California to require all new vehicles to be zero-emissions by 2035: Legal and Constitutional issues

California to require all new vehicles to be zero-emissions by 2035:

Legal and Constitutional issues

On August 25, 2022, the California Air Resources Board issued a rule requiring new vehicles sold in California to be zero-emission vehicles by the year 2035. These cars produce no emissions from the on-board source of power.[1]  The permissible vehicles include battery electric vehicles, plug-in hybrid electric vehicles, and fuel cell electric vehicles. The rule applies to auto manufacturers, but not dealers or car purchasers.[2] Gas-powered cars will no longer be sold after 2035, though they can still be driven and sold as used cars.[3] The rule phases out gas cars over time, requiring higher percentages of cars sold to be zero emissions vehicles every few years to meet the 2035 goal of 100% zero emissions vehicles.[4] According to the chair of the Resource Board, the rule will lead to a 50% reduction in pollution from vehicles by 2040.[5]

The effects of the law will project beyond California, as automakers across the country will have to consider the types of vehicles they build in light of the restrictions set by the largest state in the country. In addition, other states have legislation requiring the state to automatically adopt California’s automotive emissions laws, and more do so as a matter of course.[6]

Opponents of the new regulations have argued that the new targets are unrealistic, as they depend on a robust supply chain, and ignore the reality that electric vehicles are substantially more expensive.[7] It is also argued that the increased production of the new cars that will be needed will mitigate much of the positive environmental impact envisioned by the new rules.[8]

These restrictions on sales raise several questions of law. First, since the rules will impact commerce throughout the country, they raise constitutional issues related to the Dormant Commerce Clause doctrine.

Article I, Section 8, of the United States Constitution confers upon Congress the power to “regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes.”

Under the Dormant Commerce Clause Doctrine, as Congress has the exclusive right to regulate interstate commerce, no state may enact legislation which exercises too much control over interstate commerce.[9]

Laws that discriminate against out of state competition or which favor in-state competition, or which seeks to regulate conduct occurring wholly outside the state, will be subject to a strict scrutiny analysis.[10] Laws that only incidentally impact interstate commerce are constitutional unless the burdens they impose on interstate trade are clearly excessive in relation to local benefits.[11]

California’s fuel regulations have been challenged on Dormant Commerce Clause grounds in the past. In 2013 and again in 2019, the Ninth Circuit Court of Appeals rejected the argument that previous California emissions regulations exceeded the scope of state power under the Dormant Commerce Clause.

In allowing the California rules, that court ruled that while the California rules created incentives for out-of-state companies to modify their behavior, this did not actually regulate out-of-state companies.[12] The Court also noted that whatever their impact beyond California, the motive for the emission regulations was to address concern about the adverse impacts of climate change in California, not to devise regulations for other states.[13]

Another issue implicated in state regulation of the environment is the doctrine of federal preemption. The “Supremacy Clause” in Article IV of the Constitution provides that federal law is the supreme law of the land. This means that the federal legislation will preempt state legislation when a federal law contains an express “preemption” clause.  Federal law can also impliedly preempt state law when Congress enacts a pervasive scheme of regulation in a particular field, which implicitly precludes state regulation in that same field.[14] For example, a state would not be allowed to create its own air travel security rules, as TSA rules are designed to occupy this entire field.

The Clean Air Act of 1970 contains an explicit preemption clause, prohibiting any state from enacting its own emissions standards.[15] However, when the Clean Air Act was passed, California was dealing with the effects of smog, and so the drafters of the Act carved out an exception for California. Under the Clean Air Act, California is authorized to seek a waiver from the EPA which allows it to enact its own stricter emissions standards for new vehicles. The EPA may grant the waiver unless it finds that California’s rule is based on an arbitrary and capricious determination, or that California’s new standards are not needed to meet compelling and extraordinary conditions.[16] Once the waiver is granted, other states are free to adopt California’s stricter standards.[17]

California will be required to obtain a new waiver to implement the new restrictions. The granting of this waiver is not without controversy. In 2019, the Trump Administration revoked California’s waiver on grounds that it effectively allowed California to set national policy, but the Biden administration restored this authority in 2022.[18]

Following the restoration of the waiver, seventeen states sued the EPA. The plaintiffs argued that since California’s emissions standards carry substantial weight in the rest of the country, granting them the waiver is effectively a delegation of federal authority to a state, which is prohibited by the “Equal Sovereignty” Doctrine.[19]

Those supporting a legal challenge to the waiver may argue that the rationale offered by California undermines the purpose of the waiver process. California’s waiver provision is designed to allow California to regulate environmental concerns unique to California, such as smog. These new regulations are aimed at fighting climate change, which is not a problem unique to California.[20] Still, most observers expect the EPA to approve the waiver, allowing California to enforce the new zero emissions rules.[21] However, as history has shown, any such a grant is tenuous, and open to change with the prevailing political winds of a new administration.