A federal court in California today issued a major ruling in the battle between states and the auto industry over who has the authority to regulate emissions from motor vehicles.

In Central Valley Chrysler-Jeep v. Goldstone, Judge Ishii of the Federal District Court for the Central District of California ordered that California may properly enact emissions regulations that are more strict than the federal fuel economy standards. The Plaintiffs, led by the Association of International Automobile Manufacturers, had argued that such regulations were pre-empted by federal law, specifically the Energy Policy and Conservation Act (EPCA).

The plaintiffs claimed that the EPCA, which authorizes the National Highway Traffic Safety Administration (NHTSA) to issue fuel economy standards, conflicts with and pre-empts any attempt by a state to regulate tailpipe emissions. The court rejected these arguments, indicating that “EPA regulations under the Clean Air Act that control carbon dioxide emissions serve a purpose that is distinct from, and not in conflict with, the purpose of EPCA.”

In addition, “[s]tate laws that are granted waiver of preemption under the Clean Air Act that have the effect of requiring even substantial increases in average fuel economy performance are not preempted where the required increase in fuel economy is incidental to the state law’s purpose of assuring protection of public health and welfare under the Clean Air Act.”

The focus now turns to the EPA, and whether that agency will grant California a waiver under Section 209(b) of the Clean Air Act permitting the state’s emission regulations to go into effect. California has sued the EPA for not acting in a timely fashion on the waiver petition. Should the EPA grant the waiver, California’s regulations will go into effect, as will those of other states that have copied California’s approach. These regulations will then have to be considered by the NHTSA in any future proceedings to set fuel economy standards, potentially leading to more restrictive rules than are currently in effect.

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