California Enacts Law to Limit Greenhouse Gas Emissions from Motor Vehicles

Christopher Berka

On July 22, 2002, Gov. Gray Davis of California signed into law Assembly Bill 1493, a statute directing the California Air Resources Board to “develop and adopt regulations that achieve the maximum feasible and cost-effective reduction of greenhouse gas [GHG] emissions from motor vehicles.” The bill, introduced in the Legislature on Feb. 23, 2002, was enacted after several months of extensive controversy and media coverage.

Why California Decided to Target GHG Emissions from Motor Vehicles
In the preamble to Assembly Bill 1493, the California Legislature found and declared that global warming would impose on California “compelling and extraordinary impacts,” including potential reductions in the state’s water supply due to changes in snow pack levels, increases in air pollution, adverse impacts upon agriculture and food production, greater risk from wildfires, and potential damage to the state’s coastline and ocean ecosystems. The Legislature further found and declared that passenger vehicles and light-duty trucks are responsible for approximately 40 percent of the total GHG emissions in the state, and that technological solutions to reduce those emissions will stimulate the California economy.

What The Law Does
The statute requires the California Air Resources Board (the “state board”) to develop and adopt the regulations no later than Jan.1, 2005. The regulations may not, however, take effect prior to Jan. 1, 2006, in order to give the Legislature one year to review the regulations and determine whether to modify or overrule them. Under the statute, the regulations may apply only to “motor vehicles” manufactured in the 2009 model year, or any model year thereafter. The term “motor vehicle” is defined as a “passenger vehicle, light-duty truck, or any other vehicle determined by the state board to be a vehicle whose primary use is noncommercial personal transportation.”

The Legislature specified that the state board must consider, in developing the regulations, technological feasibility. The state board must also consider impacts on the economy, including consequences for the creation of jobs or new businesses, expansion of existing businesses, ability of businesses in the state to compete with those in other states, impacts on communities with minority or low-income populations, and effects on automobile workers and affiliated businesses in the state. Under the law, the state board may not impose additional fees or taxes on any motor vehicle, ban the sale of any vehicle category such as sport utility vehicles (SUV’s), require vehicle weight reductions, impose new speed limits, or mandate a reduction of vehicle miles traveled.

Assembly Bill 1493 allows credits for reductions in GHG emissions occurring before the state board’s regulations become final (i.e., an early reduction credit). Assembly Bill 1493 also requires that not later than July 1, 2003, the California Climate Action Registry, in consultation with the state board, shall adopt procedures for the reporting of reductions in GHG emissions from mobile sources.

In the preamble, the Legislature stated its intent for the regulations to take effect in accordance with limitations that may be imposed under the federal Clean Air Act, 42 U.S.C. section 7401 et seq., as amended by the federal Clean Air Act Amendments of 1990 (Pub. L. 101-549), and the waiver provisions of the federal act. Under the federal Clean Air Act, generally states may not enforce their own standards relating to the control of emissions from new motor vehicles. 42 U.S.C. Section 7543(a). The federal government may waive federal preemption, however, for California if California adopts standards that are “at least as protective of public health and welfare as applicable Federal standards.” 42 U.S.C. Section 7543(b). Other states may then adopt the California standards for which a waiver has been granted. 42 U.S.C. Section 7507. The complete text of AB 1493 is available on the California Air Resources Board’s website at ww.arb.ca.gov/gcc/gcc.htm.

What Lies Ahead
Under the statute, the state board is required to conduct public workshops in the state, including three in communities with the most significant exposure to air contaminants. The schedule of public workshops will be posted on the State Air Resources Board’s Web site, www.arb.ca.gov. (To receive notice of the schedule, members of the public may subscribe to e-mail updates to the Board’s Global Climate Change Program Web site by sending an e-mail to Majordomo@listserv.arb.ca.gov. In your message, leave the subject line blank, and in the e-mail message area type: subscribe gcc. You will receive an automatic message confirming you have successfully subscribed. For further information concerning the California Air Resources Board’s Global Climate Change Program Web site, contact Lisa Kasper (916/327-2932) or send an e-mail message to gcc@listserv.arb.ca.gov.) The first workshop was held Dec. 5-6, 2002; background materials for the workshop can be accessed at http://www.arb.ca.gov/msprog/zevprog/2003rule/2003rule.htm.

By Jan.1, 2005, the state board must report to the Legislature and the governor on the content of the regulations developed, including an analysis of their impact on minority or low-income communities, as well as on the economy and public health. If the federal government adopts standards regulating GHG emissions from new motor vehicles, and the state board determines that the federal standards are of “equivalent or greater effectiveness” as the regulations proposed by California, the state board may elect not to adopt a separate California standard.

Republican Bill Simon, who ran for governor of California against incumbent Gray Davis, opposed Assembly Bill 1493. In a pre-election debate with Governor Davis, Mr. Simon said that the science of global climate change is too uncertain to justify the measure and that Assembly Bill 1493 gives too much authority to the state board. Before the bill was signed by the governor, reports circulated in the media suggesting that opponents were considering a petition drive to overturn the statute by ballot referendum. Reports have also noted potential legal challenges to the bill on the grounds that federal law preempts efforts by California to regulate GHG emissions. Although, as noted above, the federal Clean Air Act allows California to adopt its own statewide standards “for the control of emissions” from new motor vehicles, 42 U.S.C. Section 7543(b), the federal Energy Policy and Conservation Act of 1975 and the federal Motor Vehicle Information and Cost Savings Act prohibit states from adopting “fuel economy standards or average fuel economy standards for automobiles covered by an average fuel economy standard” prescribed by the federal secretary of Transportation. 42 U.S.C. Section 32919(a). Whether regulations under Assembly Bill 1493 constitute permissible standards for the “control of emissions” or impermissible “fuel economy standards” is a hotly debated topic.

Controversial Issues To Be Faced By The State Board
As the state board proceeds during the next two years to develop the regulations required by Assembly Bill 1493, the agency will be confronted with a number of controversial issues. The state board, for example, will need to determine how it will design regulations and what standards it will use to measure costs and benefits. Impacts on the economy will need to be considered, as will questions of consumer choice and the effect of the regulations on the cost of new motor vehicles. The state board will also need to decide whether its regulations will govern fleet-wide averages or apply only to individual vehicles. Whether or not automakers receive offset credits by reducing emissions from non-motor vehicle sources, including factories, will also need to be decided. The state board will also need to decide what qualifies for an early reduction credit.

Several automotive design changes are likely to be considered by the state board, including changes in transmission technologies, improved seals on air conditioners, greater use of gas-electric hybrids and diesel engines, low friction tires, aerodynamic body changes, universal use of four valves per cylinder, and variable valve timing systems.

Ultimately, the members of the California Air Resources Board will vote on adopting the regulations, unless Assembly Bill 1493 is overruled by the courts or a ballot referendum. The board has eleven members appointed by the governor with the consent of the Senate. All members serve “at the pleasure” of the governor, and all, except the chairperson, serve part-time. Five of the current members of the Board were appointed by Democratic Gov. Davis, and six by his predecessor, Republican Gov. Pete Wilson.

Although Assembly Bill 1493 and regulations adopted pursuant to it apply only to new motor vehicles sold in California, the effects of the law may ultimately be experienced nationwide. If not struck down as preempted by federal law, the regulations could be adopted by other states, as permitted by the federal Clean Air Act, 42 U.S.C. section 7507, resulting in a wider application of the law. Even if not adopted by other states, however, regulations issued by the California Air Resources Board will have a profound impact on the nation’s automobile industry because California constitutes the largest automobile market in the country.

Christopher Berka is a partner in the Silicon Valley office of 800-attorney Bingham McCutchen LLP, www.bingham.com. He serves as co-chair of the firm’s Energy Group and head of the firm’s Global Climate Change Practice. He is a member of the Climate Change and Sustainable Development Committee.