CLIMATE:

EPA, Calif. defend waiver for state's tailpipe standards

Though the Obama administration has moved ahead with nationwide limits on greenhouse gas emissions from cars and light trucks, the legal fight over California's authority to set still-tougher standards has continued in court.

Arguing today before a panel of federal judges, attorneys for California and the U.S. Department of Justice said U.S. EPA made no mistake when it gave California permission to issue its own tailpipe standards for new automobiles. They urged the U.S. Circuit Court of Appeals for the District of Columbia to reject a challenge from the U.S. Chamber of Commerce and other industry groups, which claim that the Clean Air Act does not allow California to tackle the issue of climate change on its own.

Though California's waiver has taken a backseat to EPA's standards for now, environmentalists say it sets a crucial precedent for climate policy and creates a backstop in case the nationwide standards are scaled back by a future administration.

Historically, California has gotten waivers for stricter limits on soot- and smog-forming pollution from tailpipes -- a process that has effectively set rules for the whole country. Because the state makes up such a large share of the U.S. market, automakers have played ball to avoid losing ground to competitors or putting two different fleets of vehicles on the market.

When it comes to unusual local problems, the section of the Clean Air Act that allows waivers is a "pretty sensible provision about cooperative federalism," said Paul Clement, an attorney at King & Spalding LLP, arguing today on behalf of the U.S. Chamber. But because climate change has been attributed to greenhouse gas emissions from around the world, California cannot show a compelling local need beyond the state's desire to prod action by the federal government and other countries, he said.

The Justice Department's Norman Rave argued that California has a special interest in addressing climate change because it could face particularly severe problems with water scarcity, rising seas and forest fires.

On top of that, Rave said, warmer weather will exacerbate California's long-running struggle with smog. In the San Joaquin Valley, for example, levels of ground-level ozone are so high they have not met standards that were set decades ago, and scientists expect warmer weather to make the problem worse, he said.

"It's not simply a global problem -- it is also a local problem," Rave said. "These are California problems, and the statute allows California to address these problems."

The Obama administration's decision to grant the waiver was a turnaround from the George W. Bush administration, under which EPA rejected California's request. It was the first time the agency had declined to give the state a waiver for stricter tailpipe standards.

Under the leadership of EPA Administrator Lisa Jackson, the agency reconsidered the Bush-era decision and concluded that Congress had given California the "broadest possible discretion" to craft its own program for motor vehicles.

The National Automobile Dealers Association had argued that the waiver would create an unwieldy patchwork of regulations across the country, but that argument was weakened when California opted to follow the new federal rules.

Now that those regional concerns have been addressed by California's decision to follow the federal rules, the main question is whether automakers would lose money because of declining car sales, and the plaintiffs have not shown proof that will happen, Rave said.

'Can't have it both ways'

The court's decision might hinge on the level of deference given to EPA's interpretation of the Clean Air Act.

Though this case is the first in a series of challenges to the Obama administration's climate program, legal experts disagree about whether the ruling on California's waiver will give much insight into how the court will handle EPA's own regulations (ClimateWire, Aug. 23, 2010).

California's decision to follow federal rules has left the D.C. Circuit with another question: Is the challenge to the waiver moot?

Soon after Clement started addressing the court, Judge Merrick Garland chimed in, asking him to explain how businesses would be hurt by California's waiver. Attorneys for California and the Justice Department argue that business groups won't be affected -- especially now that the two sets of standards are synchronized -- but Clement said having both EPA and California enforce the rules is harm enough.

Neither the government nor industry groups want the case to be ruled moot, which would require the court to vacate the waiver under the precedent of the D.C. Circuit, Garland said. That would force the government to go back to the drawing board and would also prevent businesses from challenging the merits of the waiver decision.

Clement said the government "can't have it both ways" -- arguing on the one hand that California's standards won't cause harm to businesses and on the other hand that the waiver has a purpose that justifies leaving it in place.

Not only would the waiver allow the state to proceed if the federal government falters, but it would also "grease the skids" for future waiver requests that would go beyond federal standards, he said. Both should count as an injury, Clement said.

But Kathleen Kenealy of the California Department of Justice said the case should not be considered moot because the state did not give up its right to issue stricter limits than the federal government.

California's agreement to go along with federal standards was an effort to "harmonize" the two climate programs, she said, and it is contingent on the federal government's moving forward as planned.

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