Central Valley Chrysler-Jeep Inc. v. Goldstone

Central Valley Chrysler-Jeep Inc. v. Goldstone, No. CV-F-04-6663 (E.D. Cal. 2006).

Central Valley Chrysler-Jeep, Inc. filed a complaint against James Goldstone, in his capacity as Executive Director of the California Air Resources Board (CARB) claiming that CARB’s regulations of greenhouse gasses were preempted by the Clean Air Act (CAA), the Energy Policy and Conservation Act (EPCA), and the foreign policy of the United States.  The complaint was joined by plaintiff-intervenor, the Association of International Automobile Manufacturers (AIAM).  The case was filed with the United States District Court for the Eastern District of California.

On January 16, 2007, CARB was granted a motion for a stay of proceedings pending the outcome Mass. v. EPA before the Supreme Court of the United States.  The Supreme Court’s decision in that case was announced on April 2, 2007.  After the Supreme Court issued its opinion in Mass. v. EPA, CARB and AIAM moved for summary judgment on the issues of preemption.  Additionally, CARB moved for summary judgment on the issue of preemption by the foreign policy of the United States.   

California enacted Assembly Bill 1493 (AB 1493) in 2002.  The bill required CARB to promulgate “regulations that achieve the maximum feasible and cost-effective reduction of greenhouse gas emissions from motor vehicles” not later than January 1, 2005.  The regulations were applicable to new cars in the model year of 2009.  CARB was required to consider these time constraints as well as “environmental, economic, social, and technological factors.”  CARB’s regulations were also required to be “[e]conomical to an owner or operator of a vehicle, taking into account the full life-cycle costs of the vehicle.”  In 2004, the regulations were completed in CARB’s Resolution 04-28 (also known as AB 1493 regs).                

The district court was first asked to determine whether CARB standards were preempted by the CAA.  The court found that California must receive a waiver under section 209 of the CAA in order to enact standards that are more stringent than those offered by the EPA.  If California is granted the waiver, other states may then adopt the California standard.  The district court conditionally concluded that California and EPA can both promulgate regulations of motor vehicles’ greenhouse gas emissions if a waiver is granted.  Therefore, CARB’s standards were not preempted by the CAA but are subject to the section 209 waiver process.  [See discussion in States’ news regarding California waiver. –ADD LINK] Additionally, the district court noted that CARB’s regulations could also be enacted if new federal legislation enabled California to do so.

The court then addressed the issues of preemption and preclusion under the EPCA.  The EPCA requires the Department of Transportation, more specifically the National Highway Traffic Safety Administration (NHTSA), to determine the maximum feasible mileage standards for new vehicles on a fleet-wide basis.  The NHTSA establishes the standard by considering the following factors: “(1) technological feasibility; (2) economic practicability; (3) the effect of other Federal motor vehicle standards on fuel economy; and (4) the need of the nation to conserve energy.”  The EPCA also contains an express preemption provision that prohibits states from adopting laws or regulations related to fuel economy standards and, unlike the CAA, has no waiver provision.  

In making its determination on the issues of preemption and preclusion the district court noted, “in questions of both preemption of state law and preclusion of federal statutory remedies by other federal statutes, the touchstone is congressional intent.”  The district court found that the EPCA’s provision preempting state laws regulating fuel efficiency does not expressly preempt CARB from reducing greenhouse gasses through AB 1493.  The district court reached this decision by citing the Supreme Court’s ruling in Mass. v. EPA which indicates Congress intended that there be no conflict between EPA’s duty to protect public health and welfare and NHTSA’s duty to set fuel efficiency standards through the EPCA.  Therefore, the doctrine of conflict preemption does not apply even though there may be overlap between the agencies’ obligations.  The district court also ruled that “to the extent the enforcement of California’s AB 1493 Regulations may be inconsistent with existing CAFE standards,” EPCA grants the NHTSA “authority to reformulate CAFE standards to harmonize with the AB 1493 Regulations if, and when, such standards are granted waiver of preemption by EPA.”  

The district court also stated that no disagreement was found with the United States District Court of Vermont’s Green Mountain Chrysler Plymouth Jeep v. Dalmasse in regards to that court’s conclusion that a waiver granted under section 209 causes a state’s regulations to become federal law not subject to preemption.  Instead the court in this case “offered an alternative analysis that avoids the issue of ‘federalization’ in the hope of adding a measure of clarity to the discussion.”  In other words, the court here did not rule on the issue of whether CARB’s standards were considered federal once a waiver was granted, but instead found that the CARB’s standards and the EPCA did not have the necessary conflict required for a finding of preemption if CARB’s standards are to be considered state law nor a finding of preclusion if CARB’s standard were considered federal by means of the EPA’s waiver.

The district court also ruled for CARB on the issue of foreign policy preemption.  The district court found that the plaintiffs failed to show that the United States foreign policy is to disallow state-based efforts to reduce greenhouse gas emissions so that other countries may be leveraged into forming agreements.  Furthermore, the court found that the plaintiffs failed to show how AB 1493 will conflict in any way with United States foreign policy.  Accordingly, the court found that there was no foreign policy preemption.

The court then rejected the plaintiffs’ motions for summary judgment and granted CARB’s motions for summary judgment.  The court stated that if the EPA granted the section 209 waiver, California and other states adopting California’s standard should not be prevented by the doctrines of conflict preemption, express preemption, or foreign policy preemption from enforcing those standards.  The district court also rejected the plaintiffs’ claims under the dormant commerce clause and the Sherman Antitrust Act.

View the case document here [1]