On May 1, 2018, 17 states, including California, as well as the District of Columbia filed a Petition for Review in the US Court of Appeals for the District of Columbia in response to US EPA’s announcement that it would be rolling back tailpipe emission standards. As we previously reported, California stated in April that it was actively considering a lawsuit to challenge the decision to revise tailpipe emissions. The other states involved in the new lawsuit include Connecticut, Delaware, Illinois, Iowa, Maine, Maryland, Massachusetts, Minnesota, New Jersey, New York, Oregon, Pennsylvania, Rhode Island, Vermont, Virginia, and Washington. In total, the coalition represents approximately 140 million Americans.

The Petition calls for review of the Agency’s Notice in the Federal Register entitled “Mid-Term Evaluation of Greenhouse Gas Emission Standards for Model Year 2022-2025 Light-Duty Vehicles.” In the Notice, US EPA withdrew its January 12, 2017 Final Determination of the Mid-Term Evaluation of Greenhouse Gases for MY 2022-2025 light-duty vehicles because the Agency concluded that the standards set forth in the Final Determination are no longer appropriate in light of the record before US EPA and should be revised.  US EPA also noted its intent to initiate a subsequent notice and comment rulemaking to further consider appropriate standards for MY 2022-2025 light-duty vehicles. In a press release, the California Office of the Attorney General characterized the Petition for Review as based on US EPA’s arbitrary and capricious action, failure to follow its own regulations, and violations of the Clean Air Act.

In addition to the lawsuit, on May 7, 2018, the California Air Resources Board (CARB) issued a request for public input, indicating that it is considering a revision to “clarify the ‘deemed to comply’ provision applies to the current federal GHG standards should US EPA change the standards for any model years.” CARB explained that it would take action as needed so that weakened federal standards would not be deemed to comply with CARB standards. The comment deadline is May 31, 2018.

Despite the lawsuit initiation and CARB’s request for public input, there have been signs that the current Administration is willing to enter into discussions with California. Ten automakers met with President Trump on May 11, 2018 purportedly to discuss the fuel economy and GHG rules as well as trade issues. Industry representatives have also encouraged the Administration to negotiate with California. According to media reports, President Trump responded by asking US EPA Administrator Scott Pruitt and US Secretary of Transportation Elaine Chao to enter into negotiations with California for the purpose of setting one fuel economy standard for the country. A recent meeting occurred between US EPA, the Department of Transportation (DOT), and CARB on May 23, 2018 but there were conflicting interpretations of the meeting’s progress. While the agencies characterized the meeting as productive, Mary Nichols, the Chair of CARB issued a contrary statement on Twitter indicating there was additional need for constructive dialogue.

The result of the pending suit and California’s potential regulatory amendments will have significant implications for automakers moving forward and may cause additional states to adopt California’s more stringent standards. Squire Patton Boggs will continue to monitor this issue and provide updates.