpose as a result of CARB's 2018
amendment). Further, to the extent CARB utilized a deemed-to-comply
provision or uses non-regulatory mechanisms to achieve its air
quality objectives, this had no bearing on EPA's assessment of
whether CARB has a need for its standards under the second waiver
prong at the time of SAFE 1 or now.
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SAFE 1 gave two primary reasons for withdrawing the 2013 ACC
program waiver. Neither was an appropriate basis for reconsideration.
First, SAFE 1 premised the revocation on its interpretation of the
second waiver prong, section 209(b)(1)(B), that called for the Agency's
scrutiny of specific standards under the waiver rather than
California's program as a whole. As explained in detail in Section V of
this final action, that statutory interpretation is flawed, and EPA
does not believe a new statutory interpretation should be the basis of
reconsidering the grant of a waiver.
SAFE 1 premised the withdrawal of the ACC program waiver under
section 209(b)(1)(B) on the perceived lack of record support on the
causal link between GHG emission standards and air quality conditions
in California.\164\ Yet, the underlying record from the ACC program
waiver, and the record of SAFE 1, have shown that CARB's ZEV sales
mandate and GHG emission standards are designed to address California's
serious air quality problems, including both its NAAQS pollutants and a
variety of climate impacts from GHG emissions. As discussed in greater
detail in Section V, EPA has since at least 2009 recognized that
greenhouse gas pollution exacerbates criteria pollution, and climate
change impacts on California's air quality conditions (e.g., heat
exacerbation of ozone).\165\ The ACC program was especially designed to
[[Page 14351]]
address both criteria and GHG pollution, including the effects of GHG
pollution on criteria pollution in California.\166\ As also further
discussed in Section V, in SAFE 1 the Agency dismissed the criteria
pollutant benefits of California's ZEV sales mandate requirements based
on a snippet from the 2012 waiver request, taken out of context.\167\
This was also remarkable considering EPA's prior waivers for ZEV sales
mandate requirements that demonstrated criteria pollutant emissions
reduction benefits.\168\ The record also includes information that
demonstrates that a withdrawal of the waiver for the GHG emission
standards and ZEV sales mandate (and leaving the Federal GHG standards
at the 2020 levels as proposed in SAFE) would increase NOx emissions in
the South Coast air basin alone by 1.24 tons per day.\169\ In sum, EPA
opted to elide the available ample technical support from the ACC
program waiver proceedings. EPA's factual predicates in SAFE 1--that
there was no criteria pollutant benefit of the GHG standards and ZEV
sales mandate--for reconsideration based on the second waiver prong
were simply inaccurate and inappropriate. Reconsideration was thus
improper on this basis because there were no factual errors in the ACC
program waiver and EPA should not be exercising authority to reconsider
prior valid waivers that present no factual errors based on different
statutory interpretations.
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\164\ ``California's approach in its ACC program waiver request
differed from the state's approach in its waiver request for MY 2011
and subsequent heavy-duty tractor-trailer GHG standards, where
California quantified NOX emissions reductions attributed
to GHG standards and explained that they would contribute to PM and
ozone NAAQS attainment.'' 84 FR at 51337 n.252 (citing 79 FR at
46256, 46257 n.15, 46261, 46262 n.75).
\165\ The first HD GHG emissions standard waiver related to
certain new 2011 and subsequent model year tractor-trailers. 79 FR
46256 (August 7, 2014). CARB projected, for example, ``reductions in
NOX emissions of 3.1 tons per day in 2014 and one ton per
day in 2020'' in California. Id. at 46261. The second HD GHG
emissions standard waiver related to CARB's ``Phase I'' regulation
for 2014 and subsequent model year tractor-trailers. 81 FR 95982
(December 29, 2016).
CARB also noted the scientific findings since EPA's 2009 GHG
waiver including the report titled ``Our Changing Climate 2012
Vulnerability &Adaptation to the Increasing Risks from Climate
Change in California.'' The summary report highlights new insights
for the energy, water, agriculture, public health, coastal,
transportation, and ecological resource sectors that are vital to
California residents and businesses. The study also predicts that
peak concentrations of dangerous airborne particles will increase in
the San Joaquin Valley because of climate change on wind patterns.
This study provides further evidence of what is known as the
``climate penalty,'' where rising temperatures increase ground-level
ozone and health-damaging particles, despite the reductions achieved
by successful programs targeting smog-forming emissions from cars,
trucks, and industrial sources. Id. at 8-9. See also ``The Impacts
of Climate Change on Human Health in the United States: A Scientific
Assessment'' Chapter 3 Air Quality Impacts--Key Finding (``Climate
change will make it harder for any given regulatory approach to
reduce ground-level ozone pollution in the future as meteorological
conditions become increasingly conducive to forming ozone over most
of the United States. Unless offset by additional emissions
reductions, these climate-driven increases in ozone will cause
premature deaths, hospital visits, lost school days, and acute
respiratory symptoms.'') at https://health2016.globalchange.gov/air-quality-impacts; Chapter 13: Air Quality, Fourth National Climate
Assessment at https://nca2018.globalchange.gov/chapter/13/.
\166\ 2012 Waiver Request at 1, 9-11, 15-17 (``[A]s detailed
below, the ACC program will result in reductions of both criteria
pollutants and GHG emissions that, in the aggregate, are more
protective than the federal standards that exist.''). 78 FR at 2122
([T]he ACC program will result in reductions of both criteria
pollutants and GHG emissions.'').
\167\ 84 FR at 51337 (quoting CARB's statement that ``[t]here is
no criteria emissions benefit from including the ZEV proposal in
terms of vehicle (tank-to-wheel or TTW) emissions.''). As explained
in more detail below, this statement merely reflected how CARB
attributed pollution reductions between its different standards and
compliance mandates, not the reality of how those standards and
mandates actually drive pollution reductions.
\168\ 58 FR 4156. 71 FR 78190 (December 28, 2006); 75 FR 11878
(March 12, 2010) and 76 FR 61095 (October 3, 2011).
\169\ States and Cities at 10.
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Second, SAFE 1 premised its revocation on NHTSA's finding of
preemption under EPCA. This, too, was an inappropriate ground for
reconsideration. As earlier noted, EPA believes its inherent authority
to reconsider a waiver decision is constrained by the three waiver
criteria that must be considered before granting or denying a waiver
request under section 209(b). Preemption under EPCA is not one of these
criteria and was not considered in CARB's ACC program waiver request or
in EPA's granting of that waiver. In fact, in its waiver grant, the
Agency expressly found that consideration of preemption under EPCA
would be inappropriate and unnecessary. In SAFE 1, the Agency did not
premise its consideration of preemption under EPCA on any of the three
statutory criteria. Therefore, EPA believes that SAFE 1 was not a
proper exercise of the authority to reconsider on this basis, and any
subsequent action in SAFE 1 to withdraw the ACC program waiver was
inappropriate.
Although SAFE 1 was an inappropriate exercise of inherent authority
given that the Agency did not correct a factual error and there was no
change in factual circumstances so significant that the propriety of
the waiver would be called into doubt, it is nevertheless relevant to
note that SAFE 1 did not give appropriate consideration to the passage
of time and the reliance interests that had developed between the
granting and the revocation of the ACC program waiver. Several
automakers and industry groups have also indicated reliance on these
standards, as previously discussed.\170\ California and section 177
states were, by the time of the reconsideration, into the long-term
plans they had developed relying on the ACC program waiver
standards.\171\ California and other states rely on waivers that EPA
has approved to meet short- and long-term emission reduction
goals.\172\ In addition, by the time the SAFE proposal was published,
twelve states had already adopted at least one or both of the GHG and
ZEV standards.\173\ Several of these states incorporated these adopted
standards into their SIPs.\174\
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\170\ E.g., Ford at 1; Tesla at n.5, 4; Rivian (as a member of
NCAT) at 13-14. EPA notes that it received limited comment on
whether reliance interests had formed since the issuance of SAFE 1
but nothing to demonstrate error in the findings regarding section
209(b)(1)(C) made within the ACC program waiver. See Toyota, Docket
No. EPA-HQ-OAR-2021-0381 (``Reinstatement of California's waiver for
model years 2021 and 2022 poses significant lead time challenges
considering that 2021 model year is well underway, and 2022 model
year vehicles are generally already designed, sourced, certified to
various regulatory requirements, and ready to begin production.'').
Further, as discussed elsewhere, the short passage of time since the
promulgation of SAFE 1 and ongoing litigation over that action has,
as automakers have noted in that briefing, prevented automakers from
relying on the waiver revocation. See also Twelve Public Interest
Organizations at 11 (noting filings by automakers suggesting lack of
reliance on the waiver withdrawal).
\171\ E.g., States and Cities at 17 (the length between the
waiver grant and reconsideration was too long ``by any measure.'');
Twelve Public Interest Organizations at app. 36. EPA acknowledges
the commenter who argued that ``timeliness depends on reliance
interests'' and, because the standards were not final before the
MTE, the time period at issue is the four months between the MTE and
the SAFE 1 proposal. Urban Air at 24. EPA also received comment that
disagreed with this accounting of time stating that timeliness for
reconsidering an adjudication is measured from the date of the
agency's decision, not from the date of activity resulting from that
decision. E.g., Am. Methyl, 749 F.2d at 835 (tethering timeliness to
period for appeal of agency decision).'' Twelve Public Interest
Organizations app. 1 at 38. EPA believes it is not necessary to
resolve the permissible amount of time, or the existence or lack of
a bright line, that may pass before reconsideration of its prior
adjudication is no longer appropriate. However, EPA did not
``condition'' its ACC program waiver on any subsequent actions,
including the MTE, which explicitly applied to the federal
standards. See 78 FR at 2137. EPA expects its waiver adjudications
to be final and that appropriate reliance may flow to affected
parties. Moreover, in this instance EPA did not make any final
determination regarding the third waiver prong at section
209(b)(1)(C). EPA notes that it has administered the California
waiver program for a number of decades and acknowledges that
emission standards continue to evolve at the California and the
federal levels. This evolution in the standards has rested on
regulatory certainty and the enforceability of CARB's emission
standards once a waiver has been issued by EPA under section 209(b)
of the CAA. As for the inclusion of the deemed-to-comply provision
in the California standards, California provided documentation
demonstrating that the deemed-to-comply provision was reliant upon
the federal standards having a certain level of stringency, a fact
that EPA had recognized. See States and Cities at 18-19 n. 14, 57-
60. EPA found that the California standards were feasible even
without the deemed-to-comply provision, 78 FR at 2138, making it
irrelevant to the waiver grant. California's own actions with
respect to its standards, such as its independent review of the ACC
program, cannot disturb California's or other state's reliance on
the federal waiver.
\172\ States and Cities at 17-18.
\173\ Id. at 17.
\174\ Id. at 10; Wisconsin Department of Natural Resources
(Wisconsin), Docket No. EPA-HQ-OAR-2021-0257-0095 at 1 (``These
standards provide important and necessary reductions in both GHG and
criteria pollutant emissions needed to meet state and local air
quality goals and address federal CAA requirements.''); Connecticut
at 2 (``These programs enable long-term planning and yield critical
emission reductions that are critical to meeting Connecticut's
climate goals as well as our statutory obligations to reach
attainment with the ozone NAAQs.''); Delaware 2 (``Delaware adopted
the California LEV regulation and incorporated the LEV and GHG
standards into the State Implementation Plan. . . . Delaware will
not meet air quality goals without more protective vehicle emission
standards.''); Maine at 1 (``[T]he LEV program was initially created
to help attain and maintain the health-based National Ambient Air
Quality Standards (NAAQS) . . . The California ZEV and GHG programs
enable long-term planning for both the states and the regulated
community and have been drivers of technological change across the
industry.'').
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SAFE 1 barely mentioned these reliance interests, explaining only
that the Agency ``will consider whether and how to address SIP
implications of this action, to the extent that they exist, in separate
actions; EPA believes that it is not necessary to resolve those
implications in the course of this action.'' \175\ EPA now believes
that,
[[Page 14352]]
when exercising its inherent authority to reconsider the 2013 waiver
decision, it was inappropriate to ignore these possible reliance
interests and to ``resolve'' any potential implications at a later
time. In the SAFE 1 context, while it was not necessary to resolve the
status of every SIP, it was inappropriate to not even consider the
reliance interests raised by the adoption of California standards by
section 177 states (including, but not limited to, their adoption into
SIPs). EPA has consistently recognized the importance of long-term
planning in the attainment and maintenance of NAAQS.\176\ Given the
long-term nature of these plans, it is ``challenging (if not
impossible) to change them quickly,'' and any changes in one part of a
SIP can affect multiple sectors of the economy.\177\
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\175\ Id. at 51324 n.167.
\176\ EPA is responsible for approving SIPs and SIP amendments,
which span years. See, e.g., 82 FR 42233 (September 7, 2017)
(approval of Maine's SIP revision including updates to be consistent
with California's updated LEV program); 80 FR 13768 (March 17, 2015)
(approval of Connecticut's SIP revision, including the adoption of
elements of California's LEV program). For example, states with
areas that achieve attainment for any air pollutant must submit for
EPA approval a revised SIP that sets out the State's plan for
maintaining attainment for at least ten years after the
redesignation. At the end of that ten-year period, the State must
submit another ten-year maintenance plan to EPA for approval. 42
U.S.C. 7505a.
\177\ Twelve Public Interest Organizations app. 1 at 29, 30.
Several states also commented, during this reconsideration, that
they rely on the California GHG standards and ZEV sales mandate to
reach their own state emission reduction goals. E.g., Connecticut at
2 (``Reducing GHG emissions from the transportation sector is
required to achieve Connecticut's economy-wide targets of at least
45 percent below 2001 levels by 2030 and 80 percent below 2001
levels by 2050, as required by the 2008 Global Warming Solutions Act
(GWSA) and the 2018 Act Concerning Climate Change Planning and
Resiliency.''); Minnesota at 2 (``[California's standards] are
vitally important in helping our state achieve our GHG emission
reduction goals and reduce other harmful air pollutants, especially
in communities of color and lower-income communities, which are
disproportionately impacted by vehicle pollution. The MPCA found
that these rules are needed to address GHG emissions in our state
and take steps towards achieving Minnesota's statutory Next
Generation Energy Act GHG reduction goals. On May 7, 2021, an
independent Administrative Law Judge affirmed the MPCA findings.'');
Maine at 1 n.3 (``Maine statute at 38 M.R.S 576-A establishes tiered
GHG emission reduction requirements culminating in gross annual
reductions of at least 80% from 1990 baseline levels.'').
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As noted above, EPA also received other comments regarding reliance
interests, including those noting that the midterm evaluation (MTE) was
an indication that the technological feasibility of the GHG emission
standards was not a settled matter and hence no certainty or reliance
could accrue. EPA, however, did not ``condition'' its ACC program
waiver on any subsequent actions, including the MTE.\178\ EPA expects
its waiver adjudications to be final and that appropriate reliance may
flow to affected parties. Moreover, in this instance EPA did not make
any final determination regarding the third waiver prong at section
209(b)(1)(C). EPA notes that it has administered the California waiver
program for a number of decades and acknowledges that emission
standards continue to evolve at the California and the federal levels.
This evolution in the standards has rested on regulatory certainty and
the enforceability of CARB's emission standards once a waiver has been
issued by EPA under section 209(b) of the CAA.
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\178\ See 78 FR at 2137.
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EPA's historic practice of properly affording broad discretion to
California has meant that in almost fifty years of administering the
California waiver program the Agency had never withdrawn any waiver
prior to SAFE 1. And while SAFE 1 cited prior reconsideration actions
as support for the Agency's authority to reconsider prior waiver
decisions, as previously noted, EPA has historically limited
reconsideration of prior waived standards to statutory criteria and
most important, none of these prior reconsideration actions resulted in
a revocation.\179\ As further shown in Sections V and VI, SAFE 1 was
the result of a ``probing substantive review of the California
standards,'' with the Agency substituting its own judgment for
California's contrary to both congressional exhortation of deference to
California and the Agency's review practice.
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\179\ See, e.g., 43 FR at 7310 (affirming the grant of the
waiver in the absence of ``findings necessary to revoke California's
waiver of Federal preemption for its motorcycle fill-pipe and fuel
tank opening regulations.'').
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This present reconsideration is an appropriate exercise of the
Agency's reconsideration authority. It is not at all clear that the
reasons for limiting reconsideration of waiver grants apply to the same
degree to reconsideration of waiver denials and withdrawals. However,
EPA need not resolve the question in this action, because this action
falls well within the bounds of even the limited authority this action
concludes the Agency possesses for reconsideration of waiver grants.
First, this action corrects factual errors made in the SAFE 1 waiver
withdrawal. Specifically, even under SAFE 1's flawed interpretation of
section 209(b)(1)(B), SAFE 1 ignored facts demonstrating that
California does need the specific standards at issue to meet compelling
and extraordinary conditions. Second, in this reconsideration EPA
properly constrains its analysis to whether SAFE 1 made one of the
three statutory findings necessary to deny a waiver. Third, this
reconsideration is timely with respect to the finalization of SAFE 1
and limited, if any, reliance interests have developed as a result of
SAFE 1 (which has been subject to judicial review since its
promulgation).
C. Conclusion
In SAFE 1, EPA inappropriately exercised its limited inherent
authority to reconsider the ACC program waiver for several reasons. EPA
believes its exercise of reconsideration authority to reinterpret the
language of section 209(b)(1)(B) was not taken to correct any factual
or clerical error or based upon factual circumstances or conditions
related to the waiver criteria evaluated when the waiver was granted
that have changed so significantly that the propriety of the waiver
grant is called into doubt. Rather, as discussed in detail in Section
V, it was based upon a flawed statutory interpretation and a
misapplication of the facts under that interpretation. Likewise, EPA's
decision to reconsider the ACC program waiver based on NHTSA's
rulemaking within SAFE 1, which raised issues beyond the statutory
waiver criteria, was inappropriate. For these reasons EPA now believes
it is appropriate to rescind its actions within SAFE 1.
V. The SAFE 1 Interpretation of Section 209(b)(1)(B) was Inappropriate
and, in any Event, California met its Requirements
Even if SAFE 1's reconsideration of the 2013 program waiver grant
was appropriate, EPA concludes for two independent reasons that its
waiver withdrawal in SAFE 1 based upon its new statutory interpretation
was flawed. First, EPA concludes that the SAFE 1 interpretation of the
second waiver prong was not an appropriate reading of that second
waiver prong, section 209(b)(1)(B). It bears noting that the
traditional interpretation is, at least, the better interpretation.
Informed by but separate from the factual analysis discussed next, the
Agency finds that the new interpretation set out in SAFE 1 was
inconsistent with congressional intent and contrary to the purpose of
section 209(b). Under the traditional interpretation of the second
waiver prong, California's need for its own motor vehicle program,
including its GHG emission standards and ZEV sales mandate, to meet
compelling and extraordinary conditions is clear and the
[[Page 14353]]
waiver should not have been withdrawn.
Second, even if the interpretation in SAFE 1 were appropriate, EPA
concludes that SAFE 1 incorrectly found that California did not have a
need for its specific standards. EPA has evaluated California's need
for both requirements by applying both the traditional and the SAFE 1
interpretations of section 209(b)(1)(B). In doing so, EPA reviewed the
record from the ACC program waiver proceedings, including CARB's ACC
program waiver request and supporting documents, as well as the
comments received as part of the SAFE 1 proceeding and the comments
received under the present reconsideration of SAFE 1.\180\ The record
review focused on salient pronouncements and findings in the ACC
program waiver decision, such as the relationship of both criteria and
GHG pollutants and the impacts of climate change on California's
serious air quality conditions. For example, the effects of climate
change and the heat exacerbation of tropospheric ozone is well
established. California's ACC program is established, in part, to
address this. California's program, including its GHG emission
standards, is also designed to address upstream criteria emission
pollutants. The review did so primarily because SAFE 1 premised the
withdrawal of the GHG standards at issue on the lack of a causal link
between GHG standards and air quality conditions in California. The
review included EPA's prior findings regarding heat exacerbation of
ozone, a serious air quality issue recognized by EPA as presenting
compelling and extraordinary conditions under the second waiver prong.
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\180\ EPA notes that it reviewed the factual record within the
ACC program waiver proceeding and finds there was no factual error
in its evaluation of whether CARB's standards satisfied the second
waiver prong. EPA also notes, merely as confirming the finding it
made at the time of the ACC program waiver but not for purposes of
making a new factual finding from that made at the time of the ACC
program waiver decision, that the record and information contained
in the SAFE 1 proceeding as well as the record and information
contained in the Agency's reconsideration of SAFE 1 (including late
comments submitted during the SAFE 1 proceeding and, in some cases,
resubmitted during the Agency's reconsideration of SAFE 1) at each
point in time clearly demonstrates the need of California's
standards (whether evaluated as a program or as specific standards)
to meet compelling and extraordinary conditions within California.
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On completion of this review, EPA finds no basis for discounting
the ample record support on California's need for both the GHG
standards and the ZEV sales mandate to address compelling and
extraordinary conditions in California when using both the traditional
and SAFE 1 interpretation to the second waiver prong. Additionally,
because of the way CARB's motor vehicle emission standards operate in
tandem and are designed to reduce both criteria and GHG pollution and
the ways in which GHG pollution exacerbates California's serious air
quality problems, including the heat exacerbation of ozone, the Agency
in SAFE 1 should not have evaluated California's specific ``need'' for
GHG standards. In sum, in reconsidering SAFE 1, and after having now
reviewed and evaluated the complete factual record, EPA reaffirms that
California needs the GHG standards and ZEV sales mandate at issue to
``meet compelling and extraordinary conditions.''
A. Historical Practice
Under section 209(b)(1)(B), EPA shall not grant a waiver if
California ``does not need such State standards to meet compelling and
extraordinary conditions.'' For nearly the entire history of the waiver
program, EPA has read the phrase ``such State standards'' in section
209(b)(1)(B) as referring back to standards ``in the aggregate,'' in
the root paragraph of section 209(b)(1), which calls for California to
make a protectiveness finding for its standards. EPA has interpreted
the phrase ``in the aggregate'' as referring to California's program as
a whole, rather than each State standard, and as such not calling for
the Agency's standard-by-standard analysis of California's waiver
request.\181\ EPA has thus reasoned that both statutory provisions must
be read together so that the Agency reviews the same standards that
California considers in making its protectiveness determination and to
afford California discretion.\182\ The D.C. Circuit has also stated
that ``[t]he expansive statutory language gives California (and in turn
EPA) a good deal of flexibility in assessing California's regulatory
needs. We therefore find no basis to disturb EPA's reasonable
interpretation of the second criterion.'' \183\
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\181\ ``The interpretation that my inquiry under (b)(1)(B) goes
to California's need for its own mobile source program is borne out
not only by the legislative history, but by the plain meaning of the
statue as well.'' 49 FR at 18890.
\182\ 74 FR at 32751 n. 44;.32761 n.104. EPA cited Entergy Corp.
v. Riverkeeper, Inc., 129 S. Ct. 1498 (2009) (``That view governs if
it is a reasonable interpretation of the statute--not necessarily
the only possible interpretation, nor even the interpretation deemed
most reasonable by the courts''), and Chevron U.S.A. Inc. v. Natural
Resources Defense Council, Inc., 467 U.S. 837, 843-844 (1984).)
(``It seems to us, therefore, that the phrase ``best available,'''
even with the added specification ``for minimizing adverse
environmental impact,''' does not unambiguously preclude cost-
benefit analysis.''). See also 78 FR at 2126-2127 n. 78.
\183\ Am. Trucking Ass'n v. EPA, 600 F.3d 624, 627 (D.C. Cir.
2010) (ATA v. EPA). See also Dalton Trucking v. EPA, No. 13-74019
(9th Cir. 2021) (``The EPA was not arbitrary and capricious in
declining to find that `California does not need such California
standards to meet compelling and extraordinary conditions,' Sec.
7543(e)(2)(A)(ii), under the alternative version of the needs test,
which requires `a review of whether the Fleet Requirements are per
se needed to meet compelling and extraordinary conditions,' 78 FR at
58,103. The EPA considered `the relevant factors,' Motor Vehicle
Mfrs. Ass'n of U.S. v. State Farm Mut. Auto. Ins. Co., Inc., 463
U.S. 29, 42-43 (1983), including statewide air quality, 78 FR
58,104, the state's compliance with federal National Ambient Air
Quality standards for ozone and PM2.5 on a statewide
basis, id. at 58,103-04, the statewide public health benefits, id.
at 58,104, and the utility of the Fleet Requirements in assisting
California to meet its goals, id. at 58,110. Contrary to Dalton's
argument, the EPA did not limit its review to two of California's
fourteen air quality regions. The EPA examined the relevant data
provided by CARB, and it articulated a `satisfactory explanation for
its action including a rational connection between the facts found
and the choice made.' See Motor Vehicle Mfrs. Ass'n of U.S., Inc.,
463 U.S. at 43, 103 S.Ct. 2856 (cleaned up).'').
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In addressing the Agency's reading of section 209(b)(1)(B), for
example, in the 1983 LEV waiver request EPA explained that:
This approach to the ``need'' criterion is also consistent with
the fact that because California standards must be as protective as
Federal standards in the aggregate, it is permissible for a
particular California standard or standards to be less protective
than the corresponding Federal standard. For example, for many
years, California chose to allow a carbon monoxide standard for
passenger cars that was less stringent than the corresponding
Federal standard as a ``trade-off'' for California's stringent
nitrogen oxide standard. Under a standard of review like that
proposed by MVMA/AIAM, EPA could not approve a waiver request for
only a less stringent California standard because such a standard,
in isolation, necessarily could be found to be contributing to
rather than helping, California's air pollution problems.\184\
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\184\ 58 FR 4166, LEV Waiver Decision Document at 50-51.
In 1994, EPA again had cause to explain the Agency's reading of
section 209(b)(1)(B) in the context of California's particulate matter
---------------------------------------------------------------------------
standards waiver request:
[T]o find that the `compelling and extraordinary conditions'
test should apply to each pollutant would conflict with the
amendment to section 209 in 1977 allowing California to select
standards `in the aggregate' at least as protective as federal
standards. In enacting that change, Congress explicitly recognized
that California's mix of standards could `include some less
stringent than the corresponding federal standards.' See H.R. Rep.
No. 294, 95th Cong., 1st Sess. 302 (1977). Congress could not have
given this flexibility to California and simultaneously assigned to
the state the
[[Page 14354]]
seemingly impossible task of establishing that `extraordinary and
compelling conditions' exist for each standard.\185\
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\185\ 49 FR at 18887, 18890.
Congress has also not disturbed this reading of section
209(b)(1)(B) as calling for EPA review of California's whole program.
With two noted exceptions described below, EPA has consistently
interpreted this provision as requiring the Agency to consider whether
California needs a separate motor vehicle emission program as compared
to the specific standards in the waiver request at issue to meet
compelling and extraordinary conditions.
Congress intended to allow California to address its extraordinary
environmental conditions and foster its role as a laboratory for motor
vehicle emissions control. The Agency's long-standing practice
therefore has been to evaluate CARB's waiver requests with the broadest
possible discretion to allow California to select the means it
determines best to protect the health and welfare of its citizens in
recognition of both the harsh reality of California's air pollution and
to serve as a pioneer and a laboratory for the nation in setting new
motor vehicle emission standards and developing control
technology.\186\ EPA notes that ``the statute does not provide for any
probing substantive review of the California standards by federal
officials.'' \187\
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\186\ See, e.g., S. Rep. No. 403, 90th Cong., 1st Sess. 33
(1967) (The waiver of preemption is for California's ``unique
problems and pioneering efforts.''); 113 Cong. Rec. 30950, 32478
(``[T]he State will act as a testing agent for various types of
controls and the country as a whole will be the beneficiary of this
research.'') (Statement of Sen. Murphy).
\187\ Ford Motor Co., v. EPA, 606 F.2d 1293, 1300 (D.C. Cir.
1979).
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As a general matter, EPA has applied the traditional interpretation
in the same way for all air pollutants, criteria and GHG pollutants
alike.\188\ As discussed in Section II, there have only been two
exceptions to this practice: one in 2008 and one in 2019. In 2008, EPA
for the first time analyzed California's waiver request under an
alternative approach and denied CARB's waiver request. EPA concluded
that section 209(b) was intended to allow California to promulgate
state standards applicable to emissions from new motor vehicles to
address air pollution problems that are local or regional, but that
section 209(b)(1)(B) was not intended to allow California to promulgate
state standards for emissions from new motor vehicles designed to
address global climate change problems. Or, in the alternative, EPA
concluded that effects of climate change in California were not
compelling and extraordinary compared to the effects in the rest of the
country.\189\ EPA rejected this view a little over a year later in 2009
by applying the traditional interpretation in granting California's
waiver request for the same GHG standard, finding no support in the
statute or congressional intent for the alternative application of the
statute.\190\
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\188\ 74 FR at 32763-65; 76 FR 34693; 79 FR 46256; 81 FR 95982.
\189\ 73 FR at 12160-64.
\190\ 74 FR at 32744, 32746, 32763 (``The text of section 209(b)
and the legislative history, when viewed together, lead me to reject
the interpretation adopted in the March 6, 2008 Denial, and to apply
the traditional interpretation to the evaluation of California's
greenhouse gas standards for motor vehicles. If California needs a
separate motor vehicle program to address the kinds of compelling
and extraordinary conditions discussed in the traditional
interpretation, then Congress intended that California could have
such a program. Congress also intentionally provided California the
broadest possible discretion in adopting the kind of standards in
its motor vehicle program that California determines are appropriate
to address air pollution problems and protect the health and welfare
of its citizens. The better interpretation of the text and
legislative history of this provision is that Congress did not use
this criterion to limit California's discretion to a certain
category of air pollution problems, to the exclusion of others. EPA
concluded that even under this alternative approach California GHG
standards were intended at least in part to address a local or
regional problem because of the `logical link between the local air
pollution problem of ozone and GHG.''').
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In evaluating the ACC program waiver in 2013, EPA applied the
traditional interpretation to the ACC program waiver request and found
that the Agency could not deny the waiver request under the second
waiver prong.\191\ Further, without adopting the alternative
interpretation that had been applied in the 2008 GHG waiver denial, EPA
assessed California's need for the GHG standards at issue and found
that the Agency could not deny the ACC program waiver request, even
applying the alternative interpretation. EPA noted that to the extent
that it was appropriate to examine the CARB's need for the GHG
standards at issue to meet compelling and extraordinary conditions, the
Agency had discussed at length in the 2009 GHG waiver decision that
California has compelling and extraordinary conditions directly related
to regulations of GHGs.\192\ Similarly, EPA explained that to the
extent it was appropriate to examine California's need for the ZEV
sales mandate, these requirements would enable California to meet both
air quality and climate goals into the future.\193\ Additionally, EPA
recognized CARB's coordinated strategies reflected in the technologies
envisioned to meet the ACC program requirements and in turn addressing
both criteria pollutants and GHGs and the magnitude of the technology
and energy transformation needed to meet such goals.\194\
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\191\ 78 FR at 2129 (``CARB has repeatedly demonstrated the need
for its motor vehicle program to address compelling and
extraordinary conditions in California. As discussed above, the term
compelling and extraordinary conditions `does not refer to the
levels of pollution directly.' Instead, the term refers primarily to
the factors that tend to produce higher levels of pollution--
geographical and climatic conditions (like thermal inversions) that,
when combined with large numbers and high concentrations of
automobiles, create serious air pollution problems. California still
faces such conditions.'').
\192\ Id. at 2129-30.
\193\ Id. at 2129 (``[A]s EPA discussed at length in its 2009
GHG waiver decision, California does have compelling and
extraordinary conditions directly related to regulations of GHG.
EPA's prior GHG waiver contained extensive discussion regarding the
impacts of climate change in California. In addition, CARB has
submitted additional evidence in comment on the ACC waiver request
that evidences sufficiently different circumstances in California.
CARB notes that ``Record-setting fires, deadly heat waves,
destructive storm surges, loss of winter snowpack--California has
experienced all of these in the past decade and will experience more
in the coming decades. California's climate--much of what makes the
state so unique and prosperous--is already changing, and those
changes will only accelerate and intensify in the future. Extreme
weather will be increasingly common as a result of climate change.
In California, extreme events such as floods, heat waves, droughts
and severe storms will increase in frequency and intensity. Many of
these extreme events have the potential to dramatically affect human
health and well-being, critical infrastructure and natural
systems.'' (footnotes omitted)).
\194\ Id. at 2130-31 (``As CARB notes in its waiver request, the
goal of the CARB Board in directing CARB staff to redesign the ZEV
regulation was to focus primarily on zero emission drive--that is
BEV, FCV, and PHEVs in order to move advanced, low GHG vehicles from
demonstration phase to commercialization. CARB also analyzed
pathways to meeting California's long term 2050 GHG reduction
targets in the light-duty vehicle sector and determined that ZEVs
would need to reach nearly 100 percent of new vehicle sales between
2040 and 2050. CARB also notes that the ``critical nature of the LEV
III regulation is also highlighted in the recent effort to take a
coordinated look at strategies to meet California's multiple air
quality and climate goals well into the future. This coordinated
planning effort, Vision for Clean Air: A Framework for Air Quality
and Climate Planning (Vision for Clean Air) demonstrates the
magnitude of the technology and energy transformation needed from
the transportation sector and associated energy production to meet
federal standards and the goals set forth by California's climate
change requirements. . . . The Vision for Clean Air effort
illustrates that in addition to the cleanup of passenger vehicles
(at issue here) as soon as possible as required in the LEV III
regulation, transition to zero- and near-zero emission technologies
in all on- and off-road engine categories is necessary to achieve
the coordinated goals. Therefore, EPA believes that CARB's 2018 and
later MY ZEV standards represent a reasonable pathway to reach these
longer term goals. Under EPA's traditional practice of affording
CARB the broadest discretion possible, and deferring to CARB on its
policy choices, we believe there is a rational connection between
California ZEV standards and its attainment of long term air quality
goals. Whether or not the ZEV standards achieve additional
reductions by themselves above and beyond the LEV III GHG and
criteria pollutant standards, the LEV III program overall does
achieve such reductions, and EPA defers to California's policy
choice of the appropriate technology path to pursue to achieve these
emissions reductions.'' (footnote omitted)).
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[[Page 14355]]
The only other exception to the application of the traditional
interpretation was in SAFE 1, when EPA again used a standard-specific
level of review and focused on California's need for GHG standards at
issue under the waiver. There, EPA posited that section 209(b)(1)(B)
called for a ``particularized nexus'' for California's motor vehicle
standards: ``Congress enacted the waiver authority for California under
section 209(b) against the backdrop of traditional, criteria pollutant
environmental problems, under which all three links in this chain bear
a particularized nexus to specific local California features: (1)
Criteria pollutants are emitted from the tailpipes of the California
motor vehicle fleet; (2) those emissions of criteria pollutants
contribute to air pollution by concentrating locally in elevated
ambient levels, which concentration, in turn; (3) results in health and
welfare effects (e.g., from ozone) that are extraordinarily aggravated
in California as compared to other parts of the country, with this
extraordinary situation being attributable to a confluence of
California's peculiar characteristics, e.g., population density,
transportation patterns, wind and ocean currents, temperature
inversions, and topography.'' \195\ As support for the nexus test, EPA,
for the first time in waiver decisions, relied on section 202(a) and
its own terms of authority to inform interpretation of the second
waiver prong.\196\ In addition, EPA relied on legislative history to
interpret ``compelling and extraordinary'' conditions as a reference to
``peculiar local conditions'' and ``unique problems'' in
California.\197\ Accordingly, EPA reasoned that California must
demonstrate ``compelling and extraordinary circumstances sufficiently
different from the nation as a whole to justify standards on automobile
emissions which may, from time to time, need to be more stringent than
national standards.'' \198\
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\195\ 84 FR at 51339.
\196\ Id. at 51339-40.
\197\ Id. at 51342 (quoting S. Rep. No. 403, 90th Cong. 1st
Sess., at 32 (1967)) (``Congress discussed `the unique problems
faced in California as a result of its climate and topography.' H.R.
Rep. No. 728, 90th Cong. 1st Sess., at 21 (1967). See also Statement
of Cong. Holifield (CA), 113 Cong. Rec. 30942-43 (1967). Congress
also noted the large effect of local vehicle pollution on such local
problems. See, e.g., Statement of Cong. Bell (CA) 113 Cong. Rec.
30946. As explained at proposal, Congress focus was on California's
ozone problem, which is especially affected by local conditions and
local pollution. See Statement of Cong. Smith (CA) 113 Cong. Rec.
30940-41 (1967); Statement of Cong. Holifield (CA), id., at 30942.
See also, MEMA I, 627 F.2d 1095, 1109 (D.C. Cir. 1979) (noting the
discussion of California's `peculiar local conditions' in the
legislative history). In sum and as explained at proposal,
conditions that are similar on a global scale are not
`extraordinary,' especially where `extraordinary' conditions are a
predicate for a local deviation from national standards, under
section 209(b). 83 FR 43247.'').
\198\ Id.
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In SAFE 1, EPA then posited that the nexus test should be applied
to California's GHG standards specifically, rather than California's
program ``as a whole'' under the traditional ``aggregate'' approach,
``to ensure that such standard is linked to local conditions that
giv[e] rise to the air pollution problem, that the air pollution
problem is serious and of a local nature, and that the State standards
at issue will meaningfully redress that local problem.'' \199\ As
support for the GHG-specific scrutiny, EPA reasoned that ``[t]he
Supreme Court's opinion in UARG v. EPA, 134 S. Ct. 2427 (2014),
instructs that Clean Air Act provisions cannot necessarily rationally
be applied identically to GHG as they are to traditional pollutants.''
\200\
---------------------------------------------------------------------------
\199\ Id. at 51345.
\200\ Id. at 51340.
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Applying the nexus test, EPA concluded that California did not need
its GHG standards to meet ``compelling and extraordinary conditions''
because they were missing a particularized nexus to specific local
features. EPA in the alternative posited that ``even if California does
have compelling and extraordinary conditions in the context of global
climate change, California does not `need' these standards under
section 209(b)(1)(B) because they will not meaningfully address global
air pollution problem of the sort associated with GHG emissions.''
\201\ EPA also dismissed the 2009 GHG waiver conclusion on deleterious
effects of GHG emissions on ozone (e.g., how increases in ambient
temperature are conducive to ground-level ozone formation), stating
that such a relationship ``does not satisfy this requirement for a
particularized nexus, because to allow such attenuated effects to fill
in the gaps would eliminate the function of requiring such a nexus in
the first place.'' \202\
---------------------------------------------------------------------------
\201\ Id. at 51349.
\202\ Id.
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B. Notice of Reconsideration of SAFE 1 and Request for Comment
In the Notice of Reconsideration of SAFE 1, EPA noted its interest
in any new or additional information or comments regarding whether it
appropriately interpreted and applied section 209(b)(1)(B) in SAFE 1.
The Agency noted that EPA's finding in SAFE 1, that such standards were
only designed to address climate change and a global air pollution
problem, led EPA to a new interpretation of section 209(b)(1)(B). EPA
solicited views on whether it was permissible to construe section
209(b)(1)(B) as calling for a consideration of California's need for a
separate motor vehicle program where criteria pollutants are at issue
as well as California's specific standards where GHG standards are at
issue.
The Notice of Reconsideration also set forth that EPA's decision to
withdraw the ACC program waiver as it relates to California's ZEV sales
mandate was based on the same new interpretation and application of the
second waiver prong and rested heavily on the conclusion that
California only adopted the ZEV sales mandate requirement for purposes
of achieving GHG emission reductions. EPA recognized that this
conclusion in turn rested solely on a specific reading of a single
sentence in CARB's ACC program waiver request.\203\ EPA requested
comment on these specific conclusions and readings as well as whether
the withdrawal of the ACC program waiver, within the context of
California's environmental conditions and as applied to the GHG
standards and ZEV sales mandate requirement, was permissible and
appropriate.
---------------------------------------------------------------------------
\203\ Id. at 51330 (``Regarding the ACC program ZEV mandate
requirements, CARB's waiver request noted that there was no criteria
emissions benefit in terms of vehicle (tank-to-wheel--TTW) emissions
because its LEV III criteria pollutant fleet standard was
responsible for those emission reductions.'').
---------------------------------------------------------------------------
C. Comments Received
EPA received multiple comments on its decision to evaluate
California's need for its GHG standards separate from its need for a
separate motor vehicle emission program as a whole. Some commenters
agreed that EPA could evaluate waiver requests for the specific GHG
standards under the waiver along the lines of the Agency's
pronouncements in SAFE 1. Additionally, commenters pointed to the
method of EPA's review in SAFE 1--evaluating the standards
individually, as they are received, rather than in the aggregate--as
evidence of the flaw in the traditional interpretation.\204\ Some
commenters also echoed SAFE 1's concern that ``once EPA had determined
that California needed its very first set of submitted standards to
meet extraordinary and compelling conditions, EPA would never have the
[[Page 14356]]
discretion to determine that California did not need any subsequent
standards.'' \205\
---------------------------------------------------------------------------
\204\ CEI at 13-14.
\205\ 84 FR at 51341. See, e.g., NADA at 5; Urban Air at 25, 29-
33; AFPM at 22-23.
---------------------------------------------------------------------------
Under this analysis of the specific standards at issue under the
waiver, these commenters continued, California could not demonstrate
that its GHG and ZEV standards were, on their own, compelling and
extraordinary. These commenters agreed with SAFE 1's ``particularized
nexus'' interpretation of ``compelling and extraordinary,'' arguing
that the words required unique consequences in order to give adequate
meaning to the words themselves and in order to overcome equal
sovereignty implications.\206\ Using this interpretation, these
commenters concluded that, because ``GHG concentrations are essentially
uniform throughout the globe, and are not affected by California's
topography and meteorology,'' and because the entire nation would be
affected by climate change, neither the effects of the regulations on
climate change, nor the impacts of climate change on California could
be considered ``compelling and extraordinary.'' \207\ Some commenters
also argued that these standards were unnecessary given California's
``deemed to comply'' provision, which would theoretically allow all
automobile manufacturers to comply with California's standards by
meeting the less stringent Federal GHG standards.\208\
---------------------------------------------------------------------------
\206\ AFPM at 12; Urban Air at 4.
\207\ CEI at 14-16 (``The resulting ``global pool'' of GHG
emissions is not any more concentrated in California than anywhere
else . . . [E]ven if one assumes ``compelling and extraordinary
conditions'' can refer to climate change impacts, such as heat
waves, drought, and coastal flooding, California's vulnerability is
not ``sufficiently different'' from the rest of the nation to merit
waiving federal preemption of state emission standards. Thus,
California is not ``extraordinary'' in regard to either the
``causes'' of the ``effects'' of global climate change.''); NADA at
5 (``while vehicle GHG emissions also were, by definition, local,
their impact on serious local air quality concerns could not be
shown.''); AFPM at 11-14 (``Neither the causes nor effects of GHG
emissions are compelling and extraordinary conditions, as they are
global rather than local conditions, and California's GHG standards
and ZEV mandate will not meaningfully address the causes or effects
of these GHG emissions.'').
\208\ NADA at 4-5; Urban Air at 33.
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In contrast, other commenters asked that EPA reverse its SAFE 1
section 209(b)(1)(B) determination by reverting to EPA's long-standing
``program-level'' approach to the ``need'' inquiry, where ``EPA
considers California's need for its own mobile-source-emissions program
as a whole, not whether California needs a particular standard for
which it has requested a waiver.'' \209\ These commenters noted the
long tradition of interpreting California's need in the aggregate, an
interpretation that SAFE 1 acknowledged was reasonable.\210\ This
interpretation, they argued, best aligned with the text, legislative
history, and purpose of the waiver program.\211\ For example, some
commenters argued that, because feasibility was evaluated under an
aggregate approach, it would be unreasonable for California's need for
the program to be evaluated under a more restrictive approach.\212\
These commenters also argued that Congress had expressed approval of
this aggregate approach, citing legislative history from 1977 and
1990.\213\ This approach, they continued, aligns with the Waiver
Program's broad deference to California to create an entire regulatory
program, which is comprised of regulations that interact with and
affect each other.\214\ One commenter also responded directly to the
question EPA posed in its Notice of Reconsideration, whether it was
``permissible for EPA to construe section 209(b)(1)(B) as calling for
consideration of California's need for a separate motor vehicle program
where criteria pollutants are at issue and consideration of
California's individual standards where GHG standards are at issue.''
\215\ According to the commenter, ``The Supreme Court has rejected this
`novel interpretive approach' of assigning different meanings to the
same statutory text in the same provision, depending on the
application, because it `would render every statute a chameleon.' ''
\216\
---------------------------------------------------------------------------
\209\ States and Cities at 22 n.16.
\210\ Twelve Public Interest Organizations at 7 (``The Trump EPA
in turn acknowledged that this longstanding interpretation of
Section 209(b)(1)(B) was a reasonable one, 84 FR at 51,341 . . . .
'').
\211\ States and Cities at 22 (citing 84 FR at 51341); Tesla at
11 (``The plural reference to `such State standards' requires that
the standards be considered in the aggregate as a group. This
language stands in stark contrast to alternate phrasing that was
available to Congress and that would have permitted a non-aggregate
determination, such as: `such State does not need a State standard
to meet compelling and extraordinary conditions.' Indeed,
alternative language referencing individual standards is present in
subsection (b)(2), which references `each State standard.' '').
\212\ States and Cities at 25-26; Twelve Public Interest
Organizations at 8 (``An aggregate approach to the consistency
inquiry also makes sense under Section 209(b)(1)(C) because
technological feasibility is effectively evaluated on a program
basis. The feasibility of a new standard cannot be evaluated on its
own if there are interactions with pre-existing standards. Such
interactions between standards are what prompted Congress to add the
``in the aggregate'' phrase to section 209 in the first place.'').
\213\ States and Cities at 26-27; Ozone Transport Commission
(OTC), Docket No. EPA-HQ-OAR-2021-0257-0283 at 4.
\214\ States and Cities at 27-28.
\215\ 86 FR at 22429.
\216\ States and Cities at 24 (quoting Clark v. Martinez, 543
U.S. 371, 382 (2005) and citing U.S. v. Santos, 553 U.S. 507, 522
(2008); U.S. Dep't of the Treasury v. FLRA, 739 F.3d 13,21 (D.C.
Cir. 2014)). The commenter notes that in the SAFE 1 brief, EPA
claimed that its new approach to section 209(b)(1)(B) would apply
``for all types of air pollutants'' but EPA could point to nowhere
in SAFE 1 decision where this was said. Id. at 25. And ``only two
sentences later,'' EPA acknowledged that its review under this
second prong would change ``depending upon which `air quality
concerns' were implicated.'' Id.
---------------------------------------------------------------------------
These commenters also asked EPA to revert to the traditional
interpretation of ``compelling and extraordinary'' instead of SAFE 1's
``particularized nexus'' formulation. Commenters noted the SAFE 1
requirement appears nowhere in the text of the statute.\217\ Because of
this absence, they continued, EPA's references to the legislative
history from 1967 have no ``tether'' to the statutory text and cannot
justify the nexus requirement.\218\ Further, commenters argued that
EPA's reliance on the equal sovereignty doctrine improperly informed
how EPA should interpret the phrase ``compelling and extraordinary
conditions'' in the second waiver prong, and therefore requiring such
conditions to be sufficiently different or unique among states, was
inappropriate.\219\ Commenters argued that the equal sovereignty
doctrine was inapplicable to the second waiver prong. They explained
that the Supreme Court has only applied the ``rarely invoked'' doctrine
of equal sovereignty in the ``rare instance where Congress undertook `a
drastic departure from basic principles of federalism' by authorizing
`federal intrusion into sensitive areas of state and local
policymaking.' '' \220\ Congress's exercise of its Commerce Clause
power in regulating air pollution from new motor vehicles, commenters
continued, is not such an ``intrusion.'' Moreover, they wrote, applying
the equal sovereignty doctrine in this instance would actually
``diminish most States' sovereignty'' because it would ``reduce the
regulatory options available to California and to other [section 177]
States.'' This diminished sovereignty, they argued, would not
``enhance[e] the sovereignty of any State'' or ``alleviate'' any
unjustified burden because ``Section 209(b)(1) imposes no such
burden.'' \221\
---------------------------------------------------------------------------
\217\ States and Cities at 34 (noting the lack of the words
``nexus,'' ``particularized,'' ``peculiar,'' and ``local'' anywhere
in sections 209(b) or 202(a)(1)).
\218\ Id. at 35.
\219\ Id. at 41-43; Twelve Public Interest Organizations at 4-6.
\220\ States and Cities at 42 (quoting Shelby Cnty. v. Holder,
570 U.S. 529, 535, 545 (2013)).
\221\ Id. at 43; Twelve Public Interest Organizations at 5
(``Clean Air Act Section 209(b) places no extraordinary burden or
disadvantage on one or more States. Rather, the statute benefits
California by allowing the exercise of its police power authority to
address its particular pollution control needs'').
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[[Page 14357]]
Similarly, commenters rebutted SAFE 1's use of words like
``peculiar'' and ``unique'' to further define ``compelling and
extraordinary.'' These words, they noted, appear nowhere in the text of
section 209(b)(1)(B) and do not align with the plain meaning of the
word ``extraordinary.'' \222\ Further, they argued, this narrow
interpretation ``would render the waiver provision unworkable'' as,
``for any given air pollutant, it is possible to identify other areas
of the country that suffer from a similar pollution problem.'' \223\ In
fact, they continued, this argument was rejected in the 1967
legislative history and in 1984, ``when EPA thoroughly rebutted the
assertion that California could not receive a waiver if individual
pollutant levels were `no worse than some other areas of the country.'
'' \224\ Moreover, they argued, the existence of section 177
necessarily acknowledges that other states may have the same or similar
air pollution problems as California.\225\
---------------------------------------------------------------------------
\222\ States and Cities at 38-39 (explaining that the existence
of those words in the legislative history ``simply highlight that
Congress did not codify [them] in Section 209(b)(1)(B)'' and that
plain meaning of ``extraordinary'' is ``out of the ordinary'');
Twelve Public Interest Organizations app. 1 at 49 (``Congress
understood, even in 1967, that `[o]ther regions of the Nation may
develop air pollution situations related to automobile emissions
which will require standards different from those applicable
nationally.' S. Rep. No. 90-403, at 33.'').
\223\ Tesla at 9.
\224\ Id. (quoting 49 FR at 18887, 18891) (stating that EPA
explained that ``there is no indication in the language of section
209 or the legislative history that California's pollution problem
must be the worst in the country, for a waiver to be granted.'')).
\225\ Twelve Public Interest Organizations app. 1 at 49; States
and Cities at 38-39.
---------------------------------------------------------------------------
Other commenters argued that California needed GHG standards to
address ``compelling and extraordinary'' conditions in California even
under the SAFE 1 interpretation of the second waiver prong. These
commenters argued that GHG and ZEV standards produce both GHG and
criteria pollution benefits, pointing to language in the ACC program
waiver that acknowledged these dual benefits and to subsequent SIP
approvals that incorporated the California standards in order to
achieve criteria emission reductions.\226\ In particular, commenters
explained that the 2012 California waiver request established that the
ZEV standard would reduce criteria pollution both ``by reducing
emissions associated with the production, transportation, and
distribution of gasoline'' and ``by driving the commercialization of
zero-emission-vehicle technologies necessary to reduce future emissions
and achieve California's long-term air quality goals.'' \227\ As for
the GHG standards, commenters noted that, as acknowledged in the ACC
program waiver, ``global warming exacerbates criteria pollution and
makes it harder to meet air pollution standards.'' \228\ Thus, they
argue, ``EPA expressly and improperly limited its Determination to
consideration of the `application of section 209(b)(1)(B) to
California's need for a GHG climate program.'' \229\ Given EPA's
consistent acceptance that ``California's criteria pollution
`conditions' are `extraordinary and compelling' and that the record
demonstrates that California's GHG and ZEV standards reduce criteria
emissions in California,'' EPA should ``reverse its SAFE 1 section
209(b)(1)(B) determination and the waiver withdrawal that rested on
it--regardless of whether EPA reverts to its traditional, program-level
approach.'' \230\
---------------------------------------------------------------------------
\226\ States and Cities at 9-14, 30-31; Center for Biological
Diversity, Docket No. EPA-HQ-OAR-2021-0257-0358 at 2 (``The Trump
EPA improperly separated California's need for greenhouse gas
regulations from its need for criteria pollutant standards. In
reality, these two goals are tightly linked, and both are critical
to the Clean Air Act's goals of safeguarding public health and
welfare.''); San Joaquin Valley Air Pollution Control District
(SJVAPCD), Docket No. EPA-HQ-OAR-2021-0257-0105 at 3 (``The
District's 2016 Plan for the 2009 9-Hour Ozone Standard adopted June
16, 2016, and 2018 Plan for the 1997, 2006, and 2012 PM 2.5
Standards, adopted November 15, 2018, both rely on emission
reductions from California's Advanced Clean Cars regulation and
other mobile source measures to support the Valley's attainment of
the federal health-based NAAQS.''); NCAT at 11 (``In addition,
California's ZEV standards are intended to and do achieve
significant incremental reductions of NOx and other non-GHG
emissions.''); Tesla at 10-11 (``In comments submitted to the EPA in
2009 regarding a preemption waiver, [California] explained that it
`specifically designed its GHG standards for criteria pollutants.'
It also emphasized that it has `frequently referenced the science to
support GHG standards as a necessary method for controlling ozone
and particulate matter pollution' and has `consistently recognized
that the State's ability to reduce nonattainment days for ozone and
wildfire-caused particulate matter depends on its ability to reduce
GHG emissions. . . . EPA also has repeatedly expressed its own
understanding that GHG standards should be viewed as a strategy to
help control criteria pollutants to address National Ambient Air
Quality Standards nonattainment.'''); Twelve Public Interest
Organizations at 5 (``For example, atmospheric heating due to global
warming can increase the production of ground-level ozone in
California, which suffers from extraordinary amounts of locally
reacting nitrogen oxides and volatile organic compounds.'').
\227\ Center for Biological Diversity at 2-3. In contrast, some
commenters, echoing SAFE 1, argued that these upstream emission
benefits should not be considered in determining the criteria
pollutant benefits of these standards. CEI at 16 (``Although NHTSA
and EPA are required to consider all relevant factors when
determining CAFE and tailpipe CO2 standards, it is inappropriate to
elevate stationary source criteria pollutant emissions into a make-
or-break factor in waivers for mobile source programs. The Clean Air
Act already provides the EPA with ample authorities to regulate
stationary sources, including the NAAQS program, New Source
Performance Standards program, Prevention of Significant
Deterioration of Air Quality program, Acid Rain program, and
Regional Haze program. If Congress wanted NHTSA's CAFE program and
EPA's mobile source program to prioritize reductions of indirect
stationary source emissions, it could easily have said so. The
indirect effects on stationary source emissions are not even
mentioned.'').
\228\ Center for Biological Diversity at 3.
\229\ States and Cities at 28 (citing 84 FR at 51339 (emphasis
added)) (limiting section 209(b)(1)(B) consideration to ``the case
of GHG emissions.'').
\230\ States and Cities at 29. The commenter notes that EPA
never considered whether California needed those criteria emission
reductions from its ZEV and GHG standards because it refused to
consider those criteria reductions at all: ``EPA attempted to
justify disregarding record evidence and its own prior findings
concerning the criteria emission benefits of these California
standards by mischaracterizing CARB's 2012 waiver request. . . .
But, having chosen to sua sponte reopen the question whether
California continues to need standards it has been implementing for
six years, . . . ., EPA could not limit its consideration to what
the standards were intended to achieve when they were originally
designed or presented. . . . . CARB (and others) asserted clearly in
SAFE 1 comments that both the GHG and ZEV standards produce criteria
pollution benefits upon which California and other States rely to
improve air quality.'' Id. at 29-30.
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Regardless of the emissions benefits of the standards, some
commenters argued that California's plan to address both long-term and
short-term climate and criteria pollutant reduction goals is entitled
to deference. Thus, even if ``the mandate truly added nothing to the
emission benefits of California's standards for vehicular emissions of
criteria and greenhouse gas pollutants,'' commenters claimed, ``the
mandate would simply constitute the State's choice of means for
automakers to comply with its standards.'' \231\ These commenters
further argued that section 209(b)(1)(B) ``does not authorize EPA to
inquire into whether the means to comply with California emission
standards, as opposed to the actual standards themselves, are needed to
meet compelling and extraordinary conditions.'' \232\ Commenters also
claimed that EPA's argument, that California cannot need the GHG and
ZEV standards because those standards alone would not ``meaningfully
address global air pollution problems'' posed by climate change,
``lacks merit'' and ``is illogical.'' \233\ Such an approach, they
[[Page 14358]]
explained ``amounts to a conclusion that California is forbidden from
acting precisely because climate change is a global threat--when in
fact the global aspect of this problem demonstrates the need for
California to take action,'' a conclusion, they noted, that was
rejected by the Supreme Court in Massachusetts v. EPA.\234\ Even if
there was some merit to the argument, one commenter argued, SAFE 1's
assertion that the regulations ``would have only a de minimis effect on
climate change understates the impact that collective action by
California and the Section 177 states can have on GHG emissions.''
\235\ The commenter noted that ``[w]ith a total population of over 140
million people, these 19 jurisdictions collectively account for more
than 42 percent of the U.S. population . . . and more than 40 percent
of the U.S. new car market.'' \236\
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\231\ Twelve Public Interest Organizations at 9-10.
\232\ Id. (citing MEMA I, 627 F.2d 1095, 1111-14 (D.C. Cir.
1979)).
\233\ States and Cities at 40, 49-50; NCAT at 11 (``EPA's
argument that California does not `need' vehicle standards that
reduce GHG emissions because such standards alone cannot
meaningfully reduce the impacts of climate change in California
lacks merit. 84 FR at 51,346-47. EPA's approach in SAFE 1 read
requirements into the statute that Congress did not choose to
impose: That a single standard be sufficient to resolve an
environmental problem caused by multiple and diverse sources.
Instead, need should be defined by reference to the underlying
problem, and California's standards are one important element of the
broader response.''); Tesla at 8-9 (citing Massachusetts v. EPA, 549
U.S. 497, 525-26 (2007)) (`` `Nor is it dispositive that developing
countries such as China and India are poised to increase greenhouse
gas emissions substantially over the next century: A reduction in
domestic emissions would slow the pace of global emissions
increases, no matter what happens elsewhere.' '').
\234\ Tesla at 8-9 (``Indeed, the Supreme Court rejected this
logic in Massachusetts v. EPA, 549 U.S. 497 (2007), explaining:
``Because of the enormity of the potential consequences associated
with man-made climate change, the fact that the effectiveness of a
remedy might be delayed during the (relatively short) time it takes
for a new motor-vehicle fleet to replace an older one is essentially
irrelevant.''); States and Cities at 41.
\235\ NESCAUM at 7.
\236\ Id.
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Finally, these commenters also argued that climate change and its
impacts are, themselves, ``extraordinary and compelling'' conditions.
They provided evidence of increased weather events, agricultural
effects, and wildfires, amongst other impacts of climate change, which
have already begun to severely affect California.\237\
---------------------------------------------------------------------------
\237\ States and Cities at 43-48; Twelve Public Interest
Organizations at 5; Center for Biological Diversity at 3; Tesla at
8-9. States and Cities at 43-48; Twelve Public Interest
Organizations at 5-6; Center for Biological Diversity at 3
(``California also experiences uniquely dangerous effects from
increases in greenhouse gases. For example, the California
legislature has found that global warming will cause adverse health
impacts from increased air pollution and a projected doubling of
catastrophic wildfires. Many of the state's most extreme weather
events have occurred in the last decade, including a severe drought
from 2012-2016, an almost non-existent Sierra Nevada winter snowpack
in 2014-2015, three of the five deadliest wildfires in state
history, and back-to-back years of the warmest average temperatures
on record. These ongoing disasters demonstrate California's status
as `one of the most `climate-challenged' regions of North America.'
'').
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D. Analysis: California Needs the ACC Program GHG Standards and ZEV
Sales Mandate To Address Compelling and Extraordinary Conditions Under
Section 209(b)(1)(B)
In this action, EPA first finds that the Agency should not have
reinterpreted section 209(b)(1)(B) in evaluating California's ``need''
for GHG standards and ZEV sales mandate requirements at issue. The
analysis below walks through the statutory language and history
associated with this provision. As part of this discussion, the
relationship of this provision and California's authority and deference
is highlighted. The two interpretations of the waiver prong are then
reviewed, presenting the Agency's rationale for its findings of the
inappropriate SAFE 1 interpretation and support for its conclusion
about the better interpretation. Second, as shown below, the factual
record before the Agency at the time of SAFE 1 supports the GHG
standards and ZEV sales mandate requirements at issue under either the
traditional or SAFE 1 interpretation of section 209(b)(1)(B).
1. EPA Is Withdrawing the SAFE 1 Section 209(b)(1)(B) Interpretation
Except for two short-lived exceptions in the context of the 2008
waiver denial and SAFE 1, EPA has consistently recognized that reading
the ``needs'' test of the second waiver prong as calling for a
standard-specific evaluation would be inconsistent with congressional
intent given the text of section 209(b)(1) legislative history, as well
as the way the different standards in the ACC program work together to
reduce criteria and GHG pollution and spur innovation. As further
explained below, all of these aspects lend support to the Agency
practice of not subjecting California's waiver requests to review of
the specific standards under the second waiver prong, and we agree that
the traditional interpretation of section 209(b) is, at least, the
better interpretation.
Under section 209(b)(1)(B), EPA must grant a waiver request unless
the Agency finds that California ``does not need such State standards
to meet compelling and extraordinary conditions.'' EPA has historically
read the phrase ``such State standards'' in section 209(b)(1)(B) as
referring back to standards ``in the aggregate'' in section 209(b)(1),
which addresses the protectiveness finding that California must make
for its waiver requests. In addition, as EPA has explained in the past,
reading the provision otherwise would conflict with Congress's 1977
amendment to the waiver provision to allow California's standards to be
``at least as protective'' as the federal standards ``in the
aggregate.'' This amendment must mean that some of California's
standards may be weaker than federal standards counterbalanced by
others that are stronger. If, however, a waiver can only be granted if
each standard on its own meets a compelling need, then California could
never have a standard that is weaker than the federal standard,
rendering Congress's 1977 amendment inoperative. Congress would not
have created the option for California's individual standards to be at
least as protective ``in the aggregate'' and then taken that option
away in the second waiver prong's ``compelling need'' inquiry.
In addition, EPA has reasoned that giving effect to section
209(b)(1) means that both subparagraph (b)(1)(B) and paragraph (b)(1)
must be read together such that the Agency reviews the same standards
that California considers in making its protectiveness determination.
``Sec. 209 (formerly Sec. 208) was amended to require the U.S.
Environmental Protection Agency (EPA) to consider California's
standards as a package, so that California could seek a waiver of
preemption if its standards `in the aggregate' protected public health
at least as well as federal standards.'' \238\
---------------------------------------------------------------------------
\238\ Motor Vehicle Mfrs. Ass'n v. NYS Dep't of Env't
Conservation, 17 F.3d 521, 525 (2d Cir. 1994).
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EPA has thus explained the reasoning for the reading of ``such
State standards'' for instance, as follows:
[I]f Congress had intended a review of the need for each
individual standard under (b)(1)(B), it is unlikely that it would
have used the phrase ``. . . does not need such state standards,''
which apparently refers back to the phrase ``State standards . . .
in the aggregate,'' as used in the first sentence of section
209(b)(1), rather than to the particular standard being considered.
The use of the plural, i.e., ``standards,'' further confirms that
Congress did not intend EPA to review the need for each individual
standard in isolation.\239\
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\239\ 49 FR at 18890.
EPA has also explained that ``to find that the `compelling and
extraordinary conditions' test should apply to each pollutant would
conflict with the amendment to section 209 made in 1977 allowing
California to select standards `in the aggregate' at least as
protective as federal standards. In enacting that change, Congress
explicitly recognized that California's mix of standards could include
some less stringent than the corresponding federal standards.'' \240\
This is in accord with MEMA I, where the D.C. Circuit explained that:
---------------------------------------------------------------------------
\240\ Id. at 18890 n.24.
The intent of the 1977 amendment was to accommodate California's
particular concern
[[Page 14359]]
with oxides of nitrogen, which the State regards as a more serious
threat to public health and welfare than carbon monoxide. California
was eager to establish oxides of nitrogen standards considerably
higher than applicable federal standards, but technological
developments posed the possibility that emission control devices
could not be constructed to meet both the high California oxides of
nitrogen standard and the high federal carbon monoxide
standard.\241\
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\241\ MEMA I, 627 F.2d 1095, 1110 n.32 (D.C. Cir. 1979).
EPA has further explained that the crucial consequence of the 1977
Amendment was to require waiver grants for California's specific
standards that are part of the State's overall approach to reducing
vehicle emissions to address air pollution even if those specific
standards might not be needed to address compelling and extraordinary
conditions.\242\ For instance, EPA has previously granted a waiver for
what was then described as ``harmless emissions constituents such as
methane'' while reminding objectors of ``EPA's practice to leave the
decisions on controversial matters of public policy, such as whether to
regulate methane emissions, to California.'' \243\ Similarly, in the
1984 p.m. standards waiver decision, EPA also discussed California's
``need'' for its own standards at length in response to comments that
California must have worse air quality problems than the rest of the
country to qualify for a waiver.\244\ There, EPA explained that
California need not ``have a `unique' particulate problem, i.e., one
that is demonstrably worse than in the rest of the country [because],
there is no indication in the language of section 209 or the
legislative history that California's pollution problem must be the
worst in the country, for a waiver to be granted.'' \245\ Indeed, the
word ``unique'' is not contained in the statutory provision. EPA
further explained that ``even if it were true that California's total
suspended particulate problem is, as certain manufacturers argue, no
worse than some other areas of the country, this does not mean that
diesel particulates do not pose a special problem in California.''
\246\
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\242\ 74 FR at 32761 (``Congress decided in 1977 to allow
California to promulgate individual standards that are not as
stringent as comparable federal standards, as long as the standards
are `in the aggregate, at least as protective of public health and
welfare as applicable federal standards.'''); ``[T]he 1977
amendments significantly altered the California waiver provision.''
Ford Motor Co., 606 F.2d 1293, 1302 (D.C. Cir. 1979).
\243\ 43 FR at 25735.
\244\ It bears note that these are the same kinds of comments
that EPA received in the context of the ACC program waiver
proceedings on California's need for GHG standards.
\245\ 49 FR at 18891.
\246\ Id.
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As explained at length earlier, EPA believes Congress intended the
Agency to grant substantial deference to California on its choice of
standards that are appropriate to meet its needs. EPA has explained
that ``Congress has made it abundantly clear that the manufacturers
would face a heavy burden in attempting to show `compelling and
extraordinary conditions' no longer exist: The Administrator, thus, is
not to overturn California's judgment lightly. Nor is he to substitute
his judgment for that of the State. There must be ``clear and
compelling evidence that the State acted unreasonably in evaluating the
relative risks of various pollutants in light of the air quality,
topography, photochemistry, and climate in that State, before EPA may
deny a waiver.'' \247\ Likewise, the House Committee Report explained
for instance that ``[t]he [1977] amendment is intended to ratify and
strengthen the California waiver provision and to affirm the underlying
intent of that provision, i.e., to afford California the broadest
possible discretion in selecting the best means to protect the health
of its citizens and the public welfare.'' \248\ EPA's past practice
prior to SAFE 1, except for one instance, was consistent with this
deferential stance.
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\247\ Id. at 18890 n.25 (citing H.R. Rep. No. 95-294, 95th
Cong., 1st Sess. 302 (1977)).
\248\ MEMA I, 627 F.2d at 1110 (citing H.R. Rep. No. 294, 95th
Cong., 1st Sess. 301-02 (1977)) (emphasis added). Congress amended
section 209(b)(1)(A) so that California's determination that its
standards are as at least as protective as applicable Federal
standards so that such determination may be done ``in the
aggregate'' looking at the summation of the standards within the
vehicle program.
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In enacting section 209(b)(1), Congress struck a deliberate balance
first in 1967 when it acknowledged California's serious air quality
problems as well as its role as a laboratory for emissions control
technology for the country,\249\ and again, in the 1977 Amendments that
allowed for California to seek and obtain waivers for standards that
are less stringent than the federal standards (by amending section
209(b)(1)(A)) and also added section 177 to acknowledge that states may
have air quality problems similar to California's by allowing states,
subject to certain conditions, to adopt California's new motor vehicle
standards once waived by EPA.\250\ These provisions struck a balance
between having only one national standard and having 51 different state
standards by settling on two standards--a federal one and a California
one that other states may also adopt. Since 1967, in various amendments
to section 209, Congress has also not disturbed this reading of section
209(b)(1)(B) as calling for the review of the standards as a whole
program. Likewise, Congress has also not placed any additional
constraints on California's ability to obtain waivers beyond those now
contained in section 209(b)(1). The Agency has thus viewed the text,
legislative history, and structure of section 209(b)(1) as support for
the program-level review of waiver requests as well for the conclusion
that California's air quality need not be worse than the rest of the
country for EPA to grant a waiver of preemption. In addition, to the
extent that SAFE 1 was intended to preclude California's regulation of
all greenhouse gases from light-duty vehicles, the SAFE 1
interpretation creates a structural conflict within the relevant CAA
provisions and could also create an inability for California to address
GHG emissions and its contribution to the serious air quality problems
within the State. There is a fundamental relationship between sections
209(a) and 209(b). Section 209(a) preempts states from adopting or
enforcing new motor vehicle emission standards, and section 209(b)
calls for EPA to waive that preemption for California vehicular
emission standards unless EPA finds that one or more of the waiver
criteria set out therein are not met. Nothing on the face of the CAA or
applicable legislative history indicates that the scope of section
209(b)--the pollutants for which California may obtain a waiver--is
more limited than the scope of section 209(a).\251\ The D.C. Circuit
has
[[Page 14360]]
already held as much as to section 209(a): ``whatever is preempted [by
section 209(a)] is subject to waiver under subsection (b).'' \252\ As
demonstrated by EPA's review of the record in this decision,
California's GHG emission standards at issue meet the SAFE 1
interpretation of the second waiver prong. Nevertheless, to the extent
that SAFE 1 was intended to preclude all California regulation of
greenhouse gases, EPA believes it improper to exclude entirely a
pollutant from a waiver under section 209(b) that is otherwise
preempted by section 209(a).
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\249\ The CAA has been a paradigmatic example of cooperative
federalism, under which ``States and the Federal Government [are]
partners in the struggle against air pollution.'' General Motors
Corp. v. United States, 496 U.S. 530, 532 (1990). Motor vehicles
``must be either `federal cars' designed to meet the EPA's standards
or `California cars' designed to meet California's standards.''
Engine Mfrs., 88 F.3d at 1079-80, 1088 (``Rather than being faced
with 51 different standards, as they had feared, or with only one,
as they had sought, manufacturers must cope with two regulatory
standards.''). See also MEMA II, 142 F.3d at 463.
\250\ ``Sec. 177 . . . permitted other states to `piggyback'
onto California 's standards, if the state's standards `are
identical to the California standards for which a waiver has been
granted for such model year.''' Motor Vehicle Mfrs. Ass'n v. New
York State Dep't of Envtl. Conservation, 17 F.3d 521, 525 (2d Cir.
1994).
\251\ EPA believes that, to the extent the SAFE 1 interpretation
has the practical effect of defining or implementing the scope of
section 209(b) differently depending on the pollutants involved, the
interpretation is contrary to legislative intent and the Agency's
historic practice given the criteria emission benefits of CARB's GHG
emission standards and ZEV sales requirements as well as the impacts
of climate change on California's local and regional air quality.
\252\ MEMA I, 627 F.2d 1095, 1106-08 (D.C. Cir. 1979).
---------------------------------------------------------------------------
In addition, Congress has cited California's GHG standards and ZEV
sales mandate in subsequent legislation. Federal procurement
regulations direct the EPA to issue guidance identifying the makes and
models numbers of vehicles that are low GHG emitting vehicles.\253\ In
a clear reference to California's motor vehicle GHG standards, Congress
has required EPA when identifying those vehicles to ``take into account
the most stringent standards for vehicle greenhouse gas emissions
applicable to and enforceable against motor vehicle manufacturers for
vehicles sold anywhere in the United States.'' \254\ And in its State
Implementation Plan provision regarding fleet programs required for
certain non-attainment areas relating to issuing credits for cleaner
vehicles, Congress stated that the ``standards established by the
Administrator under this paragraph . . . shall conform as closely as
possible to standards which are established for the State of California
for ULEV and ZEV vehicles in the same class.\255\ Congress would not
likely have adopted California's standards into its own legislation if
it believed those standards to be preempted.
---------------------------------------------------------------------------
\253\ 42 U.S.C. 13212(f)(3).
\254\ Id.
\255\ 42 U.S.C. 7586(f)(4).
---------------------------------------------------------------------------
EPA also disagrees with SAFE 1's related argument that the
statutory criteria must be interpreted in the context of the
constitutional doctrine of ``equal sovereignty.'' As explained in
detail in Section VIII, waiver requests should be reviewed based solely
on the criteria in section 209(b)(1) and the Agency should not consider
constitutional issues in evaluating waiver requests.\256\ The
constitutionality of section 209 is not one of the three statutory
criteria for reviewing waiver requests. However, because the Agency
asserted in SAFE 1 that the equal sovereignty doctrine formed a gloss
on its statutory interpretation of the three criteria, EPA addresses
that argument here briefly. In short, in SAFE 1, EPA stated that
because section 209(b)(1) provides ``extraordinary treatment'' to
California, the second waiver prong should be interpreted to require a
``state-specific'' and ``particularized'' pollution problem.\257\ But
section 177's grant of authority to other states to adopt California's
standards undermines the notion that the regulatory scheme treats
California in an extraordinary manner. Indeed, if section 209(b) is
interpreted to limit the types of air pollution that California may
regulate, it would diminish the sovereignty of California and the
states that adopt California's standards pursuant to section 177
without enhancing any other state's sovereignty. Nor does section
209(b) impose any burden on any state. For these reasons, EPA agrees
with commenters who argued that the Supreme Court's decision in Shelby
County is inapposite. In section 209(b), Congress did not authorize
``federal intrusion into sensitive areas of state and local
policymaking.'' \258\ Rather, it underscored a foundational principle
of federalism--allowing California to be a laboratory for innovation.
Nor is section 209(b) an ``extraordinary departure from the traditional
course of relations between the States and the Federal Government.''
\259\ To the contrary, it is just one of many laws Congress passes that
treat States differently, and where, as discussed more fully below,
Congress struck a reasonable balance between authorizing one standard
and authorizing 51 standards in deciding to authorize two. SAFE 1's
invocation of the rarely used equal sovereignty principle as an aid in
interpreting the second waiver prong simply does not fit section 209.
---------------------------------------------------------------------------
\256\ 78 FR at 2145.
\257\ 84 FR 51340, 51347.
\258\ Shelby County v. Holder, 570 U.S. 529, 535, 545 (2013).
\259\ Id.
---------------------------------------------------------------------------
SAFE 1 dismissed the Agency's traditional interpretation of the
second waiver prong under which EPA reviews the same standards that
California considers in making its protectiveness determination,
asserting that the practical implications of reviewing standards in the
``aggregate'' compared to specific standards presented in a waiver
request meant that the Agency would never have the discretion to
determine that California did not need any subsequent standards. But
nothing in section 209(b)(1)(B) can be read as calling for scrutinizing
the specific California standards under the waiver.\260\ Under section
209(b)(1)(B), EPA is to grant a waiver unless California does not need
``such State standards'' (plural). EPA interprets section 209(b)(1)(B)
to refer back to the phrase ``in the aggregate'' in section 209(b)(1),
which was added in the 1977 CAA Amendments when Congress removed the
stringency requirements for waiver of California standards allowing
instead for standards that are not as stringent as comparable federal
standards, so long as the standards were ``in the aggregate, at least
as protective of public health and welfare as applicable Federal
standards.'' EPA believes that referring back to section 209(b)(1) is
appropriate given that it precedes the language prior to section
209(b)(1)(B) and is in accord with the deference Congress intended by
the 1977 Amendments.\261\ Conversely, EPA believes that under the SAFE
1 interpretation California would, of necessity, be required to make a
protectiveness finding for each of the specific standards, and the
Agency believes this would be an inappropriate outcome from SAFE 1.
Under the 1977 Amendments, California can ``include some less stringent
[standards] than the corresponding federal standards.'' \262\ As
previously explained, ``Congress could not have given this flexibility
to California and simultaneously assigned to the state the seemingly
impossible task of establishing that `extraordinary and compelling
conditions' exist for each standard.'' \263\
---------------------------------------------------------------------------
\260\ In the 2009 GHG waiver, and again in the 2013 ACC program
waiver, EPA explained that the traditional approach does not make
section 209(b)(1)(B) a nullity, as EPA must still determine whether
California does not need its motor vehicle program to meet
compelling and extraordinary conditions as discussed in the
legislative history. Conditions in California may one day improve
such that it may no longer have a need for its motor vehicle
program, or a program designed for a particular type of air
pollution problem, if the underlying specific air pollutant is no
longer at issue.
\261\ EPA had applied the traditional interpretation of the
second waiver prong prior to the 1977 Amendments.
\262\ See H.R. Rep. No. 294, 95th Cong., 1st Sess. 302 (1977);
``In further amendments to the Act in 1977, Sec. 209 (formerly
Sec. 208) was amended to require the U.S. Environmental Protection
Agency (EPA) to consider California's standards as a package, so
that California could seek a waiver from preemption if its standards
`in the aggregate' protected public health at least as well as
federal standards.'' Motor Vehicle Mfrs. Ass'n v. NYS Dep't of Env't
Conservation, 17 F.3d at 525.
\263\ 49 FR at 18890 n.24.
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SAFE 1 further argued that its interpretation read the use of
``such standards'' consistently between the second and third waiver
prongs,
[[Page 14361]]
sections 209(b)(1)(B) and (C).\264\ It is true that section
209(b)(1)(C) employs the same phrase ``such State standards'' as
employed in section 209(b)(1)(B), and it similarly uses that phrase to
refer to standards in the aggregate. Indeed, section 209(b)(1)(C)
involves an analysis of feasibility that can take more than the
feasibility and impacts of the new standards into account. The
feasibility assessment conducted for a new waiver request focuses on
the standards in that request but builds on the previous feasibility
assessments made for the standards already in the program and assesses
any new feasibility risks created by the interaction between the
standards in the petition and the existing standards.\265\
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\264\ Section 209(b)(1)(C) provides that no such waiver shall be
granted if the Administrator finds that ``such State standards and
accompanying enforcement procedures are not consistent with section
7521(a) [202(a)] of this title.''
\265\ For example, in the 2013 ACC waiver that contains CARB's
LEV III criteria pollutant standards and GHG emission standards, as
well as the ZEV sales mandate, EPA assessed information submitted by
CARB regarding the technological feasibility, lead time available to
meet the requirements, and the cost of compliance and the technical
and resource challenges manufacturers face in complying with the
requirements to simultaneously reduce criteria and GHG emissions. 78
FR at 2131.
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In sum, EPA now views as inconsistent with congressional intent the
SAFE 1 interpretation, which was a flawed interpretation and also a
significant departure from the traditional interpretation under which
the Agency reviews California's need for the same standards as those
that the State determines are ``in the aggregate'' as protective of
public health and welfare, under section 209(b)(1).\266\ EPA believes
the traditional interpretation is, at least, the better reading of the
statute.
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\266\ 84 FR at 51345. EPA notes that in SAFE 1 the following
rationale was used to interpret both 209(b)(1)(C) and then connect
it with 209(b)(1)(B): ``[B]ecause both sections 209(b)(1)(B) and (C)
employ the term `such state standards,' it is appropriate for EPA to
read the term consistently between prongs (B) and (C). Under section
209(b)(1)(C), EPA conducts review of standards California has
submitted to EPA for the grant of a waiver to determine if they are
consistent with section 202(a). It follows then that EPA must read
`such state standards' in section 209(b)(1)(B) as a reference to the
same standards in subsection (C).'' Although the Agency has not
pointed to 209(b)(1)(C) as a basis of statutory construction to
support the traditional interpretation of 209(b)(1)(B), EPA
nevertheless believes it is supportive. EPA notes that the term
``such state standards'' in 209(b)(1)(C) allows the Agency, in
appropriate circumstances, to review the consistency of CARB's suite
of standards, for a particular vehicle category, with section
202(a). For example, EPA evaluated all of the standards (LEV III
criteria pollutant, ZEV sales mandate, and GHG standards) of the ACC
program in recognition of the aggregate costs and lead time
associated with CARB's standards as well as technologies that may be
employed to meet more than one standard. 78 FR 2131-45. EPA's
assessment under 209(b)(1)(C) is not in practice a standard-by-
standard review. EPA believes it appropriate to read the entirety of
209 together, along with its purposes, in order to properly
interpret its components such as 209(b)(1)(B).
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As previously explained, in reviewing waiver requests EPA has
applied the traditional interpretation in the same way for all air
pollutants, criteria and GHG pollutants alike.\267\ In SAFE 1, however,
EPA reinterpreted section 209(b)(1)(B) and further set out a
particularized nexus test and applied this test separately to GHG
standards at issue. SAFE 1 then concluded that no nexus exists for GHG
emissions in California.\268\ SAFE 1 further posited that California
must demonstrate ``compelling and extraordinary circumstances
sufficiently different from the nation as a whole to justify standards
on automobile emissions which may, from time to time, need to be more
stringent than national standards.'' \269\ This has resulted in
potentially different practical results depending on whether GHG
standards or criteria emission pollutants are at issue, a distinction
neither found in nor supported by the text of section 209(b)(1)(B) and
legislative history. Specifically, SAFE 1 would have the ACC program
MYs 2017-2025 criteria pollutants standards subject to review under the
traditional interpretation while GHG standards at issue would be
subject to review under the SAFE 1 particularized nexus test or
individualized scrutiny.\270\ This uneven application is even more
irreconcilable given that California's motor vehicle emission program
includes two GHG standards for highway heavy-duty vehicles that EPA
previously reviewed under the traditional approach.\271\ EPA
acknowledges that ascribing different meanings to the same statutory
text in the same provision here, depending on its application, ``would
render every statute a chameleon.'' \272\ Nothing in either section 209
or the relevant legislative history can be read as calling for a
distinction between criteria pollutants and GHG standards and thus, the
individualized scrutiny under the SAFE 1 particularized nexus
test.\273\ Nothing in section 209(b) can be read as calling for EPA to
waive preemption only if California seeks to enforce criteria pollutant
standards. The Administrator is required to waive the preemption in
section 209(a) unless California ``does not need such State standards
to meet compelling and extraordinary conditions.'' \274\ This is in
stark contrast to, for example, section 211(c)(4)(C), which calls for a
waiver of preemption only if a state demonstrates that a fuel program
is ``necessary'' to achieve the NAAQS.\275\ Moreover, as previously
noted, ``[I]f Congress had intended a review of the need for each
individual standard under (b)(1)(B), it is unlikely that it would have
used the phrase ``. . . does not need such state standards'' (emphasis
in original), which apparently refers back to the phrase ``State
standards . . . in the aggregate as used in the first sentence of
section 209(b)(1), rather than the particular standard being
considered.'' \276\ EPA has also explained that an individualized
review of standards would mean that Congress ``g[ave] flexibility to
California and simultaneously assigned to the state the seemingly
impossible tasks of establishing that `extraordinary and compelling
conditions' exist for each less stringent standard.'' \277\
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\267\ 74 FR at 32763-65; 76 FR at 34693; 79 FR at 46256; 81 FR
at 95982.
\268\ SAFE 1 also relied on UARG v. EPA, 134 S. Ct. 2427 (2014),
where the Supreme Court disagreed with the Agency's decision to
regulate all sources of GHG under Titles I and V as the consequence
of the Agency's section 202(a) endangerment finding for motor
vehicle GHG emissions. In EPA's view upon reconsideration of SAFE 1,
UARG is distinguishable because here the Agency is acting under a
specific exemption to section 202(a) that allows for California to
set its own standards for motor vehicle GHG standards under
California state law, and thus, regulate major sources of GHG
emissions within the State. California's authority to promulgate
standards is neither contingent nor dependent on the Agency's
section 202(a) endangerment finding for GHG. See 74 FR at 32778-80;
79 FR at 46262. Moreover, as discussed above, EPA's waiver authority
under section 209(b) is coextensive with preemption under section
209(a). See MEMA I, 627 F.2d at 1107. UARG is inapplicable to the
scope of preemption under section 209(a).
\269\ 84 FR at 51341.
\270\ Id. at 51337.
\271\ The first HD GHG emissions standard waiver related to
certain new 2011 and subsequent model year tractor-trailers. 79 FR
46256 (August 7, 2014). The second HD GHG emissions standard waiver
related to CARB's ``Phase I'' regulation for 2014 and subsequent
model year tractor-trailers. 81 FR 95982 (December 29, 2016).
\272\ See States and Cities at 24 (quoting Clark v. Martinez,
543 U.S. 371, 382 (2005) and citing U.S. v. Santos, 553 U.S. 507,
522 (2008); U.S. Dep't of the Treasury v. FLRA, 739 F.3d 13, 21
(D.C. Cir. 2014)). The commenter notes that in the SAFE 1 brief, EPA
claimed that its new approach to section 209(b)(1)(B) would apply
``for all types of air pollutants'' but EPA could point to nowhere
in SAFE 1 decision where this was said. Id. at 25. And ``only two
sentences later,'' EPA acknowledged that its review under this
second prong would change ``depending upon which `air quality
concerns' were implicated.'' Id.
\273\ H.R. Rep. No. 294, 95th Cong., 1st Sess. 302 (1977); 49 FR
at 18890 n.24.
\274\ CAA section 209(b)(1)(B) (emphasis added).
\275\ Section 211(c)(4)(C) allows EPA to waive preemption of a
state fuel program respecting a fuel characteristic or component
that EPA regulates through a demonstration that the state fuel
program is necessary to achieve a NAAQS.
\276\ 49 FR at 18890.
\277\ Id. at 18890 n.24.
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[[Page 14362]]
Similarly, nothing in either section 209 or legislative history can
be read as requiring EPA to grant GHG standards waiver requests only if
California's GHG pollution problem is the worst in the country.\278\
``There is no indication in either the statute or the legislative
history that . . . the Administrator is supposed to determine whether
California's standards are in fact sagacious and beneficial.'' \279\
And most certainly, nothing in either section 209 or the legislative
history can be read as calling for EPA to draw a comparison between
California's GHG pollution problem and the rest of the country (or
world) when reviewing California's need for GHG standards. Instead, the
crucial consequence of the 1977 Amendment was to require waiver grants
for California's specific standards that are part of the State's
overall approach to reducing vehicle emissions to address air pollution
even if those specific standards might not be needed to address
compelling and extraordinary conditions.\280\ Thus, ``even if it were
true that California's [GHG] problem is, . . . no worse than some other
areas of the country, this does not mean that [GHG] do not pose a
special problem in California.'' \281\ Rather, ``EPA's practice [is] to
leave the decisions on controversial matters of public policy, such as
whether to regulate [GHG] emissions, to California.'' \282\
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\278\ Id. at 18891.
\279\ Ford Motor Co., v. EPA, 606 F.2d 1293, 1302 (D.C. Cir.
1979).
\280\ 74 FR at 32761 (``Congress decided in 1977 to allow
California to promulgate individual standards that are not as
stringent as comparable federal standards, as long as the standards
are `in the aggregate, at least as protective of public health and
welfare as applicable federal standards.' ''); ``[T]he 1977
amendments significantly altered the California waiver provision.''
Ford Motor Co., 606 F.2d 1293, 1302 (D.C. Cir. 1979).
\281\ 49 FR at 18891.
\282\ 43 FR at 25735.
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In addition, in Title II, Congress established only two programs
for control of emissions from new motor vehicles: EPA emission
standards adopted under the Clean Air Act and California emission
standards adopted under its state law. And states other than California
may not ``tak[e] any action that has the effect of creating a car
different from those produced to meet either federal or California
emission standards, a so-called `third vehicle.' '' \283\
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\283\ Motor Vehicle Mfrs. Ass'n v. NYS Dep't of Env't
Conservation, 17 F.3d 521, 526, 528 (2d Cir. 1994).
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As previously explained, and noted in the Notice of
Reconsideration, since the grant of the initial GHG waiver request in
2009, the Agency has applied the traditional interpretation in granting
two additional waivers for CARB's Heavy-Duty Vehicle GHG emission
standards and these GHG standards are now part of California's motor
vehicle program, but EPA did not address these waivers in SAFE 1.\284\
It also bears note that, given the limited analysis and application of
the SAFE 1 interpretation of the second waiver prong, it is uncertain
whether the traditional interpretation remains otherwise applicable to
earlier model year GHG standards under prior waivers. Ambiguity also
applies to SAFE 1's interpretation of this prong in respect to all
criteria pollutant standards in the ACC program. While SAFE 1 stated it
was only applicable to the GHG standards at issue, in at least one
instance the Agency indicated that the SAFE 1 interpretation could also
be applicable to future evaluation of waiver requests for criteria
pollutant standards.\285\ This uncertainty between these statements in
SAFE 1 further highlights the inappropriateness of the new
interpretation of the second prong.
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\284\ 79 FR 46256 (August 7, 2014); 81 FR 95982 (December 29,
2016).
\285\ 84 FR at 51341 n.263. ``EPA determines in this document
that GHG emissions, with regard to the lack of a nexus between their
State-specific sources and their State specific impacts, and
California's GHG standard program, are sufficiently distinct from
criteria pollutants and traditional, criteria pollutant standards,
that it is appropriate for EPA to consider whether California needs
its own GHG vehicle emissions program. EPA does not determine in
this document and does not need to determine today how this
determination may affect subsequent reviews of waiver applications
with regard to criteria pollutant control programs.'' (Emphasis
added). See also id. at 51344 n.268 (``EPA is adopting an
interpretation of CAA section 209(b)(1)(B), specifically its
provision that no waiver is appropriate if California does not need
standards ``to meet compelling and extraordinary conditions,''
similar to the interpretation that it adopted in the 2008 waiver
denial but abandoned in the 2009 and 2013 waiver grants, and
applying that interpretation to determine to withdraw the January
2013 waiver for California's GHG and ZEV program for model years
2021 through 2025''), and at 51346 (``EPA therefore views this
interpretation and application of CAA section 209(b)(1)(B) set forth
here as, at minimum, a reasonable one that gives appropriate meaning
and effect to this provision.'').
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In sum, for the reasons noted above, EPA is withdrawing the SAFE 1
interpretation and reinstating certain aspects of the ACC program
waiver that were earlier granted under the traditional interpretation
and approach. EPA concludes it erred by not properly evaluating the
statutory interpretation of section 209, the associated legislative
history including the policy deference that should be afforded to
California to address its serious air quality problems and to serve as
a laboratory for the country, and because the ``need'' for a motor
vehicle emission program and related standards within the program are
necessarily better viewed as a comprehensive and interrelated effort to
address the range of air quality problems facing California.\286\ At
the same time, EPA notes that the traditional interpretation is
reasonable and consistent with the text, structure and congressional
intent and purpose of section 209(b) and EPA is thus confirming that
the traditional interpretation of section 209(b)(1)(B) was appropriate
and is, at least, the better interpretation.\287\
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\286\ As noted previously, in the context of evaluating the
``need'' for California's motor vehicle emission standards the
Agency is informed by the legislative history from 1967 and 1977,
whereby California is properly viewed as a laboratory for the
country and that its policy decisions on how best to address its
serious air quality issues, and that deference on the question of
``need'' is in order. Therefore, EPA believes it misapplied the
concept of deference in the context of the second waiver prong
application in SAFE 1. See e.g., 84 FR at 51344 n.268. While EPA
believes it appropriate to not defer when it is interpreting its own
statute, the Agency nevertheless determines that California's policy
choices in term of its ``need'' in how best to address compelling
and extraordinary conditions in California requires deference by the
Agency. This is consistent with EPA's longstanding waiver practice
and its integration of the legislative history behind section 209.
In any event, EPA would reach the same conclusions regarding the
second waiver prong even if it did not defer to California regarding
the nature of its air quality problems. 86 FR at 74489 (``The 2009
Endangerment Finding further explained that compared with a future
without climate change, climate change is expected to increase
tropospheric ozone pollution over broad areas of the U.S., including
in the largest metropolitan areas with the worst tropospheric ozone
problems, and thereby increase the risk of adverse effects on public
health (74 FR 66525).''). See also 86 FR at 74492.
\287\ ``The interpretation that my inquiry under (b)(1)(B) goes
to California's need for its own mobile source program is borne out
not only by the legislative history, but by the plain meaning of the
statue as well.'' 49 FR at 18890.
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2. California Needs the GHG Standards and ZEV Sales Mandate Even Under
the SAFE 1 Interpretation
Even if the SAFE 1 interpretation of section 209(b)(1)(B) was
appropriate, the record of both the ACC program waiver and SAFE 1
proceeding demonstrate that California has a need for the GHG standards
and ZEV sales mandate at issue under the SAFE 1 interpretation as well.
The opponents of the waiver (including EPA in SAFE 1) did not met their
burden of proof to demonstrate that California does not need its GHG
emission standards and ZEV sales mandate, whether individually or as
part of California's motor vehicle emission program, to meet compelling
and extraordinary conditions.\288\
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\288\ EPA notes that by this action it is rescinding the
interpretation of section 209(b)(1)(B) as set forth in SAFE 1.
Nevertheless, EPA believes it appropriate to address comments
received that suggest the SAFE 1 interpretation was not only
correct, but that the factual record supported the SAFE 1 withdrawal
of the ACC waiver based on this interpretation.
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[[Page 14363]]
As previously explained, the 1977 CAA Amendments allow California
to promulgate standards that might not be considered needed to meet
compelling and extraordinary circumstances but would nevertheless be
part of California's overall approach of reducing vehicle emissions to
address air pollution in California.\289\ Thus, CARB may now design
motor vehicle emission standards, individually, that might sometimes
not be as stringent as federal standards but collectively with other
standards would be best suited for California air quality problems
because under the 1977 Amendments, California can ``include some less
stringent [standards] than the corresponding federal standards.'' \290\
And EPA is ``required to give very substantial deference to
California's judgments on this score.'' \291\
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\289\ See Ford Motor Co., v. EPA, 606 F.2d 1293, 1296-97 (D.C.
Cir. 1979); See H.R. Rep. No. 294, 95th Cong., 1st Sess. 302 (1977).
\290\ 43 FR 25729, 25735 (June 14, 1978). See Ford Motor Co.,
606 F.2d at 1296-97.
\291\ 40 FR at 23104. See also LEV I (58 FR 4166 (January 13,
1993)) Decision Document at 64.
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Indeed, as EPA noted in the ACC program waiver, Congress
intentionally provided California the broadest possible discretion in
adopting the kind of standards in its motor vehicle program that
California determines are appropriate to address air pollution problems
that exist in California, whether or not those problems are only local
or regional in nature, and to protect the health and welfare of its
citizens:
Congress did not intend this criterion to limit California's
discretion to a certain category of air pollution problems, to the
exclusion of others. In this context it is important to note that
air pollution problems, including local or regional air pollution
problems, do not occur in isolation. Ozone and PM air pollution,
traditionally seen as local or regional air pollution problems,
occur in a context that to some extent can involve long range
transport of this air pollution or its precursors. This long range
or global aspect of ozone and PM can have an impact on local or
regional levels, as part of the background in which the local or
regional air pollution problem occurs.\292\
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\292\ 78 FR at 2128-29. See ``Our Changing Climate 2012
Vulnerability & Adaptation to the Increasing Risks from Climate
Change in California.'' Publication # CEC-500-2012- 007. Posted:
July 31, 2012; available at https://ucanr.edu/sites/Jackson_Lab/files/155618.pdf at 4 (``Higher temperatures also increase ground-
level ozone levels. Furthermore, wildfires can increase particulate
air pollution in the major air basins of California. Together, these
consequences of climate change could offset air quality improvements
that have successfully reduced dangerous ozone concentrations. Given
this ``climate penalty,'' as it is commonly called, air quality
improvement efforts in many of California's air basins will need to
be strengthened as temperatures increase in order to reach existing
air quality goals.'').
In the context of implementing section 209(b)(1)(B) and assessing
the ``need'' for California's standards even under the SAFE 1
interpretation, EPA sees no reason to distinguish between ``local or
regional'' air pollutants versus other pollutants that may be more
globally mixed. Rather, it is appropriate to acknowledge that all
pollutants and their effects may play a role in creating air pollution
problems in California and that EPA should provide deference to
California in its comprehensive policy choices for addressing them.
Again, even if a new interpretation of section 209(b)(1)(B) were
appropriate in SAFE 1, and EPA believes it is not, it is important to
note that historically, criteria pollutant reductions have been
relevant to section 209(b)(1)(B). As previously noted, nothing in
section 209(b) can be read as calling for EPA to waive preemption only
if California seeks to enforce criteria pollutant standards. The
Administrator is required to waive the preemption in section 209(a)
unless California ``does not need such State standards to meet
compelling and extraordinary conditions.'' \293\ As also previously
noted this is in stark contrast to, for example, section 211(c)(4)(C),
which calls for a waiver of preemption only if a state demonstrates
that a fuel program will result in criteria pollutant reductions that
will enable achievement of applicable NAAQS.
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\293\ CAA section 209(b)(1)(B) (emphasis added).
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The first section below focuses on criteria pollution reduction,
which has long been relevant to section 209(b)(1)(B). EPA has never put
in doubt that California's serious criteria air pollution problems
(such as NAAQS nonattainment and the factors that give rise to those
conditions, including the geographic and climate conditions in the
State, the number of motor vehicles in California, and local and
regional air quality) are ``compelling and extraordinary,'' or that
California ``needs'' regulations that address such emissions in order
to achieve every fraction of criteria pollutant emissions it can
achieve.\294\ The factual record before the Agency in 2013 and again in
2019 includes ample documentation of criteria emission reductions from
California's GHG standards and ZEV sales mandate.\295\ Nothing in the
record is sufficient to demonstrate that California does not need the
ACC program (or the motor vehicle emission program) or, in the context
of the SAFE 1 interpretation, the specific GHG emission standards and
the ZEV sales mandate to meet compelling needs related to criteria
pollution. These benefits have a clear connection to California's
``need'' for its specific GHG standards and ZEV sales mandate, at issue
under the waiver. The second section below focuses on the GHG reduction
benefits of California's GHG standards and ZEV sales mandate. EPA
acknowledges that California is particularly impacted by climate
change, including increasing risks from record-setting fires, heat
waves, storm surges, sea-level rise, water supply shortages and extreme
heat, and that climate-change impacts in California are therefore
``compelling and extraordinary conditions'' for which California needs
the GHG standards and ZEV sales mandate.
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\294\ In SAFE 1, EPA found that California's criteria pollution
conditions remain ``compelling and extraordinary and that California
needs standards to produce any and all reductions in criteria
pollutant emissions.'' 84 FR at 51344, 51346.
\295\ When California originally adopted a ZEV sales mandate
into its regulations, a significant factor in support of its action
was addressing criteria pollutant emissions. In SAFE 1 EPA
acknowledged that California's ZEV mandate initially targeted only
criteria pollution. 84 FR at 51329. EPA's 2013 waiver grant
recognized that with California's ACC program California had shifted
to relying on the ZEV requirements to reduce both criteria and GHG
pollution. 78 FR at 2114.
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a. GHG Standards and ZEV Sales Mandates Have Criteria Emission Benefits
As shown below, criteria pollutant reductions are demonstrably
connected to California's ``need'' for its GHG standards and ZEV sales
mandate at issue under the waiver.\296\ EPA first concluded that there
is a ``logical link between the local air pollution problem
[[Page 14364]]
of ozone and GHGs'' in the 2009 California GHG waiver by explaining,
for instance, that ``the impacts of global climate change can
nevertheless exacerbate this local air pollution problem.'' \297\
Moreover, as previously explained, in two additional GHG waiver
requests and associated EPA waiver decisions since the 2009 GHG waiver,
EPA acknowledged that CARB had demonstrated the need for GHG standards
to address criteria pollutant concentrations in California. In the 2014
HD GHG waiver request, CARB projected, for example, ``reductions in
NOX emissions of 3.1 tons per day in 2014 and one ton per
day in 2020'' in California.\298\
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\296\ In response to comments arguing that upstream emission
benefits should not be considered in determining the criteria
pollutant benefits of CARB' standards or that it is inappropriate to
elevate stationary source criteria pollutant emissions into a make-
or-break factor in waivers for motor vehicle emission programs, EPA
believes it appropriate to reiterate the air quality problems facing
California, as evidenced by NAAQS attainment challenges. Waiver
practice and applicable case law, as previously noted, afford
California wide deference in its policy and regulatory approaches in
addressing these challenges. Therefore, EPA believes that to the
degree a nexus between CARB's standards and addressing its serious
air quality problems is required, that it is reasonable to base the
need on related criteria emission impacts. EPA notes that, in
setting its federal light-duty vehicle GHG standards, it is afforded
discretion under the CAA to consider upstream emission impacts and
does include such consideration in its own rulemakings. 77 FR 62624,
62819 (October 15, 2012) (taking fuel related upstream GHG emissions
into account in setting compliance values for vehicle GHG emissions
standards).
\297\ 74 FR at 32763. According to California, ``California's
high ozone levels-clearly a condition Congress considered-will be
exacerbated by higher temperatures from global warming . . . [T]here
is general consensus that temperature increases from climate change
will exacerbate the historic climate, topography, and population
factors conducive to smog formation in California, which were the
driving forces behind Congress's inclusion of the waiver provision
in the Clean Air Act.'' Id. (quoting comments submitted by CARB
during the 2009 reconsideration). CARB also explained that ``the
factors that cause ozone are primarily local in nature and [ ] ozone
is a local or regional air pollution problem, the impacts of global
climate change can nevertheless exacerbate this local air pollution
problem. Whether or not local conditions are the primary cause of
elevated concentrations of greenhouse gases and climate change,
California has made a case that its greenhouse gas standards are
linked to amelioration of California's smog problems . . . . There
is a logical link between the local air pollution problem of ozone
and California's desire to reduce GHGs as one way to address the
adverse impact that climate change may have on local ozone
conditions.'' Id.
\298\ 79 FR at 46261. See also 81 FR at 95985-86 n.27
(referencing Resolution 13-50's statements supporting California's
continued need for its own motor vehicle program in order to meet
serious ongoing pollution problems).
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In SAFE 1, EPA distinguished prior GHG waivers from the ACC program
GHG waiver solely on grounds of how CARB attributed the pollution
benefits in its waiver request. EPA explained that CARB had linked
those prior waived GHG standards to criteria pollutant benefits but had
not done so in the ACC program waiver request: ``California's approach
in its ACC program waiver request differed from the state's approach in
its waiver request for MY 2011 and subsequent heavy-duty tractor-
trailer GHG standards, where California quantified NOX
emissions reductions attributed to GHG standards and explained that
they would contribute to PM and ozone NAAQS attainment.'' \299\
Moreover, how CARB attributes the pollution reductions for accounting
purposes from its various standards does not reflect the reality of how
the standards deliver emissions reductions and should not drive whether
or not a waiver can be withdrawn. EPA believes, based on its historical
deference to CARB in waiver proceedings, that CARB is entitled to this
discretion.
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\299\ 84 FR at 51337 n.252 (citing 79 FR at 46256, 46257 n.15,
46261, 46262 n.75).
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EPA also believes that prior waiver decisions indicate that the
``approach'' taken by California in its waiver requests needs to be
carefully assessed and understood by the Agency before discounting the
benefits of its mobile source emission standards. The characterization
of CARB's ``approach,'' as not calling out criteria emissions benefits
(such as upstream criteria emission benefits) of GHG standards, was
incorrect and should not have undermined EPA's findings and grant of
the initial ACC program waiver request for the following reasons: (1)
As previously noted, the ACC program standards are interrelated and all
serve to reduce both criteria and GHG pollution; (2) CARB conducted a
combined emissions analysis of the elements of the ACC program because
the program was designed to work as an integrated whole; and (3) EPA
has always considered California's standards as a whole or ``in the
aggregate'' under the traditional interpretation of section
209(b)(1)(B).\300\ EPA noted the associated criteria pollutant and GHG
emissions benefits for the whole ACC program: ``the ACC program will
result in reductions of both criteria pollutants and GHG emissions
that, in the aggregate, are more protective than the pre-existing
federal standards.'' \301\ EPA also made the requisite finding that
California's protectiveness finding for the ACC program was not
arbitrary and capricious, under section 209(b)(1)(A), by explaining
that ``California's ZEV and GHG emission standards are an addition to
its LEV program.'' \302\
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\300\ ZEV ISOR, EPA-HQ-OAR-2012-0562-0008 at 72; CARB
Supplemental Comments, EPA-HQ-OAR-2012-0562-0373 at 3.
\301\ 74 FR at 2122.
\302\ Id. at 2125.
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In SAFE 1, EPA further asserted that ``California's responses to
the SAFE proposal do not rebut the Agency's views that the ZEV
standards for MY 2021-2025 are inextricably interconnected with the
design and purpose of California's overall GHG reduction strategy.''
\303\ For the following reasons, however, EPA was also incorrect in the
assessment of criteria emission benefits of CARB's ZEV sales mandate.
EPA focused on only the following snippet from one salient paragraph in
CARB's 2012 waiver request as support for the lack of criteria
emissions benefits: ``There is no criteria emissions benefit from
including the ZEV proposal in terms of vehicle (tank-to-wheel or TTW)
emissions. The LEV III criteria pollutant fleet standard is responsible
for those emission reductions in the fleet; the fleet would become
cleaner regardless of the ZEV regulation because manufacturers would
adjust their compliance response to the standard by making less
polluting conventional vehicles.'' \304\ But, as discussed above, that
was merely an attribution of benefits and did not reflect the practical
reality of how California's standards work. Moreover, the paragraph in
its entirety goes on to explain that CARB's ZEV sales mandate would
achieve criteria emission reductions: ``However, since upstream
criteria and PM emissions are not captured in the LEV III criteria
pollutant standard, net upstream emissions are reduced through the
increased use of electricity and concomitant reductions in fuel
production.'' \305\
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\303\ 84 FR at 51337.
\304\ Id. at 51337, 51330, 51337, 51353-54, 51356, 51358.
\305\ 2012 Waiver Request at 15-16. CARB also noted that
criteria and PM emission benefits will vary by region throughout the
State depending on the location of emission sources. Refinery
emission reductions will occur primarily in the east Bay Area and
South Coast region where existing refinery facilities operate. As
refinery operations reduce production and emissions, the input and
output activities, such as truck and ship deliveries, will also
decline. This includes crude oil imported through the Los Angeles
and Oakland ports, as well as pipeline and local gasoline truck
distribution statewide. EPA again notes that in its light-duty
vehicle GHG rulemaking in 2012 it also noted the upstream emission
impacts. 77 FR at 62819.
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It bears note that this attribution of criteria pollutant
reductions was similar to the one that CARB made almost a decade ago
for the 2009 GHG waiver request.\306\ For example, CARB provided
``extensive evidence of its current and serious air quality problems
and the increasingly stringent health-based air quality standards and
federally required state planning efforts to meet those standards
firmly.'' \307\ The States and Cities also commented that ``the
attribution CARB made as part of its waiver request was never intended
to, and did not, establish the absence of any
[[Page 14365]]
vehicular emission benefits from the ZEV standard.'' EPA believes that
CARB's statement was merely a ``simplification that distinguished the
standards based on the primary objectives of the two, complementary
standards.'' \308\ EPA agrees that the record from 2013, and 2019,
demonstrates that CARB's attribution of short-term emissions benefits
did not undercut the long-term vehicular emission benefits of the ZEV
standards. Thus, regardless of how the emissions reductions are
attributed, the GHG standards and ZEV sales mandate drive reductions in
criteria pollution.
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\306\ ``The establishment of greenhouse gas emission standards
will result in a reduction in upstream emissions (emission due to
the production and transportation of the fuel used by the vehicle)
of greenhouse gas, criteria and toxic pollutants due to reduced fuel
usage.'' EPA-HQ-OAR-2006-0173-0010.107 at 8.
\307\ CARB, EPA-HQ-OAR-2012-0562-0371. CARB estimated benefits
of the ZEV and GHG standards for calendar years by which the South
Coast air basin must meeting increasingly stringent NAAQS for ozone:
2023, 2031, and 2037. States and Cities app. A at 2-4, app. C at 8-
9.
\308\ States and Cities at 31 (original emphasis).
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EPA has also consistently explained that ``consideration of all the
evidence submitted concerning a waiver decision is circumscribed by its
relevance to those questions . . . consider[ed] under section 209(b).''
\309\ And so, as earlier noted, any reconsideration of a prior waiver
decision must comport with criteria in section 209(b)(1) as well as
have record support. Moreover, in prior waiver requests for ZEV sales
mandate requirements, CARB has discussed criteria pollutant emissions
reductions because of the mandate for sale of vehicles that have zero
emissions.\310\ CARB's 2012 waiver request also indicated the clear
intent regarding the evolution of the ZEV program and California's
decision to focus both on criteria pollutant and GHG reductions.\311\
EPA's reading of and reliance on the snippet from CARB's waiver request
describing the ZEV sales mandate requirements in the ACC program was
both incorrect and improper, as well as contrary to congressional
intent and EPA's historic practice of affording broad discretion to
California in selecting the best means for addressing the health and
welfare of its citizens.
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\309\ 74 FR at 32748. See also 78 FR at 2115.
\310\ 71 FR 78190 (December 28, 2006); 75 FR 11878 (March 12,
2010) and 76 FR 61095 (October 3, 2011).
\311\ See 2012 Waiver Request at 2. At the December 2009
hearing, the Board adopted Resolution 09-66, reaffirming its
commitment to meeting California's long term air quality and climate
change reduction goals through commercialization of ZEV
technologies. The Board further directed staff to consider shifting
the focus of the ZEV regulation to both GHG and criteria pollutant
emission reductions, commercializing ZEVs and PHEVs in order to meet
the 2050 goals, and to take into consideration the new LEV fleet
standards and propose revisions to the ZEV regulation accordingly.
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b. California Needs Its Standards To Address the Impacts of Climate
Change in California
Under section 209(b)(1)(B), EPA is to grant a waiver request unless
California does not need the standards at issue to address ``compelling
and extraordinary conditions.'' In applying the traditional approach,
EPA has consistently reasoned that ``compelling and extraordinary
conditions'' refers primarily to the factors that tend to produce
higher levels of pollution in California--geographical and climatic
conditions (like thermal inversions) that, when combined with large
numbers and high concentrations of automobiles, create serious air
pollution problems.\312\ These conditions continue to exist in
California and CARB, since the initial 2009 GHG waiver, has
consistently drawn attention to the existential crisis that California
faces from climate change and maintained that air quality issues
associated with GHG emissions have exacerbated this crisis and have yet
to attenuate.\313\
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\312\ 49 FR at 18890 (citing legislative history).
\313\ 2012 Waiver Request at 1.
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EPA now recognizes that CARB, as part of its original waiver
request and in comments in response to SAFE 1, submitted ample evidence
of multiple ways California is particularly impacted by climate change,
including increasing risks from record-setting fires, heat waves, storm
surges, sea-level rise, water supply shortages and extreme heat; in
other words that GHG emissions contribute to local air pollution, and
that climate-change impacts in California are ``compelling and
extraordinary conditions.'' For example, CARB noted that ``[r]ecord-
setting fires, deadly heat waves, destructive storm surges, loss of
winter snowpack--California has experienced all of these in the past
decade and will experience more in the coming decades. California's
climate--much of what makes the State so unique and prosperous--is
already changing, and those changes will only accelerate and intensify
in the future. Extreme weather will be increasingly common as a result
of climate change. In California, extreme events such as floods, heat
waves, droughts and severe storms will increase in frequency and
intensity. Many of these extreme events have the potential to
dramatically affect human health and well-being, critical
infrastructure and natural systems.'' \314\ Within the ACC waiver
request, CARB provided a summary report on the third assessment from
the California Climate Change Center (2012), which described dramatic
sea level rises and increases in temperatures in California and
associated impacts on local air quality and other conditions in
California.\315\
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\314\ CARB supplemental comment at EPA-HQ-OAR-2012-0562-0371.
CARB notes that EPA's reasoning that the ``compelling and
extraordinary conditions'' criteria should be viewed as a ``program
as a whole'' was upheld as ``eminently reasonable'' in ATA v. EPA,
600 F.3d 624, 627-29 (D.C. Cir. 2010), and that the ACC program
appropriately integrates the passenger vehicle program to address
multiple pollutant types, which also reflects the intent of Congress
in 1977 to broaden California's discretion to adjust its program as
needed (Ford Motor Co. v. EPA, 606 F.2d at 1294). This comment
extensively lays out the compelling and extraordinary conditions
associated with California's air quality challenges and the need to
reduce criteria emissions and greenhouse gas emissions associated
with CARB's ZEV sale mandate and GHG standards. Id. at 5 (``The
critical nature of the LEV III regulation is also highlighted in the
recent effort to take a coordinated look at strategies to meet
California's multiple air quality and climate goals well into the
future. This coordinated planning effort, Vision for Clean Air: A
Framework for Air Quality and Climate Planning (Vision for Clean
Air) demonstrates the magnitude of the technology and energy
transformation needed from the transportation sector and associated
energy production to meet federal standards and the goals set forth
by California's climate change requirements.'').
\315\ 78 FR at 2129 (``To the extent that it is appropriate to
examine the need for CARB's GHG standards to meet compelling and
extraordinary conditions, as EPA discussed at length in its 2009 GHG
waiver decision, California does have compelling and extraordinary
conditions directly related to regulations of GHG. EPA's prior GHG
waiver contained extensive discussion regarding the impacts of
climate change in California. In addition, CARB has submitted
additional evidence in comment on the ACC waiver request that
evidences sufficiently different circumstances in California. CARB
notes that `Record-setting fires, deadly heat waves, destructive
storm surges, loss of winter snowpack--California has experienced
all of these in the past decade and will experience more in the
coming decades. California's climate--much of what makes the state
so unique and prosperous--is already changing, and those changes
will only accelerate and intensify in the future. Extreme weather
will be increasingly common as a result of climate change. In
California, extreme events such as floods, heat waves, droughts and
severe storms will increase in frequency and intensity. Many of
these extreme events have the potential to dramatically affect human
health and well-being, critical infrastructure and natural
systems.'') (``Our Changing Climate 2012 Vulnerability & Adaptation
to the Increasing Risks from Climate Change in California.
Publication # CEC-500-2012- 007. Posted: July 31, 2012; available at
http://www.climatechange.ca.gov/adaptation/third-assessment''). EPA
also noted that ``the better interpretation of the text and
legislative history of this provision is that Congress did not
intend this criterion to limit California's discretion to a certain
category of air pollution problems, to the exclusion of others. In
this context it is important to note that air pollution problems,
including local or regional air pollution problems, do not occur in
isolation. Ozone and PM air pollution, traditionally seen as local
or regional air pollution problems, occur in a context that to some
extent can involve long range transport of this air pollution or its
precursors. This long-range or global aspect of ozone and PM can
have an impact on local or regional levels, as part of the
background in which the local or regional air pollution problem
occurs.'' 78 FR at 2128.
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To the extent that SAFE 1 relied on the premise that GHG emissions
from motor vehicles located in California become globally-mixed as part
of global climate change, and therefore do not pose a local air quality
issue (placing aside the impacts of heat on ozone as
[[Page 14366]]
well as air quality impacts from the dramatic increase in wildfires),
EPA notes that in addition to the record from the ACC waiver proceeding
noted above, the SAFE 1 record contains sufficient and unrefuted
evidence that there can be locally elevated carbon dioxide
concentrations resulting from nearby carbon dioxide emissions.\316\
This can have local impacts on, for instance, the extent of ocean
acidification.\317\ Thus, like criteria pollution, emissions of GHGs
can lead to locally elevated concentrations with local impacts, in
addition to the longer-term global impacts resulting from global
increases in GHG concentrations.
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\316\ CARB comment at EPA-HQ-OAR-2018-0283-5054 at 305-06
(California's Fourth Climate Assessment; https://www.energy.ca.gov/sites/default/files/2019-12/Governance_External_Ekstrom_ada.pdf).
\317\ See, for example, reports from California's Fourth Climate
Change Assessment, ``California Mussels as Bio-indicators of Ocean
Acidification,'' available at https://www.energy.ca.gov/sites/default/files/2019-12/Oceans_CCCA4-CNRA-2018-003_ada.pdf (``Because
of the coupling between natural (upwelling-driven) and anthropogenic
(CO2 emission-driven) processes, California waters are already
experiencing declines in pH that are not expected in other areas of
the world's oceans for decades (Feely et al. 2008; Chan et al.
2017). These perturbations to seawater chemistry join others
associated with changing seawater temperatures (Garc[iacute]a-Reyes
and Largier 2010) and reductions in ocean oxygenation (Bograd et al.
2008; Chan et al. 2008). Therefore, marine communities along the
coast of California are increasingly subjected to a suite of
concurrent environmental stressors. Substantial impetus exists to
understand, quantify, and project biological and ecological
consequences of these stressors, which current work suggests may be
pervasive and diverse (Kroeker et al. 2010, 2013; Gaylord et al.
2015).''). Further, evidence in the record from a 2019 study
demonstrated that locally enhanced carbon dioxide concentrations
above Monterey Bay, California, fluctuate by time of day likely
because of the magnitude of nearby urban carbon dioxide pollution
and the effects of topography on offshore winds, and that this
fluctuation increases the expected rate of acidification of the Bay.
See Northcott, et al., Impacts of urban carbon dioxide emissions on
sea-air flux and ocean acidification in nearshore waters, PLoS ONE
(2019). For decades, the monthly average carbon dioxide
concentrations off California's coast have been consistently higher
and more variable than those at Mauna Loa (which are commonly used
as the global measurements). In fact, another more recent study
shows that the waters of the California Current Ecosystem, off the
coast of Southern California, have already acidified more than twice
as much as the global average. E.g., Cal. Office of Environmental
Health Hazard Assessment, Atmospheric Greenhouse Gas Concentrations
(Feb. 11, 2019).
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Finally, in demonstrating the need for GHG standards at issue, CARB
attributed GHG emissions reductions to vehicles in California. For
instance, ``CARB project[ed] that the standards will reduce car
CO2 emissions by approximately 4.9%/year, reduce truck
CO2 emissions by approximately 4.1%/year (the truck
CO2 standard target curves move downward at approximately
3.5%/year through the 2016-2021 period and about 5%/year from 2021-
2025), and reduce combined light-duty CO2 emissions by
approximately 4.5%/year from 2016 through 2025.'' \318\ CARB also
projected that its GHG emissions standards for MYs 2017-2025 will
reduce fleet average CO2 levels by about 34 percent from MY
2016 levels of 251 g/mile down to about 166 g/mile, based on the
projected mix of vehicles sold in California.'' \319\ CARB further
noted that there might be a GHG emission deficit if only the Federal
GHG standards were implemented in California.\320\ The GHG emissions
from California cars, therefore, are particularly relevant to both
California's air pollution problems and GHG standards at issue.
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\318\ 78 FR at 2139.
\319\ Id. at 2135.
\320\ Id. at 2122.
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In SAFE 1, EPA dismissed California's ``need'' for the GHG
standards at issue because their impact on GHG emissions would be too
small to ``meaningfully address global air pollution problems of the
sort associated with GHG emissions'': ``[T]he most stringent regulatory
alternative considered in the 2012 final rule and [Final Regulatory
Impact Analysis] . . . , which would have required a seven percent
average annual fleetwide increase in fuel economy for MYs 2017-2025
compared to MY 2016 standards, was forecast to decrease global
temperatures by only 0.02 [deg]C in 2100.'' \321\ EPA also received
similar comments in response to the Notice of Reconsideration. But
since the inception of the waiver program, EPA has never applied a test
to determine whether a California waiver request under 209(b)(1) would
independently solve a pollution problem. EPA has never applied a de
minimis exemption authority to California waiver request under section
209(b)(1).\322\ EPA believes there is no basis for exercise of such a
test under section 209(b), considering that CARB continues to maintain
that emissions reductions in California are essential for meeting the
NAAQS.\323\ EPA has reiterated that ``California's policy judgment that
an incremental, directional improvement will occur and is worth
pursuing is entitled, in EPA's judgment, to great deference.'' \324\ As
the Supreme Court has recognized, ``[a]gencies, like legislatures, do
not generally resolve massive problems in one fell regulatory swoop. .
. They instead whittle away at them over time, refining their preferred
approach as circumstances change and as they develop a more nuanced
understanding of how best to proceed.'' \325\ And so, in the ACC
program waiver decision, EPA also explained that ``[t]he issue of
whether a proposed California requirement is likely to result in only
marginal improvement in air quality not commensurate with its cost or
is otherwise an arguably unwise exercise of regulatory power is not
legally pertinent to my decision under section 209.'' \326\
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\321\ 84 FR at 51349.
\322\ See, e.g., 74 FR at 32766 (``As noted by the Supreme Court
in Massachusetts v. EPA, while it is true that regulating motor
vehicle GHG emissions will not by itself reverse global warming, a
reduction in domestic automobile emissions would slow the pace of
global emissions increase no matter what happens with regard to
other emissions.'').
\323\ See Alabama Power Co. v. Costle, 636 F.2d 323, 360-66,
n.89 (D.C. Cir. 1979).
\324\ 74 FR at 32766 (``Under this approach, there is no need to
delve into the extent to which the GHG standards at issue here would
address climate change or ozone problems. That is an issue
appropriately left to California's judgment. . . . Given the
comments submitted, however, EPA has also considered an alternative
interpretation, which would evaluate whether the program or
standards has a rational relationship to contributing to
amelioration of the air pollution problems in California. Even under
this approach, EPA's inquiry would end there. California's policy
judgment that an incremental, directional improvement will occur and
is worth pursuing is entitled, in EPA's judgment, to great
deference.'').
\325\ Massachusetts v. EPA, 549 U.S. 497, 524 (2007).
\326\ 78 FR at 2134.
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Further, nothing in either section 209 or the legislative history
could be read as requiring EPA to grant GHG standards waiver requests
only if California's GHG pollution problem is the worst in the
country.\327\ CARB further demonstrated a ``need'' for its GHG
standards by projecting GHG emissions reductions deficits from
implementation of only the Federal GHG program in California. ``[I]f a
National Program standard was theoretically applied only to California
new vehicle sales alone, it might create a GHG deficit of roughly two
million tons compared to the California standards.'' \328\
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\327\ 49 FR at 18891.
\328\ 78 FR at 2122 (citing EPA-HQ-OAR-2012-0562-0374 at 3).
CARB also noted that ``to the extent a manufacturer chooses not to
exercise their National Program compliance option in California this
would actually provide additional GHG benefits in California, so
compliance in California can never yield fewer cumulative greenhouse
gas reductions from the industry wide fleet certified in
California.'' Id. at 2122 n.61.
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3. California's ZEV Sales Mandate as Motor Vehicle Control Technology
Development
Congress also envisioned that California's other role under section
209(b) would be an innovative laboratory for motor vehicle emission
[[Page 14367]]
standards and control technology. California is to serve as ``a kind of
laboratory for innovation'' \329\ and to ``blaze its own trail with a
minimum of federal oversight.\330\ California's ``unique [air
pollution] problems and [its] pioneering efforts justif[ied] a waiver
of the preemption section.'' \331\ Congress stressed that California
should serve the Nation as a ``testing area'' for more protective
standards.'' \332\ In the 2009 GHG waiver, for example, EPA explained
that ``the basic nature of the compromise established by Congress [is
that] California could act as the laboratory for the nation with
respect to motor vehicle emission control, and manufacturers would
continue to face just two sets of emissions standards--California's and
EPA's.'' \333\ California's ZEV sales mandates have so far supported
development of technologies such as battery electric and fuel cell
vehicles that embody the pioneering efforts Congress envisaged. EPA
acknowledged this important role in the ACC program waiver by
explaining that California needs the ZEV sales mandate requirement to
ensure the development and commercialization of technology required for
the future, deeper vehicular emission reductions California will have
to attain to meet its NAAQS obligations as well as achieve other long-
term emission goals of new vehicle sales between 2040 and 2050.\334\ In
SAFE 1, however, EPA did not consider this additional role carved out
in section 209(b)(1) for California as a proven ground for motor
vehicle control emissions technology.\335\
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\329\ MEMA I, 627 F.2d 1095, 1111 (D.C. Cir. 1979).
\330\ Ford Motor Co., v. EPA, 606 F.2d 1293, 1297 (D.C. Cir.
1979).
\331\ S. Rep. No. 90-403, at 33 (1967).
\332\ Id.
\333\ 74 FR at 32763.
\334\ 78 FR at 2123, 2130-31.
\335\ 84 FR at 51343 (``[I]n a statute designed to address
public health and welfare, it certainly cannot mean standards that
allow a state to be ``a laboratory for innovation'' in the abstract,
without any connection to a need to address pollution problems.'').
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In sum, while nothing in section 209 or the legislative history
limits EPA's waiver authority to standards that reduce criteria
pollution,\336\ analyses in this section again recognize the way the
different requirements in the ACC program work together to reduce
criteria and GHG pollution and spur technological innovation. These
analyses conclude that GHG pollution exacerbates tropospheric ozone
pollution, worsening California's air quality problems, and the manner
in which GHG and criteria pollutant standards work together to reduce
both forms of pollution. Ample record support exists on California's
need for both GHG standards and ZEV sales mandate at issue to address
compelling and extraordinary conditions in California. As noted above,
in SAFE 1 EPA, however, relied on an excerpt of the ACC program waiver
record to determine the lack of criteria emission benefits of GHG
emission standards and ZEV sales mandate at issue. In doing so, EPA did
not evaluate the complete record from the ACC waiver proceeding and the
nature of California's air quality problem, including the relationship
of climate change to California's ability to achieve the ozone NAAQS in
the assessment of California's need for these requirements.\337\
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\336\ The Agency again notes that, unlike provisions of the CAA
such as section 211(c)(4)(C) which allows EPA to waive preemption of
a state fuel program respecting a fuel characteristic or component
that EPA regulates through a demonstration that the state fuel
program is necessary to achieve a NAAQS, section 209(b) makes no
mention of NAAQS pollutants or otherwise indicates that air
pollutants should be treated differently.
\337\ For example, CARB's ISOR for its ZEV standards identifies
at Table 6.2 the well to wheel emission benefits of the ZEV program
compared to the LEV III program. ZEV ISOR, EPA-HQ-OAR-2012-0562-0008
at 78. See also 2012 Waiver Request at 16. CARB noted in its
comments on the SAFE proposal that ``Rising temperatures exacerbate
California's ozone problem by increasing ground-level ozone
concentrations.'' CARB, EPA-HQ-OAR-2018-0283-5054 at 371-72 (citing
the 2012 Waiver Request). In addition, ``Several studies indicate
that a warming climate is expected to exacerbate surface ozone in
California's two major air basins: South Coast Air Basin and San
Joaquin Valley. Id. at 372 (citing Jacob & Winner. Effect of Climate
Change on Air Quality, 43:1 ATMOS. ENVIRON. 51 (Jan. 2009); Wu, et
al., Effects of 2000-2050 Global Change on Ozone Air Quality in the
United States, 113, D06302, J. GEOPHYS. RES.-ATMOS. (Mar. 19, 2008),
available at https://doi.org/10.1029/2007JD008917; Rasmussen, et
al., The Ozone-climate Penalty: Past, Present, and Future, 47:24
ENVTL. SCI. & TECH. 14258 (Dec. 17, 2013), available at https://www.ncbi.nlm.nih.gov/pmc/articles/PMC3990462/).
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As noted above, in SAFE 1, EPA established a new test under section
209, requiring a particularized, local nexus between (1) pollutant
emissions from sources, (2) air pollution, and (3) resulting impact on
health and welfare, a test that would exclude GHG pollution from the
scope of the waiver.\338\ But this test is found nowhere in the text of
section 209-- the statute does not contain this requirement, or even
use these terms.
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\338\ 84 FR at 51339-40.
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EPA's review of the complete record confirms the Agency's
conclusions in the ACC program waiver that California needs the GHG
standards at issue to meet a compelling and extraordinary conditions
regardless of whether the Agency focuses on criteria or greenhouse gas
pollution reduction. This review also indicates that opponents of the
waiver (including EPA in SAFE 1) did not meet the burden of proof
necessary to demonstrate that California did not have a need for the
GHG standards, including under the nexus test applied in SAFE 1. It
also bears note that EPA's longstanding practice, based on the
statutory text, legislative history, and precedent calls for deference
to California in its approach to addressing the interconnected nature
of air pollution within the state and is not limited to criteria
pollutant problems. Critically, EPA is not to engage in ``probing
substantive review'' of waiver requests,\339\ but rather ``afford
California the broadest possible discretion in selecting the best means
to protect the health of its citizens and the public welfare.'' \340\
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\339\ Ford Motor Co. v. EPA, 606 F.2d 1293, 1300 (D.C. Cir.
1979).
\340\ MEMA II, 142 F.3d 449, 453 (D.C. Cir. 1998).
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E. Conclusion
Considering the text, legislative history, and precedent that
support the Agency's historical practice of interpreting section
209(b)(1)(B) as calling for a program-level evaluation of waiver
requests, as well as the uncertainty in settled expectations created by
the SAFE 1 interpretation, EPA rescinds its actions in SAFE 1 regarding
both the interpretation of section 209(b)(1)(B) and the findings
regarding California's need for the GHG standards and ZEV sales
mandate. EPA believes that the burden of proof had not been met in SAFE
1, based on the complete factual record, to demonstrate that California
did not have a need for the GHG standards and ZEV sales mandate under
the SAFE 1 interpretation of the second waiver prong nor had the burden
been met to support a finding that the ample evidence in the record at
the time of the ACC waiver decision did not demonstrate that California
had a need for its standards to meet compelling and extraordinary
conditions. As noted above, the result of the recission of the SAFE 1
action is the reinstatement of the ACC program waiver. EPA confirms the
traditional interpretation of section 209(b)(1)(B) was appropriate and
continues to be, at least, a better interpretation regardless of the
recission of the SAFE 1 interpretation of this criterion.\341\
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\341\ See 84 FR at 51344 n.269.
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[[Page 14368]]
VI. EPA Inappropriately Considered Preemption Under the Energy Policy
and Conservation Act (EPCA) in Its Waiver Decision
SAFE 1's other justification for withdrawing the ACC program waiver
was that California's GHG standards and ZEV sales mandate were
preempted under EPCA. As explained in detail in Section IV, EPA
believes this basis for reconsideration was outside the appropriate
bounds of EPA's authority to reconsider previously granted waivers. In
particular, if EPA could reconsider and withdraw a waiver based on a
factor not contained in the specified criteria for denial in section
209(b)(1), EPA could circumvent the specified criteria for denial via
reconsideration of previously granted waiver.
Even if it were appropriate for EPA to reconsider a previously
granted waiver based on non-statutory factors, in this action, EPA
concludes that it was inappropriate to rely on preemption under EPCA as
a basis for withdrawing certain aspects of the ACC program waiver. In
SAFE 1, a joint action between NHTSA and EPA, NHTSA concluded that
state or local regulations of tailpipe carbon dioxide emissions are
``related to fuel economy standards'' and are therefore preempted under
EPCA.\342\ As a direct result of NHTSA's codified text and
pronouncements on preemption set forth in SAFE 1, EPA withdrew the ACC
program waiver for California's GHG standards and ZEV sales mandate on
grounds that they were preempted under EPCA. In SAFE 1, EPA believed it
was appropriate to consider the effect of NHTSA's actions, including
the view that California cannot enforce standards that are void ab
initio, and thus EPA stated that ``to the extent that administrative
action is necessary on EPA's part to reflect that state of affairs, EPA
hereby withdraws that prior grant of a waiver on this basis.'' \343\
NHTSA has since issued a new final rule that formally repeals the
codified text and pronouncements regarding preemption under EPCA found
in SAFE 1. Upon reconsideration, EPA now believes that, given NHTSA's
repeal of its regulation and pronouncements in SAFE 1, preemption under
EPCA cannot serve as a basis for the withdrawal of the ACC program
waiver as it did in SAFE 1--if it could ever legitimately serve as such
basis. EPA thus believes it is appropriate to rescind the portion of
the waiver withdrawal that was based on preemption under EPCA.
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\342\ 49 U.S.C. 32919(a) (``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.''). NHTSA noted that a law or
regulation having the direct or substantial effect of regulating or
prohibiting tailpipe carbon dioxide emissions from automobiles or
automobile fuel economy is a law or regulation related to fuel
economy standards and expressly preempted under 49 U.S.C. 32919(a).
84 FR at 51317-18. NHTSA's rule was codified at 49 CFR 531.7
(``Preemption'') and 533.7 (``Preemption''), as well as each
Appendix B in 49 CFR part 531 (``APPENDIX B TO PART 531--
PREEMPTION'') and Part 533 (``APPENDIX B TO PART 533--PREEMPTION'').
\343\ 84 FR at 51338.
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In addition, given the unique consideration of preemption under
EPCA in SAFE 1 and its effect on an otherwise validly issued waiver
under the CAA, EPA believes it is helpful to provide additional
information regarding the Agency's historical practice and views to
demonstrate why consideration of preemption under EPCA was
inappropriate. Consideration of preemption under EPCA is beyond the
statutorily prescribed criteria for EPA in section 209(b)(1).
Preemption under EPCA was not a factor that California addressed under
the applicable waiver criteria in its initial request nor was it a
factor that EPA considered in granting the ACC program waiver. Until
SAFE 1, the Agency consistently refrained from reviewing waiver
requests against factors beyond the statutorily listed criteria under
section 209(b)(1). Thus, EPA also believes that in the reconsideration
of a waiver where EPA had previously declined to consider preemption
under EPCA, SAFE 1 was contrary to congressional intent and the
Agency's historic practice of hewing to section 209(b)(1) statutory
criteria in reviewing waiver requests. Given this backdrop, EPA
believes that the joint rulemaking context of SAFE 1 was an improper
basis to deviate from EPA's long held belief to not consider factors
outside the scope of section 209(b)(1), especially given that the
Agency indicated it would only be a singular occurrence. EPA continues
to view the text and congressional intent of the statute, as well as
subsequent case law, as best supporting a limited scope of review for
waiver requests under section 209(b)(1)--irrespective of whether a
waiver proceeding is undertaken either solely by EPA or in unison with
another agency. Therefore, based on EPA's historical practice of not
considering factors outside of the section 209(b)(1) criteria and
because EPA believes the ``joint-action'' premise was improper, the
Agency is rescinding its withdrawal of the ACC program waiver based on
preemption under EPCA.
A. Historical Practice and Legislative History
Historically, in reviewing California's waiver requests, EPA has
refrained from the consideration of factors beyond those criteria set
out in section 209(b)(1).\344\ EPA has generally explained that the
text, structure, and purpose of the California waiver provision
indicate congressional intent for EPA to provide significant deference
to California's judgment, especially on ``ambiguous and controversial
matters of public policy.'' \345\ In section 209(a), Congress generally
preempted state standards relating to the control of emissions from new
motor vehicles and engines, but, in section 209(b), Congress carved out
an exception for California, directing EPA to grant California a waiver
of section 209(a) unless the Agency can make a finding under section
209(b). Congress recognized that California's ``compelling and
extraordinary circumstances,'' and its historical practice of
regulating in the area, were sufficient ``to justify standards on
automobile emissions which may, from time to time, need be more
stringent than national standards.'' \346\ In creating the waiver
program, Congress intended not only for California to be able to meet
its own emission reduction needs, but also for California to act as ``a
kind of laboratory for innovation'' for motor vehicle standards and
control technology.'' \347\
[[Page 14369]]
Thus ``Congress consciously chose to permit California to blaze its own
trail with a minimum of federal oversight.'' \348\
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\344\ See, e.g., 43 FR at 32184 (rejecting objections to the
procedures at state level, objections that section 207(c)(3)(A)
establishes field protection, and constitutional objections all as
beyond the ``narrow'' scope of the Administrator's review); 74 FR at
32783 (rejecting comments asking for the consideration of EPCA
because it is not one of the three statutorily prescribed criteria);
78 FR at 2145 (again rejecting comments asking for the consideration
of EPCA because it is outside the statutory criteria); 79 FR at
46265 (rejecting the argument that the HD GHG Regulations
``impermissibly regulate fuel economy'' because, like the commerce
clause and Federal Aviation Administration Authorization Act of 1994
(FAAAA) issues, this issue is ``outside the proper scope of review
since it is not among the criteria listed under section 209(b).'').
\345\ 78 FR at 2112, 2115; 40 FR at 23103-04; 58 FR 4166.
\346\ H.R. Rep. No. 90-728, 90th Cong., 1st Sess. 21 (1967); S.
Rep. No. 403, 90th Cong., 1st Sess. 33 (1967) (``The waiver of
preemption is for California's `unique problems and pioneering
efforts.' '').
\347\ MEMA I, 627 F.2d 1095, 1111 (D.C. Cir. 1979); 113 Cong.
Rec. 30950, 32478 (Statement of Sen. Murphy) (``The United States as
a whole will benefit by allowing California to continue setting its
own more advanced standards for control of motor vehicle emissions.
. . [The] State will act as a testing agent for various types of
controls and the country as a whole will be the beneficiary of this
research.'').
\348\ Ford Motor Co. v. EPA, 606 F.2d 1293, 1297 (D.C. Cir.
1979).
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Legislative history makes clear that the Administrator must
``presume'' that the California standards ``satisfy the waiver
requirements'' and that the burden of proving otherwise rests on the
Administrator or other parties favoring denial of the waiver.\349\
Further, according to the House Committee Report for the 1977
amendments that strengthened California's waiver provisions, EPA is
``to afford California the broadest possible discretion in selecting
the best means to protect the health of its citizens and the public
welfare.'' \350\ According to the House Report, ``The Administrator,
thus, is not to overturn California's judgment lightly. Nor is he to
substitute his judgment for that of the State. There must be ``clear
and compelling evidence that the State acted unreasonably in evaluating
the relative risks of various pollutants in light of the air quality,
topography, photochemistry, and climate in that State, before EPA may
deny a waiver.'' \351\ EPA's historic practice of considering only
listed criteria is thus in keeping with the highly deferential review
of waiver requests that Congress intended in carving out the exception
from preemption of new motor vehicle and engine standards in section
209(a).\352\
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\349\ MEMA I, 627 F.2d at 1121-22 (citing, for example, S. Rep.
No. 403, 90th Cong., 1st Sess. 33 (1967)).
\350\ MEMA II, 142 F.3d 449, 453 (D.C. Cir. 1998) (quoting H.R.
Rep. No. 95-294, at 301-02 (1977)).
\351\ H.R. Rep. No. 95-294, at 302 (1977), reprinted in 1977
U.S.C.C.A.N. at 1381.
\352\ See, e.g., 74 FR at 32783; 78 FR at 2145.
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Courts have generally agreed with the Agency's consideration of
only listed CAA criteria in reviewing waiver requests, also pointing to
the statute's lack of any indication of the ability to consider non-
statutory criteria as well as the waiver program's significant
deference to California. The D.C. Circuit has stated that, under the
text of the statute, the section 209(b) criteria are ``the only waiver
standards with which California must comply'' and that, therefore,
``[i]f EPA concludes that California's standards [meet section 209(b)],
it is obligated to approve California's waiver application.'' \353\ The
D.C. Circuit has repeatedly described EPA's waiver approval role as
``limited'' and ``narrow.'' In MEMA I, for example, the court explained
that ``the Administrator has consistently held since first vested with
the waiver authority, [that] his inquiry under section 209 is modest in
scope. He has no `broad and impressive' authority to modify California
regulations.'' \354\ The court further noted that ``there is no such
thing as a `general duty' on an administrative agency to make decisions
based on factors other than those Congress expressly or impliedly
intended the agency to consider.'' \355\ Similarly, the court has
stated that ``[t]he statute does not provide for any probing
substantive review of the California standards by federal officials''
and that ``EPA's only role is to review California's proposed rules
under a narrowly defined set of statutory criteria.'' \356\ Thus, the
court has consistently rejected arguments requiring EPA to consider
factors outside of the statutory criteria. In MEMA I, the court
rejected a constitutional objection to a waiver, explaining that,
because ``the Administrator operates in a narrowly circumscribed
proceeding requiring no broad policy judgments on constitutionally
sensitive matters,'' ``[n]othing in section 209 requires him to
consider the constitutional ramifications of the regulations for which
California requests a waiver . . . although nothing in section 209
categorically forbids'' it.\357\ In the same case, the court also
rejected an antitrust objection as outside the scope of the
Administrator's review.\358\ The court again upheld EPA's decision to
not consider constitutional objections in American Trucking Association
(ATA) v. EPA, stating, ``We agree with EPA that ATA is seeking
`improperly to engraft a type of constitutional Commerce Clause
analysis onto EPA's [s]ection 7543(e) waiver decisions that is neither
present in nor authorized by the statute.'' \359\
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\353\ MEMA II, 142 F.3d at 463.
\354\ MEMA 1, 627 F.2d at 1119 (internal citations omitted).
\355\ Id. at 1116-17.
\356\ Ford Motor Co. v. EPA, 606 F.2d 1293, 1300 (D.C. Cir.
1979), and ATA v. EPA, 600 F.3d 624, 628 (2010), respectively.
\357\ MEMA I, 627 F.2d at 1115 (declining to consider whether
California standards are constitutional).
\358\ Id. at 1117 (``[N]othing in section 209 or elsewhere in
the Clean Air Act can fairly be read to imply a duty on the
Administrator to deny a waiver on the basis of the antitrust
implications of California regulations.'').
\359\ ATA v. EPA, 600 F.3d at 628.
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It is against this backdrop that EPA has reviewed waiver requests
by evaluating them solely under the criteria of section 209(b). For
instance, prior to SAFE 1, EPA had solicited comment, in the context of
the 2008 and 2009 GHG notices for comment on CARB's first waiver
request for GHG emission standards, as to whether the EPCA fuel economy
preemption provisions were relevant to EPA's consideration of CARB's
authority to implement its motor vehicle GHG regulations.\360\ In both
instances, EPA declined to consider preemption under EPCA.\361\ In the
2009 waiver, EPA explained that ``section 209(b) of the Clean Air Act
limits our authority to deny California's requests for waivers to the
three criteria therein.'' \362\ EPA further pointed to its historic
practice of ``refrain[ing] from denying California's requests for
waivers based on any other criteria,'' which had been reviewed and
upheld by the Court of Appeals for the District of Columbia
Circuit.\363\ In the 2013 review of the ACC program waiver request, the
Agency again declined to consider factors outside the statutory
criteria, explaining that ``EPA may only deny waiver requests based on
the criteria in section 209(b), and inconsistency with EPCA is not one
of those criteria.'' \364\ A year later, EPA yet again declined to
consider constitutionality claims, preemption under EPCA, and the
implications of the Federal Aviation Administration Authorization Act
of 1994 (FAAAA).\365\ EPA explained that section 209(b) limits the
Agency's authority to deny California's requests for waivers to the
three criteria therein and that the Agency has consistently refrained
from denying California's requests for waivers based on any other
criteria.\366\
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\360\ 73 FR at 12159.
\361\ Id.; 74 FR at 32783.
\362\ 74 FR at 32783.
\363\ Id. (citing MEMA I, 627 F.2d at 1111, 1114-20, and MEMA
II, 142 F.3d 449, 466-67 (D.C. Cir. 1998)).
\364\ 78 FR at 2145.
\365\ HD GHG Regulations for certain model year sleeper-cab
tractors and dry-van and refrigerated-van trailers. 79 FR at 46256,
46264.
\366\ Id. In rejecting the commerce clause objection, the
decision cited MEMA I's statement that ``[t]he waiver proceeding
produces a forum ill-suited to the resolution of constitutional
claims.'' Id. (citing MEMA I, 627 F.2d at 1114-20). Thus, the
decision concluded, ``Constitutional challenges to the HD GHG
Regulations [were] more appropriately addressed by a legal challenge
directly against the state.'' Id.
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In SAFE 1, EPA changed course, reasoning instead that the Agency
pronouncement in the ACC program waiver decision on factors EPA could
consider in denying a waiver request ``was inappropriately broad, to
the extent it suggested that EPA is categorically forbidden from ever
determining that a waiver is inappropriate due to consideration of
anything other than the `criteria' or `prongs' at section
209(b)(1)(B)(A)-
[[Page 14370]]
(C).'' \367\ EPA explained that this statement and EPA's historical
practice of not considering preemption under EPCA ``were made in the
context of EPA acting on its own to administer section 209(b) in
considering such applications.'' \368\ Further, EPA distinguished these
previous single-agency actions from its SAFE 1 joint action context by
explaining that ignoring NHTSA's determination of preemption in the
same action, ``would place the United States Government in the
untenable position of arguing that one federal agency can resurrect a
State provision that, as another federal agency has concluded and
codified, Congress has expressly preempted and therefore rendered void
ab initio.'' \369\ At the same time, EPA expressed intentions not to
consider factors outside the statutory criteria in future waiver
proceedings.\370\ EPA then concluded that NHTSA's determination of
preemption in the same action ``renders EPA's prior grant of a waiver
for those aspects of California's regulations that EPCA preempts
invalid, null, and void'' because ``California cannot enforce standards
that are void ab initio.'' \371\
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\367\ A complete discussion of preemption under EPCA in SAFE 1
can be found at 84 FR at 51337-38.
\368\ Id.
\369\ Id. Citing Massachusetts v. EPA, the Agency also asserted
that the consideration of EPCA was supported by the Supreme Court's
holding because it ensured consistency between NHTSA and EPA's
programs. Id.
\370\ 84 FR at 51338.
\371\ Id.
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B. Notice of Reconsideration of SAFE 1 and Request for Comment
In its April 28, 2021, Notice of Reconsideration, EPA acknowledged
that SAFE 1's consideration of NHTSA's finding of preemption under EPCA
deviated from its historic practice of ``declin[ing] to look beyond the
waiver criteria in section 209(b) when deciding the merits of a waiver
request from CARB.'' \372\ EPA sought comment on whether ``EPA properly
considered and withdrew portions of the ACC program waiver pertaining
to GHG standards and the ZEV sales mandate based on NHTSA's EPCA
preemption action, including whether EPA had the authority to withdraw
an existing waiver based on a new action beyond the scope of section
209.'' \373\ Given EPA's reliance on NHTSA's preemption findings as a
basis of waiver withdrawal in SAFE 1, EPA also sought comment on how
the repeal of SAFE 1, should NHTSA take final action to do so, would
affect its own reconsideration of SAFE 1.
---------------------------------------------------------------------------
\372\ 86 FR at 22429.
\373\ Id.
---------------------------------------------------------------------------
C. Comments Received
EPA received comments in support of and against the consideration
of preemption under EPCA in reviewing requests for waivers by
California. Multiple comments related to the Agency's use of the joint
action with NHTSA as a justification for deviating from the Agency's
practice of reviewing waiver requests under the specific statutory
criteria. Some commenters agreed that the context of a joint action
necessitated consideration of preemption under EPCA because NHTSA was
the agency charged with interpreting and implementing EPCA and so EPA
must consider its findings in the same action.\374\ One commenter also
argued that the joint rulemaking of SAFE 1 would be consistent with
pronouncements in Massachusetts v. EPA (2007) on the agencies'
respective statutory obligations and the need to avoid inconsistency
and so, ``[o]nce NHTSA proposed to finalize a determination that EPCA
preempts California's GHG motor vehicle standards, it would be
unreasonable for the EPA to refuse to take NHTSA's action into
account.'' \375\
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\374\ See, e.g., CEI at 11-12; AFPM at 2, 6.
\375\ CEI at 11.
---------------------------------------------------------------------------
Other commenters argued that the context of the rulemaking, whether
joint or not, was irrelevant. One commenter stated emphatically that
``what Congress directed EPA to consider when it wrote Section
209(b)(1) does not change depending on whether EPA acts alone or with
another agency.'' \376\ Some commenters also argued that the context of
the rulemaking was a particularly insufficient justification for
revoking the waiver given language in SAFE 1 that allowed for
inconsistent consideration of EPCA preemption. Several commenters noted
that EPA constrained the future applicability of SAFE 1 by explaining
that the Agency would not consider factors outside statutory criteria
in future waiver reviews in other subject areas.\377\ Another commenter
also noted that ``the action purported to be `joint,' and yet as now
acknowledged, SAFE Part 1 `is properly considered as two severable
actions, a rulemaking by NHTSA and a final informal adjudication by
EPA.' '' \378\ These inconsistencies, they argued, made SAFE 1's
distinction between single-agency and joint actions arbitrary and
capricious.
---------------------------------------------------------------------------
\376\ States and Cities at 20. See also Twelve Public Interest
Organizations app. 1 64-65.
\377\ NESCAUM at 3; Twelve Public Interest Organizations at app.
1 64-65; States and Cities at 20.
\378\ SCAQMD at 7 (quoting 86 FR at 22439, n.40).
---------------------------------------------------------------------------
Commenters also argued for and against consideration of factors
outside the statutory criteria--including, but not limited to,
preemption under EPCA--regardless of the kind of agency action,
although EPA did not make this argument in SAFE 1. Commenters argued
that EPA's authority to look outside the statutory criteria at EPCA was
at least permissive, if not mandatory. According to one commenter,
``EPA exaggerates the Court's position'' in MEMA I in its
Reconsideration notice: ``[T]he court did not say that the EPA is
forbidden to take constitutional ramifications into consideration, only
that it is not required to do so.'' \379\ Another commenter agreed that
MEMA I and MEMA II ``do not preclude EPA from considering'' preemption
under EPCA but then went further, saying that ``EPA is required to
consider EPCA preemption.'' \380\ The commenter argued that MEMA I
rejected petitioners' constitutional objections to a waiver under an
institutional competence line of reasoning, concluding that ``[t]he
waiver proceeding produces a forum ill-suited to the resolution of
constitutional claims.'' \381\ In contrast, they continued, the waiver
proceeding is an appropriate forum for determining whether emission
standards ``relate to'' fuel economy because this issue is ``within the
agency's competence, as this relationship is mathematical and based in
science rather than understandings of Constitutional law and
precedent.'' \382\ However, the other commenter, who agreed that EPA is
not ``forbidden'' from considering preemption under EPCA, also noted
that EPA ``has no special competence to interpret EPCA.'' \383\
---------------------------------------------------------------------------
\379\ CEI at 10 (original emphasis).
\380\ AFPM at 5-6.
\381\ Id. at 6 (quoting MEMA I, 627 F.2d 1095, 1114-15 (DC Cir.
1979)).
\382\ Id.
\383\ CEI at 11.
---------------------------------------------------------------------------
Several commenters also argued that EPA could not reinstate the
waiver because NHTSA concluded that EPCA preempts the standards, such
standards were void ab initio, and therefore ``the state mandates
referenced in CA's petition for reconsideration are not even eligible
to be considered for a CAA waiver of preemption.'' \384\ To ignore
[[Page 14371]]
this, they claimed, would violate the Supremacy Clause of the
Constitution. EPA, therefore, must look outside the statutory criteria
to consider preemption under EPCA because it cannot ``reasonably claim
that the lawfulness and constitutionality of state actions over which
it has supervision are issues outside the scope of its
responsibility[.]'' \385\
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\384\ NADA at 3-4; See also AFPM at 3 (``Since California's GHG
tailpipe standards and ZEV mandate are related to fuel economy, they
are not lawfully adopted and void ab initio--and there is nothing
for EPA to reinstate.''); Urban Air at 47-48; CEI at 2 (``But EPCA
preemption is the proverbial elephant in the room. If SAFE 1's EPCA
preemption argument is correct, the EPA could not grant a valid CAA
preemption waiver for California's tailpipe CO2 standards
and ZEV mandates, because EPCA had already turned those policies
into legal phantoms--mere proposals without legal force or
effect.'').
\385\ CEI at 11.
---------------------------------------------------------------------------
In contrast, other commenters pointed to EPA's historical practice
of evaluating waiver requests under the section 209 statutory criteria,
the text of the statute, and the policy implications of looking outside
the statutory criteria, to support a return to EPA's traditional narrow
approach. Most commenters argued that EPA's traditional interpretation
was consistent with the text of section 209(b), which has no reference
to preemption under EPCA or any other factors outside the three
statutory criteria.\386\ Not only does EPA have ``no grounds to read
EPCA preemption considerations into the statute,'' \387\ these
commenters argued, but to consider non-statutory criteria would
actually be ``arbitrary and capricious'' \388\ and contrary to
``precedent respecting separation of powers and federalism
principles.'' \389\ Yet another commenter stated that the narrow
interpretation ``provides a safeguard from the capricious injection of
outside-the-scope argumentation'' because ``[w]hen the adjudication is
permitted to stray from the statutory criteria, prospects for a fair
hearing can be derailed, and the EPA Administrator may be more prone to
overstep and exert policy preferences that are impermissible.'' \390\
---------------------------------------------------------------------------
\386\ See, e.g., States and Cities at 20 (``EPA's traditional
understanding of its limited role is entirely consistent with the
text of Section 209(b)(1) and precedent interpreting it.''); NCAT at
12 (``As EPA has stated in several prior waiver decisions, there is
no reference in Section 209(b) to EPCA preemption nor anything that
could be construed to address this issue. Section 209(b) is
unambiguous in this regard, and EPA has no grounds to read EPCA
preemption considerations into the statute.'').
\387\ NCAT at 12.
\388\ NESCAUM at 7 (``As the D.C. Circuit has explained in the
context of Section 209(b), `there is no such thing as a general
duty' on an administrative agency to make decisions based on factors
other than those Congress expressly or impliedly intended the agency
to consider.' It is a basic principle of administrative law that an
agency action is `arbitrary and capricious if the agency has relied
on factors which Congress has not intended it to consider.' '').
\389\ States and Cities at 20 (``It is likewise entirely
consistent with precedent respecting separation of powers and
federalism principles and holding that `a federal agency may pre-
empt state law only when and if it is acting within the scope of its
congressionally delegated authority.' Louisiana Pub. Serv. Comm'n v.
FCC, 476 U.S. 355, 374 (1986).'').
\390\ SCAQMD at 7.
---------------------------------------------------------------------------
Additionally, in their petitions for reconsideration of SAFE 1,
several states and cities asserted that EPA unlawfully changed course
in SAFE 1 by considering (and relying on) the purported preemptive
effect of EPCA, which is outside the confines of section 209(b) and
argued that this rationale for withdrawing the waiver was flawed.\391\
---------------------------------------------------------------------------
\391\ 86 FR at 22428.
---------------------------------------------------------------------------
D. Analysis: EPA Is Rescinding Its SAFE 1 Actions Related to Preemption
Under EPCA
Since SAFE 1, NHTSA has formally withdrawn its conclusions (and
associated regulatory text) that state or local regulations of tailpipe
carbon dioxide emissions are related to fuel economy standards and
therefore preempted under EPCA.\392\ Thus the predicate for EPA's
decision to withdraw the ACC waiver on that basis no longer exists.
Furthermore, given the context of EPA's reconsideration of the ACC
program waiver at the time of SAFE 1, the Agency believes it was
inappropriate to reconsider the validity of the waiver against criteria
such as preemption under EPCA. In this action, based on the two
independent grounds noted above, the Agency is rescinding the portion
of SAFE 1 that withdrew the ACC program waiver based on preemption
under EPCA.
---------------------------------------------------------------------------
\392\ 86 FR 74236.
---------------------------------------------------------------------------
1. NHTSA Has Since Repealed Its Findings of Preemption Made in SAFE 1
In the Notice of Reconsideration, EPA sought comment on the
Agency's reliance on NHTSA's preemption findings as a basis for its
withdrawal of the ACC program waiver in SAFE 1. EPA also sought comment
on how the repeal of SAFE 1, should NHTSA take final action to do so,
would affect its own reconsideration of SAFE 1.\393\ NHTSA has since
withdrawn its findings of preemption and the preemption basis of
withdrawal is no longer applicable. Specifically, NHTSA has issued a
new final rule that formally repeals the codified text and additional
pronouncements regarding preemption under EPCA found in SAFE 1.\394\ In
SAFE 1, EPA stated that it was appropriate to consider the effect of
NHTSA's actions, including the view that California cannot enforce
standards that are void ab initio and thus EPA stated that ``to the
extent that administrative action is necessary on EPA's part to reflect
that state of affairs, EPA hereby withdraws that prior grant of a
waiver on this basis.'' \395\ Since this condition no longer exists,
EPA believes it is appropriate to rescind the waiver withdrawal that
was based on preemption under EPCA. EPA believes that, to the extent it
was ever appropriate for the Agency to base its action on NHTSA's
finding of preemption under EPCA in SAFE 1, the repeal of the
preemption rule makes it likewise appropriate to rescind the Agency's
action in SAFE 1. This would also act to minimize regulatory
uncertainty as to do otherwise would create further confusion that
resulted from the joint action in SAFE 1 and would not appropriately
reflect the current state of affairs under the circumstances of a
unique federal regulation that had otherwise motivated EPA's actions in
SAFE 1. NHTSA's recent action also supports EPA's belief that its
practice of limiting its review of section 209(b) criteria, as
explained below, remains appropriate in the context of preemption under
EPCA.
---------------------------------------------------------------------------
\393\ 86 FR at 22429.
\394\ 86 FR 74236. NHTSA notes in this rulemaking that ``the
Agency is repealing all regulatory text and appendices promulgated
in the SAFE I Rule. In doing so, the Agency underscores that any
positions announced in preambulatory statements of prior NHTSA
rulemakings, including in the SAFE I Rule, which purported to define
the scope of preemption under the Energy Policy and Conservation Act
(EPCA), do not reflect the Agency's reconsidered understanding of
its proper role in matters of EPCA preemption.''
\395\ EPA distinguished these previous single-agency actions
from its joint action context by explaining that ignoring NHTSA's
determination of preemption in the same action, ``would place the
United States Government in the untenable position of arguing that
one federal agency can resurrect a State provision that, as another
federal agency has concluded and codified, Congress has expressly
preempted and therefore rendered void ab initio.'' 84 FR at 51338.
---------------------------------------------------------------------------
2. EPA Improperly Deviated From Its Historical Practice of Limiting Its
Review to Section 209(b) Criteria
Section 209(b)(1) of the Act limits the Agency's authority to deny
California's requests for waivers to the three criteria contained
therein and the Agency has consistently refrained from reviewing
California's requests for waivers based on any other criteria. EPA
acknowledges that California adopts its standards as a matter of law
under its state police powers, that the Agency's task in reviewing
waiver requests is limited to evaluating California's request according
to the criteria in section 209(b), and that it is appropriate to defer
to litigation brought by third parties in other courts, such as state
or federal district court, for the resolution of any constitutionality
claims and assertions of inconsistency with other statutes.
[[Page 14372]]
Considering the lack of statutory and precedential support as shown
below, even if EPA were to have discretion to consider criteria outside
section 209(b), EPA now views the joint-action context of SAFE 1 as an
insufficient justification for deviating from its statutory authority
and the Agency's historical practice and therefore the Agency rescinds
its actions regarding preemption under EPCA in SAFE 1.
Withdrawal of the waiver was premised on NHTSA's preemption
regulations in what EPA explained was a joint rulemaking action. But
nothing in section 209(b) can be read as calling for consideration of
preemption under EPCA in evaluating waiver requests regardless of
whether EPA engaged in joint rulemaking with another agency or acted
alone. Specifically, under section 209(b), EPA must grant California a
waiver of the preemption contained in section 209(a) unless the
Administrator makes a finding under any one of the listed criteria:
``The Administrator shall . . . waive application of the preemption in
section 209(a) if the Administrator finds any of the following: `(A)
[California's] determination [that its standards in the aggregate will
be at least as protective] is arbitrary and capricious, (B)
[California] does not need such State standards to meet compelling and
extraordinary conditions, or (C) such State standards and accompanying
enforcement procedures are not consistent with section [202(a)].' ''
\396\ Evaluation of preemption under EPCA is not a listed criterion.
---------------------------------------------------------------------------
\396\ CAA section 209(b)(1)(A)-(C).
---------------------------------------------------------------------------
Nor did SAFE 1 premise preemption under EPCA on any of the three
statutory criteria. In the ACC program waiver request, CARB made a
protectiveness finding that, as a quantitative matter, its standards,
in the aggregate, were as protective as the Federal standards and did
not address preemption under EPCA.\397\ In fact, while California might
opt to respond to comments on preemption under EPCA, California would
not be expected to take it into account in any protectiveness finding
made for a waiver request. It bears note that California's practice is
not unusual because there are other factors and provisions of the CAA
that California does not account for in making its protectiveness
finding under section 209(b)(1).\398\ In granting the ACC program
waiver request, EPA found that California's protectiveness finding was
neither arbitrary nor capricious.\399\ EPA also responded to comments
on the consideration of preemption under EPCA in granting the waiver
but dismissed such objections as outside the scope of its review.\400\
Historically, EPA draws a comparison between the numerical stringency
of California and federal standards in making the requisite finding as
to whether California's protectiveness determination is arbitrary and
capricious.\401\ Thus, neither California's initial request, nor EPA's
waiver grant, considered preemption under EPCA and as previously
explained in the ACC program waiver, EPA declined to consider
preemption under EPCA viewing it as outside the scope of Agency review.
---------------------------------------------------------------------------
\397\ 2012 Waiver Request at 15-17.
\398\ For example, ``California is not required to comply with
section 207 to get a waiver.'' MEMA II, 142 F.3d 449, 467 (D.C. Cir.
1989).
\399\ 78 FR at 2125.
\400\ Id. at 2145.
\401\ Section 209(b)(2) provides that if each State [California]
standard is at least as stringent as comparable applicable Federal
standards then such standard shall be deemed to be as protective of
public health and welfare as such federal standards for purposes of
section 209(b)(1)(A). EPA acknowledges that in 1977 Congress amended
the waiver provision to allow for California to address its unique
combination of air quality problems and that California only be
required to demonstrate stringency in the aggregate and that
therefore some pollutant standards may not be as stringent.
---------------------------------------------------------------------------
SAFE 1 made clear that consideration of and reliance on preemption
under EPCA was the consequence of regulations promulgated by NHTSA. As
SAFE 1 also acknowledged, however, EPA does not ``administer'' EPCA;
that task falls to NHTSA.\402\ Instead, ``[i]f EPA concludes that
California's standards [meet section 209(b)], it is obligated to
approve California's waiver application.'' \403\ EPA therefore
disagrees with the comment that Massachusetts provides the Agency
special duty to consider preemption under EPCA in a joint rulemaking
action in reviewing waiver requests. In Massachusetts, the Supreme
Court recognized the potential overlap between NHTSA's and EPA's
statutory obligations and concluded that ``there is no reason to think
the two agencies cannot both administer their obligations yet avoid
inconsistency.'' \404\As one commenter noted, EPA and NHTSA have
previously engaged in joint actions that addressed fuel economy and GHG
emissions. In those actions, NHTSA's role has been to set national fuel
economy standards and EPA's role has been to set national GHG
standards.\405\ These roles are complementary, but distinct. The Court
acknowledged the independence of these roles in Massachusetts: ``EPA
has been charged with protecting the public's `health' and `welfare,'
42 U.S.C. 7521(a)(1), a statutory obligation wholly independent of
DOT's mandate to promote energy efficiency. See Energy Policy and
Conservation Act, Sec. 2(5), 89 Stat. 874, 42 U.S.C. 6201(5).'' \406\
---------------------------------------------------------------------------
\402\ 84 FR at 51338 (``EPA agrees with commenters that EPA is
not the agency that Congress has tasked with administering and
interpreting EPCA. This is especially so because `[t]he waiver
proceeding produces a forum ill-suited to the resolution of
constitutional claims.' MEMA I, 627 F.2d at 1115.'').
\403\ MEMA II, 142 F.3d at 463.
\404\ Massachusetts v. EPA, 549 U.S. 497, 532 (2007).
\405\ In its most recent rulemaking addressing GHG emissions
from light-duty vehicles, EPA extensively coordinated with NHTSA on
details of the program but did not conduct it as a joint rulemaking.
See 86 FR 74434, 74436 (December 30, 2021).
\406\ Massachusetts, 549 U.S. at 497, 532.
---------------------------------------------------------------------------
Regarding the Agency's simultaneous pronouncement that reliance on
preemption under EPCA would be a singular exercise that would not be
repeated, statutory support or past precedent for this singular
consideration was also lacking.\407\ In fact, this singular exercise
would allow for EPA to evaluate the same waiver request differently and
depending on EPA's own choice--the choice to act with another agency or
not--rather than on the merits of the waiver request itself within
specified criteria in section 209(b). Again, the result of this unique
application of EPA's authority is unsupported under section 209(b)(1).
---------------------------------------------------------------------------
\407\ ``EPA does not intend in future waiver proceedings
concerning submissions of California programs in other subject areas
to consider factors outside the statutory criteria in section
209(b)(1)(A)-(C).'' 84 FR at 551338.
---------------------------------------------------------------------------
As previously noted, EPCA is generally administered by NHTSA and
consideration of preemption under EPCA in reviewing waiver requests
would for instance call for EPA to resolve the much debated and
differing views as to what is a ``law or regulation related to fuel
economy,'' as contemplated by 39 U.S.C. 32919(a).\408\ Relevant
judicial precedent would also appear to call into question whether
California's GHG standards and ZEV sales mandates are indeed preempted
under EPCA.\409\ But as previously explained, EPA does not implement
EPCA, and the Agency's review of waiver requests is highly deferential.
---------------------------------------------------------------------------
\408\ EPA takes no position on any role NHTSA might play under
42 U.S.C. 32919(a) and acknowledges that NHTSA discusses this in its
recent final rulemaking. See generally 86 FR 74236.
\409\ See, e.g., Cent. Valley Chrysler-Jeep, Inc. v. Goldstene,
529 F. Supp. 2d 1151, 1153-54 (E.D. Cal. 2007), as corrected Mar.
26, 2008; Green Mountain Chrysler Plymouth Dodge Jeep v. Crombie,
508 F. Supp. 2d 295, 300-01 (D. Vt. 2007).
---------------------------------------------------------------------------
EPA also disagrees with comments that the Agency must generally
consider factors outside the criteria listed in section 209(b),
including preemption under EPCA, regardless of the joint- or single-
agency nature of the action. EPA
[[Page 14373]]
has never claimed that it has such broad authority to consider factors
outside section 209(b) and the decades of waiver practice, as well as
judicial precedent, are indicative of the Agency's narrow scope of
review for California waiver requests: ``[T]he Administrator has
consistently held since first vested with the waiver authority, [that]
his inquiry under section 209 is modest in scope. He has no `broad and
impressive' authority to modify California regulations.'' \410\
Instead, EPA has consistently declined to consider factors outside the
three statutory criteria listed in section 209(b).\411\ This limited
scope of review has been repeatedly upheld by the courts. For example,
in MEMA I, the D.C. Circuit stated that ``there is no such thing as a
``general duty'' on an administrative agency to make decisions based on
factors other than those Congress expressly or impliedly intended the
agency to consider.'' \412\ In MEMA II, the D.C. Circuit again rejected
consideration of a factor outside the 209(b) statutory criteria because
doing so would restrict California's ability to ``exercise broad
discretion.'' \413\
---------------------------------------------------------------------------
\410\ MEMA I, 627 F.2d 1095, 1119 (D.C. Cir. 1979).
\411\ See, e.g., 43 FR at 32184 (rejecting objections to the
procedures at state level, objections that section 207(c)(3)(A)
establishes field protection, and constitutional objections all as
beyond the ``narrow'' scope of the Administrator's review); 74 FR at
32783 (declining to consider EPCA preemption, stating that ``section
209(b) of the Clean Air Act limits our authority to deny
California's requests for waivers to the three criteria therein.'');
79 FR at 46264 (reiterating that EPA can only deny a waiver request
based on the 209(b) statutory criteria, dismissing comments on
preemption under EPCA, as well as the Constitution and the
implications of the FAAAA).
\412\ 627 F.2d at 1116.
\413\ 142 F.3d at 464.
---------------------------------------------------------------------------
Commenters also claim that ignoring NHTSA's finding of preemption
would violate the Supremacy Clause of the Constitution because the
necessary consequence of NHTSA's conclusion in SAFE 1 is that certain
standards were void ab initio as preempted under EPCA and as such that
``the state mandates referenced in [California's] petition for
reconsideration are not even eligible to be considered for a CAA waiver
of preemption.'' \414\ EPA disagrees. As the D.C. Circuit has held,
``[t]hat [the Administrator] like every other administrative officer
owes allegiance to the Constitution does not mean that he is required
to issue rulings of constitutional dimension.'' \415\ Thus, ``[n]othing
in section 209 requires [the Administrator] to consider the
constitutional ramifications of the regulations for which California
requests a waiver.'' \416\
---------------------------------------------------------------------------
\414\ NADA at 3.
\415\ MEMA I, 627 F.2d at 1114-15.
\416\ Id. at 1115.
---------------------------------------------------------------------------
Moreover, consideration of factors beyond those set out in section
209(b)(1) would subject California and vehicle and engine manufacturers
to changes in regulatory schemes by other federal agencies not acting
under the authority of the CAA.\417\ SAFE 1 and subsequent events
perfectly encapsulate this problem. For instance, NHTSA has since
finalized the repeal of the regulatory provisions and pronouncements it
made in SAFE 1 that were the underpinnings for EPA withdrawing certain
aspects of the ACC program waiver and with that action the Agency's
basis for revocation of the waiver under EPCA has now evanesced.\418\
Additionally, this is affirmation of EPA's long held view that waiver
proceedings are not the appropriate venue for resolving these issues,
and the joint-rulemaking context is not and should never have been
justification for deviating from statutory authority and the Agency's
historical practice.
---------------------------------------------------------------------------
\417\ ``The manufacture of automobiles is a complex matter,
requiring decisions to be made far in advance of their actual
execution. The ability of those engaged in the manufacture of
automobiles to obtain clear and consistent answers concerning
emission controls and standards is of considerable importance so as
to permit economies in production.'' S. Rep. No. 403, 90th Cong., at
730 1st Sess. (1967).
\418\ See 86 FR 74236.
---------------------------------------------------------------------------
It also bears note that consideration of factors beyond the
criteria contained in section 209(b) would not be limited to preemption
under EPCA. Commenters suggested, for instance, that EPA would not be
able to ``ignore the First Amendment,'' in the hypothetical situation
where California impos[ed] standards on some manufacturers in
retaliation for their voiced opposition to California's authority as
well as criminality such as ``bribery and extortion had been
instrumental in assembling the legislative majorities.'' \419\ In
short, under the commenter's view, factors for consideration in waiver
proceedings would be innumerable. And yet these factors bear little or
no relation to specific criteria in section 209(b) that would otherwise
warrant the denial of a waiver request. The D.C. Circuit has already,
several times, held that EPA is not required to consider factors
outside of and unconnected to these statutory criteria, especially
constitutional objections. In fact, regarding the commenter's example,
the court has already specifically rejected consideration of the First
Amendment in waiver evaluations. In MEMA I, the court considered and
upheld EPA's decision declining to consider a First Amendment objection
to a waiver as beyond the scope of agency review.\420\ Courts have also
rejected objections based on the applicability of CAA section 207 to
California waiver requests \421\ and the Commerce Clause.\422\ EPA is
therefore not persuaded by these arguments. Additionally, courts have
long held that administrative proceedings for California waiver
requests are ill-suited for consideration of constitutional issues.
Nothing precludes commenters from challenging California's standards
themselves--whether under EPCA, another statute, or the Constitution--
in other, better-suited fora. According to the D.C. Circuit, for
instance, [w]hile nothing in section 209 categorically forbids the
Administrator from listening to constitutionality-based challenges,
petitioners are assured through a petition of review . . . that their
contentions will get a hearing.'' \423\ The D.C. Circuit has also
repeatedly stated that challenges which go to the legality of
California's standards themselves, are better addressed directly by
either courts or Congress.\424\ Challenges based on preemption under
EPCA similarly go to the legality of California's standards themselves
and are thus more appropriate in court or addressed to Congress.
---------------------------------------------------------------------------
\419\ CEI at 11.
\420\ MEMA I, 627 F.2d 1095, 1115 (D.C. Cir. 1979).
\421\ MEMA II, 142 F.3d 449, 467 (D.C. Cir. 1998).
\422\ ATA v. EPA, 600 F.3d 624, 628 (D.C. Cir. 2010) (``EPA's
only role is to review California's proposed rules under a narrowly
defined set of statutory criteria.''); OOIDA v. EPA, 622 Fed. Appx.
4, 5 (D.C. Cir. 2015) (rejecting a challenge for lack of
jurisdiction because challengers objected to California's
regulations themselves, not EPA's approval of them in a waiver under
209(b)).
\423\ MEMA I, 627 F.2d at 1115.
\424\ Id.at 1105. In ATA v. EPA,the D.C. Circuit rejected a
constitutional challenge to a California waiver, concluding that
Congress made the decision to give California ``the primary role in
regulating certain mobile pollution sources'' so the challenger's
argument was best directed to Congress. 600 F.3d 624, 628 (D.C. Cir.
2010).
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E. Conclusion
Because the landscape of federal law has changed since SAFE 1 due
to NHTSA's repeal of its regulatory text, appendix, and pronouncements
regarding EPCA preemption in SAFE 1, EPA believes that it is
appropriate to rescind its waiver withdrawal actions in SAFE 1 that
were predicated on the federal law context created by NHTSA's SAFE 1
action. On separate grounds, EPA also believes that, based on the
foregoing, EPA should not have deviated from its practice of limiting
its waiver review to the criteria in section
[[Page 14374]]
209(b)(1). Thus, for the reasons stated above, EPA is rescinding those
portions of SAFE 1 that withdrew the waiver of the ACC program on the
basis of preemption under EPCA.
VII. EPA Inappropriately Set Forth an Interpretive View of Section 177
in SAFE 1
In SAFE 1, EPA provided an interpretive view of section 177 of the
CAA, stating that states adopting California's new motor vehicle
emission standards (section 177 states) could not adopt California's
GHG standards.\425\ In this action, EPA determines that it was both
inappropriate and unnecessary within a waiver proceeding to provide an
interpretive view of the authority of section 177 states to adopt
California standards, as EPA plays no statutory approval role in
connection with states' adoption of standards identical to those
standards for which a waiver has been granted to California.\426\
Rather, if a state chooses to submit such standards for inclusion in an
SIP, EPA's role with regard to approval of these standards is to review
them in the same way that EPA reviews all SIP revisions a state
submits, via a notice and comment process, to ensure that the
submission meets all statutory and regulatory requirements as part of
the Agency's decision whether to approve or disapprove the submission.
Therefore, the Agency is rescinding the interpretive views on section
177 set out in SAFE 1.
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\425\ 84 FR at 51310, 51350.
\426\ EPA is aware of instances of States adopting California
new motor vehicle emission standards and not subsequently including
such standards in their SIP. In these circumstances EPA has not
played and would not play an approval role.
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A. SAFE 1 Interpretation
In the SAFE proposal, EPA proposed to conclude that ``States may
not adopt California's GHG standards pursuant to section 177 because
the text, context, and purpose of section 177 support the conclusion
that this provision is limited to providing States the ability, under
certain circumstances and with certain conditions, to adopt and enforce
standards designed to control criteria pollutants to address NAAQS
nonattainment.'' \427\ Additionally, the proposal noted the title of
section 177 (``New motor vehicle emission standards in nonattainment
areas'') indicates a limited scope of application.\428\ The proposal
also suggested that, because ``[a]reas are only designated
nonattainment with respect to criteria pollutants,'' it would be
``illogical'' if states could use their 177 authority ``to adopt
California standards that addressed environmental problems other than
nonattainment of criteria pollutant standards.'' \429\
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\427\ 83 FR at 43240.
\428\ Id.
\429\ Id.
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In the SAFE 1 decision, EPA finalized its proposed interpretive
view, reiterating that ``the text (including both the title and main
text), structural location, and purpose of the provision confirm that
it does not apply to GHG standards.'' \430\ Because section 177's title
references nonattainment areas, and because nonattainment designations
only exist for criteria pollutants, EPA claimed, states could not adopt
standards for purposes of GHG control under section 177.\431\
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\430\ 84 FR at 51350.
\431\ Id.
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As evidence for this interpretive view, EPA again pointed to the
text and location of the section, which had been the basis for the
Agency's interpretation in the SAFE proposal. EPA acknowledged
commenters who argued that ``CAA section 177 does not contain any text
that could be read as limiting its applicability to certain pollutants
only'' and that EPA had ``inappropriately relied on the heading for CAA
section 177 to construe a statutory provision as well as arrogated
authority to implement an otherwise self-implementing provision,'' but
disagreed with these commenters.\432\ In addition to the evidence
relied on in the proposal, EPA provided examples of legislative history
from the 1977 amendments to support its interpretive view.\433\
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\432\ Id.
\433\ In particular, EPA cited legislative history on section
172(b), which set forth the ``requisite provisions'' for state plans
for nonattainment areas. Id. at 51350 n.286. According to the
legislative history, one of the many factors that must be considered
by a state plan is ``actual emissions of such pollutant resulting
from in-use motor vehicles.'' Id. (quoting H.R. Rep. No. 294, 95th
Cong., 1st Sess. 212 (1977), 1977 U.S.C.C.A.N. 1077, 1291, 1997 WL
16034). Therefore, EPA claimed, this legislative history
``identifies section 177 as a means of addressing the NAAQS
attainment planning requirements of CAA section 172, including the
specific SIP content and approvals criteria for EPA.'' Id. at 51351.
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B. Notice of Reconsideration of SAFE 1 and Request for Comment
Acknowledging that ``section 177 does not require States that adopt
California emission standards to submit such regulations for EPA
review'' and that ``California in previous waiver requests has
addressed the benefits of GHG emissions reductions as it relates to
ozone,'' EPA sought comment in the 2021 Notice of Reconsideration on
whether EPA had the authority in the SAFE 1 context to interpret
section 177 of the CAA and whether the interpretive view was
appropriate.\434\ Specifically, EPA sought comment on whether it was
appropriate for EPA to provide an interpretive view of section 177
within the SAFE 1 proceeding.\435\ To the extent it was appropriate to
provide an interpretation, EPA sought comment on whether section 177
was properly interpreted and whether California's motor vehicle
emission standards adopted by states pursuant to section 177 may have
both criteria emission and GHG emission benefits and purposes.\436\
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\434\ 86 FR at 22429.
\435\ Id.
\436\ Id.
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C. Comments Received
In response to SAFE 1, EPA received multiple petitions for
reconsideration. One petition submitted by several states and cities
asserted that, in adopting its interpretation of section 177, EPA
``relie[d] on information and reasoning not presented in the SAFE
Proposal,'' particularly the ``superseded version of Section 172 . . .
and legislative history for that outdated provision.'' \437\ The
petition noted that the use of this information and reasoning was used
in the SAFE 1 to conclude that ``section 177 is in fact intended for
NAAQS attainment planning and not to address global air pollution.''
\438\ Petitioners argued that because this information and reasoning
was not presented in the proposal, ``EPA should withdraw and reconsider
its finalization of the Section 177 interpretation and allow for full
and fair public comment before proceeding further.'' \439\
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\437\ See States and Cities' Petition at 27.
\438\ Id. (quoting 84 FR at 51351).
\439\ Id.
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EPA also received many comments in response to the Notice of
Reconsideration of SAFE 1, both supporting and opposing EPA's
statements regarding section 177 in SAFE 1. Supporters of SAFE 1
reiterated the reasoning from the proposal and final action.\440\ For
example, one commenter wrote, ``In short, `the text, context, and
purpose of Section 177 suggest' that the provision is limited to motor
vehicle standards `designed to control criteria pollutants to address
NAAQS nonattainment.' '' \441\ Like the SAFE proposal and final action,
the commenter stated that in addition to the text and context of the
section, there is ``substantial legislative history showing that
Congress's purpose in creating the Section 177 program was to address
[[Page 14375]]
non-attainment with NAAQS for criteria pollutants, not to address any
global atmospheric phenomenon.'' \442\
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\440\ CEI at 17-18; NADA at 6; AFPM at 12-13.
\441\ CEI at 18 (quoting heavily from the SAFE proposal and SAFE
final action).
\442\ Id.
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Opponents of SAFE 1 argued both that EPA had no authority to issue
its 177 statement and that the merits of EPA's argument were wrong. On
the issue of authority, opponents of SAFE 1 claimed that SAFE 1 failed
to consider the reliance interests of the stakeholders, particularly
section 177 states.\443\ SAFE 1, they argued, upset this reliance and
created uncertainty.\444\ A substantial number of commentors also
argued that EPA had no authority to make its statements on section 177
because ``Congress gave EPA no role in implementing Section 177 and no
authority to constrain States' decisions regarding adoption of
California emissions standards.'' \445\
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\443\ States and Cities at 50-55; Institute for Policy Integrity
Amicus Brief at 22-26 (``[T]he fact that California and many other
states have detrimentally relied on this waiver to meet federal and
state air-pollution mandates resolves any lingering doubt about the
lawfulness of EPA's Action. . . . Revoking the preemption waiver . .
. jeopardizes the state's ability to meet federal standards for
other harmful air pollutants, since the standards covered by the
waiver would have reduced--directly and indirectly--nitrogen-oxide,
ozone, and particulate-matter pollution. See 78 FR 2122, 2129, and
2134.''); Tesla at 11-13; National Association of Clean Air Agencies
(NACAA), Docket No. EPA-HQ-OAR-2021-0257-0096 at 3. Many of the 177
states had also provided comments, during the SAFE 1 comment period,
explaining that they have adopted the ACC program standards to meet
their public health goals. See, e.g., Maryland Department of the
Environment, Docket No. EPA-HQ-OAR-2018-0283-5831 at 2-3; Delaware
Department of Natural Resources and Environment Control, Docket No.
EPA-HQ-OAR-2018-0283-5066 at 3-5; Massachusetts Department of
Environmental Protection, Docket No. EPA-HQ-OAR-2018-0283-5476;
State of California et al., Docket No. EPA-HQ-OAR-2018-0283-5481 at
130-31 (California was joined by the States of Connecticut,
Delaware, Hawaii, Iowa, Illinois, Maine, Maryland, Minnesota, New
Jersey, New Mexico, New York, North Carolina, Oregon, Rhode Island,
Vermont, Washington, the Commonwealths of Massachusetts,
Pennsylvania, and Virginia, the District of Columbia, and the Cities
of Los Angeles, New York, Oakland, San Francisco, and San Jose).
\444\ See, e.g., States and Cities at 50-55; Tesla at 11-13.
\445\ States and Cities at 51. See also Tesla at 11-13; Twelve
Public Interest Organizations app. 1 at 2; NESCAUM at 8-9; Southern
Environmental Law Center (SELC), Docket No. EPA-HQ-OAR-2021-0257-
0125 at 2-3; NCAT at 12; Class of '85, Docket No. EPA-HQ-OAR-2021-
0257-0454 (correction to an earlier comment by the same commenter,
which can be found at Docket No. EPA-HQ-OAR-2021-0257-0388) at 5-6;
Maine at 2; OTC at 2. Ironically, one supporter of SAFE 1, while
arguing that EPA cannot consider GHG reductions from section 177
states in its second prong analysis, acknowledged EPA's lack of an
oversight role under section 177: ``EPA cannot consider GHG
reductions, if any, attributable to `opt-in' states under Section
177, as these are out of the scope of a waiver application. Indeed,
EPA has no legal role in reviewing opt-in states, as the statute
grants the agency no role in reviewing opt-in by other states.''
AFPM at 15.
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On the merits of EPA's SAFE 1 argument, opponents of the action
commented that EPA misinterpreted section 177 and that, even if EPA's
interpretive view were correct, EPA misapplied it. Multiple commenters
wrote that the text of section 177 does not limit the types of
pollutants for which motor vehicle emission standards can be
authorized.\446\ Commenters also noted that the title of section 177
refers to geographic areas, not pollutants, and argued that the
restriction was therefore on which states could adopt California
standards (states with plan provisions approved under Part D) not on
the pollutants for which those states could adopt standards.\447\ A few
commenters also argued that EPA's section 177 interpretive view would
create a ``third vehicle'' scenario, in contradiction of section 177's
identicality requirement.\448\ Even if EPA's interpretation were
correct, opponents continued, California's standards have both criteria
emission and GHG emission benefits and purposes.\449\ Commenters cited
the factual record as well as EPA's own past findings as evidence of
the connection between GHG standards and NAAQS attainment.
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\446\ See, e.g., States and Cities at 53; NESCAUM at 9; NCAT at
12.
\447\ See, e.g., States and Cities at 53 (``[T]he reference in
the title to `nonattainment areas' is not a limitation to
`nonattainment (i.e., criteria) pollutants' or standards that target
them'' but rather a limitation on the states that can adopt
California's standards); NESCAUM at 9; SELC at 2; NCAT at 12.
\448\ Commenters feared that EPA's interpretation, which
``prevents Section 177 States from adopting California's GHG
standards, but not any other California standards,'' could require
states to ``extract just the GHG portion of the Advanced Clean Cars
rules from their programs, thus potentially creating type of ``third
vehicle'' forbidden by Section 177 (i.e., a vehicle subject to a
hybrid combination of the other California standards and the (now
weakened) federal GHG standards.'' States and Cities at 54. See also
NESCAUM at 11-12; SELC at 5.
\449\ States and Cities at 31-32, 50-55; NESCAUM at 12-13; SELC
at 5; NCAT at 12; Class of '85 at 4-5.
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D. Analysis: EPA Is Rescinding SAFE 1's Interpretive Views of SSection
177
EPA is withdrawing its non-regulatory and non-binding
interpretation of section 177 set forth in SAFE 1. EPA plays no
statutory approval role in connection with states' adoption of
standards identical to those standards for which the Agency has granted
a waiver to California.\450\ Rather, if a state chooses to submit such
standards for inclusion in a SIP, EPA's role with regard to approval of
these standards is to review them in the same way that EPA reviews all
SIP revisions a state submits, via a notice and comment process, to
ensure that the submission meets all statutory and regulatory
requirements as part of the Agency's decision whether to approve or
disapprove the submission.\451\
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\450\ EPA is aware of instances of States adopting California
new motor vehicle emission standards and not subsequently including
such standards in their SIP. In these circumstances EPA has not
played and would not play an approval role.
\451\ EPA notes that although section 177 states that ``. . .
any State which has plan provisions approved under this part may
adopt and enforce for any model year standards relating to control
of emissions from new motor vehicles . . .'' the language in section
177 does not require a state to submit its adopted motor vehicle
emissions standards for SIP approval.
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In reconsidering SAFE 1, EPA now believes that it was inappropriate
to offer an interpretive view of section 177 in the context of that
action. EPA believes it acted inappropriately in providing an
interpretive view in SAFE 1 and that such action was based on an
inaccurate assessment of the factual record. EPA's interpretive view
was not compelled by any petition, request, or legislative or judicial
mandate and was otherwise not final agency action.\452\ EPA is
therefore rescinding the interpretive views contained in SAFE 1.
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\452\ 84 FR at 51338 n.256 (``EPA acknowledges that its actions
in this document may have implications for certain prior and
potential future EPA reviews of and actions on state SIPs. . . . EPA
will consider whether and how to address those implications, to the
that they exist, is separate actions.''). EPA action on a state plan
(including application of Section 177) is subject to judicial
review. 42 U.S.C. 7607(b)(1).
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As commenters have noted, section 177 does not describe a direct
approval role for EPA. Section 177 says that ``any State which has plan
provisions approved under this part may adopt and enforce'' identical
California standards and delineates three specific criteria for
adoption.\453\ Nothing in this language or in the text of the rest of
the section requires or allows EPA to approve such adoption and
enforcement or directs EPA to implement the section through regulation;
EPA plays no statutory approval role in the adoption of California
standards by other states other than action on a SIP revision, should
those states include the standards in their plans. In fact, there are
only three prerequisites to adoption and enforcement by a state: That
the state has a federally approved SIP, that the standards are
identical (thus the state standards must not create or have the effect
of creating a ``third vehicle'') to California standards for which
California has received a waiver, and that California and the state
adopt the standards with at least two years lead time.\454\ This
limited role has been
[[Page 14376]]
acknowledged by courts and EPA alike.\455\ Thus, it is well established
that states have broad discretion to adopt California standards without
being subject to EPA's approval.\456\
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\453\ 42 U.S.C. 7507.
\454\ Id.
\455\ In 1979, for example, only two years after the adoption of
section 177, the D.C. Circuit stated that the Act only requires the
three listed prerequisites, ``not . . . that the EPA administrator
conduct a separate waiver proceeding for each state that chooses [to
adopt California standards].'' Ford Motor Co. v. EPA, 606 F.2d 1293,
1298 (D.C. Cir. 1979). Similarly, in 1994, while enacting rules
implementing section 209(e)(2)(B), the parallel provision for the
nonroad vehicle section of the California Waiver program, EPA noted
that section 177 states had not ``ask[ed] for EPA authorization
before they adopted the California standards, nor did EPA or the
automobile industry suggest that they needed such authorization.''
56 FR 36969, 36983 (1994). See also 77 FR 62637 n.54 (``States are
not required to seek EPA approval under the terms of section
177.'').
\456\ EPA also notes that there are ample judicial avenues to
directly challenge state adoption of California standards. For
example, the First and Second Circuits have already addressed
objections to the adoption of California standards under section
177. In both Am. Auto. Mfrs. Ass'n v. Mass. DEP and Motor Vehicle
Mfrs. Ass'n v. NYSDEC, petitioners argued that the States' adoption
of California's low emission vehicles standards without the
associated clean fuels plan violated section 177. 31 F.3d 18 (1st
Cir. 1994); 17 F.3d 521 (2d Cir. 1994).
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States with approved SIPs that have adopted the waived California
standard into state law may submit a SIP revision that includes that
adopted standard. In that proceeding, EPA could determine whether the
statutory criteria for adoption are met for purposes of approving a SIP
revision. Indeed, in the litigation following SAFE 1, EPA acknowledged
that its interpretive view of section 177 would have no actual effect
until applied in a future SIP context.\457\ SIPs are a crucial planning
tool in helping states reach attainment for NAAQS and California's
standards are key components of many of these SIPs.\458\ In a SIP
proceeding, these states and other stakeholders are better able to
provide specific and comprehensive comments about the intent and effect
of adopting California standards.\459\
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\457\ Several commenters on the Notice of Reconsideration argued
that SAFE 1 violated conformity rules by interfering with already
approved SIPs. However, as EPA explained in the litigation over SAFE
1, the action had no actual effect on ``either existing approvals of
state plans or the plans themselves for criteria pollutants.'' Final
Brief for Respondents at 106, Union of Concerned Scientists v.
NHTSA, No. 19-1230 (D.C. Cir. Oct. 27, 2020). See also 84 FR 51338,
n.256.
\458\ Wisconsin at 1 (``These standards provide important and
necessary reductions in both GHG and criteria pollutant emissions
needed to meet state and local air quality goals and address federal
CAA requirements.''); Connecticut at 2 (``These programs enable
long-term planning and yield critical emission reductions that are
critical to meeting Connecticut's climate goals as well as our
statutory obligations to reach attainment with the ozone NAAQS.'');
Delaware at 2 (``Delaware adopted the California LEV regulation and
incorporated the LEV and GHG standards into the State Implementation
Plan. . . . Delaware will not meet air quality goals without more
protective vehicle emission standards. ''); Maine at 1 (``[T]he LEV
program was initially created to help attain and maintain the
health-based National Ambient Air Quality Standards (NAAQS) . . .
The California ZEV and GHG programs enable long-term planning for
both the states and the regulated community and have been drivers of
technological change across the industry.'').
\459\ The Agency has considered whether there may be any
reliance interests on EPA's previous interpretive view of section
177 described in the SAFE 1 action. EPA is unaware of any such
interests, and none were raised in comments.
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For these reasons, EPA believes that it was inappropriate to
provide an interpretive view of section 177 in SAFE 1.\460\ Therefore,
EPA is withdrawing its SAFE 1 interpretive view of section 177.
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\460\ To the extent that EPA's reasoning in its SAFE 1 section
177 determination lacked fair notice, as the States and Cities'
Petition claimed, such a contention is rendered moot by this action.
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E. Conclusion
EPA determines that it was both inappropriate and unnecessary,
within the SAFE 1 waiver proceeding, to provide an interpretive view of
the authority of section 177 states to adopt California standards.
Therefore, EPA withdraws its interpretive views that had been set forth
in SAFE 1.
VIII. Other Issues
A. Equal Sovereignty
As explained in Section VI, EPA must grant California's waiver
request unless the Agency makes one of the specified findings in
section 209(b)(1). In this instance, Congress has made multiple
determinations through its adoption of section 209 and subsequent
amendments, dating from 1967 through the 1990 CAA Amendments, regarding
California's role and its relation to federal standard setting for
mobile sources. EPA's longstanding waiver practice, consistent with
case law, has been to refrain from considering factors beyond section
209(b)(1) criteria as well as constitutional claims in the review of
California waiver requests.\461\ EPA acknowledges that California
adopts its standards as a matter of law under its police powers,\462\
that the Agency's task in reviewing waiver requests is properly limited
to evaluating California's request according to the criteria in section
209(b), and that it is appropriate to defer to litigation brought by
third parties in other courts, such as state or federal court, for the
resolution of constitutionality claims and inconsistency, if any, with
other statutes. As further explained this practice flows from the
statute and legislative history, which reflect a broad policy deference
that is afforded to California to address its serious air quality
problems (which are on-going) as well as to drive emission control
innovation. And so, EPA has historically declined to consider
constitutional issues in evaluating and granting section 209 waivers.
In MEMA I, the D.C. Circuit rejected a First Amendment challenge to a
waiver as outside the scope of review.\463\ In 2009, EPA approved a
waiver (and authorization) under section 209(e), granting California
authority to enforce its Airborne Toxic Control Measure, which
established in-use emission performance standards for engines in
transport refrigeration units (TRUs) and TRU generator sets.\464\
Responding to comments that the waiver reached beyond California's
borders in violation of the Dormant Commerce Clause, EPA stated that
such considerations are not factors that EPA must consider under
section 209(e) because ``EPA's review of California's regulations is
limited to the criteria that Congress directed EPA to review.'' \465\
This interpretation was upheld by the D.C. Circuit Court of Appeals.
The Court agreed with EPA that the commenters had sought to
``improperly . . . engraft a type of constitutional Commerce Clause
analysis onto EPA's Section 7543(e) waiver decisions that is neither
present in nor authorized by the statute.'' \466\
[[Page 14377]]
Consistent with the Agency's long standing practice, the decision on
whether to grant the ACC program waiver was based solely on criteria in
section 209(b) and the Agency did not either interpret or apply the
Equal Sovereignty Doctrine or any other constitutional or statutory
provision in that waiver decision.\467\
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\461\ EPA has declined to consider constitutional challenges to
California Waivers since at least 1976. 41 FR 44212 (Oct. 7, 1976)
(``An additional argument against granting the waiver was raised by
the Motorcycle Industry Council and Yamaha, who contended that the
CARB had violated due process when adopting their standards, by not
allowing the manufacturers a fair and full opportunity to present
their views at a State hearing. If this argument has any validity,
the EPA waiver hearing is not the proper forum in which to raise it.
Section 209(b) does not require that EPA insist on any particular
procedures at the State level. Furthermore, a complete opportunity
was provided at the EPA waiver hearing for the presentation of
views.''). See also, e.g., 43 FR at 32184 (July 25, 1978) (rejecting
objections to the procedures at state level, objections that section
207(c)(3)(A) establishes field protection, and constitutional
objections all as beyond the ``narrow'' scope of the Administrator's
review).
\462\ Central Valley Chrysler-Jeep, Inc. v. Goldstene, 529
F.Supp.2d 1151, 1174 (``The waiver provision of the Clean Air Act
recognizes that California has exercised its police power to
regulate pollution emissions from motor vehicles since before March
30, 1966; a date that predates both the Clean Air Act and EPCA.'').
\463\ MEMA I, 627 F.2d 1095, 1111, 1114-14 (D.C. Cir. 1979).
\464\ 74 FR 3030 (January 16, 2009).
\465\ Decision Document, EPA-HQ-OAR-2005-0123-0049 at 67.
\466\ ATA v. EPA, 600 F.3d 624, 628 (D.C. Cir. 2010) (quoting
the U.S. brief). In a footnote to this statement, the Court said ATA
could attempt to bring a constitutional challenge directly (which
would argue that the waiver unconstitutionally burdens interstate
commerce) but ``express[ed] no view on that possibility.'' Id. at
n.1. See also OOIDA v. EPA, 622 Fed. Appx. 4, 5 (D.C. Cir. 2015)
(rejecting a challenge for lack of jurisdiction because challengers
objected to the state regulations themselves, not EPA's approval of
them in a waiver under 209(b)) (``To the extent there is any tension
in our case law surrounding whether we might decide a constitutional
claim brought within a broader challenge to an EPA waiver decision,
OOIDA does not present us with such a challenge, and we have no
occasion to resolve that question here.'').
\467\ 78 FR at 2145.
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Although EPA specified issues that it was seeking comment on within
the Notice of Reconsideration, commenters nevertheless argued that the
Equal Sovereignty Doctrine, which was not one of the identified aspects
in that notice, preempts reinstitution of the relevant aspects of the
ACC program waiver. According to these commenters, ``Section 209, by
allowing California and only California to retain a portion of its
sovereign authority that the Clean Air Act takes from other States, is
unconstitutional and thus unenforceable.'' \468\ Other commenters
argued that the Equal Sovereignty doctrine does not apply to the
California waiver program. One comment maintained that the holding in
Shelby County v. Holder is distinguishable from the CAA.\469\
California disagreed with EPA's characterization of the relevance of
the doctrine, commenting that the Supreme Court has only applied the
``rarely invoked'' doctrine of Equal Sovereignty in the ``rare instance
where Congress undertook `a drastic departure from basic principles of
federalism' by authorizing `federal intrusion into sensitive areas of
state and local policymaking.' '' \470\
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\468\ Ohio and 15 States, Docket No. EPA-HQ-OAR-2021-0257-0124
at 1. This commenter also stated that ``The waiver at issue here,
allowing only California to regulate carbon emissions, is not
sufficiently related to the problem that Section 209(a) targets,
Congress enacted that section to permit California to address local
air pollution. But California seeks special treatment for its
proposed greenhouse gas targets . . . designed to mitigate climate
change--an inherently global interest.'' Id. at 8-9. EPA notes that
this characterization of CARB's standards is addressed in Section V.
\469\ Twelve Public Interest Organizations at 5 (``Shelby County
does not govern here. See Amicus Br. of Prof. Leah Litman 12-17,
Union of Concerned Scientists v. NHTSA, No. 19-1230 (July 6, 2020)
(A-0384). First, Clean Air Act Section 209(b) places no
extraordinary burden or disadvantage on one or more States. Rather,
the statute benefits California by allowing the exercise of its
police power authority to address its particular pollution control
needs. Second, the foundation for reserving California's authority
has not waned over time. California had in 1967, and continues to
have, the Nation's absolute worst air quality. For example, the
South Coast air basin, home to 17 million people, typically leads
the Nation in ozone (smog) pollution. The American Lung
Association's 2021 `State of the Air' report on national air
pollution shows that seven of the ten worst areas for ozone
pollution in the country are in California, as are six of the worst
ten for small particulate matter. Am. Lung Ass'n, Most Polluted
Cities, https://www.lung.org/research/sota/city-rankings/most-polluted-cities (last visited July 2, 2021) (A-0422).'').
\470\ States and Cities at 41-42.
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As explained in the 2013 ACC program waiver decision, EPA continues
to believe that waiver requests should be reviewed based solely on the
criteria in section 209(b)(1) and specifically, that the Agency should
not consider constitutional issues in evaluating waiver requests.\471\
As previously noted in Section VI, the constitutionality of section 209
is not one of the three statutory criteria for reviewing waiver
requests, and such objections are better directed to either the courts
or Congress. As the D.C. Circuit reasoned in MEMA I, ``it is generally
considered that the constitutionality of Congressional enactments is
beyond the jurisdiction of administrative agencies.'' \472\ Although
commenters here raise a new constitutional argument--that of Equal
Sovereignty rather than the First Amendment or the Dormant Commerce
Clause--EPA is no more well-suited to resolve this constitutional
objection than it is to resolve previous constitutional
objections.\473\
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\471\ 78 FR at 2145.
\472\ MEMA I, 627 F.2d 1095, 1114-15 (D.C. Cir. 1979) (holding
that EPA did not need to consider whether California's standards
``unconstitutionally burden[ed] [petitioners'] right to communicate
with vehicle purchasers.''). See also Twelve Public Interest
Organizations at 7 (``As regulatory agencies are not free to declare
an act of Congress unconstitutional,' Springsteen-Abbott v. SEC, 989
F.3d 4, 8 (D.C. Cir. 2021), EPA cannot determine whether a statute
Congress directed it to implement contravenes the equal-sovereignty
principle. Thus, EPA should proceed to rescind the Waiver Withdrawal
and leave Ohio's argument for review by an appropriate court.'').
\473\ See, e.g., Johnson v. Robison, 415 U.S. 361, 368, (1974)
(``Adjudication of the constitutionality of congressional enactments
has generally been thought beyond the jurisdiction of administrative
agencies''); Springsteen-Abbott, 989 F.3d at 8; Meredith Corp. v.
FCC, 809 F.2d 863, 872 (D.C. Cir. 1987).
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EPA notes that Congress struck a deliberate balance in 1967 when it
acknowledged California's serious air quality problems as well as it
being a laboratory for the country, and once again in 1977 when
Congress continued to acknowledge California's air quality problems as
well as problems in other states and decided that California's new
motor vehicle standards, once waived by EPA and subject to certain
conditions, would be optionally available for all states under section
177 under specified criteria.\474\ In striking a balance between one
national standard and 51 different state standards, Congress chose to
authorize two standards--the federal standard, and California's
standards (which other states may adopt). EPA believes this balance
reflected Congress's desire for California to serve as a laboratory of
innovation and Congress's understanding of California's extraordinary
pollution problems on the one hand, and its desire to ensure that
automakers were not subject to too many different standards on the
other.
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\474\ ``Sec. 177 . . . permitted other states to `piggyback'
onto California 's standards, if the state's standards `are
identical to the California standards for which a waiver has been
granted for such model year.' '' Motor Vehicle Mfrs. Ass'n v. New
York State Dep't of Envtl. Conservation, 17 F.3d 521, 525 (2d Cir.
1994).
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In reconsidering the SAFE 1 action and the appropriateness of
reinstating the 2013 ACC program waiver, EPA has not considered whether
section 209(a) and section 209(b) are unconstitutional under the Equal
Sovereignty Doctrine. As in the 2013 ACC program waiver, the decision
on whether to grant the waiver and the consequence of a reinstated
waiver is based solely on the criteria in section 209(b) and this
decision does not attempt to interpret or apply the Equal Sovereignty
Doctrine or any other constitutional or statutory provision.
B. CARB's Deemed-To-Comply Provision
EPA received comments arguing that California's 2018 clarification
to its deemed-to-comply provision ``changed important underlying
requirements of the original 2012 waiver application'' and ``EPA cannot
reinstate a Clean Air Act waiver for a program that no longer exists.''
\475\ These commenters maintain that California has never sought a
waiver for the 2018 amendments or a determination that the change is
within the scope of the prior waiver. As such, commenters maintain that
EPA lacks a necessary predicate to permit California's enforcement of
its amended GHG standards.
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\475\ AFPM at 7; Urban Air at 2, 18-19; NADA at 6.
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Other commenters argued that the ``deemed to comply'' provision was
always conditioned on the federal standards providing GHG reductions
that were at least equal to or as protective as California's program
and so the 2018 amendments did not substantively change the provision
or affect any related reliance interests and instead were designed to
clarify the
[[Page 14378]]
provision.\476\ Commenters maintain that CARB adopted ``non-substantive
amendments for its LEV III regulations to further clarify that the
deemed-to-comply provision would only apply if the federal GHG
standards remained substantially as they were as of the date of the
2017 Final Determination.'' \477\ According to these commenters,
California adopted these amendments after EPA's withdrawal of its 2017
Final Determination that had determined that its Federal GHG standards
for model years 2022-2025 remained appropriate and instead concluded
that the federal standards for model years 2022-2025 may be too
stringent and should be revised. EPA notes that after the January 2017
MTE CARB subsequently found that compliance with those federal
standards would result in equivalent or greater GHG benefits than
originally projected for California.\478\ These commenters further
maintain that the clarification of the deemed-to-comply provision is
immaterial to the reversal of the waiver withdrawal in SAFE 1 because
the SAFE 1 action was expressly based on EPA's decision to rely on
NHTSA's preemption findings and section 209(b)(1)(B) determination,
neither of which was based on CARB's 2018 clarification rulemaking. As
such, the commenters maintain that the clarification of the deemed-to-
comply provision has no bearing on and does not preclude EPA's SAFE 1
waiver withdrawal.\479\
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\476\ States and Cities at 58-61. (``California always intended
its standards would `remain an important backstop in the event the
national program is weakened or terminated.' 78 FR at 2,128.'').
\477\ Id. at 60. ``Final Determination on the Appropriateness of
the Model Year 2022-2025 Light-Duty Vehicle Greenhouse Gas Emissions
Standards under the Midterm Evaluation'' (2017 Final Determination)
at https://nepis.epa.gov/Exe/ZyPDF.cgi?Dockey=P100QQ91.pdf.
\478\ 82 FR 14671 (March 22, 2017) and 83 FR 16077 (April 13,
2018).
\479\ States and Cities at 60-62.
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As previously explained, under section 209(b)(1) EPA is to grant a
waiver of preemption for California to enforce its own standards that
would otherwise be preempted under section 209(a). This preemption does
not extend to federal standards that are adopted under section 202(a).
EPA explained this in responding to comments on the deemed-to-comply
provision in the ACC program waiver decision. ``[T]he waiver decision
affects only California's emission standards, not the federal standards
that exist regardless of EPA's decision.'' \480\ This preemptive effect
of section 209(a) does not change even when California chooses to allow
for compliance with its standards through federal standards as
envisaged by the deemed-to-comply provision.
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\480\ 78 FR at 2124.
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It also bears note that in SAFE 1, EPA made clear that the 2018
amendment was not a ``necessary part of the basis for the waiver
withdrawal and other actions that EPA finalizes in this [SAFE1]
document.\481\ In the Notice of Reconsideration, EPA neither reopened
nor reconsidered elements of the 2013 waiver that were not part of
EPA's findings in SAFE 1.\482\ As noted in this decision, EPA has
evaluated the factual and legal errors that occurred in SAFE 1. As part
of this evaluation, EPA believes it has considered all appropriate and
relevant information necessary to its review of issues associated with
the second waiver prong or consideration of preemption under EPCA. The
Agency also recognizes that it received comments from parties that
raised non-germane issues to EPA's Notice of Reconsideration. EPA did
not conduct an analysis of such comments in the context of
reconsidering the specific actions taken in SAFE 1. EPA also makes
clear that the result of rescinding its part of SAFE 1 is the automatic
reinstatement of the waiver granted to California in 2013 for its ACC
program. That is the result of the action taken herein.\483\
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\481\ EPA declined to ``take any position at this point on what
effect California's December 2018 amendment to its ``deemed to
comply' provision . . . [may] have on the continued validity of the
January 2013 waiver.'' 84 FR at 51329, n.208, 51334, n.230. Although
EPA claimed in SAFE 1 that the deemed to comply clarification
confirmed and provided further support for the SAFE 1 action, EPA no
longer makes this claim to the extent it is relevant in its
reconsideration and rescission of SAFE 1. The consequence of this
action is the reinstatement of the ACC program waiver issued in 2013
and does not extend to other regulatory developments in California
or by EPA that occurred subsequent to that waiver ddecision.
\482\ 86 FR at 22423. In addition to declining to take a
position on the effect of California's 2018 amendments to its
``deemed to comply'' provision, SAFE 1 did not finalize the
withdrawal of the waiver under the first or third waiver prongs. EPA
also notes that it has previously responded twice to the comments
suggesting that CARB's deemed-to-comply provision demonstrates that
California does not have a need for its own standards. See 78 FR at
2124-25.
\483\ EPA acknowledges that motor vehicle emission standards in
California as well as federally are periodically clarified, amended,
or revised. For example, after California issued its first deemed-
to-comply regulation, EPA determined that the state's GHG standards
were within the scope of the 2009 waiver. While EPA believes that
Congress intended regulatory certainty to be attached to the
Agency's waivers issued under section 209, EPA acknowledges that
conditions may change over time so significantly that it could merit
a review of California's motor vehicle emission program and
applicable standards therein or that would prompt California to
submit a related waiver request to EPA. As explained in this
decision, the conditions associated with the analysis of the three
waiver criteria performed in the ACC waiver decision did not change
so as to merit the SAFE 1 action. EPA recognizes that federal light-
duty vehicle GHG emission standards have been modified twice since
SAFE 1 was issued; the current standards do not change EPA's
conclusion that SAFE 1 should be rescinded.
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IX. Decision
After review of the information submitted by CARB and other public
commenters, the SAFE 1 action, and the record pertaining to EPA's 2013
ACC program waiver, I find that EPA did not appropriately exercise its
limited inherent authority to reconsider waiver grants in SAFE 1. SAFE
1 did not correct a clerical or factual error, nor did the factual
circumstances and conditions related to the three statutory criteria
change prior to SAFE 1, much less change so significantly as to cast
the propriety of the waiver grant into doubt. On this basis, I am
rescinding the SAFE 1 action.
Furthermore, after review of both the 2013 ACC program waiver
record as well as the SAFE 1 record, to the extent that EPA did have
authority to reconsider the ACC program waiver, I have determined that
the asserted bases were in error and did not justify the waiver
withdrawal. With respect to the Agency's first purported basis--its
discretionary decision to undertake a reinterpretation of the second
waiver prong--I find that the statutory interpretation adopted in SAFE
1 is a flawed reading of the statute, and I hereby return to the
traditional interpretation of the second waiver prong, which is, at
least, the better interpretation. Under the traditional interpretation,
which looks at the program as a whole, California clearly had a
compelling need for the ACC program. Even if SAFE 1's statutory
reinterpretation, which focuses on California's compelling need for the
specific standards, were an appropriate reading, EPA did not perform a
reasonable, accurate, and complete review of the factual record in its
findings regarding the criteria emission benefits of CARB's ZEV sales
mandate and GHG emission regulations. Upon review, I find that SAFE 1's
predicate for concluding that California did not have a compelling need
for these specific standards was not reasonable given the record at the
time of the ACC program waiver and once again during the SAFE 1
proceeding. A reasonable, accurate, and complete review of the record
supports the need for California's specific GHG emission standards and
ZEV sales mandate to meet compelling and extraordinary conditions in
California. This is true whether I look at how these standards reduce
criteria pollution, GHG pollution, or both. In
[[Page 14379]]
sum, although I am not adopting the interpretation of the second waiver
prong set forth in SAFE 1, I find that the burden of proof necessary to
demonstrate that CARB's ZEV sales mandate and GHG emission standards
are not needed to meet compelling and extraordinary conditions has not
been met under either interpretation of the second waiver prong.
Therefore, I rescind the Agency's part of the SAFE 1 action to the
extent it relied upon the second waiver prong to withdraw the ACC
program waiver.
With regard to the applicability of preemption under EPCA, I find
that, to the extent EPA's authority to reconsider the ACC program
waiver rested upon NHTSA's joint action at the time as well as the
applicability of its EPCA interpretation to EPA's review, this statute
falls clearly outside the confines of section 209(b) where EPA's
authority to grant, deny, and reconsider waivers resides. In any event,
the grounds for such action under SAFE 1 no longer exist given NHTSA's
recent final action withdrawing its EPCA preemption rule in its
entirety.
Each of the decisions and justifications contained in this final
action is severable.
This decision rescinds EPA's SAFE 1 action and therefore, as a
result, the waiver of preemption EPA granted to California for its ACC
program ZEV sales mandates and GHG emission standards issued in 2013,
including for the 2017 through 2025 model years, comes back into force.
Judicial Review
Section 307(b)(1) of the CAA governs judicial review of final
actions by EPA. This section provides, in part, that petitions for
review must be filed in the Court of Appeals for the District of
Columbia Circuit: (i) When the agency action consists of ``nationally
applicable regulations promulgated, or final actions taken, by the
Administrator,'' or (ii) when such action is locally or regionally
applicable, but ``such action is based on a determination of nationwide
scope or effect and if in taking such action the Administrator finds
and publishes that such action is based on such a determination.'' For
locally or regionally applicable final actions, the CAA reserves to EPA
complete discretion whether to invoke the exception in (ii).
This final action is ``nationally applicable'' within the meaning
of section 307(b)(1). In the alternative, to the extent a court finds
this action to be locally or regionally applicable, the Administrator
is exercising the complete discretion afforded to him under the CAA to
make and publish a finding that this action is based on a determination
of ``nationwide scope or effect'' within the meaning of section
307(b)(1).\484\ This action rescinds EPA's final action in SAFE 1,
which withdrew a waiver for new motor vehicle greenhouse gas emission
standards and ZEV sales mandate granted to California under section
209(b) of the CAA. In addition to California, sixteen other states and
the District of Columbia have already adopted California's motor
vehicle greenhouse gas standards. The other states are New York,
Massachusetts, Vermont, Maine, Pennsylvania, Connecticut, Rhode Island,
Washington, Oregon, Minnesota, New Jersey, Nevada, Maryland, Virginia,
Colorado, and Delaware.\485\ These jurisdictions represent a wide
geographic area and fall within eight different judicial circuits.\486\
In addition, this action will affect manufacturers nationwide who
produce vehicles to meet the emissions standards of these states. For
these reasons, this final action is nationally applicable or,
alternatively, the Administrator is exercising the complete discretion
afforded to him by the CAA and hereby finds that this final action is
based on a determination of nationwide scope or effect for purposes of
section 307(b)(1) and is hereby publishing that finding in the Federal
Register.
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\484\ In deciding whether to invoke the exception by making and
publishing a finding that this final action is based on a
determination of nationwide scope or effect, the Administrator has
also taken into account a number of policy considerations, including
his judgment balancing the benefit of obtaining the D.C. Circuit's
authoritative centralized review versus allowing development of the
issue in other contexts and the best use of agency resources.
\485\ The same states have adopted California's ZEV sales
mandate regulation with the exception of Pennsylvania, Washington,
and Delaware.
\486\ In the report on the 1977 Amendments that revised CAA
section 307(b)(1), Congress noted that the Administrator's
determination that the ``nationwide scope or effect'' exception
applies would be appropriate for any action that has a scope or
effect beyond a single judicial circuit. See H.R. Rep. No. 95-294 at
323-24, reprinted in 1977 U.S.C.C.A.N. 1402-03.
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Under CAA section 307(b)(1), petitions for judicial review of this
action must be filed in the United States Court of Appeals for the
District of Columbia Circuit within 60 days from the date this final
action is published in the Federal Register.
X. Statutory and Executive Order Reviews
As with past waiver decisions, this action is not a rule as defined
by Executive Order 12866. Therefore, it is exempt from review by the
Office of Management and Budget as required for rules and regulations
by Executive Order 12866.
In addition, this action is not a rule as defined in the Regulatory
Flexibility Act, 5 U.S.C. 601(2). Therefore, EPA has not prepared a
supporting regulatory flexibility analysis addressing the impact of
this action on small business entities.
Further, Subtitle E of the Small Business Regulatory Enforcement
Fairness Act of 1996, also known as the Congressional Review Act, 5
U.S.C. 801, et seq., does not apply because this action is not a rule
for purposes of 5 U.S.C. 804(3).
Michael S. Regan,
Administrator.
[FR Doc. 2022-05227 Filed 3-11-22; 8:45 am]
BILLING CODE 6560-50-P
