Last week, House Energy and Commerce Committee Chairman John Dingell and Energy and Air Quality subcommittee Chairman Rick Boucher released a draft climate change bill for consideration by the House of Representatives.  Labeled a “discussion draft” for future climate legislation, the proposals included in the 461-page draft bill would impact a number of industries, as we have previously discussed.

The automotive industry will closely monitor this draft bill, as a number of “options” are presented relating to greenhouse gas (GHG) emissions by motor vehicles.  Importantly, the draft bill confirms that many crucial issues still remain on the table for developing GHG regulations.

The proposals that will likely have the most impact on the automotive industry are located in Title VIII of the discussion draft, the “Greenhouse Gas Standards.”  Specifically, Section 816 addresses “Motor Vehicle Emission Standards,” and proposes three options for discussion:

Option A:  Assumes the Environmental Protection Agency (”EPA”) has already determined that greenhouse gases may endanger public health or welfare.  It then requires the EPA to weigh the cost of any GHG emission standard that it will propose against the overall amount or cost of GHG emission reductions described in the draft bill’s proposed federal Greenhouse Gas Cap-and-Trade Program.

Option B:  Any EPA standards applicable to motor vehicle greenhouse gas emission shall be “fully consistent” with established corporate average fuel efficiency (”CAFE”) standards; and

Option C:  The EPA is precluded from setting tailpipe greenhouse gas emission standards in view of established CAFE standards for motor vehicles.

These options should be considered the first direct legislative responses by the House of Representatives to the Supreme Court’s decision in Massachusetts v. EPA, in which the Court ruled that the EPA has the authority to regulate CO₂ greenhouse gas emissions from motor vehicles.  As the authors of the draft bill noted in a letter to the members of the Committee on Energy and Commerce, “elected and accountable representatives in Congress, not the Executive Branch, should properly design [the] regulatory program” for GHG emissions in the United States.  Thus, this draft bill contemplates preventing the “certain consequence” of the EPA regulating CO₂ emissions under the Clean Air Act.

Section 816 proposes two additional options addressing standards enacted by the States governing GHG emissions by motor vehicles:

Option A:  Grants the preemption waiver submitted to the EPA by California on December 21, 2005, to control the GHG emissions from motor vehicles; and

Option B:  Preempts all GHG emission standards for motor vehicles enacted by the States.  This preemption extends to state-level requirements for certification, inspection, or any other approval relating to motor vehicle greenhouse gas emissions as a required condition for the initial retail sale, titling (if any), or registration of motor vehicles.

Although the authors noted in their letter to the Committee that regulation of GHGs by the States “could be disruptive to interstate commerce and counterproductive to the goal of limiting national greenhouse gas emissions,” California’s ability to regulate motor vehicle GHG emissions nevertheless remains a viable option in the draft bill for further discussion.

Without question, the automotive industry will follow the discussions surrounding each of these options as the draft climate change bill maneuvers its way through the House in the next Congress.

For further information about this topic, please contact Akin Gump.