Green Mountain Chrysler Plymouth Dodge Jeep v. Crombie

Green Mountain Chrysler Plymouth Dodge Jeep v. Crombie, F. Supp. 2d 295 (D. Vt. Sept. 12, 2007).

Green Mountain Chrysler Plymouth Dodge Jeep v. Crombie was a case brought by individual car manufacturers, the Alliance of Automobile Manufacturers, and several car dealerships located in the State of Vermont against state agencies.  The plaintiff automotive groups sought to invalidate Vermont’s efforts to adopt the standards of the California Air Resources Board (CARB) for the “California car.”  The 240-page ruling was issued following a bench trial and the Supreme Court’s decision in Mass. v. EPA.  The arguments to invalidate the regulation were based on express and implied preemption of the Vermont standards by the Energy Policy and Conservations Act (EPCA) or, alternatively that the standards were invalid due to a conflict between the EPCA and the Clean Air Act (CAA).  Additionally, an argument was made for foreign affairs preemption, which claimed that the regulation would inappropriately interfere with the President’s ability to negotiate an international agreement to address greenhouse gases.  Plaintiffs originally had additional claims under the dormant commerce clause, the Sherman Antitrust Act, and the Clean Air Act prior to trial, but these claims were dropped.  Several citizens’ groups, the State of New York, and Denise M. Shaheen, in her capacity as Commissioner of Environmental Conservation of the State of New York also joined the State as intervenor-defendants.  

The State and citizens’ groups attempted to dismiss the case because of ripeness.  The ripeness claim was based on the lack of a section 209 preemption waiver of the CAA granted to California by the EPA.  A waiver is required before the California standards can take effect.  Without such a waiver, the California standards are preempted under the CAA.  Vermont’s legislation was not to be effective until the preemption waiver was granted to California. Section 177 of the CAA would then allow other states, such as Vermont, to adopt the California standards.  Although California had not received the waiver, the United States District Court of Vermont ruled that the trial could proceed on the preemption issues and the court’s ruling would be based on the assumption that the EPA granted the waiver to California.  The court reasoned that the plaintiff automakers faced a “realistic danger of sustaining a direct injury” necessary to proceed with a declaratory judgment, because the companies must act now to redesign their automobiles in order to comply with the new standards.  The court’s decision to proceed with declaratory judgment was also supported by findings that the regulation had been formally enacted and the constitutional challenges were as concrete now as they would be in the future.

The court started its preemption analysis by determining that the CAA’s authority to regulate greenhouse gases and more specifically the California’s standards allowed under the CAA were not preempted by the National Highway Traffic Safety Administration’s (NHTSA) obligation to comply with the EPCA.  The court found that California’s regulations and, consequently, Vermont’s would become part of the federal “regulatory backdrop” upon the grant of the CAA preemption waiver.  The court then found Congressional intent through case law and legislative history to allow California’s regulations to be considered “other motor vehicle standards of the Government” which the NHTSA must consider when formulating fuel economy standards under section 32902 of the EPCA.  The court found additional support for agency collaboration in Executive Order 13432 which requires coordination of regulatory action where possible.  The court also cited the Supreme Court’s ruling in Mass. v. EPA, which determined that there is “overlap” but no conflict between the two statutes.  For these reasons, the court concluded that preemption doctrines do not apply to the interplay between section 209 of the CAA and the EPCA, because the alleged conflict is between federal schemes whereas preemption requires a federal scheme to forbid the implementation of a state scheme.  Despite this finding, the court conducted a standard preemption analysis because the express language of the EPCA’s preemption provision appears to forbid the Vermont regulation, and the plaintiffs alleged that the Vermont regulations result in an actual conflict with the EPCA fuel economy standards.

The court’s preemption analysis then turned to whether the EPCA’s preemption clause expressly preempts Vermont’s regulation, because it is essentially a fuel economy regulation or it is related to fuel economy standards.  In order to find express preemption, the court must find that it was the “clear and manifest purpose of Congress” to supersede power of the state.  The court found that Congress had not stated such intent because of legislative history indicating that regulation of air pollution from mobile sources was traditionally a state responsibility prior to the CAA, and the regulation of greenhouse gases from mobile sources was an area “regarded as a cooperative state federal legislative effort.”  The court also found that the Vermont regulation was not a “de facto fuel economy” standard, because there are ways to reduce greenhouse gas emissions without regulating fuel efficiency such as the use of alternative fuels.  The court then found the Vermont standards were not “related to fuel economy standards” as prohibited by the EPCA.  The court reached this finding because the EPCA was enacted against a backdrop of other federal laws that affected motor vehicles and could affect fuel economy such as the CAA, noise emissions standards, and safety standards but did not discuss displacing them in the EPCA’s legislative history.  Furthermore, the court found that the CARB standards could not be preempted, because the NHTSA was required by the EPCA to consider California standards when determining the maximum feasible average economy.  Accordingly, the court rejected the express preemption challenge.

The court then rejected the issue of field preemption.  Field preemption occurs when state law attempts to regulate in a field that Congress intended for the federal government to occupy exclusively.  Congressional intent in field preemption cases must be “clear and manifest” where the area has “been traditionally occupied by the States.”  The court found this was not the case, because the Supreme Court found in Mass. v. EPA that “the regulation of carbon dioxide emissions from motor vehicles is not the exclusive province of the federal Department of Transportation.”  The court also cited the Supreme Court’s determination that the EPA’s obligation to protect public health and welfare under the CAA may include carbon dioxide.  Furthermore, the district court found that Congress was well aware of the CAA practice of granting California waivers when it passed the EPCA and the scheme does not express sufficient dominance of the field that an EPA-approved state regulation would be precluded.  These reasons led the court to conclude that a “clear and manifest intent to render the regulation of carbon dioxide emissions from motor vehicles exclusively a federal domain.”

The court also rejected the claim of conflict preemption.  A state statute is found to be preempted to the extent that it intrudes upon Congressional objectives expressed by a federal statute.  The plaintiffs claimed that the conflict occurred in three ways: “first, that it frustrates Congressional intent to maintain a single, nationwide fuel economy standard; second, that it upsets the balance that NHTSA has chosen to strike in setting ‘maximum feasible average fuel economy’ levels by restricting consumer choice, reducing employment in the domestic automobile industry, and decreasing traffic safety; and third, that EPA’s waiver process will not ensure the absence of a conflict with EPCA objectives.”  The court rejected the first argument by citing Mass. v. EPA’s finding that Congress anticipated the overlap and allowed the NHTSA to consider the effects of such other standards when formulating the NHTSA standard.  The second and third arguments were also rejected.  There the district court stated that the plaintiffs failed to carry the burden of showing that “compliance with the regulation is not feasible; nor have they demonstrated that it will limit consumer choice, create economic hardship for the automobile industry, cause significant job loss, or undermine safety.”  Here the court went through the trial record and cited testimony demonstrating past successes of technology-forcing legislation, changing consumer trends, and current trends of emissions reductions through alternative fuels, hybrid vehicles, and efficiency technologies as evidence that the plaintiff’s burden was not met.  

The final claim rejected by the court was foreign policy preemption.  A state law may be preempted if, in absence of a federal statute or treaty, the state law “impairs the effective exercise of the Nation’s foreign policy.”  The plaintiffs made two arguments.  The first argument was that “Vermont’s regulation is preempted in the absence of any conflict with national foreign policy, by virtue of its intrusion into foreign affairs.”  The court rejected this argument by stating that Vermont’s regulation “exemplifies” the “cooperative federal state approach” to climate change described in a State Department letter to the United Nations Framework Convention on Climate Change.  Furthermore, the district court cited the Supreme Court’s conclusion in Mass. v. EPA that “while the President has broad authority in foreign affairs, that authority does not extend to the refusal to execute domestic laws.”  Therefore, the district court rejected the first foreign policy preemption argument.

The plaintiffs’ second foreign policy preemption argument was that “the regulation is preempted because there is a ‘sufficiently clear conflict’ with an ‘express foreign policy of the national government.’”  The plaintiffs claimed “that there is an express national foreign policy against the adopting unilateral binding limitations on GHG emissions in favor of a comprehensive international response on the issue.”  The district court was unable to find such a policy and rejected the claim that the United States’ disapproval of the Kyoto Protocol was evidence of such a policy.  The court also cited the State Department’s letter mentioned above as well as the Supreme Court’s dismissal of a similar argument in Mass. V. EPA.  The district court then concluded that the Vermont regulation was not in conflict with national foreign policy.

Having held that the Vermont regulations were not preempted, the district court ordered judgment for the defendants and upheld the regulation assuming that the CAA waiver was granted to the State of California.  California’s waiver request was later rejected but is currently being appealed before the Ninth Circuit Court of Appeals.

View the case document here [1]