Wednesday, 

July 8, 2009 

Part III 

Environmental 

Protection Agency 

California State Motor Vehicle Pollution 

Control Standards; Notice of Decision 

Granting a Waiver of Clean Air Act 

Preemption for California’s 2009 and 

Subsequent Model Year Greenhouse Gas 

Emission Standards for New Motor 

Vehicles; Notice 

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32744 Federal Register / Vol. 74, No. 129 / Wednesday, July 8, 2009 / Notice 

ENVIRONMENTAL PROTECTION 

AGENCY 

[FRL–8927–2] 

California State Motor Vehicle 

Pollution Control Standards; Notice of 

Decision Granting a Waiver of Clean 

Air Act Preemption for California’s 

2009 and Subsequent Model Year 

Greenhouse Gas Emission Standards 

for New Motor Vehicles 

SUMMARY: The Environmental Protection 

Agency (EPA) is granting the California 

Air Resources Board’s (CARB’s) request 

for a waiver of Clean Air Act 

preemption to enforce its greenhouse 

gas emission standards for model year 

2009 and later new motor vehicles. This 

decision is under section 209(b) of the 

Clean Air Act (the ‘‘Act’’), as amended. 

This decision withdraws and replaces 

EPA’s prior denial of the CARB’s 

December 21, 2005 waiver request, 

which was published in the Federal 

Register on March 6, 2008. 

DATES: Petitions for review must be filed 

by September 8, 2009. 

ADDRESSES: EPA has established a 

docket for this action under Docket ID 

No. EPA–HQ–OAR–2006–0173. All 

documents and public comments in the 

docket are listed on the 

www.regulations.gov Web site. Publicly 

available docket materials are available 

either electronically through 

www.regulations.gov or in hard copy at 

the Air and Radiation Docket in the EPA 

Headquarters Library, EPA West 

Building, Room 3334, 1301 Constitution 

Ave., NW., Washington, DC. The Public 

Reading Room is open from 8:30 a.m. to 

4:30 p.m., Monday through Friday, 

excluding holidays. The telephone 

number for the Reading Room is (202) 

566–1744. The Air and Radiation 

Docket and Information Center’s Web 

site is http://www.epa.gov/oar/ 

docket.html. The electronic mail (email) address for the Air and Radiation 

Docket is: a-and-r-Docket@epa.gov, the 

telephone number is (202) 566–1742 

and the fax number is (202) 566–9744. 

FOR FURTHER INFORMATION CONTACT: 

Specific questions may be addressed to 

David Dickinson, Office of 

Transportation and Air Quality, 

Compliance and Innovative Strategies 

Division (6405J–NLD), EPA, 1200 

Pennsylvania Ave., NW., Washington, 

DC 20460, telephone: (202) 343–9256, 

e-mail: Dickinson.David@epa.gov. 

SUPPLEMENTARY INFORMATION: 

Table of Contents 

I. Executive Summary 

II. Background 

A. California’s Greenhouse Gas Program for 

New Motor Vehicles 

B. EPA’s Consideration of CARB’s Request 

III. Analysis of Preemption Under Section 

209(a) of the Clean Air Act 

A. Clean Air Act Preemption Provisions 

B. Deference to California 

C. Burden of Proof 

IV. California’s Protectiveness Determination 

A. What Are ‘‘Applicable Federal 

Standards’’? 

1. Are ‘‘Applicable Federal Standards’’ 

Limited to Clean Air Act Emission 

Standards or Do They Include NHTSA’s 

Fuel Economy Standards? 

2. If EPA Did Consider CAFE Standards as 

‘‘Applicable Federal Standards,’’ Are the 

CAFE Standards More Stringent Than 

California’s Greenhouse Gas Emission 

Standards? 

B. How Does EPA Evaluate Impacts on 

Other States? 

C. Is California’s Protectiveness 

Determination Arbitrary and Capricious? 

1. Based on EPA’s Traditional Analysis, Is 

California’s Protectiveness 

Determination Arbitrary and Capricious? 

2. Is California’s Protectiveness 

Determination Arbitrary and Capricious 

Based on the Real-World In-Use Effects 

of California’s Greenhouse Gas 

Standards? 

a. Fleet Turnover/Delayed Scrappage 

b. The ‘‘Rebound Effect’’ 

c. Upstream Emissions Impacts 

D. Section 209(b)(1)(A) Conclusion 

V. Does California Need Its Standards To 

Meet Compelling and Extraordinary 

Conditions? 

A. Basis of March 6, 2008 Denial 

B. Should EPA Review This Criterion 

Based on the Need for California’s Motor 

Vehicle Program or the Need for the GHG 

Standards? 

1. Comments Supporting a Review of the 

Entire Program 

2. Comments Supporting a Review of the 

GHG Standards Separately 

3. Decision 

C. Does California Need Its Motor Vehicle 

Program To Meet Compelling and 

Extraordinary Conditions? 

D. Does California Need Its Motor Vehicle 

GHG Standards To Meet Compelling and 

Extraordinary Conditions? 

1. Are California’s GHG Standards 

Designed in Part To Address an Air 

Pollution Problem That is Local or 

Regional in Nature? 

2. Do the Impacts of Climate Change in 

California Support a Denial of the 

Waiver? 

a. What Test Applies Under This 

Alternative Approach? 

b. Would a Waiver Be Denied Under This 

Alternative Approach? 

3. Must California’s GHG Standards 

Achieve a Demonstrated Reduction in 

GHG Atmospheric Concentrations or 

Impacts Under Section 209(b)(1)(B)? 

E. Section 209(b)(1)(B) Conclusion 

VI. Are the California GHG Standards 

Consistent With Section 202(a) of the 

Clean Air Act? 

A. Historical Approach: The Standard of 

Review for Consistency With Section 

202(a) 

B. CARB’s Assessment of the State of 

Development of GHG Reduction 

Technology and Comments Supporting 

CARB’s Assessment 

1. Development of GHG Reduction 

Technology 

2. Overview of Technologies and Their 

Projected Applications 

3. CARB’s Update on Technological 

Development 

4. Manufacturers’ Comments on the 

Technological Feasibility of the GHG 

Standards 

C. Technological Feasibility and the Cost of 

Compliance 

1. Historical Approach 

2. Technology Cost Information in This 

Proceeding 

3. Consistency of Certification Test 

Procedures 

4. Safety Implications of the CARB GHG 

Standards 

E. Conclusion on Technological Feasibility 

F. Other Issues Related to Consistency 

With Section 202(a) 

1. Impacts of EPA’s March 6, 2008 Denial 

on Lead Time 

2. Endangerment of Public Health or 

Welfare 

a. Is it Appropriate To Review 

Endangerment of Public Health or 

Welfare Under the ‘‘Consistency With 

Section 202(a)’’ Criterion? 

b. Parties Opposing the Waiver Have Not 

Met Their Burden of Showing Lack of 

Endangerment to Public Health or 

Welfare 

G. Section 209(b)(1)(C) Conclusion 

VII. Additional Issues Raised 

A. EPA’s Administrative Process for 

Evaluating California’s Waiver Request 

1. Public Comment Process 

2. EPA’s Reconsideration Process 

3. Is a Waiver Required Before California 

or Section 177 States Adopt California’s 

Motor Vehicle Emission Standards? 

B. Scope of EPA’s Waiver Review 

1. Relevance of the Energy Policy and 

Conservation Act (EPCA) to the Waiver 

Decision 

2. Do California’s GHG Emission Standards 

Create an Impermissible ‘‘Patchwork’’? 

3. What Impact Does Granting California a 

Waiver for Its GHG Emission Standards 

Have on PSD Requirements for GHGs? 

VIII. Decision 

I. Executive Summary 

Today, I, as Administrator of the 

Environmental Protection Agency, am 

granting California’s request for a waiver 

of Clean Air Act preemption for 

California’s greenhouse gas emission 

standards for 2009 and later model years 

of new motor vehicles, adopted by the 

California Air Resources Board on 

September 24, 2004. This decision 

withdraws and replaces EPA’s previous 

March 6, 2008 Denial of California’s 

waiver request. 

In the March 6, 2008 Denial, EPA 

determined that one of the three criteria 

for denial of a waiver had been met, 

namely, that California did not need its 

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Federal Register / Vol. 74, No. 129 / Wednesday, July 8, 2009 / Notice 32745 

State standards to meet compelling and 

extraordinary conditions. I have 

reconsidered that determination, which 

was based on an interpretation of 

section 209(b)(1) of the Clean Air Act 

that I now reject. Based on a review of 

the statutory language, legislative 

history, and the comments received, I 

am returning to EPA’s traditional 

interpretation of this provision. 

Applying EPA’s traditional 

interpretation I have determined that 

the waiver should not be denied under 

this criterion. Since the March 6, 2008 

Denial did not evaluate or make any 

determinations concerning either of the 

other two waiver criteria, I have 

evaluated those criteria and determined 

that the waiver should not be denied 

under either of them. This includes 

careful consideration of all of the 

evidence presented concerning 

technological feasibility of the model 

year 2009 and later model year 

standards, considering lead time and the 

cost of implementation. 

The legal framework for this decision 

stems from the waiver provision first 

adopted by Congress in 1967, and later 

modified in 1977. Congress established 

that there would be only two programs 

for control of emissions from new motor 

vehicles—EPA emission standards 

adopted under the Clean Air Act and 

California emission standards adopted 

under its state law. Congress 

accomplished this by preempting all 

state and local governments from 

adopting or enforcing emission 

standards for new motor vehicles, while 

at the same time providing that 

California could receive a waiver of 

preemption for its emission standards 

and enforcement procedures. This 

struck an important balance that 

protected manufacturers from multiple 

and different state emission standards, 

and preserved a pivotal role for 

California in the control of emissions 

from new motor vehicles. Congress 

recognized that California could serve as 

a pioneer and a laboratory for the nation 

in setting new motor vehicle emission 

standards. Congress intentionally 

structured this waiver provision to 

restrict and limit EPA’s ability to deny 

a waiver, and did this to ensure that 

California had broad discretion in 

selecting the means it determined best 

to protect the health and welfare of its 

citizens. Section 209(b) specifies that 

EPA must grant California a waiver if 

California determines that its standards 

are, in the aggregate, at least as 

protective of the public health and 

welfare as applicable Federal standards. 

EPA may deny a waiver only if it makes 

at least one of three findings specified 

under the Clean Air Act (including 

whether California’s ‘‘protectiveness 

finding’’ noted above is arbitrary and 

capricious). Therefore, EPA’s role upon 

receiving a request for waiver of 

preemption from California is to 

determine whether it is appropriate to 

make any of the three findings specified 

by the Clean Air Act and if the Agency 

cannot make at least one of the three 

findings then the waiver must be 

granted. The three waiver criteria are 

properly seen as criteria for a denial— 

EPA must grant the waiver unless at 

least one of three criteria for a denial is 

met. This is different from most waiver 

situations before the Agency, where 

EPA typically determines whether it is 

appropriate to make certain findings 

necessary for granting a waiver, and if 

the findings are not made then a waiver 

is denied. This reversal of the normal 

statutory structure embodies and is 

consistent with the congressional intent 

of providing deference to California to 

maintain its own new motor vehicle 

emissions program. 

The three criteria for denial of a 

waiver are: First, whether California’s 

determination that its standards are, in 

the aggregate, at least as protective as 

applicable Federal standards is arbitrary 

and capricious (Section 209(b)(1)(A)); 

second, whether California has a need 

for such standards to meet compelling 

and extraordinary conditions (Section 

209(b)(1)(B)); and third, whether 

California’s standards are consistent 

with Section 202(a) of the Act (Section 

209(b)(1)(C)). EPA has consistently 

interpreted the waiver provision as 

placing the burden on the opponents of 

a waiver to demonstrate that one of the 

criteria for a denial has been met. In this 

context, since 1970, EPA has recognized 

its limited discretion in reviewing 

California waiver requests. EPA has 

granted over 50 waivers of preemption 

and has only fully denied one waiver 

request, the decision under 

reconsideration here. 

In this case, California first requested 

that EPA waive preemption for its new 

motor vehicle greenhouse gas emission 

standards on December 21, 2005. EPA 

did not begin its formal consideration of 

the waiver request until after the 

Massachusetts v. EPA decision in April 

2007, in which the Supreme Court 

determined that greenhouse gases are air 

pollutants within that term’s meaning in 

the Clean Air Act. On March 6, 2008, 

after an administrative process that 

included two public hearings and a 

written comment period, EPA published 

its final decision denying California’s 

request. EPA’s waiver denial was based 

on the second waiver criterion, with 

EPA determining that California did not 

need its greenhouse gas standards to 

meet compelling and extraordinary 

conditions. EPA did not address the 

other two waiver criteria. 

The reconsideration process started 

early this year. On January 21, 2009, 

California Governor Schwarzenegger 

sent a letter to President Obama, and the 

California Air Resources Board sent a 

letter to Administrator-designee 

Jackson, requesting the Agency 

reconsider the prior denial. After 

reviewing CARB’s reconsideration 

request and the concerns raised by 

many different parties, EPA found that 

there were significant issues regarding 

the Agency’s denial of the waiver. The 

denial was a substantial departure from 

EPA’s longstanding interpretation of the 

Clean Air Act’s waiver provision and 

EPA’s history of granting waivers to 

California for its new motor vehicle 

emissions program. Many different 

parties, including California, states that 

have adopted or are interested in 

adopting California’s standards, 

members of Congress, scientists, and 

other stakeholders, had expressed 

similar concerns about the denial of the 

waiver. Based on this, EPA believed 

there was merit to reconsidering its 

decision denying California’s waiver 

request and on February 12, 2009, EPA 

published a Federal Register notice 

announcing its reconsideration of 

California’s greenhouse gas waiver 

request. EPA held a public hearing on 

March 5, 2009, and received written 

comments through April 6, 2009. 

EPA received substantial comment on 

each of the three waiver criteria. The 

entire administrative process in 

consideration of California’s request 

provided the Agency with extensive 

legal argument and evidence, including 

oral testimony from three public 

hearings and nearly 500,000 written 

comments. This material has been 

substantive and invaluable in the 

Agency’s review. EPA has received 

extensive comments from many states; 

federal, state and local officials; 

industry; environmental groups; 

scientists; and other stakeholders. The 

vast majority of comments EPA received 

were in support of the waiver. 

After a thorough evaluation of the 

record, I am withdrawing EPA’s March 

6, 2008 Denial and have determined that 

the most appropriate action in response 

to California’s greenhouse gas waiver 

request is to grant that request. I have 

determined that the waiver opponents 

have not met their burden of proof in 

order for me to deny the waiver under 

any of the three criteria in section 

209(b)(1). The findings I have made 

concerning each of the criteria are 

summarized below. 

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32746 Federal Register / Vol. 74, No. 129 / Wednesday, July 8, 2009 / Notice 

1 68 FR 19811 (April 22, 2003) and 71 FR 78190 

(December 26, 2006). 

2California Air Resources Board, EPA–HQ–OAR– 

2006–0173–0004.2. 

Concerning the criterion with respect 

to the protectiveness of California’s 

standards in the aggregate, I find that 

the opponents of the waiver have not 

met their burden to demonstrate that 

California’s determination was arbitrary 

and capricious. This evaluation can 

properly by made in situations where 

EPA has not issued its own standards, 

and this finding is appropriate whether 

or not comparison is made to EPA’s 

current emissions standards or the 

National Highway Transportation Safety 

Administration’s (NHTSA’s) fuel 

economy standards, and whether or not 

it includes an evaluation of the realworld in-use effect of California’s 

greenhouse gas standards on its broader 

motor vehicle program. 

With respect to the criterion 

concerning the need for California’s 

state standards to meet compelling and 

extraordinary conditions, I have found 

that the March 6, 2008 Denial was based 

on an inappropriate interpretation of the 

waiver provision. The March 6, 2008 

Denial determined that Congress 

intended to allow California to 

promulgate only those state standards 

that address pollution problems that are 

local or regional, and this provision was 

not intended to allow California to 

promulgate state standards designed to 

address global climate change problems. 

In the alternative, EPA found that the 

effects of climate change in California 

are not compelling and extraordinary 

compared to the effects in the rest of the 

country. 

The text of section 209(b) and the 

legislative history, when viewed 

together, lead me to reject the 

interpretation adopted in the March 6, 

2008 Denial, and to apply the traditional 

interpretation to the evaluation of 

California’s greenhouse gas standards 

for motor vehicles. If California needs a 

separate motor vehicle program to 

address the kinds of compelling and 

extraordinary conditions discussed in 

the traditional interpretation, then 

Congress intended that California could 

have such a program. Congress also 

intentionally provided California the 

broadest possible discretion in adopting 

the kind of standards in its motor 

vehicle program that California 

determines are appropriate to address 

air pollution problems and protect the 

health and welfare of its citizens. The 

better interpretation of the text and 

legislative history of this provision is 

that Congress did not use this criterion 

to limit California’s discretion to a 

certain category of air pollution 

problems, to the exclusion of others. 

Under that interpretation, I cannot 

find that opponents of the waiver have 

demonstrated that California does not 

need its state standards to meet 

compelling and extraordinary 

conditions. The opponents of the waiver 

have not adequately demonstrated that 

California no longer has a need for its 

motor vehicle emissions program. I have 

also determined that even under the 

interpretation announced in the March 

6, 2008 Denial, opponents of the waiver 

have not demonstrated that California 

does not need its greenhouse gas 

emission standards to meet compelling 

and extraordinary conditions. In 

addition, I have interpreted the 

‘‘compelling and extraordinary 

conditions’’ criterion to not properly 

include a consideration of whether the 

impacts from climate change are 

compelling and extraordinary in 

California. Nevertheless, I have 

evaluated the comments received and 

evidence in the record and have 

determined that the opponents of the 

waiver have not met their burden in 

demonstrating why evidence such as the 

impacts of climate change on existing 

ozone conditions in California along 

with the cumulative impacts identified 

by proponents of the waiver (e.g., 

impacts on snow melt and water 

resources and agricultural water supply, 

wildfires, coastal habitats, ecosystems, 

etc.) is not compelling and 

extraordinary. 

Concerning the criterion with respect 

to consistency of the greenhouse gas 

emission standards with section 202(a), 

EPA has reviewed extensive comments 

and records received from California 

and from the regulated community 

concerning the kinds of technology 

needed to comply with California’s 

standards, including costs and lead 

time, as well as evidence concerning the 

current compliance status of 

manufacturers. In light of the previous 

waiver denial, EPA specifically asked 

for comment on how lead time should 

be evaluated as part of the Agency’s 

reconsideration. Based on all of that 

information, I cannot find that 

opponents of the waiver have 

demonstrated that the greenhouse gas 

emission standards are inconsistent 

with section 202(a). While I believe that 

a grant of the waiver for model year 

2009 would not be a retroactive change 

in the law, to limit any potential 

concerns that have been raised by the 

manufacturers over their potential 

reliance upon EPA’s previous waiver 

denial, my decision provides that CARB 

may not hold a manufacturer liable or 

responsible for any noncompliance civil 

penalty action caused by emission 

debits generated by a manufacturer for 

the 2009 model year. 

EPA finds that those opposing the 

waiver request have not met the burden 

of demonstrating that California’s 

regulations do not satisfy the statutory 

criteria of section 209(b). For this 

reason, I am granting California’s waiver 

request to enforce its greenhouse gas 

motor vehicle emission regulations. 

II. Background 

A. California’s Greenhouse Gas Program 

for New Motor Vehicles 

As further explained below, CARB 

has adopted amendments to title 13, 

California Code of Regulations (CCR), 

sections 1900 and 1961, and established 

standards to regulate greenhouse gas 

(GHG) emissions from new passenger 

cars, light-duty trucks and medium-duty 

vehicles in a new section 1961.1. 

California’s GHG standards are 

included as part of its second generation 

low-emission vehicle program known as 

LEV II. EPA previously issued a waiver 

for the LEV II program and also issued 

a waiver for CARB’s zero-emission 

vehicle program (known as ZEV) 

through the 2011 model year (MY).1 By 

Resolution 04–28, CARB approved the 

GHG standards for motor vehicles on 

September 24, 2004, and California’s 

Office of Administrative Law approved 

the regulations on September 15, 2005.2

CARB’s regulation covers largevolume motor vehicle manufacturers 

beginning in the 2009 model year, and 

intermediate and small manufacturers 

beginning in the 2016 model year and 

controls greenhouse gas emissions from 

two categories of new motor vehicles— 

passenger cars and the lightest trucks 

(PC and LDT1) and heavier light-duty 

trucks and medium-duty passenger 

vehicles (LDT2 and MDPV). The 

regulations add four new greenhouse 

gas air contaminants (carbon dioxide 

(CO2), methane (CH4), nitrous oxide 

(N2O), and hydrofluorocarbons (HFCs)) 

to California’s existing regulations for 

criteria and criteria-precursor pollutants 

and air toxic contaminants. There are 

separate fleet average emission 

standards for the two vehicle size 

categories and within each category the 

sales-weighted average of a 

manufacturer’s vehicles is required to 

comply with the standard. The 

regulations establish a manufacturer 

declining fleet average emission 

standard for these gases (expressed as 

grams of carbon dioxide equivalent per 

mile (‘‘gpm’’)), with separate standards 

for each of the two categories of 

passenger vehicles noted above. CARB 

places the declining standards into two 

phases: near-term standards phased in 

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3California Air Resources Board, EPA–HQ–OAR– 

2006–0173–0004. 

4 Massachusetts v. EPA, 549 U.S. 497, 127 S. Ct. 

1438 (2007). On April 24, 2009, EPA issued 

‘‘Proposed Endangerment and Cause or Contribute 

Findings for Greenhouse Gases under Section 

202(a) of the Clean Air Act’’ at 74 FR 18885 (April 

24, 2009). 

5 72 FR 21260 (April 30, 2007). 

6 73 FR 12156 (March 6, 2008). The State of 

California brought litigation against EPA in the 

United States Court of Appeals, DC Circuit. This 

litigation is held in abeyance pending further order 

of the court. (February 25, 2009). 

7California Air Resources Board, EPA–HQ–OAR– 

2006–0173–7044. 

8 74 FR 4905 (January 28, 2009). 

9 74 FR 7040 (February 12, 2009). 

10Clean Air Act section 209(a). 

11California is the only State which meets section 

209(b)(1)’s requirement for obtaining a waiver. See 

S. Rep. No. 90–403 at 632 (1967). 

from the 2009 through 2012 model 

years, and mid-term standards, phased 

in from the 2013 through 2016 model 

years. Manufacturers may receive 

credits for meeting the standards before 

model year 2009, for surpassing the 

standards in later model years, and for 

selling alternative fuel vehicles. These 

credits may be banked for later use, 

transferred between vehicle categories, 

or sold to another manufacturer. If a 

manufacturer fails to meet the standard 

in a particular model year, it will begin 

to accrue debits. At that point it will 

have five years to make up for the 

debits, either by generating credits, or 

by purchasing credits from another 

manufacturer. 

B. EPA’s Consideration of CARB’s 

Request 

By letter dated December 21, 2005, 

CARB submitted a request (‘‘Waiver 

Request’’) seeking a waiver of Section 

209(a)’s prohibition for its motor vehicle 

GHG standards.3 On February 21, 2007, 

EPA notified the Executive Officer of 

CARB that the timing of EPA’s 

consideration of the GHG waiver request 

was related to the then-pending 

Massachusetts v. EPA case before the 

United States Supreme Court. EPA 

stated that the decision in that case 

could potentially be relevant to issues 

EPA might address in the context of the 

GHG waiver proceeding. The Supreme 

Court issued its Massachusetts v. EPA 

decision on April 2, 2007, finding that 

greenhouse gases are air pollutants 

under the Clean Air Act, and that EPA 

is required to decide the pending 

rulemaking petition under section 

202(a) of the Act, based on the statutory 

criteria of whether, in the 

Administrator’s judgment, emissions of 

greenhouse gases from new motor 

vehicles cause or contribute to air 

pollution that may reasonably be 

anticipated to endanger public health or 

welfare.4

On April 30, 2007, a Federal Register 

notice was published announcing an 

opportunity for hearing and comment 

on CARB’s request.5 EPA subsequently 

held two public hearings on May 22, 

2007, in Washington, DC, and on May 

30, 2007, in Sacramento, CA. The 

written comment period closed on June 

15, 2007. On several occasions, EPA 

received requests to extend or re-open 

the comment period; however, the 

Agency did not extend the June 15, 2007 

deadline. The Agency instead indicated 

that consistent with past waiver practice 

it would continue, as appropriate, to 

communicate with stakeholders and 

evaluate any comments submitted after 

the close of the comment period to the 

extent practicable. By letter dated 

December 19, 2007, EPA notified 

California Governor Schwarzenegger 

that EPA would be denying the waiver. 

On March 6, 2008, EPA published its 

decision denying California’s waiver 

request (March 6, 2008 Denial).6

EPA’s March 6, 2008 Denial was 

based on a finding that California did 

not need its GHG standards for new 

motor vehicles to meet compelling and 

extraordinary conditions. Because this 

finding was sufficient to deny 

California’s waiver request, the 

Administrator found it unnecessary to 

determine whether the criteria for 

denial of a waiver under sections 

209(b)(1)(A) and (C) had been met. 

On January 21, 2009, CARB submitted 

a request for EPA to reconsider its 

March 6, 2008 Denial (‘‘Reconsideration 

Request’’).7 CARB’s Reconsideration 

Request stated its belief that EPA has 

the inherent authority to reconsider its 

previous waiver denial and EPA should 

do so in order to restore the Agency’s 

interpretations and applications of the 

Clean Air Act to continue California’s 

longstanding leadership role in setting 

emission standards. Specifically, CARB 

noted several bases for the 

reconsideration centered on EPA’s 

misinterpretation of the Clean Air Act to 

set new flawed tests and misapplication 

of facts to those tests. 

President Obama issued a Presidential 

Memorandum to the Administrator of 

the Environmental Protection Agency 

on January 26, 2009, stating that ‘‘In 

order to ensure that the EPA carries out 

its responsibilities for improving air 

quality, you are hereby requested to 

assess whether the EPA’s decision to 

deny a waiver based on California’s 

application was appropriate in light of 

the Clean Air Act. I further request that, 

based on that assessment, the EPA 

initiate any appropriate action.’’ 8

Subsequently, EPA published a 

Federal Register notice on February 12, 

2009, which responded to CARB’s 

reconsideration request and announced 

that EPA would fully review and 

reconsider its March 6, 2008 Denial.9

The February 12, 2009 notice 

specifically sought comment on: any 

new or additional information regarding 

the three section 209(b) waiver criteria; 

whether EPA’s interpretation and 

application of section 209(b)(1)(B) in the 

March 6, 2008 Denial was appropriate; 

and, the effect of the waiver denial on 

whether CARB’s GHG standards are 

consistent with section 202(a), 

including lead time. After holding a 

public hearing on March 5, 2009, the 

written comment period closed on April 

6, 2009. 

III. Analysis of Preemption Under 

Section 209(a) of the Clean Air Act 

A. Clean Air Act Preemption Provisions 

Section 209(a) of the Act provides: 

No State or any political subdivision 

thereof shall adopt or attempt to enforce any 

standard relating to the control of emissions 

from new motor vehicles or new motor 

vehicle engines subject to this part. No State 

shall require certification, inspection or any 

other approval relating to the control of 

emissions from any new motor vehicle or 

new motor vehicle engine as condition 

precedent to the initial retail sale, titling (if 

any), or registration of such motor vehicle, 

motor vehicle engine, or equipment.10

Section 209(b)(1) of the Act requires 

the Administrator, after an opportunity 

for public hearing, to waive application 

of the prohibitions of section 209(a) for 

any State that has adopted standards 

(other than crankcase emission 

standards) for the control of emissions 

from new motor vehicles or new motor 

engines prior to March 30, 1966, if the 

State determines that its State standards 

will be, in the aggregate, at least as 

protective of public health and welfare 

as applicable Federal standards.11

However, no such waiver shall be 

granted by the Administrator if she 

finds that: (A) The protectiveness 

determination of the State is arbitrary 

and capricious; (B) the State does not 

need such State standards to meet 

compelling and extraordinary 

conditions; or (C) such State standards 

and accompanying enforcement 

procedures are not consistent with 

section 202(a) of the Act. In previous 

waiver decisions, EPA has stated that 

Congress intended EPA’s review of 

California’s decision-making be narrow. 

This has led EPA to reject arguments 

that are not specified in the statute as 

grounds for denying a waiver: 

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12 36 FR 17458 (Aug. 31, 1971). Note that the 

more stringent standard expressed here, in 1971, 

was superseded by the 1977 amendments to section 

209, which established that California must 

determine that its standards are, in the aggregate, 

at least as protective of public health and welfare 

as applicable Federal standards. 

13 40 FR 23103–23104; see also LEV I Decision 

Document at 64. 

14 40 FR 23104; 58 FR 4166. 

15 MEMA I, 627 F.2d at 1110 (citing H.R. Rep. No. 

294, 95 Cong., 1st Sess. 301–02 (1977). 

16 MEMA I, 627 F.2d at 1122. 

17 Id. 

18 Id. 

19 Id. 

20See, e.g., 40 FR 21102–103 (May 28, 1975). 

21 MEMA I, 627 F.2d at 1121. 

22 Id. at 1126. 

23 Id. at 1126. 

24Alliance of Automobile Manufacturers, EPA– 

HQ–OAR–2006–0173–8994 at 6–7. 

The law makes it clear that the waiver 

requests cannot be denied unless the specific 

findings designated in the statute can 

properly be made. The issue of whether a 

proposed California requirement is likely to 

result in only marginal improvement in air 

quality not commensurate with its cost or is 

otherwise an arguably unwise exercise of 

regulatory power is not legally pertinent to 

my decision under section 209, so long as the 

California requirement is consistent with 

section 202(a) and is more stringent than 

applicable Federal requirements in the sense 

that it may result in some further reduction 

in air pollution in California.12

Thus, my consideration of all the 

evidence submitted concerning a waiver 

decision is circumscribed by its 

relevance to those questions that I may 

consider under section 209(b). 

B. Deference to California 

In previous waiver decisions, EPA has 

recognized that the intent of Congress in 

creating a limited review based on the 

section 209(b)(1) criteria was to ensure 

that the federal government did not 

second-guess the wisdom of state 

policy. This has led EPA to state: 

It is worth noting * * * I would feel 

constrained to approve a California approach 

to the problem which I might also feel unable 

to adopt at the federal level in my own 

capacity as a regulator. The whole approach 

of the Clean Air Act is to force the 

development of new types of emission 

control technology where that is needed by 

compelling the industry to ‘‘catch up’’ to 

some degree with newly promulgated 

standards. Such an approach * * * may be 

attended with costs, in the shaped of reduced 

product offering, or price or fuel economy 

penalties, and by risks that a wider number 

of vehicle classes may not be able to 

complete their development work in time. 

Since a balancing of these risks and costs 

against the potential benefits from reduced 

emissions is a central policy decision for any 

regulatory agency under the statutory scheme 

outlined above, I believe I am required to 

give very substantial deference to California’s 

judgments on this score.13

EPA has stated that the text, structure, 

and history of the California waiver 

provision clearly indicate both a 

congressional intent and appropriate 

EPA practice of leaving the decision on 

‘‘ambiguous and controversial matters of 

public policy’’ to California’s 

judgment.14

The House Committee Report 

explained as part of the 1977 

amendments to the Clean Air Act, 

where Congress had the opportunity to 

restrict the waiver provision, it elected 

instead to explain California’s flexibility 

to adopt a complete program of motor 

vehicle emission controls. The 

amendment is intended to ratify and 

strengthen the California waiver 

provision and to affirm the underlying 

intent of that provision, i.e., to afford 

California the broadest possible 

discretion in selecting the best means to 

protect the health of its citizens and the 

public welfare.15

C. Burden of Proof 

In Motor and Equip. Mfrs Assoc. v. 

EPA, 627 F.2d 1095 (DC Cir. 1979) 

(MEMA I), the U.S. Court of Appeals 

stated that the Administrator’s role in a 

section 209 proceeding is to: 

consider all evidence that passes the 

threshold test of materiality and * * * 

thereafter assess such material evidence 

against a standard of proof to determine 

whether the parties favoring a denial of the 

waiver have shown that the factual 

circumstances exist in which Congress 

intended a denial of the waiver.16

The court in MEMA I considered the 

standards of proof under section 209 for 

the two findings necessary to grant a 

waiver for an ‘‘accompanying 

enforcement procedure’’ (as opposed to 

the standards themselves): (1) 

Protectiveness in the aggregate and (2) 

consistency with section 202(a) 

findings. The court instructed that ‘‘the 

standard of proof must take account of 

the nature of the risk of error involved 

in any given decision, and it therefore 

varies with the finding involved. We 

need not decide how this standard 

operates in every waiver decision.’’ 17

The court upheld the Administrator’s 

position that, to deny a waiver, there 

must be ‘clear and compelling evidence’ 

to show that proposed procedures 

undermine the protectiveness of 

California’s standards.18 The court 

noted that this standard of proof also 

accords with the congressional intent to 

provide California with the broadest 

possible discretion in setting regulations 

it finds protective of the public health 

and welfare.19

With respect to the consistency 

finding, the court did not articulate a 

standard of proof applicable to all 

proceedings, but found that the 

opponents of the waiver were unable to 

meet their burden of proof even if the 

standard were a mere preponderance of 

the evidence. Although MEMA I did not 

explicitly consider the standards of 

proof under section 209 concerning a 

waiver request for ‘‘standards,’’ as 

compared to accompanying enforcement 

procedures, there is nothing in the 

opinion to suggest that the court’s 

analysis would not apply with equal 

force to such determinations. EPA’s past 

waiver decisions have consistently 

made clear that: ‘‘[E]ven in the two areas 

concededly reserved for Federal 

judgment by this legislation—the 

existence of compelling and 

extraordinary’ conditions and whether 

the standards are technologically 

feasible—Congress intended that the 

standards of EPA review of the State 

decision to be a narrow one.’’ 20

Finally, opponents of the waiver bear 

the burden of showing that the criteria 

for a denial of California’s waiver 

request has been met. As found in 

MEMA I, this obligation rests firmly 

with opponents of the waiver in a 

section 209 proceeding, holding that: 

‘‘[t]he language of the statute and it’s 

legislative history indicate that 

California’s regulations, and California’s 

determinations that they must comply 

with the statute, when presented to the 

Administrator are presumed to satisfy 

the waiver requirements and that the 

burden of proving otherwise is on 

whoever attacks them. California must 

present its regulations and findings at 

the hearing and thereafter the parties 

opposing the waiver request bear the 

burden of persuading the Administrator 

that the waiver request should be 

denied.’’ 21

The Administrator’s burden, on the 

other hand, is to make a reasonable 

evaluation of the information in the 

record in coming to the waiver decision. 

As the court in MEMA I stated, ‘‘Here, 

too, if the Administrator ignores 

evidence demonstrating that the waiver 

should not be granted, or if he seeks to 

overcome that evidence with 

unsupported assumptions of his own, 

he runs the risk of having his waiver 

decision set aside as ‘arbitrary and 

capricious.’ ’’ 22 Therefore, the 

Administrator’s burden is to act 

‘‘reasonably.’’ 23

EPA received comment suggesting 

that the burden of proof upon 

reconsideration of EPA’s March 6, 2008 

Denial should be reversed and placed 

on California.24 It is not clear whether 

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25 Id. 26 MEMA I, 627 F.2d at 1121. 27 MEMA I, 627 F.2d at 1110–11, citing H.R. Rep. 

No. 294, 95th Cong., 1st Sess. 301–02 (1977). 28Federal Communications Commission v. Fox 

Television Stations, Inc., 129 S.Ct. 1800, 1809 

(2009). 

29 In situations where there are no Federal 

standards directly comparable to the specific 

California standards under review, the analysis then 

occurs against the backdrop of previous waivers 

which determined that the California program was 

at least as protective of the federal program ((LEV 

II + ZEV) + GHG). See 71 FR 78190 (December 28, 

2006), Decision Document for Waiver of Federal 

Preemption for California Zero Emission Vehicle 

(ZEV) Standards (December 21, 2006). 

30 36 FR 17458 (Aug. 31, 1971). (‘‘The law makes 

it clear that the waiver requests cannot be denied 

unless the specific finding designated in the statute 

can properly be made. The issue of whether a 

proposed California requirement is likely to result 

in only marginal improvement in air quality not 

commensurate with its cost or is otherwise an 

arguably unwise exercise of regulatory power is not 

legally pertinent to my decision under section 209, 

so long as the California requirement is consistent 

with section 202(a) and is more stringent than 

applicable Federal requirements in the sense that it 

may result in some further reduction in air 

pollution in California.’’). The ‘‘more stringent’’ 

standard expressed here in 1971 was superseded by 

the 1977 amendments to section 209, which 

established that California’s standards must be, in 

the aggregate, at least as protective of public health 

and welfare as applicable Federal standards. The 

stringency standard remains, though, in section 

209(b)(2). 

31 In situations where there are no Federal 

standards directly comparable to the specific 

California standards under review, the analysis then 

occurs against the backdrop of previous waivers 

which determined that the California program was 

at least as protective of the federal program ((LEV 

II + ZEV) + GHG). See 71 FR 78190 (December 28, 

2006), Decision Document for Waiver of Federal 

Preemption for California Zero Emission Vehicle 

(ZEV) Standards (December 21, 2006). 

32 MEMA I, 627 F.2d at 1122. 

33 ‘‘Once California has come forward with a 

finding that the procedures it seeks to adopt will 

not undermine the protectiveness of its standards, 

parties opposing the waiver request must show that 

this finding is unreasonable.’’ MEMA I, 627 F.2d at 

1124. 

34California Air Resources Board, EPA–HQ– 

OAR–2006–0173–0010.107, ‘‘Resolution 04–28, 

State of California, Air Resources Board, September 

23, 2004’’ (‘‘BE IT FURTHER RESOLVED that the 

Board hereby determines that the regulations 

approved herein will not cause California motor 

vehicle emission standards, in the aggregate, to be 

less protective of public health and welfare than 

applicable federal standards.’’). 

the commenter is also suggesting that 

the entire burden of proof now shifts to 

California in that ‘‘[s]uch an allocation 

of the burden of proof ensures that 

decisions in which EPA has invested 

time and resources are not lightly 

overturned, and that those decisions 

enjoy the finality to which they are 

entitled.’’ Moreover, the commenter 

suggests that EPA carries a separate 

responsibility, in order to reverse its 

prior decision, to explain why its first 

decision on the waiver request is no 

longer the correct one. The commenter 

cites several cases for the proposition 

that ‘‘[A]n agency changing its course 

* * * is obligated to supply a reasoned 

analysis for the change beyond that 

which may be required when an agency 

does not act in the first instance’’ and 

that an agency must offer sufficient 

explanation to ensure the court that it is 

not ‘‘repudiating precedent to conform 

with shifting political mood.’’ 25

EPA believes that, regardless of the 

previous waiver denial, once California 

makes its protectiveness determination 

the burden of proof falls on the 

opponents of the waiver. This burden is 

inherent in the statutory requirement 

that EPA grant the waiver unless it 

makes one of the specific negative 

findings in section 209(b)(1).26 This is 

consistent with the legislative history, 

which indicates that Congress intended 

a narrow review by EPA and to preserve 

the broadest possible discretion for 

California.27

As EPA explained in the previous 

waiver denial, the Agency did not 

address the section 209(b)(1)(A) and (C) 

criteria in its decision; therefore EPA is 

not in a position of reversing any 

interpretations or evidentiary findings. 

As further discussed in section VI, 

although commenters argue various 

adverse effects of the prior waiver 

denial on lead time, the burden remains 

on the opponents of the waiver to 

demonstrate why California’s GHG 

standards are not consistent with 

section 202(a). With regard to section 

209(b)(1)(B) and EPA’s prior waiver 

denial, EPA has provided a reasoned 

analysis and explanation for any 

reversal of positions taken in this new 

decision. In the context of this reasoned 

explanation, EPA believes it is only 

required to demonstrate that it is aware 

that it is changing positions and that 

there are good reasons for the change in 

position.28 As discussed above, the 

burden of proof under section 

209(b)(1)(B) still falls on those who wish 

EPA to deny the waiver, based on the 

statutory structure of section 209(b)(1) 

and the legislative history. This 

requirement is not disturbed by EPA’s 

initial denial. 

IV. California’s Protectiveness 

Determination 

Section 209(b)(1)(A) of the Act 

requires EPA to deny a waiver if the 

Administrator finds that California was 

arbitrary and capricious in its 

determination that its State standards 

will be, in the aggregate, at least as 

protective of public health and welfare 

as applicable Federal standards. EPA 

recognizes that the phrase ‘‘States 

standards’’ means the entire California 

new motor vehicle emissions program. 

Therefore, as explained below, when 

evaluating California’s protectiveness 

determination, EPA compares the 

California-to-Federal standards. That 

comparison is undertaken within the 

broader context of the previously 

waived California program, which relies 

upon protectiveness determinations that 

EPA have previously found were not 

arbitrary and capricious.29

Traditionally, EPA has evaluated the 

stringency of California’s standards 

relative to comparable EPA emission 

standards.30 That evaluation follows the 

instruction of section 209(b)(2), which 

states: ‘‘If each State standard is at least 

as stringent as the comparable 

applicable Federal standard, such State 

standard shall be deemed to be at least 

as protective of health and welfare as 

such Federal standards for purposes of 

[209(b)(1)].’’ 

To review California’s protectiveness 

determination in light of section 

209(b)(2), EPA conducts its own 

analysis of the newly adopted California 

standards to comparable applicable 

Federal standards. Reviewing that 

comparison quantitatively answers 

whether the new standards are more or 

less protective than the Federal 

standards. That comparison of the 

newly adopted California standards to 

the comparable applicable Federal 

standards is conducted in light of prior 

waiver determinations. That is, the 

California-to-Federal analysis is 

undertaken within the broader context 

of the previously waived California 

program, which relies upon 

protectiveness determinations that EPA 

has not found arbitrary and 

capricious.31

A finding that California’s 

determination was arbitrary and 

capricious under section 209(b)(1)(A) 

must be based upon ‘‘‘clear and 

compelling evidence’ to show that 

proposed [standards] undermine the 

protectiveness of California’s 

standards.’’ 32 Even if EPA’s own 

analysis of comparable protectiveness or 

that suggested by a commenter might 

diverge from California’s protectiveness 

finding, that is not a sufficient basis on 

its own for EPA to make a section 

209(b)(1)(A) finding that California’s 

protectiveness finding is arbitrary and 

capricious.33

California made a protectiveness 

determination with regard to its 

greenhouse gas regulations in 

Resolution 04–28, adopted by the 

California Air Resources Board on 

September 23, 2004.34 Included in that 

Resolution were several bases to support 

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35California Air Resources Board, EPA–HQ– 

OAR–2006–0173–0010.107 at 9 (‘‘Over the last 

hundred years, average temperatures in California 

have increased 0.7% F, sea levels have risen by 

three to eight inches, and spring run-off has 

decreased 12 percent. These observed and future 

changes are likely to have significant adverse effects 

on California’s water resources, many ecological 

systems, as well as on human health and the 

economy. The signs of a global warming trend 

continue to become more evident and much of the 

scientific debate is now focused on expected rates 

at which future changes will occur.’’); California Air 

Resources Board, EPA–HQ–OAR–2006–0173– 

0010.107 at 13 (‘‘There are no comparable federal 

regulations that specifically require the control of 

greenhouse gas emissions from motor vehicles.’’). 

36 ‘‘The establishment of greenhouse gas emission 

standards will result in a reduction in upstream 

emissions (emission due to the production and 

transportation of the fuel used by the vehicle) of 

greenhouse gas, criteria and toxic pollutants due to 

reduced fuel usage.’’ EPA–HQ–OAR–2006–0173– 

0010.107 at 8. 

37 ‘‘Supplemental analysis of the potential 

response of consumers (consumer response) to the 

regulations was performed as part of the staff 

evaluation. The evaluation of consumer response 

indicates that the impact of vehicle price increases 

on fleet turnover (changes to the average age of the 

motor vehicle fleet) as well as the impacts of lower 

operating costs on vehicle miles traveled (rebound 

effect) by consumers have minor impacts (less than 

one percent of the passenger vehicle emissions 

inventory) on criteria pollutant emissions.’’ EPA– 

HQ–OAR–2006–0173–0010.107 at 12. 

38 ‘‘Taking into account the penetration of 2009 

and later vehicles meeting the new standard, the 

proposed regulation will reduce greenhouse gas 

emission by an estimated 87,700 CO2-equivelent 

tons per day statewide in 2020 and by 155,200 CO2- 

equivelent tons per day in 2030. This translates into 

an 18 percent overall reduction in greenhouse gas 

emissions from the light duty fleet in 2020 and a 

27 percent overall reduction in 2030; Taking into 

account the penetration of 2009 and later vehicles 

meeting the new standard, the proposed regulation 

will reduce upstream emissions of non-methane 

organic gases (NMOG) by 4.6 tons per day statewide 

in 2020 and 7.9 tons per day statewide in 2030, and 

will reduce upstream emissions of NOX by 1.4 tons 

per day statewide in 2020 and 2.3 tons per day 

statewide in 2030. The regulation will provide a 

criteria pollutant benefit even taking into account 

possible pollutant increases due to consumer 

response.’’ EPA–HQ–OAR–2006–0173–0010.107 at 

15. 

39 68 FR 19811 (April 22, 2003), Decision 

Document for Waiver of Federal Preemption for 

Low Emission Vehicle Amendments (LEV II) (April 

11, 2003). 

40Association of International Automobile 

Manufacturers, Inc., EPA–HQ–OAR–2006–1073– 

9005 at 13–14; Alliance of Automobile 

Manufacturers, EPA–HQ–OAR–2006–0173–8994 at 

16–23. 

California’s protectiveness 

determination. Most generally, CARB 

made a broad finding that observed and 

projected changes in California’s climate 

are likely to have a significant adverse 

impact on public health and welfare in 

California, and that California is 

attempting to address those impacts by 

regulating in a field for which there are 

no comparable federal regulations.35

CARB also found that its greenhouse gas 

standards will increase the health and 

welfare benefits from its broader motor 

vehicle emissions program by directly 

reducing upstream emissions of criteria 

pollutants from decreased fuel 

consumption.36 Beyond that analysis of 

the new regulations’ impact on its 

broader program, CARB projected 

consumer response to the greenhouse 

gas regulations. With respect to 

consumer shifts due to a potential 

‘‘scrappage effect’’ (the impact of 

increased vehicle price on fleet age) and 

‘‘rebound effect’’ (the impact of lower 

operating costs on vehicle miles 

travelled), CARB found minor impacts— 

but net reductions—on criteria pollutant 

emissions.37 Further, even assuming 

larger shifts in consumer demand 

attributable to the greenhouse gas 

emission standards, CARB found that 

the result remains a net reduction in 

both greenhouse gas emissions and 

criteria pollutant emissions.38 That is, 

CARB found that the addition of its 

greenhouse gas emission standards to its 

larger motor vehicle emissions program 

(LEV II), which generally aligns with the 

federal motor vehicle emissions 

program (Tier II), renders the whole 

program to be more protective of public 

health and welfare. CARB noted that 

EPA has already determined that 

California was not arbitrary and 

capricious in its determination that the 

pre-existing California standards for 

light-duty vehicles and trucks, known as 

LEV II, is at least as protective as 

comparable Federal standards, the Tier 

II standards.39 Implicit in California’s 

greenhouse gas protectiveness 

determination, then, is that the 

inclusion of greenhouse gas standards 

into California’s existing motor vehicle 

emissions program will not cause 

California’s program to be less 

protective than the federal program. 

A. What Are ‘‘Applicable Federal 

Standards’’? 

EPA has received comments 

suggesting that the section 209(b)(1)(A) 

comparison to ‘‘applicable Federal 

standards’’ should include corporate 

average fuel economy (CAFE) standards 

promulgated, or that in the future may 

be promulgated, by the National 

Highway Traffic Safety Administration 

under the Energy Policy and 

Conservation Act of 1975 (EPCA), as 

amended by the Energy Independence 

and Security Act of 2007 (EISA).40 That 

suggestion departs from EPA’s 

traditional analysis. EPA has always 

interpreted ‘‘applicable Federal 

standards’’ as limiting EPA’s inquiry to 

motor vehicle emission standards 

established by EPA under the Clean Air 

Act. After a thorough examination of the 

text and legislative history of the section 

209(b) waiver provision, EPA has 

determined that it should continue to 

interpret ‘‘applicable Federal standards’’ 

to mean motor vehicle emission 

standards established by EPA under the 

Clean Air Act that apply to the same 

cars and the same air pollutants or 

group of air pollutants as considered in 

California’s aggregate protectiveness 

finding. Additionally, EPA has 

determined that even if it were 

appropriate to take NHTSA’s fuel 

economy standards into account as 

‘‘applicable Federal standards,’’ the 

waiver opponents have not met their 

burden of proof to demonstrate that 

California’s protectiveness 

determination was arbitrary and 

capricious. No waiver opponent has 

demonstrated that existing or proposed 

fuel economy standards are more 

stringent or more protective of the 

public health and welfare than 

California’s greenhouse gas emission 

standards. 

1. Are ‘‘Applicable Federal Standards’’ 

Limited to Clean Air Act Emission 

Standards or Do They Include NHTSA’s 

Fuel Economy Standards? 

Section 209(b)(1)(A) requires EPA to 

evaluate whether California’s 

determination regarding the 

comparative level of protectiveness of 

its standards of the public health and 

welfare was ‘‘arbitrary and capricious.’’ 

California’s standards act to improve air 

quality, and thus benefit the public 

health and welfare, by establishing 

limits for emissions of air pollutants 

from new motor vehicles and new motor 

vehicle engines. California is then 

required to compare these new motor 

vehicle standards in the aggregate to 

‘‘applicable Federal standards’’ to 

determine the relative protectiveness of 

California’s standards. Depending on 

whether the waiver is granted or denied, 

vehicle manufacturers will either have 

to meet California standards for those 

new vehicles subject to its standards 

and EPA standards for others, or EPA 

standards for all of the new vehicles. 

The most straightforward reading of 

the comparison called for by the statute, 

between California and Federal 

standards, is an ‘‘apples to apples’’ 

comparison. California has standards 

that apply to new motor vehicles and 

the standards set limits for emissions of 

air pollutants. California would then 

compare its standards to the same kind 

of Federal standard—Federal standards 

that apply to the same new motor 

vehicles and also set limits for 

emissions of air pollutants. The term 

‘‘applicable’’ has to refer to what the 

Federal standards apply to, and the 

most straightforward meaning is that 

they apply in the same way that the 

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41 ‘‘The legislative history of section 209 supports 

the Administrator’s interpretation that the waiver 

provision is coextensive with the preemption 

provision, thereby permitting the Administrator to 

consider waiving preemption of California’s entire 

program of emissions control.’’ MEMA I, 627 F.2d 

1095, 1108. 

42H.R. Rep. No. 294, 95th Cong., 1st Sess. 301– 

302 (1977); MEMA I, 627 F. 2d at 1110–11. 

43See MEMA I, 627 F. 2d at 1111. 

44Entergy Corp. v. Riverkeeper, Inc., 129 S.Ct. 

1498 (2009) (‘‘That view governs if it is a reasonable 

interpretation of the statute—not necessarily the 

only possible interpretation, nor even the 

interpretation deemed most reasonable by the 

courts. Chevron U.S.A. Inc. v. Natural Resources 

Defense Council, Inc., 467 U.S. 837, 8430844 

(1984).’’). 

45 In this waiver there are no EPA or other Federal 

standards that have been identified that explicitly 

and directly regulate emissions of GHGs from new 

motor vehicles. While emission standards 

promulgated by EPA have always been treated as 

applicable Federal standards because they 

explicitly regulate the same vehicles and air 

pollutants, there is the possibility that another 

Federal agency could have a standard that also 

directly and explicitly regulates emissions from 

some new motor vehicles. EPA is not aware of any 

such circumstances at this time, but reserves the 

right to consider in the future whether such a nonEPA Federal standard would be considered an 

‘‘applicable Federal standards’’ for the purpose of 

a CAA waiver determination. 

California standards apply, by setting 

limits on emissions of air pollutants 

from specified new motor vehicles. 

‘‘[A]pplicable Federal standards’’ would 

be standards that impose a requirement 

on new motor vehicles and that directly 

establishes limits on emissions of air 

pollutants, as do the California 

standards. The ‘‘applicable’’ Federal 

standards are those set by EPA that 

directly apply by regulation to the same 

vehicles and, like the California 

regulations, set limits for the same air 

pollutants. 

This is a straightforward and logical 

approach that provides clear guidance 

for California on what standards to 

compare. It avoids an open-ended 

inquiry into what other potential 

Federal standards might regulate 

different vehicles or regulate different 

aspects of the vehicles than emissions, 

and instead focuses the comparison on 

a clearly-defined and identifiable set of 

Federal standards that are parallel to the 

California standards at issue. 

This interpretation also ties the 

comparison to the only Federal 

standards that are affected by the results 

of the comparison. If the California 

comparison shows it is more protective 

and the waiver is granted, the California 

standards would apply to the vehicles 

under section 209(b) and compliance 

with the California’s standards will be 

deemed to mean compliance with the 

EPA standards under section 209(b)(3). 

If the California comparison is arbitrary 

and capricious and a waiver is denied, 

then EPA’s Federal emission standards 

apply to those vehicles and California’s 

standards do not. The applicability of 

emission standards under section 209(b) 

that results from the waiver decision is 

parallel to and fully consistent with the 

comparison made between the 

California and applicable Federal 

standards. 

EPA has always limited its 

interpretation of the section 209(b) 

waiver provision to the scope of section 

209(a)’s preemption.41 Section 209(a) 

creates the explicit preemption of state 

emission standards, and at the same 

time leaves EPA to set federal emission 

standards, under the authority of section 

202(a). Within the context of section 

209, and the preemption of 209(a), 

section 209(b)’s waiver provision allows 

California the ability to set its own 

emission standards. Notably, section 

209(b) merely gives back to California 

what was taken away by section 

209(a)—the ability to adopt and enforce 

its own state emission standards. This 

interaction between sections 209(a) and 

209(b) supports interpreting the 

‘‘applicable Federal standards’’ 

mentioned in section 209(b)(1)(A) to 

mean the same types of emission 

standards as the emission standards that 

are actually set by California are 

preempted under section 209(a), and are 

the subject of a waiver request under 

section 209(b). 

Additionally, EPA’s construction of 

‘‘applicable Federal standards’’ provides 

a single, consistent usage of that phrase 

in the context of the section 209(b) 

waiver provision. In section 209(b), the 

phrase ‘‘applicable Federal standards’’ 

appears three times. The first two 

instances appear in sections 209(b)(1) 

and 209(b)(2) and pertain to EPA’s 

review of California’s protectiveness 

determination and the relative 

stringency of California’s standards, as 

has been discussed above. The third 

instance occurs in section 209(b)(3) and 

specifically contemplates treatment of 

waived California standards for the 

purpose of Clean Air Act compliance. 

Section 209(b)(3) states: ‘‘in the case of 

any new motor vehicle or new motor 

vehicle engine to which State standards 

apply pursuant to a waiver granted 

under paragraph (1), compliance with 

such State standards shall be treated as 

compliance with applicable Federal 

standards for purposes of this title.’’ 

(Emphasis added) The reference to Title 

II of the Clean Air Act in section 

209(b)(3) is further reason to limit the 

construction of ‘‘applicable Federal 

standards’’ to comparable Clean Air Act 

emission standards in sections 209(b)(1) 

and 209(b)(2). All three occurrences of 

‘‘applicable Federal standards’’ in 

section 209(b) are then given the same 

meaning, in a context where all three 

occurrences function interactively to 

allow California to enforce its own 

emission standards. 

The textual structure and legislative 

history of the waiver provision also 

support EPA’s interpretation of 

‘‘applicable Federal standards.’’ The 

structure of section 209(b) is notable in 

its focus on limiting the ability of EPA 

to deny a waiver and preserving ‘‘the 

broadest possible discretion’’ for 

California to construct its motor vehicle 

program as it deems appropriate to 

protect its public health and welfare.42

Where, as in this case, California’s 

emission standards are specified in 

terms of direct regulation of emissions 

from new motor vehicles, it is most 

clearly reasonable for EPA to limit its 

review under this criterion to those 

federal standards that likewise set limits 

for the same air pollutant emissions 

from the same motor vehicles. This is 

consistent with Congress’ intent to 

provide California the broadest 

discretion and avoids limiting 

California’s authority and frustrating 

this congressional intent.43 EPA, thus, 

has determined it is reasonable to 

interpret ‘‘applicable Federal standards’’ 

to mean those EPA standards under the 

Clean Air Act that apply in the same 

manner as the California emission 

standards, regulating emissions of air 

pollutants from new motor vehicles.44

Under this approach, any EPA standard 

that, like California’s standards, sets 

limits for motor vehicle emissions could 

be considered an ‘‘applicable Federal 

standard’’ for the purpose of California’s 

protectiveness determination.45

Applying this interpretation, Federal 

fuel economy standards issued by 

NHTSA would not be considered 

‘‘applicable Federal standards’’ for 

purposes of this waiver criterion. In 

contrast to standards set limits for 

emissions from new motor vehicles, 

corporate average fuel economy (CAFE) 

standards set limits on fuel efficiency, to 

reduce fuel consumption. In contrast to 

EPA’s and California’s emission 

standards, which typically establish 

grams per mile (‘‘gpm’’) levels of 

acceptable pollutant emissions, CAFE 

standards establish ‘‘miles per gallon’’ 

(‘‘mpg’’) levels of acceptable fuel 

efficiency. Standards that set limits for 

emission levels and standards that set 

limits for fuel efficiency apply different 

legal requirements. The two kinds of 

standards can overlap significantly, in 

that the technology used to increase fuel 

efficiency will also lead to reductions in 

emissions of one of the GHGs—CO2— 

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46The Supreme Court acknowledged this 

‘‘overlap’’ between fuel economy and emission 

standards in Massachusetts v. EPA, 127 S. Ct. at 

1438. (‘‘[T]hat DOT sets mileage standards in no 

way licenses EPA to shirk its environmental 

responsibilities. EPA has been charged with 

protecting the public’s ‘health’ and ‘welfare.’ 42 

U.S.C. 7521(a)(1), a statutory obligation wholly 

independent of DOT’s mandate to promote energy 

efficiency. See Energy Policy and Conservation Act, 

section 2(5), 89 Stat. 874, 42 U.S.C. 6201(5). The 

two obligations may overlap, but there is no reason 

to think the two agencies cannot both administer 

their obligations and yet avoid inconsistency.’’) 

47See e.g., Authorization of California’s Under 25 

Horsepower Utility Lawn and Garden Equipment 

Engine Exhaust Emission Standards (ULGE) (July 5, 

1995) at 18. (‘‘CARB’s protectiveness determination 

must be judged on the standards that are in 

existence at the time EPA makes it authorization 

determination. However, as CARB correctly states, 

until EPA’s rules become final no changed 

circumstances exist that affect CARB’s 

protectiveness determination, and that it would be 

premature to make a protectiveness comparison 

with non-finalized federal standards.’’) 

48 74 FR 14196 (March 30, 2009). 

49 74 FR 24007 (May 22, 2009). 

50S. Rep. No. 403, 90th Cong. 1st Sess. (1967), at 

33–34. 

but they are not the same legal 

requirements and the regulations do not 

apply in the same manner.46 Fuel 

economy standards do impact the levels 

of one GHG—CO2—that is emitted from 

motor vehicles. But fuel economy 

standards do not set limits on emission 

levels of CO2 or any other air pollutant, 

as do California’s standards. Lacking 

that kind of regulation of emissions of 

an air pollutant, fuel economy standards 

are not ‘‘applicable Federal standards.’’ 

The difference between emission 

standards and fuel economy standards 

is highlighted by comparing the two sets 

of standards at issue here. California’s 

greenhouse gas emission standards 

establish allowable grams per mile 

(‘‘gpm’’) levels for greenhouse gas 

emissions, including tailpipe emissions 

of carbon dioxide (CO2), nitrous oxide 

(N2O), and methane (CH4) as well as 

emissions of CO2 and 

hydrofluorocarbons (HFCs) related to 

operation of the air conditioning system. 

By regulating emissions of four different 

greenhouse gas pollutants, the standards 

do more than reduce tailpipe CO2

emissions resulting from fuel 

combustion. They do not directly equate 

to miles per gallon fuel economy 

reductions. Fuel economy standards, on 

the other hand, directly control miles 

per gallon (‘‘mpg’’) fuel economy levels. 

CO2 reductions will occur, but they are 

an expected indirect effect of improved 

fuel economy standards because the 

same technology that improves fuel 

economy effectively reduces CO2

emissions. 

There is no doubt that a CAFE 

standard would clearly produce 

companion reductions in CO2 as fuel 

economy improves, given the 

technology used to improve fuel 

economy. However, for the reasons 

described above EPA believes the better 

interpretation of section 209(b)(1)(A) is 

to look at whether the Federal standard 

is applicable to the same vehicles and 

air pollutants as the California 

standards, by considering whether they 

directly regulate the same vehicles and 

air pollutants. It is clear that a CAFE 

standard does not meet this test. While 

there is a large but non-identical overlap 

in effect between a CAFE standard and 

a GHG emission standard with respect 

to emissions of CO2, the CAFE standards 

do not set limits on emissions of CO2 or 

any other GHG. There also remain 

important areas where there is no 

overlap at all with the California 

standards, including the regulation of 

greenhouse gas pollutants other than 

CO2. Instead of making an exception to 

its interpretation of ‘‘applicable Federal 

standards’’ for NHTSA’s CAFE fuel 

economy standards, EPA believes it is 

more appropriate to apply its traditional 

interpretation, for all of the reasons 

discussed above. Therefore, EPA has 

determined that NHTSA’s CAFE 

standards are not ‘‘applicable Federal 

standards’’ for purposes of this waiver 

criterion. 

2. If EPA Did Consider CAFE Standards 

as ‘‘Applicable Federal Standards,’’ Are 

the CAFE Standards More Stringent 

Than California’s Greenhouse Gas 

Emission Standards? 

Even if EPA were to take fuel 

economy standards into consideration 

as ‘‘applicable Federal standards,’’ 

opponents of the waiver have not met 

their burden of proof to demonstrate 

that California’s protectiveness 

determination was arbitrary and 

capricious. No waiver opponent has 

demonstrated that existing CAFE 

standards are more stringent or more 

protective of the public health and 

welfare than California’s greenhouse gas 

emission standards. 

EPA has consistently stated in prior 

waiver determinations that California’s 

protectiveness determination must 

consider the ‘‘applicable Federal 

standards’’ in existence at the time of 

EPA’s waiver decision.47 Standards in 

existence at the time of a waiver 

decision have only included finalized 

emission standards that EPA has 

promulgated through its rulemaking 

process and pursuant to its Clean Air 

Act authority. 

Applying that approach here, if EPA 

were to take NHTSA’s fuel economy 

standards into account when reviewing 

California’s protectiveness 

determination, our inquiry would be 

limited to those final fuel economy 

standards that are currently in existence 

at the time of the waiver decision. 

Although NHTSA is required by the 

EISA to promulgate more stringent fuel 

economy standards in the future, the 

only final fuel economy standard under 

EISA that is currently in existence is 

that for the 2011 model year.48

Additionally, although EPA and the 

Department of Transportation (DOT) 

have issued a notice of intent to engage 

in a joint rulemaking, with NHTSA 

issuing fuel economy standards under 

the EISA for the 2012 through 2016 

model years and EPA issuing 

greenhouse gas standards under the 

CAA for those same model years, those 

standards are neither proposed nor final 

at this time.49 To consider CAFE 

standards that have been proposed or 

those standards that may be proposed 

would be speculative about what 

standards will be adopted, and EPA has 

consistently found it inappropriate to 

engage in that speculation with respect 

to either EPA’s or California’s future 

standards in prior waiver decisions. 

Further, it is reasonable to limit our 

consideration of ‘‘applicable Federal 

standards’’ to those final standards that 

are in existence, in light of the range of 

options that remain for California and 

EPA after a decision on this waiver. If 

federal greenhouse gas standards are 

promulgated in the future, and if such 

standards bring this determination into 

question, then EPA can revisit this 

decision at that time. The legislative 

history of section 209(b) makes clear 

that Congress considered section 209(b) 

as including the authority for EPA to 

withdraw a waiver if circumstances 

occur in the future that would make this 

appropriate: ‘‘Implicit in this provision 

is the right of the [Administrator] to 

withdraw the waiver at any time [if] 

after notice and an opportunity for 

public hearing he finds that the State of 

California no longer complies with the 

conditions of the waiver.50 EPA need 

not decide now what action might be 

authorized or appropriate under section 

209(b) if EPA adopts greenhouse gas 

emission standards in the future, as that 

is best decided when EPA takes such 

action. Additionally, the possibility that 

CARB may revise its standards is always 

present. Such a revision would be 

considered by EPA in a future waiver 

proceeding. EPA would then determine 

whether those changes are within-thescope of its prior waiver or if a new, full 

waiver determination would need to be 

made, as would be required if California 

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51California Air Resources Board, Comparison of 

Greenhouse Gas Reductions for the United States 

and Canada under U.S. CAFE Standards and 

California Air Resources Board Greenhouse Gas 

Regulations, February 25, 2008, available at 

http://www.arb.ca.gov/cc/ccms/reports/pavleycafe_

reportfeb25_08.pdf. 

52The 2009 through 2020 model year standards 

are not a straightforward comparison of California’s 

greenhouse gas standards to EISA standards 

because the years do not align. The California 

greenhouse gas standards at issue, here, are for the 

2009 and later model years, whereas EISA was 

enacted in 2007 and mandates standards to reach 

35 miles per gallon by the 2020 mode year, but as 

of yet have only been promulgated for the 2011 

model year. The 2009 and 2010 MY federal fuel 

economy standards were pre-EISA standards. 

Neither California nor NHTSA has yet promulgated 

standards for the 2017–2020 model years: California 

greenhouse gas standards for those years are 

currently proposed in California (as ‘‘Pavley 2’’ 

standards), as are all the EISA standards from the 

2012 through 2015 model years. 

53California Air Resources Board, Comparison of 

Greenhouse Gas Reductions for the United States 

and Canada under U.S. CAFE Standards and 

California Air Resources Board Greenhouse Gas 

Regulations, (February 25, 2008), at 13–14. 

54Association of International Automobile 

Manufacturers, Inc., EPA–HQ–OAR–2006–0173– 

9005 at 13–14. 

55Alliance of Automobile Manufacturers, EPA, 

HQ–OAR–2006–0173–8994 at 20. 

56The Alliance’s comments received April 6, 

2009 state: ‘‘It should be noted that * * * it is also 

true that the fuel economy improvements required 

by the California GHG standards are more stringent, 

overall, for the industry than the CAFE standards 

in many jurisdictions in which the state GHG 

standards would apply compared to the CAFE 

standards. CARB does not disagree with this point. 

See CARB, Comparison of Greenhouse Gas 

Reductions for the United States and Canada Under 

U.S. CAFE Standards and California’s Air Resources 

Continued 

decided to increase the stringency of its 

greenhouse gas standards. 

California’s greenhouse gas emission 

standards begin with the 2009 model 

year and increase in stringency through 

the 2016 model year. For that same time 

period, fuel economy standards only 

exist for the 2009 through 2011 model 

years. An appropriate comparison 

between California’s greenhouse gas 

standards and NHTSA’s fuel economy 

standards, then, would compare 

California’s standards for the 2009 and 

later model years to NHTSA’s fuel 

economy standards for the 2009 through 

2011 model years. 

In his December 19, 2007 letter 

notifying California Governor 

Schwarzenegger that California’s waiver 

request would be denied, former EPA 

Administrator Johnson stated that the 

EISA ‘‘establishes an aggressive 

standard of 35 miles per gallon for all 

50 states, as opposed to the 33.8 miles 

per gallon in California and a patchwork 

of other states.’’ California prepared and 

documented a technical evaluation 

comparing federal fuel economy 

standards to its own standards.51

Accounting for the differences between 

the two sets of standards, CARB 

attempted an ‘‘apples to apples’’ 

comparison of the standards and made 

several assumptions to that end. For its 

own standards, CARB assumed its 

current greenhouse gas regulations—at 

issue here—were in effect for the 2009 

through 2016 model years and that 

those standards increased in stringency 

for the 2016 through 2020 model years 

(its ‘‘Pavley 2’’ standards that are not at 

issue in this waiver proceeding). 

Because EISA does not set standards, 

but directs NHTSA to issue standards 

that increase fuel economy to a 

minimum of 35 miles per gallon by the 

2020 model year, CARB projected that 

the new CAFE standards would 

proportionally increase by 3.44 percent 

each year after the 2011 model year. 

Also, because EISA allows a fuel 

economy credit up to 1.2 miles per 

gallon for use of flexible fuel vehicles 

(FFVs) that can operate on high-blend 

ethanol, such as E85, based on 

manufacturer statements that they 

would produce large numbers of FFVs, 

CARB assumed maximum use of that 

credit. CARB also took into account 

differences in fleet mix in California and 

the other 49 states. To compare this 

range of years of the California 

greenhouse gas emission standards to 

the corresponding range of years of 

EISA fuel economy standards, CARB 

translated the miles per gallon standards 

from EISA into greenhouse gas emission 

rates. The rates of greenhouse gas 

emission reduction from each set of 

standards were then compared from 

2009 through 2020.52 CARB found that 

in California in 2016, its greenhouse gas 

emission standards would achieve 51.9 

million metric tons of greenhouse gas 

emission reductions compared to 23.7 

million metric tons from federal fuel 

economy standards. By 2020, CARB 

found 100.5 million metric tons of 

greenhouse gas emission reductions 

from its standards compared to 59.5 

million metric tons of greenhouse gas 

emission reductions from the federal 

fuel economy standards.53 Both sets of 

reductions follow a similar pattern 

because both sets of standards are 

relatively similar in stringency in the 

near-term (2009–2011), with California’s 

standards ramping up in the mid-term 

(2012–2016), just as the proposed EISA 

standards begin to increase their 

stringency. While both sets of standards 

gain stringency in the long-term (2016 

and beyond), California found that its 

standards are more stringent sooner and 

in the long-term and, furthermore, that 

its standards are more protective of its 

public health and welfare because they 

achieve greater greenhouse gas 

reductions. 

EPA notes that this comparison 

requires speculation regarding what 

final CAFE standards will be 

promulgated by NHTSA for the 2012– 

2020 model years, and what final GHG 

standards may be promulgated by CARB 

for the 2017–2020 model years. If the 

comparison were truly between final, 

promulgated standards of California 

GHG-to-CAFE, it would compare 

California standards for the 2009 

through 2016 model years to the lone 

NHTSA fuel economy standard for the 

2011 model year, and the preexisting 

standards for the 2009–2010 model 

years. This highlights that the 

appropriate approach is to compare 

standards that are final as of the time of 

the waiver decision. However, 

California’s approach indicates that its 

standards are more stringent than 

federal CAFE standards even if CAFE 

standards increased in the 2012 through 

2016 model years. Therefore, this 

approach also would indicate that 

California’s standards, reviewing only 

those standards that are final at this 

time, are more stringent in the aggregate. 

No commenter has presented 

evidence that questions CARB’s claim 

that its greenhouse gas emission 

standards are more stringent than EISA. 

Most commenters opposing the waiver 

do not focus on the comparative 

stringency of the two sets of standards, 

but instead focus on EISA’s mandate for 

more stringent fuel economy standards 

as undermining the currency of 

California’s protectiveness 

determination or California’s ‘‘need’’ for 

its greenhouse gas emission standards. 

For example, AIAM has argued that the 

increased stringency of CAFE standards 

due to the EISA removes the basis for 

California’s protectiveness 

determination.54 Similarly, the Alliance 

argues that ‘‘CARB erred in a 

fundamental way when it chose to 

ignore the impact of the federal CAFE 

standards generally and EISA’s passage 

in specific on California’s outdated 

protectiveness determination.’’ 55 These 

arguments assume that CAFE standards 

are ‘‘applicable Federal standards’’ and 

that non-final standards may be taken 

into consideration at the time of a 

waiver determination. As explained in 

detail above, those assumptions are not 

consistent with EPA’s interpretation of 

the section 209(b)(1)(A) criterion. 

Notably though, neither argument 

presents a factually-based analysis of 

the stringency of California’s 

greenhouse gas emission standards as 

compared to existing fuel economy 

standards that undermines California’s 

protectiveness determination.56 Such an 

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Board Greenhouse Gas Regulations: An Enhanced 

Assessment, at 8 (February 25, 2008).’’ Alliance of 

Automobile Manufacturers, EPA–HQ–OAR–2006– 

0173–8994 at 20, note 4. 

57 Id. 

58Association of International Automobile 

Manufacturers, EPA–HQ–OAR–2006–0173– 

7176.11, p. 1–2, 24–25; National Automobile 

Dealers Association, EPA–HQ–OAR–2006–0173– 

7176.1, EPA–HQ–OAR–2006–0173–8956; NERA 

Economic Consulting and Sierra Research, EPA– 

HQ–OAR–2006–0173–9053.1. 

59New York (6 NY Code, Rules & Regs., Part 218– 

8.3), Massachusetts (310 Code of Mass. Regs. 

7.40(2)(a)(6)), Maryland (Code of Md. Regs. 

§ 26.11.34), Vermont (Vt Air Poll. Ctrl Regs., 

Subchapter XI, 5–1106(a)(5)), Maine (06 Code of 

Maine Rules § 127), Connecticut (Conn. Admin. 

Code § 22a–174–36b), Arizona (18 A.A.C. 2), New 

Jersey (NJ Admin. Code §§ 7:27–29.13), New 

Mexico (20 NM Admin. Code, Chapter 2, Part 88), 

Oregon (Or. Admin. Rules § 340–257), Pennsylvania 

(36 Pa.B. 7424), Rhode Island (RI Air Poll. Ctrl Reg. 

37.2.3), Washington (Wash. Admin. Code 

§ 173.423–090(2), and Washington, DC (DC Law 17– 

0151) have adopted California’s greenhouse gas 

emission standards. See also http://

www.pewclimate.org/what_s_being_done/in_the_

states/vehicle_ghg_standard.cfm. Four more states, 

including Florida, Colorado, Utah, and Montana are 

poised to adopt the standards. 

60National Automobile Dealers Association, 

EPA–HQ–OAR–2006–0173–7176.1, EPA–HQ– 

OAR–2006–0173–8956. 

61Alliance of Automobile Manufacturers, EPA– 

HQ–OAR–2006–0173–8994 at 22. 

62These states and the District of Columbia have 

acted pursuant to section 177 of the Clean Air Act, 

which is not relevant to this proceeding, and that 

any issues commenters have regarding section 177 

and state compliance with that statutory provision, 

is not appropriate for this proceeding. EPA notes 

that the language of section 209(b(1) refers to the 

‘‘State’’ in several instances but in no instance does 

it refer to ‘‘states’’ or other areas of the country. 

63See CAA section 209(b)(2). 

64 71 FR 78190 (December 28, 2006) and Decision 

Document for Waiver of Federal Preemption for 

California Zero Emission Vehicle (ZEV) Standards 

(December 21, 2006); 68 FR 19811 (April 22, 2003) 

and Decision Document for Waiver of Federal 

Preemption for Low Emission Vehicle Amendments 

(LEV II)(April 11, 2003). 

65EPA’s August 13, 2008 Response to Petition for 

Administrative Reconsideration of EPA’s ZEV 

Waiver Decision (through the 2011 Model Year) 

published on December 28, 2006, at 3. 

66 Id. at 13. 

analysis would be necessary for EPA to 

make a section 209(b)(1)(A) finding, if 

EPA were to depart from its traditional 

review of California’s protectiveness 

determination and interpret ‘‘applicable 

Federal standards’’ to include NHTSA’s 

fuel economy standards. As noted 

below, the Alliance points to an analysis 

of the relative stringency of the two sets 

of standards to find that: ‘‘the combined 

vehicle-fuel program created by the 

EISA would result in greater life-cycle 

GHG reductions than the state standards 

that are the subject of this proceeding by 

the end of the decade.’’ That analysis, 

however, is flawed for the purpose of 

this waiver consideration because it 

speculates as to NHTSA standards that 

are not yet finalized, or even proposed. 

Additionally, it infers that California’s 

standards are more protective until 

2017.57

Based on the above, and recognizing 

that federal fuel economy standards are 

not ‘‘applicable Federal standards,’’ EPA 

notes that even if the stringency of 

CAFE standards are considered in 

context of the section 209(b)(1)(A) 

waiver criterion, the opponents of the 

waiver have not presented sufficient 

evidence to show that California’s 

protectiveness determination is arbitrary 

and capricious. No commenter has 

shown that California’s determination 

was arbitrary and capricious in finding 

that NHTSA’s fuel economy standards 

are not in the aggregate more protective 

of human health and welfare than 

California’s greenhouse gas standards, 

whether one considers just the CARB 

and NHTSA standards that are currently 

finalized, or one considers possible 

future standards that either agency 

might adopt. 

B. How Does EPA Evaluate Impacts on 

Other States? 

Several comments have suggested that 

EPA should consider the impacts of 

California’s greenhouse gas standards on 

other states.58 At present time, thirteen 

other states and the District of Columbia 

have already adopted California’s 

greenhouse gas emission standards 

pursuant to section 177 of the Act.59

These comments raise two objections 

concerning other states adoption of 

California’s greenhouse gas emission 

standards. First, these comments suggest 

that state-by-state compliance with each 

state’s adopted set of California 

standards presents an unworkable 

compliance ‘‘patchwork’’ for automobile 

manufacturers.60 Second, and related, 

the comments suggest that enforcement 

of California’s greenhouse gas standards 

in other states will lead to 

‘‘environmental disbenefits’’ in those 

states.61 EPA takes no position on the 

merits of either argument because these 

arguments are outside the scope of our 

section 209(b)(1) waiver criteria. EPA’s 

evaluation of California’s waiver request 

is limited to the State of California.62 To 

the extent that these comments raise 

issues regarding the environmental 

impacts of consumer shifts within 

California they are evaluated below. 

C. Is California’s Protectiveness 

Determination Arbitrary and 

Capricious? 

1. Based on EPA’s Traditional Analysis, 

Is California’s Protectiveness 

Determination Arbitrary and 

Capricious? 

As described above, EPA’s traditional 

analysis has been to evaluate 

California’s protectiveness 

determination by comparing the new 

California standards to applicable EPA 

emission standards for the same 

pollutants.63 In the context of 

greenhouse gas emissions this analysis 

is simple. EPA has already determined 

that California was not arbitrary and 

capricious in its determination that the 

pre-existing California standards for 

light-duty vehicles and trucks, known as 

LEV II, is at least as protective as 

comparable Federal standards, known 

as the Tier II standards.64 In the context 

of the ZEV proceeding, EPA conducted 

its traditional analysis to compare 

California’s newly enacted ZEV 

standards to a similar lack of applicable 

Federal standards. At that time, 

California found, and EPA deemed 

reasonable, that the addition of the ZEV 

standards did not render California’s 

LEV II program, for which a waiver had 

previously been granted, less protective 

than the Federal Tier II program. In 

addressing the Alliance’s petition for 

reconsideration with respect to this 

issue, EPA stated that ‘‘the words 

‘standards’ and ‘in the aggregate’ in 

section 209(b)(1)(A) * * * . at 

minimum, include all the standards 

relating to the control of emissions for 

a category of vehicles (e.g. passenger 

cars, etc.) subject to CARB regulation, 

particularly where the standards are 

designed to respond to the same type of 

pollution.’’ 65

California’s greenhouse gas standards 

are also an addition to its existing LEV 

II program. Since the greenhouse gas 

standards add onto California standards 

that have already been determined to be 

as least as protective, and since there are 

no applicable federal greenhouse gas 

emission standards, the point of 

comparison, here, is between 

California’s greenhouse gas standards 

and an absence of EPA greenhouse gas 

emission standards. Comparing an 

absence of EPA greenhouse gas emission 

standards to the enacted set of 

California greenhouse gas emission 

standards provides a clearly rational 

basis for California’s determination that 

the California greenhouse gas emission 

program will be more protective of 

human health and welfare than nonexistent applicable federal standards. 

California directly addressed this 

traditional analysis in its finding that 

‘‘[t]here are no comparable federal 

regulations that specifically require the 

control of greenhouse gas emissions 

from motor vehicles.’’ 66

EPA received comments suggesting 

that this type of traditional comparison 

is inappropriate, even ‘‘impossible,’’ in 

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67Alliance of International Automobile 

Manufacturers, EPA–HQ–OAR–2006–0173–1455 at 

3; Alliance of Automobile Manufacturers, EPA– 

HQ–OAR–2006–0173–1297 at 2, 5–7, 11–12; 

National Automobile Dealers Association, EPA– 

HQ–OAR–0173–1671 at 3. 

68The waiver provision allows California to ‘‘act 

as a testing agent for various types of control and 

the country as a whole will be a beneficiary of this 

research’’ (113 Cong. Rec. 32478 [1967]); ‘‘act as a 

laboratory for innovation’’ (MEMA I at 1095). See 

Decision Document for Authorization of State 

Standards for Utility Lawn and Garden Equipment 

(ULGE) (July 5, 1995). 

69California first began regulating motor vehicle 

emissions in 1957, nearly a decade before Congress 

enacted the Motor Vehicle Air Pollution Control 

Act of 1965, which enabled a federal program. 

70See e.g., Authorization of California’s Under 25 

Horsepower Utility Lawn and Garden Equipment 

Engine Exhaust Emission Standards (ULGE) (July 5, 

1995). 

71 Id. at 18. 

72See section IV.A., regarding ‘‘applicable 

Federal standards.’’ 

73The Alliance similarly argues that EISA’s 

mandate for reformed CAFE standards renders 

California’s protectiveness determination 

‘‘obsolete’’ or ‘‘stale.’’ Alliance of Automobile 

Manufacturers, EPA–HQ–OAR–2006–0173–8994 at 

21. 

74Likewise, EPA and DOT’s ‘‘Notice of Upcoming 

Joint Rulemaking To Establish Vehicle GHG 

Emissions and CAFE Standards’’ does not include 

any final standards which EPA can take into 

account as an ‘‘applicable Federal standards.’’74 FR 

24007 (May 22, 2009). 

75Alliance of Automobile Manufacturers, EPA– 

HQ–OAR–2006–0173–1297 at 5–12, and EPA–HQ– 

OAR–2006–0173–8994 at 22. 

76 Id. 

77Sierra Research, Inc., EPA–HQ–OAR–2006– 

0173–1447, 1447.1–.5. 

78California Air Resources Board, EPA–HQ– 

OAR–2006–0173–3601. 

79NERA Economic Consulting, Inc. and Sierra 

Research, EPA–HQ–OAR–2006–0173–3651. 

80NERA Economic Consulting and Sierra 

Research, EPA–HQ–OAR–2006–0173–9053. 

81Thomas L. Darlington and Dennis F. Kahlbaum, 

Evaluation of California Greenhouse Gas Standards 

and Federal Independence and Security Act—Part 

2: CO2 and GHG Impacts, SAE Paper No. 2008–01– 

1853 (2008), Alliance of Automobile Manufacturers, 

EPA–HQ–OAR–2006–0173–8994 at 20, note 44. 

82Air Improvement Resources, Inc., EPA–HQ– 

OAR–2006–0173–13662. 

the absence of Federal greenhouse gas 

emission standards.67 Such an argument 

is contrary to legislative intent and 

EPA’s practice.68 This is not the first 

time that California has enacted 

emission standards in the absence of 

Federal standards; in fact, California’s 

pioneering role in setting mobile source 

emission standards is one reason the 

waiver provision exists.69 Given that 

section 209(b)(1) is designed to allow 

California to have standards more 

stringent than Federal standards, it 

would make little sense to use this 

provision to prevent California from 

having such standards where the 

Federal government has not yet acted. 

Moreover, in prior decisions EPA has 

found that such protectiveness 

determinations by California in the 

absence of Federal standards were 

reasonable.70 Indeed, California 

standards may be most clearly ‘‘at least 

as protective’’ when they are compared 

to the absence of Federal emission 

standards. This commenter further 

points to the ‘‘tremendous level of 

current federal activity’’ as the primary 

reason why ‘‘it is impossible for EPA to 

evaluate how the GHG Regulations will 

compare with federal regulation in this 

field.’’ While EPA has announced its 

intention to propose greenhouse gas 

emission standards, EPA has 

consistently stated that CARB’s 

protectiveness determination must 

consider the Federal standards in 

existence at the time of EPA’s waiver 

decision.71

Furthermore, waiting for future 

federal regulation would be contrary to 

the purpose of the section 209(b) waiver 

provision—effectively stalling 

California’s ability to enforce its own 

program. CARB’s protectiveness 

determination was made on September 

23, 2004, at which time there were no 

federal greenhouse gas standards. 

CARB’s determination, then, correctly 

compared its standards to the absence of 

federal emission standards. Since that 

time, there has been no relevant 

intervening ‘‘applicable Federal 

standard.’’ 72 Although AIAM points to 

the Massachusetts v. EPA decision and 

Executive Order 13,432, neither of those 

documents, nor any subsequent actions 

by the Federal government,73 constitute 

final EPA regulation of greenhouse gas 

emissions for new motor vehicles that 

could be used as a comparable standard 

in this waiver proceeding.74 The current 

lack of federal greenhouse gas emission 

standards maintains the factual basis for 

CARB’s September 23, 2004 

protectiveness determination. As noted 

above, if and when greenhouse gas 

standards are promulgated by EPA in 

the future, and if such standards bring 

this determination into question, then 

EPA can revisit this waiver decision at 

that time. Accordingly, applying its 

traditional comparative analysis, 

opponents of the waiver have not shown 

flaw or lack of reason in California’s 

protectiveness determination; and we 

cannot find that California’s 

protectiveness determination is arbitrary 

and capricious. 

2. Is California’s Protectiveness 

Determination Arbitrary and Capricious 

Based on the Real-World In-Use Effects 

of California’s Greenhouse Gas 

Standards? 

EPA received comments suggesting 

the need for and appropriateness of 

applying an alternative interpretation of 

section 209(b)(1)(A), based on an 

inquiry into the in-use effect of 

inclusion of greenhouse gas standards 

upon the broader motor vehicle 

emissions program.75 EPA does not take 

a position as to the validity of the 

suggestion that the type of numerical 

analysis discussed above is insufficient. 

Noting the legislative history and text of 

section 209(b)(2), EPA would need a 

concrete factual basis to examine the inuse effect of California’s greenhouse gas 

standards on its broader LEV II program 

as compared to the Federal Tier II 

program. We need not take a position on 

that matter because to the extent that the 

in-use effects of the greenhouse gas 

standards are considered, the waiver 

opponents do not meet their burden to 

show that CARB’s analysis of the effects 

is unreasonable. 

These comments suggest that 

consumer effects will cause California’s 

broader LEV II motor vehicle emissions 

program to be less protective than the 

Federal Tier II emissions program.76 In 

support of this analysis, the Alliance 

commissioned a study from Sierra 

Research, NERA Economic Consulting, 

and Air Improvement Resource, Inc. 

entitled ‘‘Effectiveness of the California 

Light Duty Vehicle Regulations as 

Compared to Federal Regulations,’’ 

which was submitted to EPA on June 

15, 2007 (‘‘June 2007 AIR/NERA/Sierra 

Study’’).77 CARB specifically responded 

to the June 2007 Study in comments it 

submitted to the docket on July 24, 2007 

(‘‘CARB’s July Comments’’).78 Next, the 

Alliance submitted a response to 

California’s response prepared by NERA 

Economic Consulting and Sierra 

Research (‘‘October 2007 NERA/Sierra 

Study’’).79 Most recently, the Alliance 

submitted another study produced by 

NERA Economic Consulting and Sierra 

Research entitled ‘‘Impacts of the 

California Greenhouse Gas Emission 

Standards on Motor Vehicle Sales’’ 

(‘‘April 2009 NERA/Sierra Study’’).80

On this issue, the Alliance also refers to 

a study published by the Society of 

Automotive Engineers entitled 

‘‘Evaluation of California Greenhouse 

Gas Standards and Federal 

Independence and Security Act—Part 2: 

CO2 and GHG Impacts’’ (‘‘SAE 

Study’’).81 At the same time, Air 

Improvement Resource, Inc. has 

independently submitted comments 

which include its ‘‘Evaluation of 

California Greenhouse Gas Standards 

and Federal Energy Independence and 

Security Act’’ (‘‘March 2009 AIR 

Study’’).82

The Alliance has raised this issue 

before, in its request for reconsideration 

of EPA’s waiver for California’s ZEV 

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83 Decision Document for Waiver of Federal 

Preemption for California Zero Emission Vehicle 

(ZEV) Standards (December 21, 2006) and EPA’s 

August 13, 2008 Response to Petition for 

Administrative Reconsideration of EPA’s ZEV 

Waiver Decision (through the 2011 Model Year) 

published on December 28, 2006. 

84EPA’s August 13, 2008 Response to Petition for 

Administrative Reconsideration of EPA’s ZEV 

Waiver Decision (through the 2011 Model Year) 

published on December 28, 2006, at 17–18. That 

denial further opined: ‘‘In light of the language of 

section 209(b)(1)(A) and associated legislative 

history, it may only be necessary to examine the 

applicable emission limits in determining 

California’s ability to set more stringent standards 

and pursue pioneering efforts (which may or may 

not lead to higher costs and associated fleet 

turnover concerns) under section 209(b)(1)(A). 

Given the legislative history * * * . EPA would 

need a concrete basis to examine the ‘‘real world’’ 

or in-use effect of California’s standards in 

comparison to applicable federal standards (in this 

case, a comparison of LEV II + ZEV versus Tier 2). 

To require CARB to justify its standards and policy 

goals within the context of the protectiveness 

criteria based on waiver opponents’ complicated 

and controversial models that apply assumptions 

that are themselves controversial, and where there 

are no corresponding federal standards, raises 

questions about whether demanding this type of 

review conflicts with Congress’ intent to allow 

California ‘the broadest possible discretion’ in 

fashioning its own motor vehicle program without 

EPA second-guessing California’s policy choices.’’ 

Id. at 12. 

85California Air Resources Board, EPA–HQ– 

OAR–2006–0173–0010.107 at 15 (‘‘Taking into 

account the penetration of 2009 and later vehicles 

meeting the new standard, the proposed regulation 

will reduce greenhouse gas emission by an 

estimated 87,700 CO2-equivelent tons per day 

statewide in 2020 and by 155,200 CO2-equivelent 

tons per day in 2030. This translates into an 18 

percent overall reduction in greenhouse gas 

emissions from the light duty fleet in 2020 and a 

27 percent overall reduction in 2030; Taking into 

account the penetration of 2009 and later vehicles 

meeting the new standard, the proposed regulation 

will reduce upstream emissions of non-methane 

organic gases (NMOG) by 4.6 tons per day statewide 

in 2020 and 7.9 tons per day statewide in 2030, and 

will reduce upstream emissions of NOX by 1.4 tons 

per day statewide in 2020 and 2.3 tons per day 

statewide in 2030. The regulation will provide a 

criteria pollutant benefit even taking into account 

possible pollutant increases due to consumer 

response.’’). 

86California Air Resources Board, EPA–HQ– 

OAR–2006–0173–3601. 

87California Air Resources Board, EPA–HQ– 

OAR–2006–0173–3601 at 8. 

88NERA Economic Consulting, Inc. and Sierra 

Research, EPA–HQ–OAR–2006–0173–3651. 

standards.83 In that reconsideration, the 

Alliance referred to the same June 2007 

AIR/NERA/Sierra Study, saying that the 

California program, as a whole, was not 

at least as protective of public health 

and welfare as comparable federal 

standards. EPA denied the Alliance’s 

request, in particular because the June 

2007 AIR/NERA/Sierra Study was 

produced under the assumption that 

California’s ZEV standards would be in 

effect until at least 2020 and that 

California’s greenhouse gas standards 

would also be in effect. As EPA had 

only granted the ZEV waiver through 

the 2011 model year and had not 

granted the greenhouse gas waiver, EPA 

found that the study was not based 

upon the proper assumptions for 

comparing California’s standards to 

federal standards. EPA stated at that 

time: ‘‘[T]o the extent that the realworld emission effects of CARB’s ZEV 

program (aggregated with its LEV II 

standards) are relevant, if at all, the 

Alliance fails to submit sufficiently 

focused information regarding these 

programs and their associated effect on 

emissions. Thus, no basis exists to 

reconsider EPA’s December 2006 waiver 

decision based on the NERA/Sierra/Air 

report.’’ 84

In evaluating its greenhouse gas 

standards, California’s protectiveness 

determination went beyond a simple 

numerical comparison of its greenhouse 

gas standards to non-existent federal 

greenhouse gas standards. Its 

protectiveness determination was also 

based upon its own analysis of the 

impact of its greenhouse gas standards 

on its larger program. California found 

that its new greenhouse gas standards 

would yield not only reductions in 

greenhouse gas emissions but also a net 

reduction in criteria pollutant 

emissions.85 Therefore, to the extent this 

analysis is even relevant for an EPA 

waiver review opponents must present 

‘‘clear and compelling’’ evidence 

challenging the reasonableness of this 

determination and California’s analysis. 

The June 2007 AIR/NERA/Sierra 

Study prepared for the Alliance presents 

a finding that its results ‘‘indicate that 

the California Program, in the aggregate, 

is less protective of public health than 

the Federal Program with respect to 

emissions of ozone precursors and 

several other criteria pollutants.’’ The 

study undertook consumer choice 

modeling to evaluate the effect of the 

California greenhouse gas emission 

standards on the new motor vehicle 

fleet and vehicle miles travelled (VMT) 

and compare those effects with fleet and 

VMT conditions were the Federal 

Program in effect in California. Its 

results showed that compliance with the 

California greenhouse gas standards 

would raise the cost of new motor 

vehicles in California, which would 

then lead to higher new vehicle prices, 

decreased new vehicle sales, increased 

retention of used vehicles (‘‘scrappage 

effect’’), increased fuel economy which 

would lead to increased VMT (‘‘rebound 

effect’’), and, finally, increased 

emissions of ozone precursors and 

several other criteria air pollutants. 

On July 24, 2007, CARB submitted a 

response to comments received by EPA 

which specifically addressed the June 

2007 AIR/NERA/Sierra Study.86 First, 

CARB insisted that such a study should 

have been presented for consideration 

during California’s rulemaking process 

and not later during EPA’s 

consideration of California’s waiver 

request. Second, CARB substantively 

responded to the June 2007 AIR/NERA/ 

Sierra Study and claimed that its 

protectiveness determination was 

proper. In sum, CARB objected that the 

June 2007 AIR/NERA/Sierra Study is 

inappropriate because it is not focused 

on the relative stringency of emission 

standards, but instead presents ‘‘a series 

of speculative events driven by disputed 

and unsupported compliance costs that 

would supposedly result—contrary to 

experience with previous reduction and 

automotive regulatory measures—in a 

substantial reduction in new motor 

vehicle sales (fleet turnover); and * * * 

Californians’ theoretical desire to drive 

even more miles than already projected 

to reach increasingly distant 

destinations in the face of increasing 

traffic congestion (rebound effect).’’ 87

CARB further critiqued several points of 

AIR/NERA/Sierra’s analysis, including 

what it viewed as ‘‘grossly overstated 

* * * highly speculative cost 

estimates,’’ modeling errors, lack of 

methodological detail, and faulty 

assumptions. CARB asserted that its 

staff reviewed similar analyses and had 

provided its own analyses that are 

‘‘more reasonable and historically 

reliable’’ and ‘‘lead to dramatically 

different outputs.’’ 

NERA/Sierra responded to that 

critique on October 29, 2007.88 That 

document includes specific responses to 

criticisms raised by CARB and generally 

defends the integrity of its analyses. 

NERA/Sierra affirmed its conclusions 

that CARB’s protectiveness 

determination is not fully supported 

because it understates or ignores costs, 

does not consider the combined effects 

of the ZEV mandate and GHG 

requirements, and does not assure 

compliance through technological 

implementation. As to the specific 

modeling issues raised by CARB, NERA/ 

Sierra maintained the correctness of its 

modeling assumptions and estimations 

with regard to technology cost, fleet 

turnover, rebound effect, and pollutant 

emission effect. 

NERA/Sierra also submitted an 

additional study on April 6, 2009, 

presenting many of the same 

methodological assertions noted above. 

Notably, though, this study is less 

methodologically clear: It does not 

quantify scrappage or its effects on 

emissions, assumes technology is 

applied only to meet federal CAFE 

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89NERA Economic Consulting and Sierra 

Research, EPA–HQ–OAR–2006–0173–9053 at E–1. 

90Air Improvement Resources, Inc., EPA–HQ– 

OAR–2006–0173–13662 at 2. Yet this analysis 

presumes the promulgation of fuel economy 

standards that have not yet been promulgated and 

does not accordingly presume the promulgation of 

further greenhouse gas standards by California, 

despite the fact that the Pavley law in California 

makes such further standards a significant 

possibility. 

91Air Improvement Resources, Inc., EPA–HQ– 

OAR–2006–0173–13662. 

92EPA’s role in reviewing California’s waiver 

request is limited to finding whether opponents 

have shown that California’s protectiveness 

determination is arbitrary and capricious. In making 

its protectiveness determination, CARB included 

these analyses and the studies noted above have 

included similar analyses based on diverging 

assumptions. EPA has evaluated these analyses to 

demonstrate that CARB’s protectiveness 

determination was not arbitrary and capricious. 

This evaluation is separate and distinct from any 

analysis that EPA would conduct in promulgating 

its own regulation. Nothing in this evaluation 

should be construed as an endorsement of CARB’s 

or any other analysis or any particular assumption 

they rely upon. 

93California Air Resources Board, EPA–HQ– 

OAR–2006–0173.0010.116. 

standards (and not beyond that level of 

stringency), and assumes that further 

compliance is achieved through fleet 

mix changes combined with restrictions 

on vehicle availability. It is not clear 

whether and how ZEV program 

requirements are included in this study. 

Most importantly, though, the April 

2009 NERA/Sierra Study is outside the 

scope of this proceeding; it presents 

‘‘the effects on motor vehicle sales of the 

California Standards, assuming that they 

are implemented in the 13 states that 

have adopted California’s standards.’’ 89

That is, the April 2009 NERA/Sierra 

Study seeks to present the effect of 

California’s greenhouse gas standards on 

new motor vehicle sales in those 13 

states. This is inappropriate because the 

waiver inquiry is limited to the State of 

California (as noted above) and, even if 

this study had been limited to 

California, it would still be inadequate 

because it does not connect its findings 

with regard to depressed vehicle sales to 

increased criteria pollutant emissions. 

Air Improvement Resources, Inc. 

(‘‘AIR’’), who had originally participated 

in the June 2007 AIR/NERA/Sierra 

Study but submitted comment 

independently on April 6, 2009, 

evaluated California’s greenhouse gas 

standards as compared to EISA 

‘‘standards.’’ As noted above, this 

evaluation is not relevant to EPA’s 

section 209(b)(1)(A) inquiry because 

EISA ‘‘standards’’ are not ‘‘applicable 

Federal standards’’ for the purpose of 

our waiver inquiry. Nor have any fuel 

economy standards been promulgated 

beyond the 2011 model year. Those 

underlying inadequacies render this 

study unpersuasive, if not entirely 

irrelevant. However, it is interesting to 

note that the primary finding of this 

study is that ‘‘the California program 

has lower GHG emissions until about 

2016–2018.’’ 90 AIR also included as an 

attachment an SAE Paper evaluating 

impacts on new vehicle fuel economy 

from California’s greenhouse gas 

standards and EISA ‘‘standards.’’ The 

finding of this paper is that California’s 

greenhouse gas standards will lead to 

higher fuel economy than EISA 

‘‘standards’’ until the 2017 model 

year.91 The findings of both reports are 

based on inconsistent assumptions that 

California’s greenhouse gas standards 

will not become more stringent after the 

2016 model year, (because this waiver 

request ends with the 2016 model year 

standards) but the federal fuel economy 

standards will become more stringent 

even though there are not yet any 

federal fuel economy standards past the 

2011 model year. As stated above, EPA 

is not including fuel economy standards 

in its consideration of ‘‘applicable 

Federal standards.’’ But, even if EPA 

were to engage in that analysis, it can 

only consider standards in existence at 

the time of a waiver decision, as stated 

above. Since no federal fuel economy 

standards exist yet beyond the 2011 

model year, EPA will not make 

predictions about later year fuel 

economy standards in order to take 

them into account here. 

As discussed below, EPA has 

evaluated both sets of analyses (from 

CARB and NERA/Sierra) and makes 

note of the following with regard to (1) 

fleet turnover/delayed scrappage, (2) the 

rebound effect, and (3) upstream 

emissions impacts.92

a. Fleet Turnover/Delayed Scrappage 

The Alliance argues that California’s 

greenhouse gas standards will cause 

delayed fleet turnover and, thus, 

increase criteria air pollutant emissions. 

Delayed fleet turnover results when the 

prices of new vehicles increase, causing 

prices of existing vehicles to increase as 

well. A consumer’s decision to scrap an 

existing vehicle depends upon the 

trade-off between the value of existing 

vehicle in its working condition and its 

scrappage value. Rising prices of 

existing vehicles lead some consumers 

to decide to delay scrapping their 

vehicles. An older vehicle stock on the 

road results in an increase in criteria air 

pollution. 

In conducting its analysis on 

consumer behavior impacts in its June 

2007 study, NERA/Sierra/AIR evaluated 

the combined impacts of the California 

greenhouse gas emission standards and 

the Zero Emission Vehicle (‘‘ZEV’’) 

rules. It is difficult to discern the total 

cost per vehicle over various model 

years of the greenhouse gas versus the 

ZEV portion of the rules and, therefore, 

determine how much of the consumer 

behavior impacts are appropriately 

attributable to the greenhouse gas 

standards. Thus, it is difficult to 

undertake a direct comparison of the 

NERA/Sierra/Air and CARB studies. 

According to NERA/Sierra/AIR, as a 

result of price increases associated with 

the greenhouse gas and ZEV rules in 

2020, they project that new vehicle sales 

in California will fall by approximately 

130,000 vehicles. In addition, the 

number of vehicles in the fleet prior to 

the effective date of the ZEV and GHG 

regulations (i.e., pre-2009 model year 

vehicles) is more than 250,000 greater in 

2020 than would otherwise be the case 

under a federal program. 

CARB, on the other hand, only looks 

at the economic impacts of the 

California greenhouse gas standards, 

independent of the ZEV requirements. 

Without the ZEV requirements, CARB 

estimates that California’s greenhouse 

gas standards will result in an increase 

in new vehicle prices of approximately 

$1,000 per vehicle (i.e., $1,064 for 

passenger vehicles, small trucks and 

sport utility vehicles (SUVs) and $1,029 

for certain medium-duty trucks/ 

SUVs).93 Using a consumer choice 

model, CARBITS, CARB estimated new 

vehicle sales from California standards 

would increase in the near-term, 

resulting in accelerated fleet turnover, 

but see declines in fleet turnover in the 

longer-term, with a loss of vehicle sales 

of roughly 97,000 in 2020. By 2020, 

CARB estimates that lost vehicle sales 

would lead to delayed fleet turnover. 

The potential increase in ozone 

precursor emission in California in out 

years (i.e., 2020) from delayed fleet 

turnover is about 2.5 tons/day. CARB 

estimates that those ‘‘disbenefits’’ of 

fleet turnover delay are more than offset 

by faster turnover in the early years of 

the California standard and reductions 

in emissions associated with fuel 

production. The more recent April 2009 

NERA/Sierra study projects the impacts 

of the California GHG standards on new 

motor vehicle sales in the thirteen states 

that have adopted the California 

standards. Since the study only 

examines the impacts on new vehicle 

sales, it does not provide estimates of 

ozone precursor impacts of California 

standards. 

b. The ‘‘Rebound Effect’’ 

The Alliance contends that criteria air 

pollutant emissions will increase due to 

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94EPA’s August 13, 2008 Response to Petition for 

Administrative Reconsideration of EPA’s ZEV 

Waiver Decision (through the 2011 Model Year) 

published on December 28, 2006, at 17, note 25. 

95To the extent that an analysis of the in-use 

effects of California’s greenhouse gas standards may 

be appropriate, then such analysis properly 

includes consideration of the upstream emission 

reduction impacts identified and linked to the 

standards. A holistic examination of the in-use 

effects of a regulation should naturally include 

those effects that have a plausible connection to the 

standards, including such consequences as indirect 

upstream emission reductions. The March 6, 2008 

Denial stated that California may otherwise have 

independent authority to regulate stationary sources 

and therefore there was no basis to include 

emission reductions from such sources as part of a 

mobile source rulemaking. However, EPA believes 

that the issue under section 209(b)(1)(A) is whether 

the so-called vehicle ‘‘rebound effect.’’ 

The rebound effect for vehicle fuel 

economy is defined as the increase in 

vehicle travel resulting from a decrease 

in the fuel cost per vehicle miles as a 

consequence of an increase in fuel 

economy. It is projected that increasing 

fuel efficiency lowers the effective cost 

of driving to the consumer, which 

results in an increase in vehicle usage 

(holding all other factors constant). 

NERA developed their own econometric 

estimate of the California rebound 

effect—17%—based on California 

vehicle inspection data from 1983–2003. 

In addition, NERA re-estimated a CARBsponsored study on the rebound effect 

by Small & Van Dender and NERA 

found the long-run rebound effect in 

California to be roughly 13%. 

In contrast, CARB used two types of 

analysis to evaluate the impact of the 

proposed regulations on changes in 

vehicle miles traveled: Econometric 

work by Small and Van Dender and 

travel demand modeling (Southern 

California Association of Governor’s 

(SCAG)). The study by Small & Van 

Dender allowed the rebound effect to 

vary based on changes in income and 

congestion. In addition, the Small & Van 

Dender study also analyzed the impact 

of higher vehicle costs on VMT. Based 

on the econometric modeling, projected 

California incomes and transportation 

conditions, Small and Van Dender 

estimated a dynamic rebound effect of 

approximately 3% for the State of 

California in 2020. A major difference 

between the NERA and Small and Van 

Dender study was the way nominal 

income was converted to real income. 

NERA tried to approximate state cost of 

living adjustments, but had to modify 

metropolitan cost of living adjustments; 

Small and Van Dender used the national 

consumer price index. Based on the 

difference in income calculation, NERA 

found that income was no longer 

statistically significant in explaining 

changes in the rebound effect. 

Therefore, they removed this term from 

their model. California also used the 

Southern California Association of 

Governor’s (SCAG) travel demand 

model to project changes in demand 

travel based on declining vehicle 

operating costs in the context of the 

transportation system in the L.A. South 

Coast Air Basin. In contrast to the 

econometric study, the travel demand 

modeling takes into account the 

available transportation infrastructure. 

CARB examined the emission impacts 

of changes in both the amount and the 

speed of motor vehicle travel, relative to 

the cost of gasoline per mile traveled. 

Based on the vehicle classes affected by 

the proposed GHG regulation, the 

results from SCAG indicate an elasticity 

of VMT to fuel cost (i.e., a rebound 

effect) of roughly 4 percent in 2020. 

c. Upstream Emissions Impacts 

California’s greenhouse gas standards 

also will influence the amount of fuel 

going through the petroleum marketing 

and distribution infrastructure in 

California. This, in turn, will reduce the 

‘‘upstream’’ criteria air pollutants from 

transportation, spills, and other events 

associated with the infrastructure. There 

were large differences between the 

CARB and NERA/Sierra estimates of 

upstream emissions. NERA, focusing on 

fuel delivery trucks and transit 

distances, characterized CARB’s 

estimates as significantly flawed. 

However, both estimated upstream 

emission reductions of ROG and NOX, 

with CARB estimating a 6 ton per day 

reduction and NERA estimating a 1.1– 

1.5 ton per day reduction. The table 

below presents the rivaling estimates 

presented by the CARB and NERA/ 

Sierra analyses. 

CARB NERA 

Fleet Turnover/Scrappage 

Effect.

Accelerated fleet turnover in near-term; smaller delayed 

fleet turnover in out years (e.g., 2020). 

Delayed fleet turnover in near term; larger delayed fleet 

turnover in out years (e.g., 2020). 

Rebound Effect .................... 3% in 2020 ...................................................................... 17% in 2003, 13% in 2007. 

Upstream Emissions ............ 6 tons/day reduction in ROG+NOx ................................. 1.1–1.5 tons/day reduction in ROG+NOx. 

Additionally, as with our analysis of 

the AIR/NERA/Sierra analysis in the 

context of the ZEV waiver 

reconsideration, we note that the study 

included a presumption that the ZEV 

standards would be in effect until at 

least 2020, and that this assumption 

appears to have a significant effect on 

other assumptions in the analysis. 

However, EPA explicitly declined to 

approve its waiver for California’s ZEV 

standards beyond the 2011 model year, 

based in part on concerns that echoed 

comments from the Alliance. This 

makes the AIR/NERA/Sierra analysis an 

insufficient analysis to base a denial of 

California’s waiver request. 

In evaluating the studies prepared by 

AIR/NERA/Sierra in light of California’s 

protectiveness determination, EPA takes 

important note of CARB’s response. As 

stated above, while CARB disagrees that 

these studies are properly before EPA in 

the waiver proceeding, it points out that 

even if it is proper for EPA to consider 

the AIR/NERA/Sierra studies, they do 

not provide a basis for finding that 

California’s protectiveness 

determination was arbitrary and 

capricious. CARB maintains that the 

Alliance has made no attempt to show 

that CARB’s analyses are irrational, 

which CARB states waiver opponents 

must make given the ‘‘arbitrary and 

capricious’’ standard. 

EPA agrees that to make a section 

209(b)(1)(A) finding, it is not enough for 

waiver opponents to provide competing 

analyses that they claim are based on a 

rational set of assumptions. Rather, they 

must show that California’s analysis, or 

the assumptions California relied on to 

support its protectiveness determination 

were arbitrary and capricious. 

Competing analyses, each based on 

rational assumptions, are not sufficient 

to deny a waiver.94

As previously stated, EPA does not 

need to decide the validity of the 

suggestion that the traditional numerical 

analysis is insufficient and that EPA 

must also consider the in-use effects of 

the standards. Given the legislative 

history and text of section 209(b)(2), 

EPA would need a concrete factual basis 

to examine the in-use effect of 

California’s greenhouse gas standards on 

its broader LEV II program as compared 

to the Federal Tier II program. We need 

not take a position on that matter 

because the waiver opponents do not 

meet their burden to show that CARB’s 

analysis of the in-use effects is arbitrary 

and capricious.95 Rather, they present 

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the indirect reductions of ozone pollutants from 

stationary sources created by the greenhouse gas 

emission standards for motor vehicles, can 

reasonably be considered by California in its 

determination that its standards are as protective of 

public health and welfare as applicable federal 

standards. Given that the effects are reasonably 

related to the regulations, if it is appropriate to 

consider in-use effects then it was not arbitrary and 

capricious for California to include such effects in 

this analysis. 96 49 FR 18887 (May 3, 1984). 

97 Id. at 18890. 

98 73 FR 12156, 12159–60 (March 6, 2008). 

99 73 FR at 12159–60. 

100EPA recently reaffirmed that the traditional 

interpretation still applied for motor vehicle 

standards designed to address air pollution 

problems that are local or regional in nature. 71 FR 

78190, 78192 (December 28, 2008); see also 71 FR 

78190 and Decision Document for Waiver of 

Federal Preemption for California Zero Emission 

Vehicle Standards, at 34. 

rivaling analyses—each making 

different assumptions so that the 

differences in findings can be reduced 

to differences in assumptions. EPA finds 

that the Alliance has not met its burden 

of proof that the greenhouse gas 

regulations undermine California’s 

previous LEV II and ZEV protectiveness 

determinations or that California was 

arbitrary and capricious in its 

greenhouse gas protectiveness 

determination. 

EPA, therefore, finds that opponents 

of the waiver have not presented clear 

and compelling evidence that CARB 

was arbitrary and capricious in finding 

that the real-world effect of its standards 

‘‘in the aggregate’’ would not lead to 

greater emissions of pollutants than the 

federal program. 

D. Section 209(b)(1)(A) Conclusion 

Based on the record before me, I 

cannot find that CARB was arbitrary and 

capricious in its finding that the 

California motor vehicle emission 

standards including the greenhouse gas 

standards are, in the aggregate, at least 

as protective of public health and 

welfare as applicable Federal standards. 

V. Does California Need Its Standards 

To Meet Compelling and Extraordinary 

Conditions? 

Under section 209(b)(1)(B) of the Act, 

I cannot grant a waiver if I find that 

California ‘‘does not need such State 

standards to meet compelling and 

extraordinary conditions.’’ EPA has 

traditionally interpreted this provision 

as considering whether California needs 

a separate motor vehicle program to 

meet compelling and extraordinary 

conditions. However in the March 6, 

2008 Denial, EPA limited this 

interpretation to California’s motor 

vehicle standards that are designed to 

address local or regional air pollution 

problems. EPA determined that the 

traditional interpretation was not 

appropriate for standards designed to 

address a global air pollution problem 

and its effects and that it was 

appropriate to address such standards 

separately from the remainder of the 

program. EPA then proceeded to find 

that California did not need such 

standards to meet compelling and 

extraordinary conditions. The 

interpretation adopted in the March 6, 

2008 Denial is now before me for 

reconsideration. 

A. Basis of March 6, 2008 Denial 

In the March 6, 2008 Denial, EPA 

provided its reasoning for changing its 

long-standing interpretation of this 

provision, as it pertains to California 

standards designed to address global air 

pollution. EPA described its longstanding interpretation in some detail, 

stating that: 

Under this approach EPA does not look at 

whether the specific standards at issue are 

needed to meet compelling and extraordinary 

conditions related to that air pollutant. For 

example, EPA reviewed this issue in detail 

with regard to particulate matter in a 1984 

waiver decision.96 In that waiver proceeding, 

California argued that EPA is restricted to 

considering whether California needs its own 

motor vehicle program to meet compelling 

and extraordinary conditions, and not 

whether any given standard is necessary to 

meet such conditions. Opponents of the 

waiver in that proceeding argued that EPA 

was to consider whether California needed 

these PM standards to meet compelling and 

extraordinary conditions related to PM air 

pollution. 

The Administrator agreed with California 

that it was appropriate to look at the program 

as a whole in determining compliance with 

section 209(b)(1)(B). One justification of the 

Administrator was that many of the concerns 

with regard to having separate state standards 

were based on the manufacturers’ worries 

about having to meet more than one motor 

vehicle program in the country, but that once 

a separate California program was permitted, 

it should not be a greater administrative 

hindrance to have to meet further standards 

in California. The Administrator also 

justified this decision by noting that the 

language of the statute referred to ‘‘such state 

standards,’’ which referred back to the use of 

the same phrase in the criterion looking at 

the protectiveness of the standards in the 

aggregate. He also noted that the phrase 

referred to standards in the plural, not 

individual standards. He considered this 

interpretation to be consistent with the 

ability of California to have some standards 

that are less stringent than the federal 

standards, as long as, per section 

209(b)(1)(A), in the aggregate its standards 

were at least as protective as the federal 

standards. 

The Administrator further stated that in the 

legislative history of section 209, the phrase 

‘‘compelling and extraordinary 

circumstances’’ refers to ‘‘certain general 

circumstances, unique to California, 

primarily responsible for causing its air 

pollution problem,’’ like the numerous 

thermal inversions caused by its local 

geography and wind patterns. The 

Administrator also noted that Congress 

recognized ‘‘the presence and growth of 

California’s vehicle population, whose 

emissions were thought to be responsible for 

ninety percent of the air pollution in certain 

parts of California.’’ 97 EPA reasoned that the 

term compelling and extraordinary 

conditions ‘‘do not refer to the levels of 

pollution directly.’’ Instead, the term refers 

primarily to the factors that tend to produce 

higher levels of pollution—‘‘geographical and 

climatic conditions (like thermal inversions) 

that, when combined with large numbers and 

high concentrations of automobiles, create 

serious air pollution problems.’’ 98

The Administrator summarized that 

under this interpretation the question to 

be addressed in the second criterion is 

whether these ‘‘fundamental 

conditions’’ (i.e. the geographical and 

climate conditions and large motor 

vehicle population) that cause air 

pollution continued to exist, not 

whether the air pollution levels for PM 

were compelling and extraordinary, or 

the extent to which these specific PM 

standards will address the PM air 

pollution problem.99

However in the March 6, 2008 Denial, 

EPA limited this interpretation to 

California’s motor vehicle standards that 

are designed to address local or regional 

air pollution problems. EPA determined 

that the traditional interpretation was 

not appropriate for standards designed 

to address a global air pollution problem 

and its effects.100

With respect to a global air pollution 

problem like elevated concentrations of 

greenhouse gases, EPA’s March 6, 2008 

Denial found that the text of section 

209(b)(1)(B) was ambiguous and does 

not limit EPA to this prior 

interpretation. In addition, EPA noted 

that the legislative history supported a 

decision to ‘‘examine the second 

criterion specifically in the context of 

global climate change.’’ The legislative 

history: 

[I]ndicates that Congress was moved to 

allow waivers of preemption for California 

motor vehicle standards based on the 

particular effects of local conditions in 

California on the air pollution problems in 

California. Congress discussed ‘‘the unique 

problems faced in California as a result of its 

climate and topography.’’ H.R. Rep. No. 728, 

90th Cong. 1st Sess., at 21 (1967). See also 

Statement of Cong. Holifield (CA), 113 Cong. 

Rec. 30942–43 (1967). Congress also noted 

the large effect of local vehicle pollution on 

such local problems. See, e.g., Statement of 

Cong. Bell (CA) 113 Cong. Rec. 30946. In 

particular, Congress focused on California’s 

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101 73 FR at 12161. 

102California Air Resources Board, EPA–HQ– 

OAR–2006–0173–0004.1 at 27. 

smog problem, which is especially affected 

by local conditions and local pollution. See 

Statement of Cong. Smith (CA) 113 Cong. 

Rec. 30940–41 (1967); Statement of Cong. 

Holifield (CA), id. at 30942. See also, MEMA 

I, 627 F. 2d 1095, 1109 (DC Cir., 1979) 

(noting the discussion of California’s 

‘‘peculiar local conditions’’ in the legislative 

history). Congress did not justify this 

provision based on pollution problems of a 

more national or global nature in justifying 

this provision.101

Relying on this, and without any 

further significant discussion of either 

congressional intent or how this new 

approach properly furthered the goals of 

section 209(b), EPA determined that it 

was appropriate to: 

[R]eview California’s GHG standards 

separately from the remainder of its motor 

vehicle emission control program for 

purposes of section 209(b)(1)(B). In this 

context it is appropriate to give meaning to 

this criterion by looking at whether the 

emissions from California motor vehicles, as 

well as the local climate and topography in 

California, are the fundamental causal factors 

for the air pollution problem—elevated 

concentrations of greenhouse gases—apart 

from the other parts of California’s motor 

vehicle program, which are intended to 

remediate different air pollution concerns. 

EPA then proceeded to apply this 

interpretation to the GHG standards at 

issue in this waiver proceeding, and 

found that California did not need the 

GHG standards under this 

interpretation. Having limited the 

meaning of this provision to situations 

where the air pollution problem was 

local or regional in nature, EPA found 

that California’s greenhouse gas 

standards do not meet this criterion. 

EPA found that the elevated 

concentrations of greenhouse gases in 

California are similar to concentrations 

elsewhere in the world, and that local 

conditions in California such as the 

local topography and climate and the 

number of motor vehicles in California 

are not the determinant factors causing 

the elevated GHG concentrations found 

in California and elsewhere. Thus, the 

March 6, 2008 Denial found that 

California did not need its GHG 

standards to meet compelling and 

extraordinary conditions, and the 

waiver was denied. 

EPA also considered an alternative 

interpretation, where EPA would 

consider ‘‘the effects in California of this 

global air pollution problem in 

California in comparison to the rest of 

the country, again addressing the GHG 

standards separately from the rest of 

California’s motor vehicle program.’’ 

Under this alternative interpretation, 

EPA considered whether the impacts of 

global climate change in California were 

significant enough and different enough 

from the rest of the country such that 

California could be considered to need 

its greenhouse gas standards to meet 

compelling and extraordinary 

conditions. EPA determined that the 

waiver should be denied under this 

alternative interpretation as well. 

B. Should EPA Review This Criterion 

Based on the Need for California’s 

Motor Vehicle Program or the Need for 

the GHG Standards? 

The essential first question to resolve 

in addressing whether California needs 

‘‘such State standards to meet 

compelling and extraordinary 

conditions’’ is whether it is appropriate 

for EPA to evaluate this criterion based 

on California’s need for its motor 

vehicle program as a whole, or to 

evaluate only the particular standards 

being addressed in this waiver 

proceeding. 

1. Comments Supporting a Review of 

the Entire Program 

In its initial waiver request, CARB 

restates its need for its own engine and 

vehicle programs to meet serious air 

pollution problems. It notes that the 

relevant inquiry is whether California 

needs its own emission control program 

as opposed to the need for any given 

standard as necessary to meet 

compelling and extraordinary 

conditions. CARB notes that in prior 

waivers the Administrator has 

determined that: 

‘‘[C]ompelling and extraordinary 

conditions’’ does not refer to levels of 

pollution directly, but primarily to the factors 

that tend to produce them: geographical and 

climatic conditions that, when combined 

with large numbers and high concentrations 

of automobiles create serious air pollution 

problems.’’ 

In its initial waiver request letter, CARB 

stated: 

California, the South Coast and San 

Joaquin Air basins in particular, continues to 

experience some of the worst air quality in 

the nation. California’s ongoing need for 

dramatic emission reductions generally and 

from passenger vehicles specifically is 

abundantly clear from its recent adoption of 

state implementation plans for the South 

Coast and other California air basins. The 

unique geographical and climatic conditions, 

and the tremendous growth in the vehicle 

population and use which moved Congress to 

authorize California to establish separate 

vehicle standards in 1967, still exist today.102

CARB notes that these conditions 

have not changed to warrant a change in 

confirmation by EPA and that the 

opponents of the waiver bear the burden 

on showing why California no longer 

has a compelling need, informed by its 

own circumstances and benefits that 

would accrue to it and other states. 

EPA also received comment that the 

Massachusetts v. EPA holding suggests 

that EPA should treat greenhouse gases 

just like all other air pollutants when 

evaluating a section 209(b) waiver 

request for greenhouse gases. These 

comments suggest that once the 

Supreme Court clarified that greenhouse 

gases are Clean Air Act air pollutants, 

there was no room left to distinguish 

greenhouse gases from other air 

pollutants when evaluating waiver 

requests under section 209(b). These 

comments suggest that EPA ought not to 

treat elevated concentrations of 

greenhouse gases as an air pollution 

problem different from California’s 

traditional air pollution problems. 

Likewise, the comments suggest, 

greenhouse gas pollutants should be 

treated just like other air pollutants 

which give rise to the need for 

California’s motor vehicle emission 

program, and, therefore, be subject to 

EPA’s traditional section 209(b)(1)(B) 

analysis. 

Several commenters suggest that 

review of California’s need for its motor 

vehicle emissions program as a whole is 

not only appropriate but is mandated by 

the statute. 

2. Comments Supporting a Review of 

the GHG Standards Separately 

Several commenters opposing the 

GHG waiver request have advocated that 

EPA should review California’s GHG 

standards separately under the 

‘‘compelling and extraordinary 

conditions’’ criterion. Essentially, this 

would require that EPA’s determination 

be based on California’s need for GHG 

standards in isolation of its need for its 

own motor vehicle emissions program. 

These commenters state that the 

statute requires a linkage between the 

compelling and extraordinary 

conditions and the particular standards 

that California wishes to enforce, and 

that a set of standards that cannot be 

linked to the compelling and 

extraordinary conditions cannot be said 

to be needed to meet such conditions. 

The commenters note that the statute 

refers to ‘‘standards’’—not to a 

‘‘program’’—and that such an approach 

would shield regulations that would not 

meet the criterion from any review 

simply by referring to other regulations 

that do meet the criterion. Moreover, 

they state that the need for such 

standards must be based on the 

particular characteristics (topography, 

photochemistry) that make California’s 

conditions compelling and 

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103This comment, suggesting that the ‘‘need for 

such State standards to meet compelling and 

extraordinary conditions,’’ is made under Step 1 of 

the test established under Chevron, USA., Inc. v. 

NRDC. 

104The traditional interpretation of section 

209(b)(1)(B) is certainly not ‘‘unambiguous 

precluded’’ by the language of the statute. See 

Entergy Corp. v. Riverkeeper, Inc., 129 S.Ct. 1498 

(2009)(‘‘That view governs if it is a reasonable 

interpretation of the statute—not necessarily the 

only possible interpretation, nor even the 

interpretation deemed most reasonable by the 

courts. Chevron U.S.A. Inc. v. Natural Resources 

Defense Council, Inc., 467 U.S. 837, 843–844 

(1984).’’) (‘‘It seems to us, therefore, that the phrase 

‘‘best available,’’ even with the added specification 

‘‘for minimizing adverse environmental impact,’’ 

does not unambiguously preclude cost-benefit 

analysis.’’). Carrow v. Merit Systems Protection 

Board, 564 F.3d 1359 (Fed. Cir. 2009) (‘‘[W]e are 

obligated to give controlling effect to [agency’s] 

interpretation if it is reasonable and is not contrary 

to the unambiguously expressed intent of 

Congress’’, citing Entergy Corp.) . 

105H.R. Rep. No. 294, 95th Cong., 1st Sess. 301– 

302 (1977). See MEMA, 627 F. 2d at 1110–11. 

106 MEMA, 627 F. 2d at 1111. 

107This broad interpretation of section 209(b) is 

similar to the broad reading the Court provided to 

section 302(g) of the Clean Air Act when it held that 

the term ‘‘air pollutant’’ included greenhouse gases, 

rejecting among other things the argument that 

Congress limited the term to apply only to certain 

kinds of air pollution. Massachusetts v. EPA, 549 

U.S. 497, 532 footnote 26. 

extraordinary, whereas global climate 

change (and, thus, control of GHGs) is 

not related to such conditions. 

Included among the comments 

suggesting that section 209(b) was 

intended to allow California to address 

local air pollution problems and not 

global environmental issues like climate 

change was an argument that the phrase 

‘‘need for such State standards to meet 

compelling and extraordinary 

conditions’’ is unambiguous.103 That 

lack of ambiguity, according to these 

comments, compels the conclusion that 

global warming is not the type of 

condition California was meant to 

address with its motor vehicle 

emissions program. These commenters 

further suggest that the intent of 

Congress was to allow California the 

ability to set its own standards to 

address the state’s unique local air 

pollution problems and ‘‘scientific 

evidence confirms that California’s 

temperature trends are neither unique 

nor particularly distinct from those of at 

least a dozen other States.’’ 

3. Decision 

After reviewing the comments and the 

March 6, 2008 Denial, I believe the 

better approach is to review California’s 

need for its new motor vehicle 

emissions program as a whole to meet 

compelling and extraordinary 

conditions, and not to apply this 

criterion to specific standards, or to 

limit it to standards designed to address 

only local or regional air pollution 

problems. The traditional approach to 

interpreting this provision is the best 

approach for considering a waiver for 

greenhouse standards, as well as a 

waiver for standards designed to 

address local or regional air pollution 

problems.104 Therefore, I believe the 

interpretation that was applied in the 

March 6, 2008 Denial should be rejected 

and no longer be followed. 

This traditional interpretation is the 

most straightforward reading of the text 

and legislative history of section 209(b). 

Congress decided in 1977 to allow 

California to promulgate individual 

standards that are not as stringent as 

comparable federal standards, as long as 

the standards are ‘‘in the aggregate, at 

least as protective of public health and 

welfare as applicable federal standards.’’ 

This decision by Congress requires EPA 

to allow California to promulgate 

individual standards that, in and of 

themselves, might not be considered 

needed to meet compelling and 

extraordinary circumstances, but are 

part of California’s overall approach to 

reducing vehicle emissions to address 

air pollution problems. 

EPA is to determine whether 

California’s determination is arbitrary 

and capricious under section 

209(b)(1)(A), and is to determine 

whether California does not need ‘‘such 

State standards’’ to meet compelling and 

extraordinary conditions. The natural 

reading of these provisions leads EPA to 

consider the same group of standards 

that California considered in making its 

protectiveness determination. While the 

words ‘‘in the aggregate’’ are not 

specifically applicable to section 

209(b)(1)(B), it does refer to the need for 

‘‘such State standards,’’ rather than 

‘‘each State standard’’ or otherwise 

indicate a standard-by-standard 

analysis. 

In addition, EPA’s March 6, 2008 

Denial determined that this provision 

was appropriately interpreted to 

consider California’s standards as a 

group for standards designed to address 

local or regional air pollution problems, 

but should be interpreted in the 

opposite fashion for standards designed 

to address global air pollution problems. 

The text of the provision, however, 

draws no such distinction, and provides 

no indication other than Congress 

intended a single interpretation for this 

provision, not one that varied based on 

the kind of air pollution problem at 

issue. 

The March 6, 2008 Denial considered 

the legislative history, and determined 

that Congress was motivated by concern 

over local conditions in California that 

lead to local or regional air pollution 

problems. From this, EPA determined 

that Congress intended to allow 

California to address these kinds of local 

or regional air pollution problems, but 

no others. In effect, EPA inferred from 

the discussion in the legislative history 

that Congress intended to limit 

California’s authority in this way, and to 

prohibit a waiver for California 

standards aimed at global air pollution 

problems. 

This ignores the main thrust of the 

text and legislative history of section 

209(b), and improperly reads too much 

into an absence of discussion of global 

air pollution problems in the legislative 

history. The structure of section 209, 

both as adopted in 1967 and as 

amended in 1977, is notable in its focus 

on limiting the ability of EPA to deny 

a waiver, and thereby preserves 

discretion for California to construct its 

motor vehicle program as it deems 

appropriate to protect the health and 

welfare of its citizens. The legislative 

history indicates Congress quite 

intentionally restricted and limited 

EPA’s review of California’s standards, 

and its express legislative intent was to 

‘‘provide the broadest possible 

discretion [to California] in selecting the 

best means to protect the health of its 

citizens and the public welfare.’’ 105 The 

DC Circuit recognized that ‘‘[t]he history 

of the congressional consideration of the 

California waiver provision, from its 

original enactment up through 1977, 

indicates that Congress intended the 

State to continue and expand its 

pioneering efforts at adopting and 

enforcing motor vehicle emission 

standards different from and in large 

measure more advanced than the 

corresponding federal program. In short, 

to act as a kind of laboratory for 

innovation. * * * For a court [to limit 

California’s authority] despite the 

absence of such an indication would 

only frustrate the congressional 

intent.’’ 106

In this context, it is fully consistent 

with the expressed intention of 

Congress to interpret section 

209(b)(1)(B) the same way both for 

standards designed to address local and 

regional air pollution problems, and 

standards designed to address global air 

pollution problems. Congress intended 

to provide California the broadest 

possible discretion to develop its motor 

vehicle emissions program. Neither the 

text nor the legislative history of section 

209(b) indicates that Congress intended 

to limit this broad discretion to a certain 

kind of air pollution problem, or to take 

away all discretion with respect to 

global air pollution problems.107 In 

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108See Massachusetts v. EPA, ‘‘While the 

Congresses that drafted section 202(a)(1) might not 

have appreciated the possibility that burning fossil 

fuels could lead to global warming, they did 

understand that without regulatory flexibility, 

changing circumstances and scientific 

developments would soon render the Clean Air Act 

obsolete. The broad language of section 202(a)(1) 

reflects an intentional effort to confer the flexibility 

necessary to forestall such obsolescence. See 

Pennsylvania Dept. of Corrections v. Yeskey, 

524 U.S. 206, 212 (1998) (‘‘[T]he fact that a statute 

can be applied in situations not expressly 

anticipated by Congress does not demonstrate 

ambiguity. It demonstrates breadth’’ (internal 

quotation marks omitted)). Because greenhouse 

gases fit well within the Clean Air Act’s capacious 

definition of ‘‘air pollutant,’’ we hold that EPA has 

the statutory authority to regulate the emission of 

such gases from new motor vehicles.’’ 549 U.S. 497 

at 532. 

109See e.g. Approval and Promulgation of State 

Implementation Plans; California—South Coast, 64 

FR 1770, 1771 (January 12, 1999). See also 69 FR 

23858, 23881–90 (April 30, 2004) (designating 15 

areas in California as nonattainment for the federal 

8-hour ozone national ambient air quality standard). 

addition, applying the traditional 

interpretation to greenhouse gas 

standards does not change the basic 

nature of the compromise established by 

Congress—California could act as the 

laboratory for the nation with respect to 

motor vehicle emission control, and 

manufacturers would continue to face 

just two sets of emissions standards— 

California’s and EPA’s. 

This interpretation is directly in line 

with the purpose of Congress, as 

compared to the interpretation adopted 

in the March 6, 2008 Denial. The 2008 

interpretation relied on the discussion 

in the legislative history of local 

conditions in California leading to air 

pollution problems like ozone. While 

this was properly read to support the 

view that this provision should be 

interpreted to address California’s need 

for a motor vehicle program as a whole, 

the March 6, 2008 Denial went further 

and inferred that by discussing such 

local conditions, Congress also intended 

to limit California’s discretion to only 

these kinds of local or regional air 

pollution problems. The March 6, 2008 

Denial pointed to no particular language 

in the legislative history or the text of 

section 209(b) indicating such, instead, 

congressional intent to limit California’s 

discretion was inferred from the 

discussion of local conditions. However, 

basing a limitation on such an inference 

is not appropriate given the express 

indication that Congress intended to 

provide California the ‘‘broadest 

possible discretion’’ in selecting the best 

means to protect the health of its 

citizens and the public welfare. 

The text of section 209(b) and the 

legislative history, when viewed as a 

whole, leads me to conclude that the 

interpretation adopted in the March 6, 

2008 Denial should be rejected. The 

better way to interpret this provision is 

to apply the traditional interpretation to 

the evaluation of California’s 

greenhouse gas standards for motor 

vehicles. If California needs a separate 

motor vehicle program to address the 

kinds of compelling and extraordinary 

conditions discussed in the traditional 

interpretation, then Congress intended 

that California could have such a 

program. Congress also intentionally 

provided California the broadest 

possible discretion in adopting the kind 

of standards in its motor vehicle 

program that California determines are 

appropriate to address air pollution 

problems that exist in California, 

whether or not those problems are local 

or regional in nature, and to protect the 

health and welfare of its citizens. The 

better interpretation of the text and 

legislative history of this provision is 

that Congress did not intend this 

criterion to limit California’s discretion 

to a certain category of air pollution 

problems, to the exclusion of others. In 

this context it is important to note that 

air pollution problems, including local 

or regional air pollution problems, do 

not occur in isolation. Ozone and PM air 

pollution, traditionally seen as local or 

regional air pollution problems, occur in 

a context that to some extent can 

involve long range transport of this air 

pollution or its precursors. This longrange or global aspect of ozone and PM 

can have an impact on local or regional 

levels, as part of the background in 

which the local or regional air pollution 

problem occurs. As discussed later, the 

effects of global concentrations of 

greenhouse gases can have an impact on 

local ozone levels. This context for air 

pollution problems supports the view 

that Congress did not draw such a line 

between the types of air pollution 

problems under this criterion, and that 

EPA should not implement this 

criterion in a narrow way restricting 

how California determines it should 

develop its motor vehicle program to 

protect the health and welfare of its 

citizens.108

This approach does not make section 

209(b)(1)(B) a nullity, as some have 

suggested. EPA must still determine 

whether California does not need its 

motor vehicle program to meet the 

compelling and extraordinary 

conditions discussed in the legislative 

history. If that is the case, then a waiver 

would be denied on those grounds. As 

discussed below, that is not the case at 

this point, even though conditions in 

California may one day improve such 

that it no longer has the need for a 

separate motor vehicle program. The 

statute contemplates that such 

improvement is possible. In addition, 

the opponents of a waiver always have 

the ability to raise their legal, policy, 

and other concerns in the State 

administrative process, or through 

judicial review in State courts. 

Congress, however, provided EPA a 

much more limited role under section 

209(b) in considering objections raised 

by opponents of a waiver. 

For these reasons, I believe that the 

better approach for analyzing the need 

for ‘‘such State standards’’ to meet 

‘‘compelling and extraordinary 

conditions’’ is to review California’s 

need for its program, as a whole, for the 

class or category of vehicles being 

regulated, as opposed to its need for 

individual standards. 

Having adopted this interpretation of 

section 209(b)(1)(B), I apply it below to 

determine whether EPA can find that 

California does not need its motor 

vehicle program to meet compelling and 

extraordinary conditions. Given the 

basis for EPA’s March 6, 2008 Denial 

and the considerable debate regarding 

the permissible interpretations of this 

provision, EPA has also evaluated this 

criterion reviewing the greenhouse gas 

standards separately—using the two 

interpretations discussed in the March 

6, 2008 Denial. In either case, EPA also 

cannot deny California’s request for a 

waiver based on a finding that 

California does not need such standards 

to meet compelling and extraordinary 

circumstances. 

C. Does California Need Its Motor 

Vehicle Program To Meet Compelling 

and Extraordinary Conditions? 

As discussed above, the better 

interpretation of this criterion, adopted 

herein, is the traditional approach of 

evaluating California’s need for a 

separate program to meet compelling 

and extraordinary conditions. Applying 

this approach, with due deference to 

California, I cannot deny the waiver. 

CARB has repeatedly demonstrated 

the need for its motor vehicle program 

to address compelling and extraordinary 

conditions in California. In its Waiver 

Request letter, CARB stated: 

California—the South Coast and San 

Joaquin Air basins in particular—continues 

to experience some of the worst air quality 

in the nation. California’s ongoing need for 

dramatic emission reductions generally and 

from passenger vehicles specifically is 

abundantly clear from its recent adoption of 

state implementation plans for the South 

Coast and other California air basins.109 The 

unique geographical and climatic conditions, 

and the tremendous growth in the vehicle 

population and use which moved Congress to 

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110California Air Resources Board, EPA–HQ– 

OAR–2006–0173–0004.1, at 16. 

111California Air Resources Board, EPA–HQ– 

OAR–2006–0173–1686 at 7. 

112California submits evidence that at the 

national scale, using global to regional air quality 

models, various papers demonstrate that climate 

change alone can worsen summertime surface 

ozone pollution in polluted regions of the United 

States including one finding that ‘‘climate change 

alone will increase summertime ozone in polluted 

regions by 1–10 ppb over the coming decades, with 

the largest effects in urban areas and during 

pollution episodes’’ and therefore ‘‘climate change 

will partly offset the benefit of the emissions 

reductions.’’ See Jacob and Winner (2009), EPA– 

HQ–OAR–2006–0173–9010.4. CARB also cites the 

2007 Interim Report of the U.S. EPA Global Change 

Research Program Assessment of the Impacts of 

Global Change on Regional U.S. Air Quality, a draft 

EPA study which concludes that climate change 

may significantly increase ground-level ozone in 

areas throughout the nation. See also EPA’s final 

April 2009 ‘‘Assessment of the Impacts of Global 

Climate Change on Regional U.S. Air Quality: A 

Synthesis of Climate Change Impacts on GroundLevel Ozone’’ which states as one of its general 

findings: ‘‘[W]hile these modeling studies cannot 

tell us what the future will hold, they demonstrate 

the potential for global climate change to make U.S. 

air quality management more difficult, and 

therefore future air quality management decisions 

should begin to account for the impacts of climate 

change.’’ EPA–HQ–OAR–2006–0173–9006 at 7–9. 

113 Id. 

114California also submits evidence that its GHG 

emission regulations would result in a slight 

reduction of ozone precursors. EPA–HQ–OAR– 

2006–0173–9006 at 10. 

115 73 FR 12156, 12164. 

authorize California to establish separate 

vehicle standards in 1967, still exist today.110

CARB notes in its July 14, 2007 

comments that it testified at EPA’s 

earlier hearings on this waiver request 

that ‘‘since nothing has changed in the 

few months since EPA last easily made 

this determination [regarding the need 

for the motor vehicle emission program] 

on December 28, 2006 (71 FR 78190), 

and since California still has the 

‘‘geographical and climatic conditions 

that, when combined with the large 

numbers and high concentrations of 

automobiles, create serious pollution 

problems,’’ (49 FR at 18890 (citing 

legislative history)), this is the end of a 

proper and legal EPA analysis of the 

extraordinary and compelling 

conditions waiver prong.’’ 111

EPA has not received any adverse 

comments suggesting that California no 

longer needs a separate motor vehicle 

emissions program to address the 

various conditions that lead to serious 

and unique air pollution problems in 

California. 

Based on the record, I am unable to 

identify any change in circumstances or 

any evidence to suggest that the 

conditions that Congress identified as 

giving rise to serious air quality 

problems in California no longer exist. 

Therefore, using the traditional 

approach of reviewing the need for a 

separate California program to meet 

compelling and extraordinary 

conditions, I cannot deny the waiver 

based on this criterion. 

D. Does California Need Its Motor 

Vehicle GHG Standards To Meet 

Compelling and Extraordinary 

Conditions? 

As discussed above, EPA has also 

evaluated this criterion under two 

alternative approaches, reviewing the 

greenhouse gas standards separately 

using the two interpretations discussed 

in the March 6, 2008 Denial. While 

recognizing that they are not the 

interpretations adopted here by EPA, 

this section discusses the Agency’s 

consideration of these alternative 

interpretations. 

1. Are California’s GHG Standards 

Designed in Part To Address an Air 

Pollution Problem That Is Local or 

Regional in Nature? 

In the March 6, 2008 Denial, EPA 

interpreted this criterion as calling for a 

review of California’s GHG standards 

separately from the remainder of its 

motor vehicle emission control program. 

In that context, it was determined 

appropriate to look at whether the 

emissions from California motor 

vehicles, as well as the local climate and 

topography in California, are the 

fundamental causal factors for the air 

pollution problem of greenhouse gases. 

This interpretation limited the meaning 

of this provision to situations where the 

motor vehicle standards at issue were 

designed to address an air pollution 

problem that was local or regional in 

nature, such that the local conditions in 

California were the fundamental causes 

of the air pollution problem. 

The March 6, 2008 Denial applied this 

interpretation by focusing on elevated 

concentrations of greenhouse gases as 

the air pollution—a global air pollution 

problem. The March 6, 2008 Denial 

rejected arguments that the GHG 

standards should also been seen as an 

ozone control strategy, on the grounds 

that even if elevated concentrations of 

greenhouse gases lead to climate 

changes that exacerbate ozone, the 

causes of elevated concentrations of 

greenhouse gases are not solely local to 

California but are global in nature. 

This overly narrow view fails to 

consider that although the factors that 

cause ozone are primarily local in 

nature and that ozone is a local or 

regional air pollution problem, the 

impacts of global climate change can 

nevertheless exacerbate this local air 

pollution problem. Whether or not local 

conditions are the primary cause of 

elevated concentrations of greenhouse 

gases and climate change, California has 

made a case that its greenhouse gas 

standards are linked to amelioration of 

California’s smog problems. Reducing 

ozone levels in California cities and 

agricultural areas is expected to become 

harder with advancing climate change. 

California and many other commenters 

note that ‘‘California’s high ozone 

levels—clearly a condition Congress 

considered—will be exacerbated by 

higher temperatures from global 

warming.’’ 112 California also notes that 

there is general consensus that 

temperature increases from climate 

change will exacerbate the historic 

climate, topography, and population 

factors conducive to smog formation in 

California, which were the driving 

forces behind Congress’ inclusion of the 

waiver provision in the Clean Air 

Act.113 There is a logical link between 

the local air pollution problem of ozone 

and California’s desire to reduce GHGs 

as one way to address the adverse 

impact that climate change may have on 

local ozone conditions.114 Given the 

clear deference that Congress intended 

to provide California on the 

mechanisms it chooses to use to address 

its air pollution problems, it would be 

appropriate to consider its GHG 

standards as designed in part to help 

address a local air pollution problem, 

and, thus, a waiver should not be 

denied even under the narrow 

interpretation employed in the March 6, 

2008 Denial. 

2. Do the Impacts of Climate Change in 

California Support a Denial of the 

Waiver? 

As part of EPA’s March 6, 2008 

Denial, EPA also considered an 

alternative interpretation for this 

criterion, where EPA would consider 

‘‘the effects in California of this global 

air pollution problem * * * in 

comparison to the rest of the country, 

again addressing the GHG standards 

separately from the rest of California’s 

motor vehicle program.’’ EPA 

considered evidence and arguments 

submitted by commenters concerning 

whether the impacts of global climate 

change in California were significant 

enough and different enough from the 

rest of the country such that California 

could be considered to need its 

greenhouse gas standards to meet 

compelling and extraordinary 

conditions.115 EPA determined in the 

March 6, 2008 Denial that the waiver 

should be denied under this approach 

as well. 

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116Association of International Automobile 

Manufacturers, EPA–HQ–OAR–2006–0173–9005. 

This comment notes the finding in Massachusetts 

v. EPA that the impacts of global warming are 

‘‘widely shared’’ among the states. 

117EPA has not received any comment suggesting 

EPA’s prior inventory of evidentiary information is 

incorrect as set forth in its discussion of the 

‘‘Relationship of Impacts of Global Climate Change 

in California to the Rest of the Country’’ at 73 FR 

12156, 12163–12168. In addition, several new 

studies have been submitted to EPA, including: a 

recent report from the Pacific Institute examining 

the impacts that sea level rise would have on 

population, infrastructure, and property in 

California (this report uses projections of medium 

to medium-high greenhouse gas emissions scenarios 

indicating a 1.4 meter rise in the seal level by 2100 

with 480,000 people at risk and $100 million in 

property at risk from a 100 year flood event); 

California’s Climate Action Team Reports that 

emphasizes many of the points made in California’s 

waiver request including the air quality impacts 

(‘‘Climate change could slow progress toward 

attainment of health-based air quality standards and 

increase pollution control costs by increasing the 

potential for high ozone and high particulate days.’’ 

The report itself synthesizes 37 recent reports that 

address a wide body of information on the range 

and gravity of the risks that climate change poses 

to California’s citizens, natural resources, and 

economy); and the Public Policy Institute of 

California assessment of climate change on public 

health in California and cites number impacts 

including ‘‘an increase in the frequency and 

severity of air pollution episodes’’ and ‘‘an increase 

in extreme heat events and associated increases in 

heat related morbidity and mortality.’’ See 

Environmental Defense Fund, EPA–HQ–OAR– 

2006–0173–9025 at 15–18; See also California Air 

Resources Board, EPA–HQ–OAR–2006–0173–9006 

at 7–16. 

118Environmental Defense Fund, EPA–HQ–OAR– 

2006–0173–9025 at 11–12. 

119The Association of International Automobile 

Manufacturers notes that although in the March 6, 

2008 Denial, ‘‘EPA found that there is ample 

evidence that global warming is ‘compelling’ in the 

As discussed above, this is not the 

interpretation that EPA now adopts. 

However, even if EPA were to examine 

the impacts of climate change in 

California under this interpretation, 

based on a review of all the evidence in 

the record, I cannot deny the waiver. 

a. What Test Applies Under This 

Alternative Approach? 

In the March 6, 2008 Denial, EPA 

found that legislative intent called for 

particular circumstances in California 

that are ‘‘sufficiently different’’ from the 

nation as a whole that justify separate 

standards in California. 

EPA received comment stating that 

there is no statutory foundation for a 

‘‘sufficiently different’’ test. 

Commenters noted there is nothing in 

the term ‘‘compelling and extraordinary 

conditions’’ that requires a comparison 

to the rest of the country. Similarly, 

commenters point to EPA’s 1984 PM 

waiver where EPA’s Administrator 

found that ‘‘there is no indication in the 

language of section 209 or the legislative 

history that California’s pollution 

problem must be the worst in the 

country for a waiver to be granted.’’ EPA 

also received comment that it was not 

reasonable for EPA to conclude that 

California does not face global warming 

impacts, including water supply, 

agricultural production, and wildfire 

seasonal impacts that present 

compelling and extraordinary 

conditions, since other states will face 

similar impacts. Under this rationale, 

since states other than California are 

also experiencing serious global 

warming impacts, California could 

never receive a waiver to combat 

climate change. Commenters find flaw 

in this rationale: similar impacts in 

other states have never before prevented 

California from receiving a waiver. Even 

though many states are faced with nonattainment ozone areas and smog 

problems similar to California, 

California has never had a waiver 

denied based on a finding under section 

209(b)(1)(B) that it did not need its 

standards to meet compelling and 

extraordinary conditions. As such, EPA 

also received comment suggesting that 

the impacts of climate change should be 

reviewed within the State of California 

to determine their severity, and that 

such impacts need not be compared to 

impacts experienced or projected to 

occur elsewhere in the country. 

Several commenters maintain that 

although the impacts of climate change 

in California may be compelling, they 

are not extraordinary when compared to 

the rest of the nation.116 These 

commenters point to the record and the 

many submissions from other states, 

which recount the variety of impacts 

and risks of climate change in their 

respective states and claim that 

California is no different than any other 

state. 

EPA does not need to resolve this 

issue. As discussed below, EPA has 

evaluated the evidence submitted 

concerning the observed and projected 

impacts of global climate change in 

California and other states and 

determined that even under the 

alternative approach used in the March 

6, 2008 Denial, EPA cannot deny a 

waiver. 

b. Would a Waiver Be Denied Under 

This Alternative Approach? 

Commenters supporting the waiver 

maintain that California has clearly 

demonstrated that the impacts in 

California of global warming are 

‘‘compelling and extraordinary.’’ 

Several commenters point to the 

impacts of global warming recited in 

EPA’s March 6, 2008 initial denial as 

evidence that EPA committed an error 

in judgment by not finding that the 

extreme and various impacts of climate 

change in California are compelling and 

extraordinary in nature and that, 

further, California clearly satisfied the 

section 209(b)(1)(B) requirements.117

Commenters supporting the waiver, 

including California, have submitted an 

extensive array of reports and data 

outlining the risks and impacts of 

climate change on California. EPA 

received comment restating EPA’s own 

statements from its March 6, 2008 

Denial, including the following: 

California has the largest agricultural based 

economy (13% of the U.S. market value of 

agricultural products sold) which is heavily 

dependent on irrigation, has the nation’s 

highest crop value and is the nation’s leading 

dairy producer. There is improved 

information on how livestock productivity 

may be affected by thermal stress and 

through nutritional changes in forage caused 

by elevated CO2 concentrations. In addition, 

wine is California’s highest value agricultural 

product, and wine grapes are very sensitive 

to temperature changes. California has the 

largest state coast population, representing 

25% of the U.S. oceanic coastal population. 

The conditions which create California’s 

tropospheric ozone problems remain (e.g., 

topography, regional meteorology, number of 

vehicles) and climate change is expected to 

exacerbate tropospheric ozone levels. 

California’s water resources are already 

stressed due to demands from agricultural, 

industrial and municipal uses, and climate 

change is expected to introduce an additional 

stress to an already over-allocate system by 

increasing temperatures and by decreasing 

snowpack which is an important water 

source in spring and summer. California has 

the greatest variety of ecosystems in the U.S., 

and the second most threatened and 

endangered species (of plants and animals 

combined) and the most threatened and 

endangered animal species, representing 

about 21% of the U.S. total. 

In addition, one commenter suggests 

that this summary of findings about 

California’s special characteristics that 

differentiate the magnitude, intensity 

and range of impacts of climate change 

supports that assessment. Dr. Stephen 

Schneider of Stanford University stated 

that ‘‘not only are California’s 

conditions ‘unique and arguably more 

severe’ (e.g. temperature impacts from 

global warming are more certain for 

states like California) but also that no 

other state faces the combination of 

ozone exacerbation, wildfire emission’s 

contributions, water system and coast 

system impacts and other impacts faced 

by California.’’ 118 Conversely, 

opponents of the waiver do not contest 

California’s claims that the impacts of 

climate change in California and 

elsewhere are substantial.119 Instead, 

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sense that it presents serious environmental issues, 

the agency correctly determined that it does not 

present an extraordinary condition in California.’’ 

EPA–HQ–OAR–2006–0173–9005 at 9. EPA did 

receive comment from Air Improvement Resources 

(AIR) suggesting that it might be contesting whether 

positive feedback from CO2 concentrations on 

temperature increases (as seen in the models and 

data submitted to EPA by proponents of the waiver) 

will be seen in certain geographic areas due to an 

increase in cloudiness. EPA–HQ–OAR–2006–0173– 

13662 at 5–6. However, in its same submission it 

also states that while it may be true that California’s 

cities will be disproportionately affected by 

increased temperatures it is by no means clear that 

this will be true in the future. (See p. 7). As noted 

in the text, the burden of proof is on the opponents 

of the waiver to demonstrate that the effects of 

climate change are not compelling or serious. Such 

opponents have not clearly stated the basis for 

making such a determination nor countered the 

many studies and data submitted by California and 

other proponents of the waiver. For purposes of this 

waiver proceeding, EPA is not making its own 

judgment with regard to the issues under section 

202(a). 

120Association of International Automobile 

Manufacturers, EPA–HQ–OAR–2006–0173–9005 at 

9, citing 73 FR 12168—‘‘As the discussion above 

indicates, global climate change has affected, and is 

expected to affect, the nation, indeed the world, in 

ways very similar to the conditions noted in 

California * * * These identified impacts are found 

to affect other parts of the United States and 

therefore these effects are not sufficiently different 

compared to the nation as a whole. California’s 

precipitation increases are not qualitatively 

different from changes in other areas. Rise in sea 

level in the coastal parts of the United States are 

projected to be severe, or more severe, particularly 

in consequences, in the Atlantic and Gulf Regions 

than in the Pacific regions, which includes 

California. Temperature increases have occurred in 

most parts of the United States, and while 

California’s temperatures have increased by more 

than the national average, there are other places in 

the United States with higher or similar increases 

in temperature.’’ 

121 Id. at 9–10. The Association of International 

Automobile Manufacturers notes that comments 

submitted from States supporting the waiver 

include statements such as ‘‘Connecticut faces loss 

of its shoreline and beaches, forest die offs, 

destruction of shell fisheries and marine resources, 

* * *’’ ‘‘Global warming is having a serious impact 

on New Jersey’s public health and economy * * *’’ 

‘‘Rhode Island * * * As the most densely 

populated State in the country, direct impacts due 

to climate change, such as heat wave, increased fire 

frequency, increased storm intensity resulting in 

beach erosion, loss of property, and loss of life— 

pose great concerns for us,’’ and other concerns 

expressed by states such as Pennsylvania, 

Maryland, and New Mexico. See also Alliance of 

Automobile Manufacturers, EPA–HQ–OAR–2006– 

0173–1297 at 14–17 and EPA–HQ–OAR–2006– 

0173–0421–12 at 61–70 and General Motors 

Corporation, EPA–HQ–OAR–2006–0173–1596 at 6– 

8. 

122See EPA’s ‘‘Proposed Endangerment and 

Cause or Contribute Findings for Greenhouse Gases 

under Section 202(a) of the Clean Air Act’’ at 74 FR 

18886 (April 29, 2009). 

opponents of the waiver claim that the 

impacts in California are not unique or 

extraordinary. EPA received comment 

suggesting that the impacts of climate 

change in California are not sufficiently 

different from the nation as a whole to 

warrant a waiver.120 Commenters note 

that the ‘‘need’’ requirement in section 

209(b)(1)(B) authorizes the creation of 

regulatory standards specific to 

California only in cases where it is 

necessary to meet conditions unique to 

California. Commenters claim that 

California cannot meet this standard 

with respect to a global problem that 

does not affect California in a unique 

way as compared to other states. The 

commenters claim the impacts to 

coastline, ozone levels, and other 

impacts are not unique to California as 

they affect many other states as well.121

EPA notes that under this alternative 

approach the opponents of the waiver 

continue to bear the burden of proof to 

demonstrate their claims. Commenters 

opposing the waiver primarily focus and 

argue on one issue: Whether the effects 

of climate change in California are 

sufficiently different from the nation as 

a whole. Opponents of the waiver 

identify singular or multiple impacts in 

some other states but they largely 

submit conclusions—not factual 

evidence—as to why such adverse 

impacts demonstrate that California is 

not sufficiently different. On the other 

hand, California has identified a wide 

variety of impacts and potential impacts 

within California, which include 

exacerbation of tropospheric ozone, heat 

waves, sea level rise and salt water 

intrusion, an intensification of wildfires, 

disruption of water resources by, among 

other things, decreased snowpack 

levels, harm to high value agricultural 

production, harm to livestock 

production, and additional stresses to 

sensitive and endangered species and 

ecosystems. Opponents have not 

demonstrated that any other state, group 

of states, or area within the United 

States would face a similar or widerrange of vulnerabilities and risks. In 

addition, California has submitted 

information that climate change can 

impact ozone levels in California due to 

temperature exacerbation effects. 

Although other areas of the country are 

also projected to experience increases in 

temperatures which may also exacerbate 

local ozone levels, opponents of the 

waiver have not demonstrated that 

California’s ozone levels should not be 

considered compelling and 

extraordinary conditions. 

Under this alternative interpretation, 

the burden of proof is on the opponents 

of the waiver to demonstrate that the 

impacts of global climate change in 

California are either not significant 

enough or are not different enough from 

the rest of the country to be considered 

compelling and extraordinary 

conditions. The opponents of the waiver 

have focused their argument on the 

latter part of this interpretation, whether 

the impacts in California are sufficiently 

different from the rest of the country. 

Limiting evaluation to this issue, 

California has presented evidence of a 

wide variety of vulnerabilities, impacts 

and potential impacts within California, 

while the opponents have not 

demonstrated that any other state, group 

of states, or area within the United 

States would face a similar or widerrange of vulnerabilities and risks. 

Therefore, EPA believes that those 

opposing the waiver have not met their 

burden of proof to demonstrate that the 

conditions in California are not 

sufficiently different and that a waiver 

should be denied under this alternative 

approach. 

It is important to note that nothing in 

this decision or this document should 

be construed as reflecting a judgment 

concerning the issues pending before 

EPA under section 202(a) of the Act— 

whether emissions of GHGs from new 

motor vehicles or engines cause or 

contribute to air pollution which may 

reasonably be anticipated to endanger 

public health or welfare. EPA recently 

proposed to make an affirmative finding 

under that statutory provision.122 The 

issues involved in that proposal are 

separate and different from those 

involved in this decision on California’s 

request for a waiver under section 

209(b). Nothing in this decision should 

be construed as reflecting the Agency’s 

judgment regarding any issue relevant to 

the determinations in the pending 

proposal under section 202(a). The 

statutory provisions and criteria are 

different, and the judgments called for 

under these provisions are very different 

in nature. For example, in evaluating 

the alternative section 209(b)(1)(B) 

interpretation, I am not evaluating how 

serious the impacts or potential impacts 

of global climate change are, either in 

California or the rest of the country, as 

the opponents of the waiver have not 

focused on that issue. My finding under 

this alternative interpretation is a 

narrow one, and is limited to finding 

that the opponents of the waiver have 

not met their burden of proof under this 

alternative interpretation of section 

209(b) concerning how the impacts in 

California might differ from the rest of 

the country. 

3. Must California’s GHG Standards 

Achieve a Demonstrated Reduction in 

GHG Atmospheric Concentrations or 

Impacts Under Section 209(b)(1)(B)? 

Regardless of whether EPA examines 

the need for California’s motor vehicle 

emissions program or conversely the 

need just for the GHG emission 

standards, some commenters suggest 

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123However, the Alliance presented some 

evidence at the May 30, 2007 waiver hearing that 

some temperature reduction may be achieved, 

based on application of the Wigley equation. EPA– 

HQ–OAR–2006–0173–0421 at 71. 

124 74 FR 12156, 12159–60 (March 6, 2008). 

125MEMA I at 1110–11. 

126California Air Resources Board, EPA–HQ– 

OAR–2006–0173–0004. 

127 Massachusetts v. EPA, 59 U.S. 497, 525–526 

(2007). 

128EPA also received comment during the second 

comment period indicating that a local decrease in 

GHGs can have a direct effect on reducing local 

ozone concentrations, as well as particulate matter 

concentrations, in California, before they mix with 

other greenhouse gases in the upper atmosphere. 

The comments that address Dr. Jacobson’s 

testimony do not dispute these atmospheric 

reactions and the fact that they can increase local 

temperature which can increase ozone 

concentrations. 

that the GHG emission standards must 

be proven to have some mitigative effect 

in order for them to be needed. Some 

commenters suggest that to the extent 

that California’s high ozone levels could 

be exacerbated by higher temperatures 

from global warming, there is no 

demonstration in the waiver record that 

implementation of the California GHG 

standards would have any perceptible 

impact on temperature trends in 

California. Opponents of the waiver 

have argued that California, therefore, 

cannot show that its GHG emission 

regulations will achieve a measurable 

and specific temperature reduction in 

California, and thereby mitigate the 

identified climate change impacts in 

California.123 They maintain that 

California’s GHG regulations will not be 

needed to meet a particular condition 

since there is no analysis suggesting that 

California’s GHG standards will have 

any discernible impact on that 

condition or achieve any perceptible 

improvement in environmental 

conditions inside California. In terms of 

GHG concentrations in California’s 

atmosphere, EPA received comment 

stating there is no offered proof that a 

reduction in GHG emissions from 

California vehicles would have any 

impact on GHG concentrations in 

California’s atmosphere compared to the 

GHG concentration impacts already in 

the record. 

In response, other commenters 

supporting the waiver assert that the 

efficacy of California’s standards is not 

at issue in this proceeding. There is no 

requirement in section 209(b)(1)(B) that 

California prove a certain level of 

environmental benefit. They assert that 

is particularly true in this instance, 

where the actual and anticipated 

impacts of global warming are complex 

and historically unprecedented, and it is 

widely-recognized that a number of 

efforts by governments, private entities, 

and individuals globally will be 

required to mitigate climate change, as 

no single source of GHG emissions, 

whether from an entire state, sector of 

the nation’s economy, or of individual 

countries, is completely dominant in 

terms of influencing atmospheric 

concentrations of GHGs. They claim that 

California need not show that the 

climate will in fact respond to its 

regulatory action; rather its obligation is 

to show a rational connection between 

the regulation it has promulgated and 

the problem it seeks to address. 

As noted above, the Agency’s inquiry 

under section 209(b)(1)(B) is whether 

California needs its own motor vehicle 

emission control program to meet 

compelling and extraordinary 

conditions. Under this criterion, EPA 

does not consider, for example, the 

extent to which specific PM standards 

will address the PM air pollution 

problem.124 Under this approach, there 

is no need to delve into the extent to 

which the GHG standards at issue here 

would address climate change or ozone 

problems. That is an issue appropriately 

left to California’s judgment. 

Given the comments submitted, 

however, EPA has also considered an 

alternative interpretation, which would 

evaluate whether the program or 

standards has a rational relationship to 

contributing to amelioration of the air 

pollution problems in California. Even 

under this approach, EPA’s inquiry 

would end there. California’s policy 

judgment that an incremental, 

directional improvement will occur and 

is worth pursuing is entitled, in EPA’s 

judgment, to great deference.125 EPA’s 

consistent view is that it should give 

deference to California’s policy 

judgments, as it has in past waiver 

decisions, on California’s choice of 

mechanism used to address air 

pollution problems. EPA does not 

second-guess the wisdom or efficacy of 

California’s standards.126 EPA has also 

considered this approach with respect 

to the specific GHG standards 

themselves, as well as California’s motor 

vehicle emissions program. 

After reviewing the arguments, I 

conclude that California has submitted 

evidence demonstrating not only the 

causal connection between higher 

temperatures from global warming and 

its general exacerbation of tropospheric 

ozone, but also the serious effects of that 

potential increase in ozone on the 

public health and welfare in California. 

EPA notes that several commenters have 

stated that while California’s GHG 

regulations will provide only a small 

difference in temperatures and/or GHG 

concentrations, there clearly will be 

some reductions. These commenters 

note that given the numerous sources in 

California and around the world that 

contribute to GHG concentrations, no 

single regulation could on its own 

reduce GHG emissions to the levels 

necessary to reduce all concerns, but 

that every small reduction is helpful in 

reducing these concerns. As noted by 

the Supreme Court in Massachusetts v. 

EPA, while it is true that regulating 

motor vehicle GHG emissions will not 

by itself reverse global warming, a 

reduction in domestic automobile 

emissions would slow the pace of global 

emissions increase no matter what 

happens with regard to other 

emissions.127 Moreover, there is some 

evidence in the record that proffers a 

specific level of reduction in 

temperature resulting from California’s 

regulations.128 EPA believes that under 

this alternative approach, opponents 

have not met their burden of 

demonstrating that California’s motor 

vehicle program, or its GHG standards, 

does not have a rational relationship to 

contributing to amelioration of the air 

pollution problems in California. 

E. Section 209(b)(1)(B) Conclusion 

With respect to the need for 

California’s state standards to meet 

compelling and extraordinary 

conditions, I have found that the March 

6, 2008 Denial was based on a departure 

from the traditional interpretation of the 

waiver provision. An examination of the 

text of section 209(b) and the legislative 

history, when viewed together, lead to 

the conclusion that the best way to 

interpret this provision and the 

interpretation I adopt here, is to apply 

the traditional interpretation to the 

evaluation of California’s greenhouse 

gas standards for motor vehicles. As 

such, if California needs a separate 

motor vehicle program to address the 

kinds of compelling and extraordinary 

conditions discussed in the traditional 

interpretation, then Congress intended 

that California could have such a 

program. The best interpretation of the 

text and legislative history of this 

provision is that Congress did not use 

this criterion to limit California’s 

discretion to a certain category of air 

pollution problems, to the exclusion of 

others. 

Under that interpretation, I cannot 

find that opponents of the waiver have 

demonstrated that California does not 

need its state standards to meet 

compelling and extraordinary 

conditions. The opponents of the waiver 

have not adequately demonstrated that 

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129MEMA I, 627 F.2d at 1126. 

130See e.g., 38 FR 30136 (November 1, 1973) and 

40 FR 30311 (July 18, 1975). 

131To be consistent, the California certification 

test procedures need not be identical to the Federal 

test procedures. California procedures would be 

inconsistent, however, if manufacturers would be 

unable to meet both the state and Federal 

requirements with the same test vehicle in the 

course of the same test. See, e.g., 43 FR 32182, (July 

25, 1978). 

132Natural Resources Defense Council v. EPA, 

655 F.2d 318, 331. (emphasis added) 

California no longer has a need for its 

motor vehicle emission program. 

Separately, even applying the 

alternative interpretations set forth in 

the March 6, 2008 Denial, I cannot find 

that that the opponents of the waiver 

have demonstrated that California does 

not need its greenhouse gas emission 

standards to meet compelling and 

extraordinary conditions. Nor can I find 

that the opponents of the waiver have 

demonstrated that the impacts from 

climate change in California are not 

compelling and extraordinary. 

Therefore, upon reconsideration of 

the March 6, 2008 Denial, I determine 

that I cannot deny the waiver request 

under section 209(b)(1)(B). 

VI. Are the California GHG Standards 

Consistent With Section 202(a) of the 

Clean Air Act? 

EPA has reviewed the information 

submitted to the record of this 

proceeding to determine whether the 

parties opposing this waiver request 

have met their burden to demonstrate 

that the GHG standards are not 

consistent with section 202(a). In its 

submissions, CARB has submitted 

information and argument that these 

GHG standards do provide regulated 

manufacturers with sufficient lead-time 

for the near term standards regardless of 

how it is measured and regardless of the 

waiver denial. For the mid-term 

standards, CARB has stated that 

initially, manufacturers can achieve 

compliance with credits from the nearterm production, and subsequently can 

achieve compliance with refinements to 

existing technology and advanced 

technology combinations. The industry 

opponents of the waiver have submitted 

information and argument that there is 

insufficient leadtime for the CARB nearterm standards because the already 

short time-frame for technology 

development was made even shorter by 

EPA’s waiver denial. For the mid-term 

standards, the industry stated that it is 

likely that most large-volume 

manufacturers will be able to comply 

with the CARB standards only by ‘‘mixshifting’’ their products to offer for sale 

more higher mileage vehicles to ensure 

meeting the CARB fleet average. The 

industry also submitted information and 

argument that the GHG standards will 

result in unsafe vehicles because 

vehicles meeting the standards will be 

lighter and more hazardous to 

occupants in accidents, and will be 

driven more because of higher fuel 

efficiency, so more accidents will occur. 

The industry argued that these 

complying vehicles are technologically 

infeasible because of the safety 

concerns. EPA’s analysis of the 

consistency of the CARB standards with 

section 202(a) of the Act follows. 

A. Historical Approach: The Standard 

of Review for Consistency With Section 

202(a) 

Under section 209(b)(1)(C), EPA must 

deny California’s waiver request if the 

Agency finds that California standards 

and accompanying enforcement 

procedures are not consistent with 

section 202(a) of the Act. The scope of 

EPA’s review under this criterion is 

narrow. EPA has previously stated that 

the determination is limited to whether 

those opposed to the waiver have met 

their burden of establishing that 

California’s standards are 

technologically infeasible, or that 

California’s test procedures impose 

requirements inconsistent with the 

Federal test procedure.129 Previous 

waivers of federal preemption have 

stated that California’s standards are not 

consistent with section 202(a) if there is 

inadequate lead time to permit the 

development of technology necessary to 

meet those requirements, giving 

appropriate consideration to the cost of 

compliance within that time.130

California’s accompanying enforcement 

procedures would be inconsistent with 

section 202(a) if the Federal and 

California test procedures conflict, i.e., 

if manufacturers would be unable to 

meet both the California and Federal 

test requirements with the same test 

vehicle.131

EPA does not believe that there is any 

reason to review these criteria any 

differently for EPA’s evaluation of 

California’s greenhouse gas waiver 

request. There is nothing inherently 

different about how GHG control 

technologies should be reviewed when 

making a determination about 

technological feasibility or consistency 

of test procedures. 

In the GHG waiver proceeding, 

automobile industry opponents of the 

waiver have presented evidence for 

EPA’s consideration which they believe 

will require EPA to make the finding of 

inconsistency with section 202(a), and 

therefore require EPA to deny this 

waiver. They believe this finding should 

be made on one or more grounds that 

there is inadequate lead time provided 

by the CARB standards. EPA’s process 

for evaluating lead time is discussed 

immediately below. The industry 

opponents also raise arguments based 

on the cost of compliance with the 

standards, and claims of possible 

significant vehicle safety problems 

caused, at least indirectly, by 

compliance with the GHG standards, 

which will be discussed in other parts 

of this section. 

Regarding lead time, EPA historically 

has relied on two decisions from the 

U.S. Court of Appeals for the DC Circuit 

for guidance regarding the lead time 

requirements of section 202(a). Section 

202(a) provides that an emission 

standard shall take effect after such 

period as the Administrator finds 

necessary to permit the development 

and application of the requisite 

technology, giving appropriate 

consideration to the cost of compliance. 

In Natural Resources Defense Council v. 

EPA (‘‘NRDC’’), 655 F.2d 318 (DC Cir. 

1981), the court reviewed claims that 

EPA’s particulate matter standards for 

diesel cars and light trucks were either 

too stringent or not stringent enough. In 

upholding the EPA standards, the court 

concluded: 

Given this time frame [a 1980 decision on 

1985 model year standards]; we feel that 

there is substantial room for deference to the 

EPA’s expertise in projecting the likely 

course of development. The essential 

question in this case is the pace of that 

development, and absent a revolution in the 

study of industry, defense of such a 

projection can never possess the inescapable 

logic of a mathematical deduction. We think 

that the EPA will have demonstrated the 

reasonableness of its basis for projection if it 

answers any theoretical objections to the 

[projected control technology], identifies the 

major steps necessary in refinement of the 

technology, and offers plausible reasons for 

believing that each of those steps can be 

completed in the time available.132

Another key case addressing the lead 

time requirements of section 202(a) is 

International Harvester v. Ruckelshaus 

(‘‘International Harvester’’), 478 F 2.d 

615 (DC Cir. 1979). In International 

Harvester, the court reviewed EPA’s 

decision to deny applications by several 

automobile and truck manufacturers for 

a one-year suspension of the 1975 

emission standards for light-duty 

vehicles. In the suspension proceeding, 

the manufacturers presented data 

which, on its face, showed little chance 

of compliance with the 1975 standards, 

but which, at the same time, contained 

many uncertainties and inconsistencies 

regarding test procedures and 

parameters. In a May 1972 decision, the 

Administrator applied an EPA 

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133 International Harvester v. Ruckelshaus, 478 

F.2d 615, 626. 

134NRDC, 655 F.2d 318, 330. 

135 Id. The ‘‘hardships’’ referred to are hardships 

that would be created for manufacturers able to 

comply with the more stringent standards being 

relaxed late in the process. 

136 40 FR 23102, 23103 (waiver decision citing 

views of Congressman Moss and Senator Murphy) 

(May 28, 1975). 

137 Id. at 23103. 

138See e.g., 59 FR 40625 (September 22, 1994). 

139California Air Resources Board, EPA–HQ– 

OAR–2006–0173–9006, at 23. 140NRDC, 655 F.2d 318, 331. 

methodology to the submitted data, and 

concluded that ‘‘compliance with the 

1975 standards by application of present 

technology can probably be achieved,’’ 

and so denied the suspension 

applications.133 In reviewing the 

Administrator’s decision, the court 

found that the applicants had the 

burden of coming forward with data 

showing that they could not comply 

with the standards, and if they did, then 

EPA had the burden of demonstrating 

that the methodology it used to predict 

compliance was sufficiently reliable to 

permit a finding of technological 

feasibility. In that case, EPA failed to 

meet this burden. 

With respect to lead time, the court in 

NRDC pointed out that the court in 

International Harvester ‘‘probed deeply 

into the reliability of EPA’s 

methodology’’ because of the relatively 

short amount of lead time involved (a 

May 1972 decision regarding 1975 

model year vehicles, which could be 

produced starting in early 1974), and 

because ‘‘the hardship resulting if a 

suspension were mistakenly denied 

outweigh the risk of a suspension 

needlessly granted.’’ 134 The NRDC court 

compared the suspension proceedings 

with the circumstances concerning the 

diesel standards before it: ‘‘The present 

case is quite different; ‘the base hour’ for 

commencement of production is 

relatively distant, and until that time the 

probable effect of a relaxation of the 

standard would be to mitigate the 

consequences of any strictness in the 

final rule, not to create new 

hardships.’’ 135 The NRDC court further 

noted that International Harvester did 

not involve EPA’s predictions of future 

technological advances, but an 

evaluation of presently available 

technology. 

EPA also evaluates CARB’s request in 

light of congressional intent regarding 

the waiver program generally. This is 

consistent with the motivation behind 

section 209(b) to foster California’s role 

as a laboratory for motor vehicle 

emission control, in order ‘‘to continue 

the national benefits that might flow 

from allowing California to continue to 

act as a pioneer in this field.’’ 136

For these reasons, EPA believes that 

California must be given substantial 

deference when adopting motor vehicle 

emission standards which may require 

new and/or improved technology to 

meet challenging levels of compliance. 

This deference was discussed in an 

early waiver decision when EPA 

approved the waiver request for 

California’s 1977 model year standards: 

Even on this issue of technological 

feasibility I would feel constrained to 

approve a California approach to the problem 

which I might also feel unable to adopt at the 

Federal level in my own capacity as a 

regulator. The whole approach of the Clean 

Air Act is to force the development of new 

types of emission control technology where 

that is needed by compelling the industry to 

‘catch up’ to some degree with newly 

promulgated standards. Such an approach to 

automotive emission control might be 

attended with costs, in the shape of a 

reduced product offering, or price or fuel 

economy penalties, and by risks that a wider 

number of vehicle classes may not be able to 

complete their development work in time. 

Since a balancing of these risks and costs 

against the potential benefits from reduced 

emissions is a central policy decision for any 

regulatory agency, under the statutory 

scheme outlined above I believe I am 

required to give very substantial deference to 

California’s judgment on that score.’’ 137

EPA has traditionally considered lead 

time as starting with the date that the 

rules are adopted and become effective 

under California state law—not from the 

subsequent date of a request for a waiver 

or the decision on a waiver.138 This is 

consistent with the structure of section 

209(b), where the waiver criteria are 

presumed to be met absent an 

affirmative finding that requires EPA to 

deny it, which gives EPA a limited 

scope of review and affords deference to 

California. At the time that California 

adopts its rules, manufacturers have 

clear knowledge and are fully on notice 

of California’s requirements and the 

date when such requirements will be 

implemented. In this case, the CARB 

GHG regulations became final and 

effective in 2004. This was five years 

before the first phase of compliance (the 

2009 model year) and eight years before 

compliance with the ‘‘mid-term’’ 

standards, which include the most 

stringent standards (model year 2016). 

Because of this large amount of lead 

time available to manufacturers under 

CARB’s regulatory schedule, the 

approach described in NRDC is the most 

appropriate under the circumstances at 

issue here. 

EPA notes, however, that 

manufacturers have disputed whether 

ample lead time exists. Because EPA 

initially denied this waiver request, 

manufacturers have asserted that the 

lead time should have ‘‘tolled’’ at the 

time of the denial, since California 

could not implement and enforce 

standards which had not received a 

waiver. This tolling issue is discussed 

below in section VI.F.1. Additionally, if 

the tolling might be considered to cause 

a reduction in lead time for the CARB 

near-term standards, it could be argued 

that the International Harvester 

approach, involving circumstances 

where the lead time is short, should 

apply. CARB, while maintaining that 

the NRDC approach is the correct 

measurement here, commented that 

even if International Harvester was the 

correct guide, ‘‘we believe that a 

combination of manufacturers’ 

statements and plans indicated that 

manufacturers are already in, or with 

minor changes can demonstrate 

compliance for the 2009 and 2010 

model years.’’ 139 Under International 

Harvester, the burden was on the 

industry to demonstrate that the 

evidence supported the grant of an 

extension, then, the burden shifted to 

EPA to demonstrate the reasonableness 

of its projection. As discussed below, 

the manufacturers have not met their 

burden to show that the California 

standards are not technologically 

feasible, considering the lead time 

provided and cost of compliance. 

Under NRDC, when compliance with 

CARB standards is phased-in over a 

lengthy time period, the reasonableness 

of a projection of technological 

feasibility can be based on answering 

any theoretical objections to the 

projected control technology; 

identifying the major steps necessary in 

refinement of the technology; and 

offering plausible reasons for believing 

that each of those steps can be 

completed in the time available.140

EPA’s review of the evidence on the 

technological feasibility of GHG 

technologies follows. 

B. CARB’s Assessment of the State of 

Development of GHG Reduction 

Technology and Comments Supporting 

CARB’s Assessment 

1. Development of GHG Reduction 

Technology 

Under the terms of Assembly Bill 

1493, which is the legislation that 

directed CARB to establish greenhouse 

gas emission standards, the CARB staff 

was directed to set those standards in a 

manner that would ‘‘achieve the 

maximum feasible and cost-effective 

reduction of greenhouse gas emissions 

from motor vehicles.’’ CARB has 

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141California Air Resources Board, EPA–HQ– 

OAR–2006–0173–0010.44. 

142 Id. at 43. 

143 Id. at 58. 

144NESCCAF undertook this study ‘‘to help 

define GHG—reducing motor vehicle technologies 

that are expected to be feasible, commercially 

available and cost effective in the 2009–2015 

timeframe.’’ It was ‘‘inspired by the California’s 

legislature’s passage of Assembly Bill 1493 * * *’’ 

and it related to the Northeast U.S. because ‘‘the 

results presented in this report have significant 

implications for states in the Northeast and 

elsewhere that share California’s commitment to 

reducing transportation related GHG emissions as 

part of a broader effort to address the risks posed 

by global climate change.’’ Reducing Greenhouse 

Gas Emissions from Light-Duty Motor Vehicles, 

NESCCAF, p 1–1, September 2004. 

145California Air Resources Board, EPA–HQ– 

OAR–2006–0173–0010.44 at 44. 

146California Air Resources Board, EPA–HQ– 

OAR–2006–0173–0010.116. 

147The NESCAAF study had a different schedule: 

Near-term technologies (2009–2012), mid-term 

(2013–2015) and long term (2015 and later). 

California Air Resources Board, EPA–HQ–OAR– 

2006–0173–0004.1 at 27. 

148California Air Resources Board, EPA–HQ– 

OAR–2006–0173–0010.44 at iii. 

identified four basic areas of GHG 

reduction technology: (1) Engine, 

drivetrain and other vehicle 

modifications; (2) mobile air 

conditioning system modifications; (3) 

alternative fuel vehicles; and (4) exhaust 

catalyst improvements. 

To accomplish the assessment 

mandated by AB 1493, CARB staff held 

several meetings and workshops in 2003 

and 2004 on GHG vehicle technology. 

Those meetings brought together 

technology developers, researchers from 

the auto industry, vehicle component 

suppliers, academic participants, and 

vehicle simulation firms to discuss 

technologies and their potential to 

reduce climate change emissions from 

motor vehicles. CARB staff presented its 

preliminary findings in a draft 

technology and cost assessment and 

held a public workshop to receive 

comments in April 2004. Following that 

presentation, CARB issued a draft 

proposal on the methodology for 

developing the GHG standards and the 

preliminary standards themselves, in 

June 2004. A public workshop on this 

draft was held in July 2004. After 

considering all the comments from these 

sessions, CARB published its final staff 

proposal in the Staff Report: Initial 

Statement of Reasons (ISOR) in August 

2004.141

The CARB vehicle technology results 

in the ISOR relied on an existing vehicle 

simulation study (discussed below), as 

well as other existing studies and 

research, rather than on any sort of 

primary development or engineering 

work. CARB staff acknowledged that 

‘‘because powertrain changes will be the 

focus for obtaining the reductions 

sought in this (GHG) rulemaking rather 

than aftertreatment technologies, staff 

could not reasonably build prototypes 

and test them in our laboratory. * * * 

Because building and testing prototypes 

is so expensive, and time consuming, 

even major automobile manufacturers 

rely on vehicle simulation firms to 

predict the performance of new 

technology either individually or in 

combination, and to assess their 

performance and emissions.’’ 142 CARB 

further commented that the advantage of 

systems modeling ‘‘is to allow a wide 

diversity of combinations of 

technologies to be modeled together and 

examine how they interact when 

simulating a vehicle operating on 

various driving cycles.’’ 143

The study forming the basis of the 

ISOR vehicle technology results was a 

comprehensive vehicle simulation 

modeling effort and a thorough cost 

analysis performed for the Northeast 

States Center for a Clean Air Future 

(NESCCAF), by the recognized expert 

companies AVL Powertrain 

Engineering, Martec, and Meszler 

Engineering Services.144 CARB staff 

believed that ‘‘the NESCAAF study is 

the most advanced and accurate 

evaluation of vehicle technologies that 

reduce greenhouse gas emissions yet 

performed.’’ 145 Besides the NESCAAF 

study on vehicle technologies, CARB 

monitored a separate analysis of the 

GHG benefits of alternative fuel 

technologies, including upstream 

benefits and the cost associated with 

alternative fuel technologies, from work 

performed by TIAX, LLC. Finally, for air 

conditioning research, CARB staff met 

with various groups (including EPA) to 

develop its approach for reducing the 

emissions of air conditioning refrigerant 

and excess CO2 emissions from air 

conditioning use. 

After the release of the Initial Staff 

Report, CARB received comments on its 

evaluation of technological steps that 

could be taken to meet its GHG 

standards from parties who supported 

the CARB study, and from various 

industry parties who disagreed with 

many of the CARB conclusions. As part 

of its standard-setting process, CARB 

staff considered the comments from all 

parties on both sides, and responded to 

industry concerns in its Final Statement 

of Reasons (FSOR), published in August 

2005.146 CARB concluded that it had 

identified the necessary technology in 

existence at that time that could enable 

vehicles to meet the GHG standards; or 

specifically identified the projected 

control technologies; answered the 

industry objections regarding the 

technology; and has explained its 

reasons for believing that each of the 

steps can be completed in the time 

available. 

2. Overview of Technologies and Their 

Projected Applications 

The NESCAAF study identified 

technologies for reducing CO2 emissions 

that were modeled both individually 

and in various technology combinations 

(or ‘‘packages’’). Because there were a 

multitude of technologies available for 

the CO2 reductions, CARB realized that 

there needed to be engineering 

guidelines for choosing combinations 

that would be economical to the 

consumer. The guidelines tried to avoid 

combining technologies that tend to 

address the same categories of losses or 

technologies that may not complement 

one another from a drivability 

standpoint. Participants in the 

NESCAAF study and CARB staff then 

assembled a wide variety of combined 

technologies to evaluate through 

simulation modeling in order to identify 

those which would provide the greatest 

CO2 reductions. In an effort to cover the 

full spectrum of CO2 reductions that 

could be accomplished, CARB staff 

divided the results into two categories: 

near-term phase-in and mid-term phasein applications. These translate to the 

following model year ranges: Near-term 

(2009–2012) and mid-term to fully 

phased-in (2013–2016).147

In the Initial Staff Report, CARB staff 

summarized the state of near-term 

technology for meeting its proposed CO2

standards: 

The technologies explored (in the Initial 

Staff Report) are currently available on 

vehicles in various forms, or have been 

demonstrated by auto companies and/or 

vehicle suppliers in at least prototype form 

* * * There is near term, or off the shelf 

technology package in each of the vehicles 

classes evaluated (small and large car, 

minivan, small and large truck) that resulted 

in a reduction of CO2 emissions of at least 15 

to 20 percent from baseline values. In 

addition there is generally a near-term 

technology package in each of the vehicle 

classes that results in about a 25 percent CO2

emission reduction.’’ 148

For engines, CO2 is emitted with 

engine exhaust as a result of the 

combustion process. CARB projected 

that by 2009, reductions in engine CO2

emissions would result from these 

primary technology drive-train changes 

which could be expected in all vehicle 

classes: Dual cam phasing, 

turbocharging with engine downsizing, 

automated manual transmissions, and 

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149California Air Resources Board, EPA–HQ– 

OAR–2006–0173–0010.44 at 59–60. 

150California Air Resources Board, EPA–HQ– 

OAR–2006–0173–0004.1 at 34. 

151California Air Resources Board, EPA–HQ– 

OAR–2006–0173–0004.1 at 27 and 35, and OAR– 

2006–0173–0010.44 at 59. 

152California Air Resources Board, EPA–HQ– 

OAR–2006–0173–0004.1 at 27. 

153California Air Resources Board, EPA–HQ– 

OAR–2006–0173–0004.1 at 35–36. 

154California Air Resources Board, EPA–HQ– 

OAR–2006–0173–0010.44 at 69–73, and EPA–HQ– 

OAR–2006–0173–0004.1 at 22–23. 155California Air Resources Board, EPA–HQ– 

OAR–2006–0173–0010.44 at 78–79. 

156California Air Resources Board, EPA–HQ– 

OAR–2006–0173–1686, Attachments 84 and 85. 

157California Air Resources Board, EPA–HQ– 

OAR–2006–0173–1686, Attachments 86 through 93 

and 103, 104, 114, and California Air Resources 

Board, EPA–HQ–OAR–2006–0173–3601, 

Attachments 173–177. 

camless valve actuation.149 CARB also 

described several other technology 

items that may not be present in most 

vehicles in the early years of the 

standards, but are expected to be used 

in later years as development continues. 

These include: Gasoline direct injection, 

engine friction reduction, aerodynamic 

drag and rolling resistance, more 

aggressive shift logic, and early torque 

converter lock-up. Finally, CARB staff 

identified two other technology choices 

that while offering real GHG reduction 

capability were not as cost effective as 

the other technologies, and, accordingly, 

were not projected to be applied in the 

near-term—these are hybridization and 

greater dieselization of the fleet. 

For the later years of these standards, 

CARB stressed that its GHG regulations 

‘‘rely less on traditional technologyforcing than repackaging a combination 

of off-the-shelf technologies to meet the 

adopted standards.’’ 150 The NESCAAF 

Report included, for each of the five 

vehicle categories, a table showing 

several promising technology packages, 

for each of the three time frames 

(near-, mid-, and long-term), their 

resulting CO2 reductions, and expected 

costs.151 Additionally, for the long-term 

phase of the standards (2015–2016), 

CARB projects that there will be 

increased market penetration of hybridelectric vehicles and advanced multimode diesel vehicles.152 In its December 

2005 request letter, CARB discussed 

how improvements will occur, as it 

expects ‘‘that a manufacturer would 

plan for a rollout of new technologies 

that would begin in 2009 and then build 

on the initial efforts with additional 

near and mid-term technologies that 

would be commensurate with previous 

investments.’’153

For air conditioning systems, GHG 

emissions are either direct or indirect. 

Direct emissions are the result of normal 

leakage of the air conditioning 

refrigerant from the system over time, as 

well as leakages that occur because of 

vehicle accidents, poorly performed 

maintenance, or improper refrigerant 

recovery prior to vehicle scrappage. Air 

conditioning refrigerants used in 

vehicles today are typically a hydrofluorocarbon (HFC), which is a very 

strong GHG. Indirect emissions are the 

additional CO2 emissions from the 

engine which occur because of the 

added load on the engine from 

operation of the air conditioning system. 

CARB, using the modeling in the 

NESCAAF Report, projected that CO2

equivalent reductions could result from 

these improvements in the air 

conditioning system: improved variable 

displacement compressor with revised 

controls, improved low-leak systems, 

and the use of an improved 

refrigerant.154

CARB notes that alternative fueled 

vehicles generally can help reduce GHG 

emissions by: (1) Direct reduction of 

GHG emissions because the alternative 

fuels will produce fewer GHG 

emissions, and (2) indirect reductions in 

GHG emissions because of the decreased 

upstream emissions. Upstream 

emissions are well-to-tank emissions, 

including the fuels’ extraction, 

processing, distribution and marketing. 

The alternative fuels which result in 

GHG reductions are CNG, LPG, ethanol 

(including E85), electric, and hybridelectric. 

In its ISOR, CARB identified exhaust 

catalyst improvement as another 

technology area that could lead to GHG 

emission reductions, specifically the 

reduction of methane and nitrous oxide 

(N2O). These gases are greenhouse gases 

just like CO2, but their mass emissions 

from motor vehicles are very small 

compared to CO2. CARB notes that 

‘‘although it is conceivable that these 

methane and N2O emissions could be 

reduced by faster catalyst heating at 

vehicle start-up and enhanced catalysts 

systems with higher surface density or 

higher and/or revised catalyst loadings, 

staff is not aware of such efforts at this 

time (August 2004).’’ 155 There were no 

further submissions to the record by 

CARB or any other party on this 

particular technology area. 

3. CARB’s Updates on Technological 

Development 

At the time of the first set of EPA 

hearings on the CARB waiver request, in 

April 2007, CARB presented additional 

information to bolster its assertions on 

technological feasibility to highlight 

developments in GHG technology since 

CARB originally submitted its request to 

EPA in 2005. CARB summarized the 

recent developments and additional 

examples of real-life implementation of 

the technologies identified in its waiver 

request. In its comments following the 

April 2007 hearings, and its July 2007 

letter responding to post-hearing 

comments, CARB offered additional 

information to bolster their GHG 

technology projections. Generally, 

CARB pointed to numerous instances in 

which many of the near-term and midterm technologies have been applied in 

vehicles which have been produced in 

the years since 2004 (when the CARB 

standards became final) right up to mid2007. For example, attached to 

additional comment letters it submitted 

to EPA’s Docket in June and July 2007, 

CARB discussed the increased use of the 

GHG technologies discussed in the ISOR 

and provided summaries of GHG 

technology used in 2007 and 2008 

model year vehicles showing increased 

use of all the near-term and mid-term 

technologies.156 CARB also offered 

numerous examples, contained in 

manufacturer news releases and 

advertisements, and trade press stories, 

illustrating real-life adoption of the GHG 

technologies in both domestic and 

foreign manufacturers’ vehicles.157

At its March 5, 2009 hearing 

following EPA’s decision to reconsider 

its previous denial, CARB presented 

additional new information highlighting 

developments in GHG technology since 

the last opportunity to submit public 

comment on this issue. In addition, 

some environmental groups submitted 

testimony and comments in support of 

the CARB finding of technological 

feasibility of the GHG standards. This 

next section will summarize the 

technological feasibility information 

submitted by CARB and other parties. 

CARB noted that the manufacturers 

were employing the individual GHGreducing technologies as well as the 

packages of those technologies CARB 

had projected as viable compliance 

pathways as early as 2004. CARB also 

noted that in addition to phasing-in 

technologies, as CARB had originally 

predicted, manufacturers were using 

other technologies that CARB did not 

rely on originally—including increased 

hybrid sales, downsized turbocharged 

engines in light truck lines, a large 

influx of diesel vehicle sales, and 

improved air conditioning systems. In 

some cases, the resulting reductions 

produced as much as 10% of the GHG 

reductions needed for manufacturers’ 

fleet averages to meet the CARB 

standards. 

CARB also cited to recent EPA studies 

on technological feasibility and costs for 

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158Advanced Notice of Proposed Rulemaking, 

Regulating Greenhouse Gas Emissions Under the 

Clean Air Act, 73 FR 44354 (July 30, 2008). 

159California Air Resources Board, EPA–HQ– 

OAR–2006–0173–9019.5. 

160This approach uses a computer model 

developed by the Department of Transportation 

Volpe Center called the ‘‘CAFE Effects and 

Compliance Model’’ (‘‘Volpe Model’’). 

161This EPA assessment of the Light-Duty 

Vehicle TSD was contained in the Advanced Notice 

of Proposed Rulemaking, Regulating Greenhouse 

Gas Emissions Under the Clean Air Act, 73 FR 

44354, at 44444 (July 30, 2008). 

162California Air Resources Board, EPA–HQ– 

OAR–2006–0173–9006, at 21. 

163California Air Resources Board, EPA–HQ– 

OAR–2006–0173–9019.6. at 1. 

164California Air Resources Board, EPA–HQ– 

OAR–2007–0173–9019.7. 

165For example, this updated analysis included 

factors such as consideration of multi-year planning 

cycles available to manufacturers, consideration of 

CO2 trading between car and truck fleets within the 

same manufacturer, and inclusion of plug-in 

hybrids as a viable technology beginning in 2012. 

Advanced Notice of Proposed Rulemaking, 

Regulating Greenhouse Gas Emissions Under the 

Clean Air Act, 73 FR 44354, at 44444 (July 30, 

2008). 

166California Air Resources Board, EPA–HQ– 

OAR–2006–0173–9006, at 21. 

167 Id. 

168 Id. at 23. 

169California Air Resources Board, EPA–HQ– 

OAR–2006–0173–9019.12. 

GHG reductions in motor vehicles, 

conducted by EPA in 2007. These EPA 

reports were discussed in EPA’s 

Advanced Notice of Proposed 

Rulemaking on Regulating Greenhouse 

Gas Emissions Under the Clean Air Act 

published on July 30, 2008.158 The 

findings in these studies were very 

consistent with the technological 

feasibility, cost and lead time estimates 

from the CARB ISOR in 2004. 

Three EPA studies were referenced by 

CARB. First, CARB discussed the June 

2008 document ‘‘Vehicle Technical 

Support Document: Evaluating Potential 

GHG Reduction Programs for Light-Duty 

Vehicles (Light-Duty Vehicle TSD).’’ 159

The Light-Duty Vehicle TSD 

represented EPA’s assessment during 

2007 of how a light-duty vehicle 

program for GHG emission reductions 

under the Clean Air Act might be 

designed and implemented, with two 

program options: either (1) a fixed 

percentage reduction (4%) in CO2

emissions per model year from 2011 to 

2018, or (2) an annual reduction in CO2

emissions per model year from 2011 to 

2018, based on a model developed by 

the Department of Transportation’s 

Volpe Center, establishing CO2 emission 

standards, at the point the model 

projects maximum net benefits for those 

model years.160 The Light-Duty Vehicle 

TSD collected information from a wide 

range of sources, including a 2002 

National Academy of Sciences report, 

the 2004 NESCAAF report (also used by 

CARB), current technical literature, and 

information from vehicle manufacturers 

and automotive suppliers. CARB noted 

that the emission reduction potentials 

and costs in the EPA study were similar 

to the reduction potentials and costs 

estimated by CARB in its ISOR. In 

discussing the Light-duty TSD in the 

ANPRM, EPA also acknowledged that, 

based on enhancements to the Volpe 

Model later in 2007, the earlier EPA 

analysis ‘‘tended to underestimate the 

benefits and/or overestimate the costs of 

light-duty vehicle CO2 standards that 

could be established under the 

CAA.’’ 161

CARB also referenced the March 2008 

‘‘EPA Staff Technical Report: Cost and 

Effectiveness Estimates of Technologies 

Used to Reduce Light-duty Vehicle 

Carbon Dioxide Emissions.’’ This report 

presented the EPA staff assessment of 

costs and effectiveness of over 40 CO2

reduction technologies in the categories 

of engines, transmissions, hybrids, 

accessories and other technologies (e.g., 

aerodynamic improvements). EPA noted 

that the majority of the technologies 

investigated are in production and 

available on current vehicles, either in 

the U.S., Europe or Japan. As part of that 

report, EPA worked with an 

internationally recognized automotive 

technology firm to perform a detailed 

vehicle simulation modeling study of 

the GHG reduction effectiveness of a 

number of advanced automotive 

technologies. As noted by CARB, the 

EPA Report obtained technology 

package reductions and cost estimates 

very similar to those in the CARB 

ISOR.162 As in the earlier Light-Duty 

TSD, EPA noted that the estimates in 

this report are conservative because they 

rely on data sources from one to six 

years old and declared that the 

‘‘automotive industry is a technologydriven industry, and new technologies 

are developed and introduced quickly. 

A number of technologies which have 

only recently been introduced or will be 

within the next year are likely to see 

improvements in their effectiveness and 

cost reductions beyond what we 

estimate (in this report).’’ 163

Finally, CARB referenced an EPA staff 

technical memorandum 

‘‘Documentation of Updated Light-duty 

Vehicle GHG Scenarios,’’ dated June 23, 

2008.164 This memorandum 

summarized the staff work to update the 

‘‘4% per year’’ GHG reduction scenario 

that was first documented in the Lightduty Vehicle TSD, by addressing some 

of the deficiencies of the earlier 

study,165 and was discussed in the 

ANPRM for GHG Standards. EPA once 

again noted that because the updated 

analysis did not address all the issues 

identified in the earlier TSD, it 

continued to believe that the results of 

this updated analysis are conservative, 

tending to overestimate the costs and/or 

underestimate the benefits. In its most 

recent comment, CARB noted that the 

EPA lead time estimates in EPA’s 

ANPRM cite implementation rates 

supportive of CARB’s estimates for 

implementing vehicle GHG reducing 

technologies.166

CARB summarizes the reports from 

EPA, NESCAAF and others by declaring 

that ‘‘the technologies examined are 

well known and most are already being 

implemented on today’s vehicles, while 

the others are simply advanced versions 

of conventional technologies that are 

already being demonstrated by vehicle 

manufacturers and component 

suppliers.’’ 167 To bolster this statement, 

CARB submitted a list of Model Year 

2009 vehicles which employ GHG 

reduction technologies, which shows a 

gradual phasing-in of these technologies 

across all manufacturers and all product 

lines. CARB also submitted a list 

showing 2009 Model Year vehicles that 

comply with the CARB GHG standards; 

the list shows significant numbers of 

2009 passenger cars and light trucks 

meeting the 2012 and later standards, 

significantly ahead of the deadlines. 

With respect to the overall 

technological feasibility of its GHG 

standards, CARB believes that it has 

reasonably projected technological 

feasibility, consistent with the approach 

employed in the NRDC decision, when 

manufacturers have several years of lead 

time before compliance. CARB notes 

that it ‘‘either has demonstrated that the 

necessary technologies presently exist to 

meet the established standards or we 

have specifically identified the 

projected control technologies, 

answered objections raised by industry 

regarding those technologies, and 

explained why we believe that each of 

the steps can be completed in the time 

available.’’ 168

In support of its conclusion, CARB 

submitted for the record three analyses 

showing that the manufacturers are 

employing the GHG technologies at least 

as fast as CARB predicted, and certainly 

in time for compliance with the early 

model years. First, CARB did an 

‘‘industry-wide’’ projection using 

manufacturers’ 2009 sales projections 

and worst case CO2 values per single 

test vehicle, and used the 2009 

projected sales as unchanged for 2010 

and 2011 model years.169 The results of 

this analysis show industry-wide GHG 

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170California Air Resources Board, EPA–HQ– 

OAR–2006–0173–9006 at 24. 

171California Air Resources Board, EPA–HQ– 

OAR–2006–0173–9019.13. CARB limited this 

particular analysis to the domestic manufacturers 

because, in its assessment, ‘‘the international auto 

companies are better positioned to comply and will 

unquestionably meet early model year standards.’’ 

As summarized in the first (industry-wide) CARB 

analysis, although at least one international 

manufacturer (BMW) projected a slight debit for 

2009, all the manufacturers were projected for 

overall compliance for the period 2009–2011. 

172California Air Resources Board, EPA–HQ– 

OAR–2006–0173–9019.14. 

173Natural Resources Defense Council, EPA–HQ– 

OAR–2006–0173–7176.13, at 5–6. The NRDC 

testimony also noted that developments in the 

period between the first waiver hearing (May 2007) 

and the new hearing strengthen the California case 

that the GHG standards are cost-effective and 

technically feasible—namely, higher gas prices, the 

market shift to cleaner cars and the passage of new 

Federal fuel economy standards. 174California Air Resources Board, EPA–HQ– 

OAR–2006–0173–9019.15. 175EEA completed a detailed study of product 

plans for the Big Six manufacturers for the U.S. 

Department of Energy in late 2008, and they used 

that study as a baseline for this report on California 

GHG compliance. 

credits for 2009 and 2010 and a debit for 

2011, but an overall credit for the threeyear period. CARB noted that because 

this was done on a worst-case testing 

basis, it is likely that testing with 

additional vehicles in each test group 

would show even the debiting 

companies in compliance.170

Second, CARB looked at the 

compliance projection for the major 

domestic manufacturers (Ford, GM and 

Chrysler) for the 2009 and 2010 model 

years.171 CARB used the actual 2009 

model year registration data (from Polk) 

and, then, applied CO2 emissions data 

by vehicle model obtained from EPA, 

selecting the highest CO2 emissions data 

for those vehicle models with multiple 

engines. The results showed that for the 

2009 model year, GM and Ford have 

ample compliance margins for both PC/ 

LDT1 and LDT2/MDV, while Chrysler 

has a debit for its PC/LDT1 fleet, but a 

wide margin for its LDT2/MDV fleet. 

The overall net result is compliance for 

all three companies. For 2010, the three 

companies run debits for PC/LDT1 but 

have compliance margins for LDT2/ 

MDV (a small margin for GM, and 

substantial margins for Ford and 

Chrysler). Again, based on the use of 

accumulated credits, these companies 

would comply with the model years 

analyzed. 

Third, CARB focused on just GM for 

the 2009 model year, using a different 

technique than their study directly 

above.172 CARB used certification data 

provided by GM, projected sales based 

on GM’s latest manufacturer update to 

CARB, and CO2 results provided by 

EPA. Then each GM certification test 

group was divided by GM into sales 

sub-groups, each having one or several 

vehicle models. For each sub-group, the 

CO2 emissions of the highest emitting 

model were multiplied with the total 

number of vehicles in the subgroup to 

calculate the sub-group’s GHG value. 

The GHG values from all sales 

subgroups in a test group were summed 

up to represent the sales group GHG 

value. For the 2009 model year, under 

this analysis, the GM PC/LDT1 fleet 

over-complies by 14 grams per mile and 

the LDT2/MDV fleet over-complied by 

27 grams per mile, generating 

substantial credits for 2010 and beyond. 

Additional support for 2009–2011 

compliance was provided by the Natural 

Resources Defense Council. At EPA’s 

March 5, 2009 waiver hearing, NRDC 

presented testimony regarding the 

technological feasibility of the GHG 

standards for the early years of 

compliance. NRDC performed its 

analysis by using EPA fuel economy 

trends data for MY 2008, which 

predicted a national average fuel 

economy level without CAFE credits for 

flexible fuel vehicles. NRDC then 

converted the miles per gallon numbers 

to CO2 grams per mile levels using the 

California sales mix and the GHG 

conversion established by CARB. The 

result is that industry accrues 

substantial amount of credits in 2009 

and 2010, and then runs a small deficit 

in 2011 that can be easily made up 

using banked credits from the first two 

years.173

Beyond submitting results from its 

own recent analyses, CARB submitted a 

very recent (March 2009) study by 

Energy & Environmental Analysis (EEA) 

entitled ‘‘Automakers Ability to Comply 

with California GHG Standards Through 

2012.’’ 174 The EEA study notes that, if 

the California waiver is granted, 

manufacturers would be required to 

comply with standards for MY 2009 

vehicles, which are already in 

production and being sold, and would 

have very little lead time to make 

changes for MY 2010 (which will start 

production in mid-calendar year 2009), 

and limited opportunity to make 

changes at this point for MY 2011 and 

2012. EEA looked at the product plans 

for the ‘‘Big Six’’ manufacturers in the 

U.S. (GM, Ford, Chrysler, Toyota, 

Honda and Nissan) based on 

commercially available data, and from 

public information reported in the trade 

press, as well as the information 

submitted by the manufacturers to the 

Federal government in connection to the 

auto restructuring plans.175 Generally, 

because of projected large sales of 

hybrids and to a lesser extent, sales of 

diesel vehicles, EEA projected that 

Toyota and Honda will meet California 

GHG standards through 2012, and that 

Nissan may have a shortfall in LDV/ 

LDT1 for 2012, but will easily comply 

with LDT2/MDV in 2012, and will be 

able to meet the 2012 standards by 

trading between categories and using 

banked credits from prior years. 

For the domestic manufacturers, EEA 

noted concerns about compliance with 

the California GHG standards, in part 

because these companies have Federal 

CAFE values which are significantly 

below the three Japanese companies, 

meaning that it will be harder for them 

to reach the target. Nevertheless, the 

EEA report noted that the product plans 

of these companies show the following 

industry-wide technology 

improvements coming on line in the 

next 4 to 5 years: 

—Luxury vehicles adopting GDI across 

most product lines; 

—4 valve OHC/DOHC engines with VVT 

replacing the few remaining 2-valve 

OHC 4 and 6 cylinder engines; 

—6-speed transmissions replacing 4 or 5 

speed units in most mass market 

vehicles 

—Electric power steering replacing 

hydraulic units in compact and mid 

size cars; 

—Cylinder cut-out applications to V–8 

and some V–6 units; 

—Variable valve lift used more widely 

by Japanese manufacturers; 

—Introduction of several new diesel 

models and hybrid models by all 

manufacturers; 

—Introduction of new small ‘‘crossover’’ 

SUV and car models that are one size 

class below the existing smallest 

models offered by the domestic 

manufacturers to compete with the 

Toyota Scion XD and XB models and 

the Honda Fit model. 

To perform the GHG estimate, the 

EEA study used the actual fuel economy 

data by vehicle model for MY 2009, and 

used the product-plan based technology 

forecasts to derive fuel economy by 

model for MY 2010 through 2012. For 

sales numbers, EEA used 2008 sales 

data and sales for the first two months 

of 2009 both nationally and for 

California as sales indicators for the 

near term (MY 2009 and 2010). For 2011 

and 2012, EEA used the sales forecast it 

had developed in the 2008 DOE study, 

which was a 15 million annual sales 

level of light duty vehicles nationally. 

The power train mix numbers (engine/ 

transmission combinations) for all years 

were the 2008 numbers because this was 

the latest data available from the CAFE 

data base. 

Using this approach, EEA found that 

all three domestic manufacturers are in 

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176California Air Resources Board, EPA–HQ– 

OAR–2006–0173–9019.15. 

177California Air Resources Board, EPA–HQ– 

OAR–2006–0173–9006, at 27. 

178California Air Resources Board, EPA–HQ– 

OAR–2006–0173–9021.1, at 21. 

179Natural Resources Defense Council, EPA–HQ– 

OAR–2006–0173–7176.13, at 4. 

180California Air Resources Board, EPA–HQ– 

OAR–2006–0173–9020.2, at U116, and California 

Air Resources Board, EPA–HQ–OAR–2006–0173– 

9020.3, at 118–120. 

181Natural Resources Defense Council, EPA–HQ– 

OAR–2006–0173–7176.13, at 4, citing from Ford 

Motor Company Business Plan, Submitted to the 

House Financial Services Committee, December 2, 

2008. 

182California Air Resources Board, EPA–HQOAR–2006–0173–0010.116, Comment 154 (at 107) 

and Comments 158–159(–115). 

183California Air Resources Board, EPA–HQ– 

OAR–2006–0173–0010.116, Comment 162 at 117. 

184Testimony of Alliance of Automobile 

Manufacturers, EPA–HQ–OAR–2006–0173–0422, at 

98. 

185Association of International Automobile 

Manufacturers, EPA–HQ–OAR–2006–0173–1455.2 

at 11–12. The litigation in Vermont is Green 

Mountain Chrysler-Plymouth Dodge-Jeep v. 

Crombie, 508 F. Supp, 295 (D. Vt.). 

186Alliance of Automobile Manufacturers, EPA– 

HQ–OAR–2006–0173–1297.2 at 35–36. 

compliance with current and expected 

CAFE through 2012, with Chrysler 

lagging somewhat behind Ford and GM. 

EEA then translated these forecasts to 

GHG forecasts for the California vehicle 

class definitions, assuming no A/C 

improvement credits or alternative fuel 

credits, and no trading of credits 

between manufacturers, and predicted 

as follows: 

—All manufacturers will comply with 

GHG requirements for 2009; 

—GM and Chrysler will comply with 

GHG regulation in 2010 while Ford is 

on the edge of compliance. Ford can 

likely comply by either using banked 

credits from 2009 or with small 

adjustments to the power train and 

sales mix sold in California if 

necessary; 

—Chrysler and GM may be able to meet 

2011 GHG standards using banked 

credits from 2009 and 2010 and credit 

trading between classes. All three 

manufacturers could require 

additional efforts such as air 

conditioner improvements to comply 

with 2011 GHG requirements. 

—Compliance with 2012 GHG 

requirements will be a challenge and 

may require credit trading and banked 

past and future credits over and above 

credits from air conditioner 

improvements and introduction of 

alternative fuel vehicles. 

—The results appear to be very realistic 

based on the auto-manufacturers 

public statements of future fuel 

economy.176

Regarding the long-term (MY 2012 

and later) outlook, CARB compared the 

restructuring plans submitted by the 

automakers to the arguments 

manufacturers made in this proceeding, 

regarding later model year feasibility. 

CARB stated that ‘‘by 2015, even those 

manufacturers facing the most difficult 

challenge complying with California’s 

standards have made statements that on 

their face show they plan to comply 

with the later model years standards, 

even before receiving additional credit 

for GHG reductions from air 

conditioning improvements and 

regardless of 2009 and 2010 credits 

carrying forward.’’ 177 For example, 

CARB cited from the GM restructuring 

plan that the company stated that it will 

work to develop any changes needed to 

* * * meet such additional 

requirements as California’s.178 Further, 

at EPA’s March 5, 2009 hearing, NRDC 

pointed out that the plans of both GM 

and Ford show MY 2012 fuel economy 

levels for cars and light trucks fleet 

average that come very close to allowing 

the automakers to comply with the GHG 

standards with little or no additional 

effort.179 Additionally, CARB noted that 

Chrysler stated that, should this GHG 

waiver be granted, the company would 

try its best to comply using available 

technology; however, as a last resort it 

might restrict sales of certain vehicle 

models in California and other states 

adopting the California standards, out of 

necessity.180 Finally, regarding Ford, 

NRDC stated in its testimony that Ford 

plans to improve the average fuel 

economy by 26 percent by 2012 and by 

36 percent by 2015.181

4. Manufacturers’ Comments on the 

Technological Feasibility of the GHG 

Standards 

Manufacturers raised arguments 

regarding the feasibility of the CARB 

GHG standards both in the underlying 

rulemaking in California, and in the 

EPA waiver proceeding. In the CARB 

rulemaking, the manufacturers generally 

criticized some aspects of the CARB 

modeling work that substantiated 

CARB’s conclusions on technological 

feasibility. For example, a manufacturer 

argued that CARB overestimated the 

emission reductions from the 

powertrain changes in many of the 

technology packages used in the 

modeling studies, such as the NESCAAF 

study. Because the studies assumed 

changes in the use of advanced 

transmissions and engines in such a 

magnitude to be unrealistic for the U.S. 

fleet, the manufacturer stated that the 

changes would require retooling of all 

U.S. driveline plants, perhaps more than 

once.182 Manufacturers also argued that 

the modeling of technology packages 

risked ‘‘double-counting’’ emission 

benefits produced by the individual 

technologies, thus producing an 

unrealistic estimate of emission 

reductions.183 CARB responded to these 

comments by stating that manufacturers 

were already planning to incorporate 

advanced transmissions and engine 

technologies in their vehicles, and that 

the gradual phase-in of the CARB 

standards allowed manufacturers to 

accomplish this during regular 

scheduled vehicle upgrades. CARB also 

noted that its modeling done by AVL 

specifically avoided double-counting 

(while some manufacturers’ modeling 

did not). 

Regarding the EPA waiver proceeding, 

while the manufacturers did take issue 

with some of the CARB modeling work 

during the CARB rulemaking, the 

manufacturers did not challenge CARB’s 

general conclusions that the necessary 

technology presently exists to meet the 

near-term standards, that projected 

control technologies for future years 

have been identified, and that objections 

raised by industry have been answered. 

Rather, the industry offered an 

assessment that much of this technology 

is already at hand. At the first EPA 

hearing in March 2007, although no 

individual manufacturer presented 

testimony, the Alliance of Automobile 

Manufacturers discussed the progress of 

the industry in producing more fuelefficient vehicles. The Alliance stated 

that ‘‘every model available today is 

equipped with some kind of fuel 

efficient technology, including direct 

fuel injection, variable valve timing, 

continuously variable transmissions, 

cylinder deactivations, and more.’’ 184

These technologies in the 2007 and 

2008 MY vehicles are among those that 

CARB projected as being in use for the 

near-term GHG standards (see above 

discussion on ‘‘Overview of 

Technologies and Their Projected 

Applications,’’ section VI.B.2). 

In comments sent to EPA after the 

March 2007 hearing, the industry 

commenters focused on whether there 

was adequate lead time to comply with 

the near-term standards, citing 

testimony from a CARB official (in the 

Vermont litigation) that some 

manufacturers may need up to six years 

to comply with the 2011 MY standards 

and up to 7 years to comply with the 

2012 MY standards.185 Also, the 

industry criticized CARB for not 

providing sufficient information on 

some technology issues for the EPA (or 

the public) to make an informed 

decision.186 CARB responded to these 

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187California Air Resources Board, EPA–HQ– 

OAR–2006–0173–3601, at 26–27. 

188CARB referenced the industry assessments of 

early model year compliance from the litigation in 

Vermont, Green Mountain Chrysler-Plymouth 

Dodge-Jeep v. Crombie, 508 F. Supp, 295 (D. Vt.), 

California Air Resources Board, EPA–HQ–OAR– 

2006–0173–1686 at 20–21, California Air Resources 

Board, EPA–HQ–OAR–2006–0173–3601, at 27–28. 

189The list of issues and the CARB response are 

discussed in the CARB July 2007 letter. EPA–HQ– 

OAR–2006–0173–3601, at 26. 

190Testimony of Association of Automobile 

Manufacturers, EPA–HQ–OAR–2006–0173–7177, at 

108. 

191Association of Automobile Manufacturers, 

EPA–HQ–OAR–2006–0173–8994.1, at 24–25; 

Association of International Automobile 

Manufacturers, EPA–HQ–OAR–2006–0173–9005.2 

at 4. 

192Regarding mix-shifting, the National 

Automobile Dealers Association also commented 

that this would be costly to dealers who would lose 

business due to the ‘‘scrappage effect’’ (see above 

pp 46–49), being forced to accept smaller vehicles 

regardless of local consumer demand, rationing of 

larger vehicles, and out-of state dealers 

unencumbered by CARB’s regulations. National 

Automobile Dealers Association, EPA–HQ–OAR– 

2006–0173–8956.1, at 8–9. 

193Association of Automobile Manufacturers, 

EPA–HQ–OAR–2006–0173–8994.1 at 26. 

194 40 FR 23102, 23103 (May 28, 1975). 

195H.R. Rep. No. 95–294, 95th Cong., 1st Sess. 

301 (1977). 

196 MEMA I at 1118 (emphasis added). See also 

id. at 1114 n. 40 (‘‘[T]he ‘cost of compliance’ 

criterion relates to the timing of standards and 

procedures.’’). 

197See, e.g., 47 FR 7306, 7309 (Feb. 18, 1982), 43 

FR 25735 (Jun. 14, 1978), and 46 FR 26371, 26373 

(May 12, 1981). 

points, stating that the CARB official 

also testified that most of the CARBidentified technologies are already 

developed and required only a few years 

of lead time for implementation. 

Additionally, based on lead time 

beginning at the time of the final 

adoption of the standards by CARB 

(August 2005), CARB notes that the 6 or 

7 year lead time for the 2011 and 2012 

model years respectively is 

reasonable.187 CARB also provided, in 

its June 2007 and July 2007 comments, 

information from the Vermont litigation 

where various manufacturers testified 

that they would be able to meet the 

early years of the California GHG 

standards.188 Concerning the list of 

technical issues on which the industry 

claimed CARB had not provided enough 

information to allow public comment, 

CARB stated that these issues were 

among many issues previously 

addressed fully both in submissions to 

the Docket (primarily the CARB Final 

Statement of Reasons) as well as in the 

Federal litigation.189

Manufacturers also presented 

information on technological feasibility 

at EPA’s March 5, 2009 hearing and the 

subsequent comment period. At the EPA 

hearing, the Alliance continued to 

acknowledge technological advances in 

GHG control. The Alliance stated that 

‘‘automakers have made major 

contributions into developing new fuel 

efficient technologies and the results are 

now coming to dealer showrooms. More 

than 50 technologies offered in vehicles 

today reduce emissions, increase 

mileage and allow vehicles to run on 

cleaner fuels.’’ 190 Regarding 

technological feasibility for the early 

years (near-term), the industry trade 

groups generally argued that CARB 

relied on manufacturer credits for these 

years to provide a cushion for 

compliance in the later years, but that 

the several years of lead time required 

for mid-term compliance combined with 

uncertainty resulting from the EPA 

waiver denial makes even the near-term 

lead time inadequate.191 CARB, in its 

testimony and subsequent comments, 

presented its new analyses of 

compliance (for the industry in general, 

and for GM) that showed industry 

compliance is likely if not certain for 

the 2009 through 2011 model years (see 

discussion above at section VI.B.3.). 

Additionally, if any individual 

manufacturers incur a debit in any 

model year, the CARB regulations 

provide the manufacturer up to five 

model years afterwards to make up the 

debit to avoid any noncompliance 

penalty. 

Regarding the mid-term (2012–2016) 

model years of the GHG standards, the 

industry commenters have argued that 

the only means by which most largevolume manufacturers will be able to 

meet the CARB standards is by ‘‘mixshifting’’ their product lines to offer for 

sale more higher mileage vehicles to 

ensure meeting the CARB fleet 

average.192 The Alliance stated that ‘‘it 

is simply too late for manufacturers to 

meet all the Pavley standards for future 

model years through the use of 

technologies, if for no other reason than 

because approximately 18 months of the 

product planning and development 

cycle was pretermitted while the waiver 

was denied (assuming for purposed of 

this analysis that a waiver would be 

granted in June 2009).’’ 193 As discussed 

earlier, CARB responded to these 

arguments by noting that in the 

restructuring plans recently submitted 

to the government, the manufacturers 

have made statements demonstrating 

they plan to comply with the later 

model years of the CARB standards, 

even before receiving additional credit 

for GHG reductions from air 

conditioning improvements and 

regardless of 2009 and 2010 credits 

carrying forward. Regarding the 

manufacturers’ mix-shifting argument, 

EPA notes that under the narrow 

standard of review applied to 

California’s technological feasibility 

determinations, consistency with 

section 202(a) does not mean that all 

manufacturers will be able to sell all 

vehicle models in California and that a 

reduced product offering in California 

resulting from California emission 

standards is a policy decision left to the 

state.194

C. Technological Feasibility and the 

Cost of Compliance 

1. Historical Approach 

Congress has stated that the 

consistency requirement of section 

202(a) relates to technological 

feasibility.195 Section 202(a)(2) states, in 

part, that any regulation promulgated 

under its authority ‘‘shall take effect 

after such period as the Administrator 

finds necessary to permit the 

development and application of the 

relevant technology, considering the 

cost of compliance within that time.’’ 

Section 202(a) thus requires the 

Administrator to first review whether 

adequate technology already exists, or if 

it does not, whether there is adequate 

time to develop and apply the 

technology before the standards go into 

effect. 

In MEMA I, the court addressed the 

cost of compliance issue at some length 

in reviewing a waiver decision. 

According to the court: 

Section 202’s cost of compliance concern, 

juxtaposed as it is with the requirement that 

the Administrator provide the requisite lead 

time to allow technological developments, 

refers to the economic costs of motor vehicle 

emission standards and accompanying 

enforcement procedures. See S. Rep. No. 192, 

89th Cong., 1st Sass. 5–8 (1965); H.R. Rep. 

No. 728 90th Cong., 1st Sass. 23 (1967), 

reprinted in U.S. Code Cong. & Admin. News 

1967, p. 1938. It relates to the timing of a 

particular emission control regulation rather 

than to its social implications. Congress 

wanted to avoid undue economic disruption 

in the automotive manufacturing industry 

and also sought to avoid doubling or tripling 

the cost of motor vehicles to purchasers. It, 

therefore, requires that the emission control 

regulations be technologically feasible within 

economic parameters. Therein lies the intent 

of the cost of compliance requirement.196

Previous waiver decisions are fully 

consistent with MEMA I, which 

indicates that the cost of compliance 

must reach a very high level before the 

EPA can deny a waiver. Therefore, past 

decisions indicate that the costs must be 

excessive to find that California’s 

standards are inconsistent with section 

202(a).197 It should be noted that, as 

with other issues related to the 

determination of consistency with 

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198 36 FR 17158 (August 31, 1971). See also 40 

FR 23102, 23104; 58 FR 4166 (January 7, 1993), LEV 

Waiver Decision Document at 20. 199California Air Resources Board, EPA–HQ– 

OAR–2006–0173–0004.1 at 40. 

200California Air Resources Board, EPA–HQ– 

OAR–2006–0173–0010.116 at 141–155. 

201California Air Resources Board, EPA–HQ– 

OAR–2006–0173–1686 at 19, and EPA–HQ–OAR– 

2006–0173–3601 at 28–29. CARB also notes that in 

the Green Mountain case, 508 F. Supp. 2d at 365– 

366, the Court found that the industry consultant’s 

(T. Austin) baseline assumptions and resulting cost 

estimates—double that of defendants’ expert—were 

unsupported by the evidence. 

202National Automobile Dealers Association, 

EPA–HQ–OAR–2006–0173–8956.1 at 5–6. 

203Testimony of National Association of Minority 

Automobile Dealers, EPA HQ–OAR–2006–0173– 

7177, at 126–127. 

204See, e.g., 43 FR 32182 (Jul. 25, 1978). 

205California Air Resources Board, EPA–HQ– 

OAR–2006–0173–0004.1 at 42 and EPA–HQ–OAR– 

2006–0173–9006 at 29. 

section 202(a), the burden of proof 

regarding the cost issue falls upon the 

opponents of the grant of the waiver. 

Consistent with MEMA I, the Agency 

has evaluated costs in the waiver 

context by looking at the actual cost of 

compliance in the time provided by the 

regulation, not the regulation’s costeffectiveness. Cost-effectiveness is a 

policy decision of California that is 

considered and made when California 

adopts the regulations, and EPA, 

historically, has deferred to these policy 

decisions. EPA has stated in this regard, 

‘‘the law makes it clear that the waiver 

request cannot be denied unless the 

specific findings designated in the 

statute can be made. The issue of 

whether a proposed California 

requirement is likely to result in only 

marginal improvement in air quality not 

commensurate with its cost or is 

otherwise an arguably unwise exercise 

of regulatory power is not legally 

pertinent to my decision under section 

209 * * *’’ 198 Thus, under the language 

of section 202(a)(2), EPA will look at the 

compliance costs for manufacturers in 

developing and applying the technology 

with the costs being broken down on a 

cost per vehicle or unit basis. 

2. Technology Cost Information in This 

Proceeding 

At the time of CARB’s original waiver 

request, CARB presented the projected 

technology costs for the GHG vehicle 

standards based on cost estimates for 

necessary components provided by 

Martec, the company that did the 

modeling studies that produced the 

CARB technology assessment in its 

ISOR. The costs were calculated by 

applying a mark-up factor, determined 

by the Argonne National Laboratory, for 

the components needed for the vehicles. 

Additionally, CARB assumed an 

additional 30% discount for a limited 

number of components where 

unanticipated improvements in 

production processes or simplifications 

or consolidation in parts after additional 

further development would be likely.199

At that time, CARB stated that the 

average cost of control for near-term 

technology packages on PC/LDT1 

category vehicles was estimated at $383 

per vehicle, and for LDT2/MDV category 

vehicles was estimated at $327 per 

vehicle. Performing similar calculations 

for the mid-term technology packages, 

CARB put the estimates for PC/LDT1 at 

$1,115, and for LDT2/MDV at $1,341. 

CARB also presented information on the 

estimates of costs for the ‘‘major 6’’ 

manufacturers cost of compliance over 

the term of these standards. These 

figures ranged from $0 (for the three 

Japanese companies and GM) for the 

2009 MY (i.e., the fleets of these 

companies would comply with the 2009 

standards with no changes) to the 

highest costs in the 2016 MY, with a 

$1,288–$1,341 range for the domestic 

manufacturers and a $272–$298 range 

for the Japanese manufacturers. 

During the CARB GHG rulemaking, 

the manufacturers commented that 

CARB underestimated costs of 

individual technologies because CARB 

did not use the manufacturers’ costs to 

individually develop each of the 

technologies, and CARB used a mark-up 

factor for final technology cost that was 

too low. The Alliance commissioned a 

study by Air Improvement Resources, 

NERA Economic Consulting, and Sierra 

Research (the above noted ‘‘June 2007 

AIR/NERA/Sierra Study’’) that found 

the average vehicle cost increase to be 

about $3000, several times larger that 

the CARB estimates. In response, CARB 

provided a detailed critique of why the 

cost conclusions in this study were not 

reasonable. CARB found faulty technical 

analysis and inflated component 

costs.200 In the time period since the 

CARB request, CARB has updated its 

technology cost estimates with new reallife information to show that 

manufacturers are continuing to 

implement the GHG technology 

packages and combinations CARB had 

identified at the outset—at costs in line 

with CARB’s projections.201

EPA also received comments from the 

National Auto Dealers Association 

(NADA) and the National Association of 

Minority Automobile Dealers (NAMAD) 

concerning the costs of the CARB 

standards to its constituents, above the 

costs that GHG technology adds to the 

vehicle price to buyers. NADA notes 

that because of ‘‘dire financial straits’’ in 

the auto industry due to the economic 

recession, dealers are experiencing 

financial difficulties from vastly 

reduced vehicle sales (among other 

problems). NADA believes that if this 

waiver is granted, and the various other 

states which have adopted the GHG 

standards begin their own programs, the 

result will be a ‘‘state-by-state 

patchwork approach to fuel economy 

that would fill their lots with more 

unsold vehicles.’’ 202 NAMAD believes 

that ‘‘dealer will lose sales if automakers 

have to ration delivery of large vehicles 

in CARB (Section 177) states to meet the 

fleet average, and * * * if dealers are 

forced to take delivery of more small 

cars that their customers don’t want, 

dealers will be stuck paying the interest 

charges while these vehicles sit on their 

lots.’’ 203 EPA notes the comments of 

NADA and NAMAD on this particular 

type of cost, but also notes that these 

comments are not relevant to the issue 

of whether the technology feasibility of 

the GHG standards are consistent with 

section 202(a). The comments regarding 

the ‘‘patchwork’’ of the GHG standards 

in other states are discussed below in 

section VII. B. 2. 

3. Consistency of Certification Test 

Procedures 

The enforcement procedures that 

accompany California’s greenhouse gas 

standards would also be inconsistent 

with section 202(a) if the California test 

procedures impose testing requirements 

inconsistent with the Federal testing 

requirements. Such inconsistency 

means that manufacturers would be 

unable to meet both the California and 

the Federal test requirements with the 

same test vehicle.204

CARB stated in its December 2005 

Waiver Request letter that there ‘‘are no 

Federal test procedures that measure 

GHG for climate change purposes, [so] 

there are no potential inconsistencies 

precluding a manufacturer from using 

the same test vehicle to meet both 

Federal and California requirements’’ 

and noted in its most recent (April 

2009) comment letter that this was still 

true.205

EPA received no comments suggesting 

that CARB’s GHG testing requirements 

pose a test procedure consistency 

problem with federal test procedures. 

4. Safety Implications of the CARB GHG 

Standards 

The industry raised a vehicle safety 

issue for consideration within the 

technological feasibility criterion. The 

industry has proffered the idea that the 

CARB GHG standards will result in the 

production of vehicles which will be 

unsafe for two reasons. First, they claim 

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206 Decision Document, Authorization of 

California’s Under 25 Horsepower Utility Lawn and 

Garden Equipment Engine Exhaust Emission 

Standards (ULGE) (July 5, 1995), EPA Docket A–91– 

01 at 61–70. 

that many GHG-compliant vehicles will 

achieve compliance because they will 

be downsized, and will be inherently 

less safe in collisions. Second, they 

claim that because GHG-compliant 

vehicles will also have higher fuel 

economy than today’s fleet, owners will 

drive more, and that additional VMT 

means more accidents will occur. The 

industry asserts that because the GHG 

standards will cause these problems, the 

resulting vehicles are technologically 

infeasible because of the safety 

concerns. 

EPA takes safety into account in 

evaluating technology, feasibility and 

lead time of California emission 

standards. For example, when CARB in 

1994 requested authorization for its 

original set of emission standards for 

small spark-ignition engines used in 

utility, lawn and garden equipment, the 

industry trade association raised safety 

concerns in the EPA authorization 

proceeding. The industry argued that 

compliance with the CARB standards 

would require the use of catalyst 

technology in equipment, and that 

current catalysts produced high exhaust 

and surface temperatures, and could 

also possibly cause sparking and 

flaming, so these safety issues must be 

addressed before this technology could 

become feasible, and the authorization 

should be denied on that basis. EPA 

examined these safety issues within the 

traditional consistency with section 

202(a) criterion, with the requisite 

deference given to CARB and the 

burden placed on those arguing that 

safety concerns should give cause for 

EPA to deny the authorization. CARB 

responded to the industry objections by 

offering a detailed review of steps 

necessary to refine small engine catalyst 

technology to meet the standards while 

reducing the high temperature risks, as 

well as identifying some current small 

engines that met the standards without 

using a catalyst. After reviewing all 

relevant information from CARB and 

other commenters on the safety issues 

(and other technological feasibility 

issues) the Administrator stated he was 

‘‘unable to make the finding that the 

CARB Tier 2 standards are not 

technologically feasible within the 

available lead time.’’ 206

In the California GHG proceeding, 

CARB has responded to the industry 

safety arguments, both during the 

underlying California rulemaking and in 

comments submitted to EPA in this 

waiver proceeding. In summary, CARB 

rejected the industry arguments in 

several ways. First, it pointed out that 

under the terms of AB 1493, CARB is 

precluded from requiring vehicle downweighting as a means of achieving 

compliance. Second, CARB has laid out 

a broad pathway of potential 

technologies for achieving compliance 

for all vehicle types, none of which 

require any weight reduction of 

vehicles. Third, CARB notes that an 

industry study (Sierra 2004) shows that 

weight reduction is far from costeffective and therefore becomes an 

unlikely compliance option. Fourth, 

CARB submitted reports from experts 

that tend to dispute any safety impacts 

from the GHG standards by 

demonstrating that any weight 

reduction that may be made to comply 

with the GHG standards need not 

adversely affect vehicle safety. Finally, 

the opponents VMT safety theory is 

entirely based on their flawed rebound 

and fleet turnover arguments (discussed 

above in section IV.C.2). 

Regarding the safety issue, EPA notes 

that CARB has provided considerable 

evidence that its GHG standards can be 

met without any increase in concern 

regarding vehicle safety. Even accepting 

the industry arguments regarding the 

safety implications of downsizing— 

which are disputed by CARB, 

particularly for downsizing of larger 

vehicles—EPA cannot make the finding 

that the CARB standards are 

technologically infeasible because 

manufacturers may choose to use a 

method of compliance that is not as safe 

as the methods CARB has identified, 

particularly where there are many 

business reasons for manufacturers not 

to choose such a method. The burden, 

here, is on manufacturers to 

demonstrate that safety concerns with 

the technology available for compliance 

were unavoidable and substantial and 

that manufacturers would have no 

reasonable technological option 

available to them in the lead time 

provided for compliance. Based on the 

entire record, they have not made such 

a demonstration. Beyond this limited 

type of review under section 209(b), 

EPA’s proper role is to leave for 

California the judgment of what 

greenhouse standards are appropriate in 

light of safety concerns raised by 

manufacturers. 

With regard to the claim that 

increased VMT will increase the 

number of accidents, this argument is 

not relevant to the safety of the vehicle 

but to an outcome based on the possible 

actions or changes of driving patterns of 

people who own these vehicles. This 

argument does not go to the 

technological feasibility of the vehicle 

itself. This is a public policy argument 

that is left for California’s discretion but 

is not relevant to the narrow 

technological feasibility analysis 

authorized for EPA under section 

209(b). 

For these reasons, EPA finds that the 

industry opponents of this waiver 

request, with respect to the vehicle 

safety impact of the CARB GHG 

standards have not met their burden of 

proof for EPA to find that these 

standards are not consistent with 

section 202(a) of the Act. 

E. Conclusion on Technological 

Feasibility 

After its review of the information in 

this proceeding, EPA has determined 

that CARB has demonstrated a 

reasonable projection that compliance 

with its GHG standards is reasonable, 

based upon the current and future 

availability of the described 

technologies in the lead-time provided 

and considering the cost of compliance. 

The industry opponents have not met 

the burden of producing the evidence 

necessary for EPA to find that 

California’s GHG standards are not 

consistent with section 202(a). 

With regard to motor vehicles 

required to meet the near-term 

standards for the 2009 through 2011 

model years, the CARB technical 

information presented in this record 

clearly indicates that these requirements 

are feasible. CARB has presented the 

case that the industry as a whole will be 

able to meet these standards for this 

period—for the 2009 and 2010 model 

years—with compliance with the 

standards including credit generation, 

and for the 2011 model year—with a 

carry-forward of credits earned in the 

2009 and 2010 model years. Within the 

industry, several manufacturers are not 

expected to need credits to comply in 

the 2011 model year. Moreover, 

California has provided several 

technological avenues that are currently 

available for meeting the 2011 MY 

standards without the need for credits. 

Manufacturers have provided no 

evidence that these technologies cannot 

be applied to meet the 2009–2011 MY 

standards. 

For the mid-term standards, 2012 MY 

and beyond, CARB again identified 

various and reasonable technological 

avenues that manufacturers could use to 

meet the mid-term standards. CARB 

initially presented that the continued 

use of technologies identified for the 

near-term along with more sophisticated 

technologies and the expected upswing 

in hybrid-electric and diesel vehicles 

would result in industry compliance for 

these years. In its June 2007 comments, 

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207California Air Resources Board, EPA–HQ– 

OAR–2006–0173–9006 at 27. 

208California Air Resources Board, EPA–HQ– 

OAR–2006–0173–9006 at 29. CARB also noted, that 

in the final efforts to persuade EPA to deny this 

waiver, waiver opponents cited policy arguments 

against the waiver, such as the preference for a 

uniform national standard to avoid a ‘‘patchwork’’ 

of state regulations, rather than any attack on the 

technological feasibility of the standards. 

209Regarding lead time, some industry comments 

suggest that EPA should count lead time from the 

time the waiver is granted. EPA, however, believes 

that lead time should run from the time the rule is 

adopted by California. As EPA made clear in its 

waiver decision for California’s standards regulating 

medium-duty motor vehicles (59 FR 48625 (Sept. 

22, 1994), Decision Document at 39–41), lead time 

should generally be measured from the point at 

which California adopts its regulations. At that 

point, the regulations, and their obligations on 

regulated parties, are clear. EPA measures lead time 

for its regulations from the time of promulgation, 

which is analogous to California’s adoption of its 

regulations. EPA review of CARB waiver requests 

causes no more uncertainty than judicial review of 

EPA regulations. In addition, California and 

regulated parties do not know when EPA will make 

a final decision on a request for waiver of 

preemption, so California would have little ability 

to evaluate lead time at the time it adopts its 

standards if lead time were based on a future action 

by another entity the timing of which is uncertain. 

In any case, the commenters have not shown that 

the amount of lead time provided from the date of 

the waiver is insufficient. 

210California Air Resources Board, EPA–HQ– 

OAR–2006–0173–0010.14 at 80–83 and, EPA–HQ– 

OAR–2006–0173–0004.1 at 39–40. 

211Alliance of Automobile Manufacturers, EPA– 

HQ–OAR–2006–0173–8994.2 at 27, and, Alliance of 

International Automobile Manufacturers, EPA–HQ– 

OAR–2006–0173–9005.2 at 16, Note 4. 

212Alliance of Automobile Manufacturers, EPA– 

HQ–OAR–2006–0173–8994.2 at 23–25, see also 

National Automobile Dealers Association, EPA– 

HQ–OAR–2006–0173–8956.1, at 10–12. 

CARB noted that it expected 

manufacturers to use combinations of 

the initially introduced technologies to 

meet the mid-term standards and cited 

several examples of this already 

happening in several manufacturers’ 

products. CARB also noted that in 2007, 

manufacturers were aggressively 

introducing new hybrid vehicles well 

ahead of the mid-term standards. For 

the longer term, as noted earlier, CARB 

states that ‘‘by 2015, even those 

manufacturers facing the most difficult 

challenge complying with California’s 

standards have made statements that on 

their face show they plan to comply 

with the later model years of standards, 

even before receiving additional credit 

for GHG reductions from air 

conditioning improvements and 

regardless of 2009 and 2010 credits 

carrying forward.’’ 207

In its comment submitted after EPA’s 

March 5, 2009 hearing, CARB 

summarized the industry discussion on 

technological feasibility as follows: 

In our July 24, 2007 comments CARB 

stated ‘‘* * * not a single manufacturer from 

either the Alliance or AIAM has 

independently presented any substantive 

comment concerning the principal and 

proper focus of the (EPA) proceeding—the 

technological feasibility and lead time for 

those manufacturers to comply with the 

subject greenhouse gas standards.’’ Document 

ID No. EPA–HQ–OAR–2006–0173.3601 at 26. 

That statement remains true today, and 

stands in stark contrast to the renewed 

demonstration CARB has made in this 

reconsideration proceeding.208

Regarding the lead time provided by 

California to meet the near-term and the 

mid-term and later standards, the 

commenters have not met their burden 

to show that the lead time is 

insufficient. California provided 

manufacturers 4–5 years before the nearterm GHG standards would go into 

effect and 8–9 years before the later 

standards, giving substantial time for 

development of technologies to meet the 

standards. The industry commenters 

have not shown that this lead time was 

insufficient, both for the near-term GHG 

standards, that were based on 

technologies already known and 

developed, as well as for the mid-term 

GHG standards, where CARB provided 

a reasonable pathway to be followed— 

answering theoretical objections, 

identifying major steps needed to refine 

technology, and offering plausible 

reasons for predicting successful 

technologies.209

Regarding the cost component of the 

technological feasibility test, EPA 

believes that the opponents of the 

waiver have not met the burden of proof 

to show that the GHG standards are not 

technologically feasible because of 

excessive cost. The industry cost study 

(from Sierra Research) from the CARB 

rulemaking found an average vehicle 

cost increase of about $3,000 to comply 

with the CARB standards, an increase 

which CARB rebutted in detail, and 

which was also found not credible by 

the district court in the Vermont 

litigation. Alternatively, even if the 

industry estimates were closer to the 

mark than the CARB estimates, CARB 

points out that Congress was concerned 

with standards causing a doubling or 

tripling of vehicle costs (MEMA 627 

F.2d at 1118), not the cost increases that 

CARB has projected (ranging from under 

$100 for some manufacturers in nearterm to a maximum of $1,100 to $1,350 

for vehicles in the 2016 MY).210

Therefore, for the above reasons, I am 

unable to find that the CARB GHG 

motor vehicle emission standards are 

not technologically feasible within the 

available lead-time giving consideration 

to the cost of compliance. 

F. Other Issues Related to Consistency 

With Section 202(a) 

1. Impact of EPA’s March 6, 2008 Denial 

on Lead Time 

In EPA’s February 12, 2009 Federal 

Register notice, EPA specifically sought 

comment on the effect of the March 6, 

2008 Denial on whether CARB’s GHG 

standards are consistent with section 

202(a), including lead time. 

In comments submitted for this 

reconsideration, the industry 

commenters asserted that any lead time 

clock that may have been running 

should have stopped completely and 

immediately upon EPA’s March 6, 2008 

Denial. Both the Alliance of Automobile 

Manufacturers and the Association of 

International Automobile Manufacturers 

noted that even CARB officials testified 

that manufacturers should have started 

development of their 2010–2012 MY 

product lines at the time the final 

standards were finalized in the 2004– 

2005 time frame, and that there should 

be a presumption that the industry 

could and would stop ongoing 

development efforts when this waiver 

was denied.211 In its comments, the 

Alliance noted that it should not be 

assumed that a ‘‘retroactive’’ waiver 

would impose no hardship because 

manufacturers are able to earn credits 

for sales for the 2009 and 2010 MYs in 

advance of any waiver grant. They claim 

that the regulated parties would have 

conducted their business differently if 

they knew in advance that these 

regulations would be enforced.212

On the other hand, CARB urges EPA 

to reject the argument that the March 6, 

2008 Denial tolled the lead time 

countdown. CARB noted that it always 

maintained that it intended to enforce 

the GHG standards from their start point 

for the 2009 MY, discussed how it 

pursued promptly all available avenues 

to overturn the March 6, 2008 Denial, 

and noted that the denial was all but 

guaranteed to be revisited because its 

waiver request was supported by both 

candidates for President in 2008. 

Additionally, CARB argues that any 

period the March 6, 2008 Denial was in 

effect was not significant compared to 

the four to ten years of lead time 

available to the manufacturers, and that 

technological advancements continued 

to appear during the denial period. 

The manufacturers argue that EPA’s 

earlier denial was reasonably relied 

upon by manufacturers, that the denial 

tolled or suspended lead time and 

allowed them to stop working towards 

compliance, which affects the adequacy 

of the lead-time for California’s 

standards. This amounts to an argument 

that they reasonably had the 

opportunity to stop work towards 

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213EPA notes here (again) that lead time begins 

when California promulgates its standards, not 

when the waiver is granted. 

214Securities and Exchange Commission v. 

Chenery Corp., 332 U.S. 194 at 203 (‘‘That such 

action might have a retroactive effect was not 

necessarily fatal to its validity. Every case of first 

impression has a retroactive effect, whether the new 

principle is announced by a court or by an 

administrative agency. But such retroactivity must 

be balanced against the mischief of producing a 

result which is contrary to a statutory design or to 

legal and equitable principles. If that mischief is 

greater than the ill effect of the retroactive 

application of a new standard, it is not the type of 

retroactivity which is condemned by law.’’). 

215 68 FR 19811, 12 (April 22, 2003). 

216 MEMA III, 142 F. 3d at 463; Ford, 606 F. 2d 

at 1296, n. 17, 1297; H.R.Rep, No. 728, 90th Cong, 

at 22–23. 

compliance at that point if they chose. 

However it does not change the basic 

issue before EPA: whether the 

manufacturers, as opponents of the 

waiver, demonstrated that the standards 

are not consistent with section 202(a) 

because of inadequate lead time. 

Based on a review of the entire record, 

and even assuming the reasonableness 

of the manufacturers’ claim that they 

could have reasonably stopped work 

towards compliance upon the March 6, 

2008 Denial, the industry commenters 

have not shown that the lead time 

provided under these circumstances 

was insufficient. This is particularly 

true regarding the near-term GHG 

standards, which were based on 

technologies already known and 

developed. But this is also true for the 

mid-term GHG standards, where CARB 

provided a reasonable pathway to be 

followed—answering theoretical 

objections, identifying major steps 

needed to refine technology, and 

offering plausible reasons for predicting 

successful technologies.213 I believe that 

this is borne out by the evidence 

submitted to the record by CARB and 

the NRDC, which show industry-wide 

compliance with the near-term GHG 

standards and with future-term 

compliance attainable using technology 

developments as well as early credits. 

Manufacturers have not come forward 

with evidence to show that they cannot 

feasibly achieve the near-term or midterm GHG standards, based on lead 

time. Although the industry trade 

association comments generally 

discussed manufacturers’ reliance on 

the EPA waiver denial to suspend or 

stop planning for California compliance, 

no manufacturer came forward and 

asserted that it actually stopped 

planning. Whatever disruptions may or 

may not have occurred as a result of the 

denial, near-term standards have clearly 

been shown to be feasible and mid-term 

standards are clearly feasible given the 

lead time provided, even taking account 

of the denial. 

Regarding implementation and 

enforcement by CARB for the 2009 MY, 

manufacturers claim that approving the 

waiver for that year would be a 

retroactive grant of a waiver and would 

be improper. However, approval of the 

waiver for the 2009 MY technically 

would not be a retroactive action. EPA 

would not be determining that past 

conduct was or was not lawful when it 

occurred in the past, or rewriting past 

legal obligations. The legal obligation at 

issue is still a future obligation— 

compliance with the annual fleetaveraging requirements for the 2009 MY 

standards by the end of 2009, based on 

sales throughout the year. The fact that 

some conduct which occurred in 2009 

prior to the grant of the waiver is 

relevant to determining compliance 

with the 2009 MY obligation, after the 

end of the model year, does not by itself 

make the obligation to comply with the 

2009 MY standards a retroactive legal 

obligation. In any case, even if a waiver 

for the 2009 MY was considered to 

impose retroactive obligations, EPA has 

the authority in an adjudication to take 

such action under appropriate 

circumstances.214

Under these circumstances, all of the 

evidence presented to date indicates 

that manufacturers will be in 

compliance with the 2009 standards. 

EPA is granting the waiver for 2009 and 

later years. However, out of an 

abundance of caution, and since any 

delay in granting this waiver stems from 

EPA’s prior March 2008 Denial, EPA is 

imposing one specific limitation 

designed to ensure that CARB not hold 

a manufacturer liable or responsible for 

any noncompliance civil penalty action 

that could be caused by emission debits 

generated by a manufacturer for the 

2009 model year. For the 2009 model 

year, CARB can fully implement and 

enforce its regulations, including 

implementation of CARB’s Executive 

Orders for 2009 model year families 

issued both before and after the date of 

today’s waiver, as described below. 

While debits from model year 2009 may 

offset credits generated in later years, 

and reduce the amount of credits 

available to a manufacturer, any debits 

from model year 2009 may not be used 

as a basis for holding a manufacturer in 

noncompliance and no civil penalties 

may be assessed based on such debits. 

Other than that restriction, CARB may 

fully implement and enforce, and 

manufacturers may use the GHG 

standards program as promulgated, such 

that CARB may implement certification 

for MY 2009 motor vehicles, and may 

grant manufacturers credits that can be 

used for future obligations. This 

restriction on handling of any possible 

debits appropriately limits any potential 

concern raised by manufacturers over 

their potential reliance upon EPA’s 

previous waiver denial. 

2. Endangerment of Public Health or 

Welfare 

a. Is it Appropriate To Review 

Endangerment of Public Health or 

Welfare Under the ‘‘Consistency With 

Section 202(a)’’ Criterion? 

EPA has traditionally stated that a 

state standard would be inconsistent 

with section 202(a) if there is 

inadequate lead time to permit the 

development of the necessary 

technology, given the cost of 

compliance within that time, or if the 

Federal and State test procedures 

impose inconsistent certification 

requirements.215 The legislative history 

of this provision and judicial precedent 

indicate that technological feasibility in 

the lead time provided was intended to 

be the primary focus of this criterion.216

However, several industry 

commenters have suggested that in the 

context of this waiver, it is also 

appropriate for EPA to include 

endangerment to public health or 

welfare in its evaluation of consistency 

with section 202(a). They note the 

language in section 202(a)(1) of the 

Clean Air Act that requires the 

Administrator to promulgate standards 

‘‘applicable to the emission of any air 

pollutant * * * which in his judgment 

cause, or contribute to, air pollution 

which may reasonably be anticipated to 

endanger public health or welfare.’’ 

While acknowledging the limits of 

EPA’s traditional review under the 

‘‘consistency with section 202(a)’’ 

criterion, they note that previous 

waivers have generally reviewed 

standards designed to reduce 

concentrations of air pollutants, like 

criteria air pollutants that EPA has 

listed under section 108 of the CAA, for 

which an endangerment finding 

required under section 202(a)(1) has 

already been made. Even standards 

regulating PM and formaldehyde, for 

which EPA has granted waivers, 

involved pollutants that had been 

identified by EPA, or by Congress in the 

Clean Air Act, as needing regulation. 

Thus, the question of endangerment was 

not in dispute in previous waivers. By 

contrast, EPA has not made any final 

decision regarding whether emissions of 

GHGs from new motor vehicles cause or 

contribute to air pollution that may 

reasonably be anticipated to endanger 

public health or welfare (this two-part 

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217On April 24, 2009, EPA published a notice 

proposing to find that elevated concentrations of 

greenhouse gases in the atmosphere are reasonably 

anticipated endanger the public health and welfare 

of current and future generations and also 

proposing to find that emissions of carbon dioxide, 

methane, nitrous oxide, and hydrofluorocarbons 

from new motor vehicles and new motor vehicle 

engines are contributing to this air pollution under 

section 202(a) of the Clean Air Act. 74 FR 18885, 

18886. 

218See MEMA I, 627 F. 2d at 1121 (‘‘The language 

of the statute and its legislative history indicate that 

California’s regulations, and California’s 

determination to comply with the statute, when 

presented to the Administrator are presumed to 

satisfy the waiver requirements and that the burden 

of proving otherwise is on whoever attacks them.’’). 

219See MEMA I, 627 F. 2d at 1126. 

220See MEMA I, 627 F. 2d at 1111. 

test is hereafter referred to as 

‘‘endangerment’’). This is a requirement 

for EPA to issue regulations under 

section 202(a).217 Thus, the commenters 

state that there is an issue for review in 

this waiver under the consistency with 

section 202(a) criterion that was never 

relevant for EPA’s review of previous 

waiver requests. 

In contrast, CARB states that no new 

test of consistency with section 202(a) is 

warranted or permissible. CARB argues 

that precedent shows that nothing more 

than technological feasibility and test 

compatibility is required under section 

209(b)(1)(C). 

I find that in this instance, I do not 

need to resolve the issue of whether it 

is appropriate to address the issue of 

endangerment under the consistency 

with section 202(a) criterion of section 

209(b). This is because in this instance, 

I find that even if the issue of 

endangerment is relevant to EPA’s 

evaluation of consistency with section 

202(a), those opposing the waiver have 

not met their burden of proving that 

California’s regulations are inconsistent 

with section 202(a) based on that 

concern. 

b. Parties Opposing the Waiver Have 

Not Met Their Burden of Showing Lack 

of Endangerment to Public Health or 

Welfare 

As noted above, parties opposed to a 

waiver have the burden of proof to show 

that one of the findings under section 

209(b)(1) should be made. To the extent 

that the two-part endangerment test is 

relevant to a determination of 

consistency with section 202(a), those 

opposing a waiver must affirmatively 

demonstrate that California’s standards 

are inconsistent with this criterion. 

They have failed to do so in this 

instance. 

Commenters who claim that EPA 

should deny the waiver generally base 

their claim on the fact that EPA has not 

yet determined whether greenhouse gas 

emissions from new motor vehicles 

cause or contribute to air pollution 

which may reasonably be anticipated to 

endanger public health or welfare, or 

promulgated greenhouse gas standards 

pursuant to section 202(a). They claim 

that unless and until EPA makes such 

a determination that authorizes 

regulation under section 202(a), EPA 

cannot grant a waiver to California. 

They also state that the fact that the 

current California waiver request 

pertains to global climate change 

emissions, rather than to conventional 

pollutants, means that EPA should not 

give California’s waiver request a 

presumption of consistency under 

Section 209(b)(1)(C). 

In contrast, commenters supporting 

the waiver request contend that EPA’s 

lack of a determination on 

endangerment and lack of GHG 

emission regulations is not relevant to 

EPA’s consideration of the waiver 

request. CARB notes in its comments 

that EPA may not find inconsistency on 

the ground that EPA must first make its 

own endangerment finding on GHG 

emissions before granting California’s 

waiver request. CARB suggests that 

Massachusetts v. EPA’s contemplation 

of coordinated activity at the federal 

level is entirely irrelevant to the waiver. 

CARB also provides significant 

discussion on this issue providing 

evidence that, according to CARB, 

shows that global climate change does 

endanger public health and welfare. 

Manufacturer suggestions that EPA 

should deny California’s request 

because it has not yet made a finding of 

endangerment mistake the burden of 

proof that opponents of a waiver are 

obliged to meet before EPA must deny 

a waiver. To deny a waiver based on 

section 209(b)(1)(C), EPA must find that 

California’s standards ‘‘are not 

consistent with section 202(a).’’ It is not 

enough that EPA has not made a 

decision on the subject of whether GHG 

standards are authorized under section 

202(a). To deny a waiver the 

Administrator must affirmatively find 

that the standards are inconsistent with 

section 202(a). The initial presumption 

of consistency is not dependent on the 

pollutants being regulated, as suggested 

by commenters—the presumption is 

provided for in the statute.218 Regarding 

endangerment, therefore, I believe that, 

to the extent it is even an appropriate 

criterion under section 209(b)(1)(C), it 

would not be appropriate to deny a 

waiver request unless it is affirmatively 

demonstrated that the pollutants being 

regulated do not ‘‘cause, or contribute 

to, air pollution which may reasonably 

be anticipated to endanger public health 

or welfare.’’ 

To the extent endangerment is 

relevant to whether California’s 

standards are consistent with section 

202(a), this criterion should be narrowly 

interpreted and should require more 

than the fact that EPA has not yet made 

a final decision concerning 

endangerment. Denial of a waiver based 

on this issue should require either a 

previous determination by EPA on the 

merits that the endangerment test has 

not been met, or a demonstration in this 

proceeding by the opponents of the 

waiver that EPA could not find that the 

endangerment test is met. Lack of a final 

decision by EPA on this would not be 

sufficient to deny the waiver. Those 

opposing the waiver cannot simply 

point to an open question regarding the 

issue at hand—on the contrary, they 

must come forward with evidence 

demonstrating that California’s 

standards are not consistent with 

section 202(a).219

In order to regulate emissions of a 

particular pollutant under section 

202(a), EPA must review several issues, 

including whether the emissions of the 

pollutant from motor vehicles cause, or 

contribute to, air pollution which may 

reasonably be anticipated to endanger 

public health or welfare, and whether 

the standards are technologically 

feasible within the lead time provided. 

EPA has to make such determinations as 

part of lawfully adopting GHG standards 

under section 202(a). However, lack of 

either kind of action by EPA is not by 

itself evidence that GHG standards are 

in fact inconsistent with section 202(a). 

The fact that EPA has not yet made 

either determination, in the context of 

its own rulemaking, is by itself not a 

basis to deny a waiver. 

Congress understood that California 

may act a ‘‘laboratory for innovation’’ in 

the regulation of motor vehicles, and 

intended section 209 to allow such 

innovation.220 Yet the ability of 

California to encourage such innovation 

would be greatly compromised if EPA 

were to determine that California could 

take no action under section 209 unless 

EPA had already made all of the 

necessary determinations regarding the 

consistency of its own standards in the 

context of its own regulation under 

section 202(a). 

In similar instances where EPA 

reviewed California standards and EPA 

had not promulgated similar standards, 

EPA has determined that the absence of 

EPA standards does not by itself 

preclude a waiver or prevent its ability 

to review California’s standards under 

section 209. Any comparisons necessary 

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32780 Federal Register / Vol. 74, No. 129 / Wednesday, July 8, 2009 / Notice 

221 71 FR 75536 (December 15, 2006). 222Commenter Alliance appears to put much 

weight on the existence of section 202(b)(3). That 

subsection was added in 1977 to ensure that where 

EPA provides a waiver for vehicle standards, 

vehicles meeting California standards can still 

receive a Federal certificate and be sold in 

California and other states where California 

standards are applicable. This was needed as some 

of the California standards may not individually be 

as stringent as federal standards, given the ‘‘in the 

aggregate’’ protectiveness provision. See discussion 

in Ford v. EPA, 606 F.2d 1293 (DC Cir. 1979). 

Without this provision, where more stringent 

individual federal standards applied, vehicles 

complying only with California standards could not 

receive a federal certificate of conformity. The 

language therefore is designed to deal with 

situations where federal standards exist, and may 

be more stringent than California’s. It was not 

intended to add or imply any new substantive 

requirements regarding the existence of federal 

standards. Similarly, Alliance’s reference to use of 

the word ‘‘the’’ in section 202(b)(2) is directed 

towards the first criterion of section 209(b), not the 

third. In any case, the argument raised could at 

most mean that section 209(b)(2) is not applicable 

to this waiver request. California does not rely on 

section 209(b)(2) in its request. Also, as noted 

above, EPA has long held that the absence of 

comparable federal standards would not 

automatically result in a denial of a waiver request 

under the ‘‘in the aggregate’’ criterion because EPA 

believes the appropriate comparison is between the 

protectiveness of the California standards as 

compared to the absence of the federal standards. 223 40 FR 23104. 

224 74 FR 18885 (April 24, 2009). 225Some commenters have indicated that if EPA 

chooses not to deny the waiver based on lack of an 

endangerment finding, EPA should hold its 

decision in abeyance until it makes a finding. 

However, given the burden of proof on opponents 

of a waiver, and the lack of any significant evidence 

to the contrary in the record on this issue, I believe 

it is not appropriate to delay further a decision on 

this matter. 

under section 209 would simply take 

account of the absence of EPA 

regulations, i.e., the comparison would 

be California standards to the absence of 

EPA standards. For example, under the 

similar procedures of section 209(e), 

EPA authorized California to enforce its 

standards on evaporative emissions for 

small nonroad engines despite the fact 

that EPA had not yet promulgated 

evaporative standards for such 

engines.221 In any case, commenters’ 

discussions of ‘‘comparisons to federal 

standards’’ in this context is more suited 

to review of section 209(b)(1)(A), which 

discusses comparisons between 

California and applicable federal 

standards. Section 209(b)(1)(C) concerns 

whether California standards are 

consistent with section 202(a). This 

criterion is not dependent on the 

existence of comparable federal 

standards.222

An additional reason for interpreting 

the waiver criterion this way, and not 

determining inconsistency with section 

202(a) based on lack of an EPA final 

decision on an issue, is that EPA may 

always take action in the future that 

may impact the criteria for a waiver. For 

example, if in the future EPA 

promulgated standards that were more 

stringent than California’s standards, 

this could implicate the 

‘‘protectiveness’’ criterion of section 

209(b)(1)(A). The possibility of such 

future events should not be used as a 

reason to deny a waiver now. Instead, 

the impact of a future EPA action 

should be considered if and when EPA 

takes action. Otherwise, the waiver 

could be denied now, even though in 

the future it could be determined that it 

should have been granted. This would 

tend to reverse the statutory 

presumption of the grant of waiver 

unless opponents demonstrate it should 

be denied for certain specific reasons. 

Instead, it would be denied because of 

some future possible action that may or 

may not occur, and may be delayed for 

an unspecified period of time. Basing a 

denial on the possibility of events that 

may happen in the future is not 

consistent with Congress’ goal to 

preserve the broadest possible 

discretion to California. A more prudent 

approach is to take action based on the 

record at hand, with the possibility of 

reviewing such action in the future if 

facts change that merit such a review. 

As discussed above in section IV.C.1, 

EPA may withdraw a waiver in the 

future if circumstances make such 

action appropriate. 

It is important to remember that the 

criterion being reviewed under section 

209(b)(1)(C) is consistency with section 

202(a) and not consistency with EPA 

standards. EPA has considerable 

deference within section 202(a) to 

promulgate the regulations it believes 

are most reasonable. The test for EPA 

under section 209(b)(1)(C) is not 

whether California standards are the 

same as the standards that EPA has 

promulgated or would promulgate 

under section 202(a), but whether the 

opponents of the waiver have met their 

burden to show, based on the record 

before the Agency, that the standards 

promulgated by California could not 

lawfully be promulgated in a manner 

consistent with section 202(a). As a 

prior Administrator has stated: 

I would feel constrained to approve a 

California approach to the problem which I 

might also feel unable to adopt at the federal 

level in my own capacity as a regulator. The 

whole approach of the Clean Air Act is to 

force the development of new types of 

emission control technology where that is 

needed by compelling the industry to ‘‘catch 

up’’ to some degree with newly promulgated 

standards. Such an approach * * * may be 

attended with costs, in the shape of a 

reduced product offering, or price or fuel 

economy penalties, and by risks that a wider 

number of vehicle classes may not be able to 

complete their development work in time. 

Since a balancing of these risks and costs 

against the potential benefits from reduced 

emissions is a central policy decision for any 

regulatory agency under the statutory scheme 

outlined above, I believe I am required to 

give very substantial deference to California’s 

judgments on this score.223

In this case, opponents of the waiver 

have not met their burden of proving 

that EPA could not find that emissions 

of GHGs from new motor vehicles cause 

or contribute to air pollution which may 

reasonably be anticipated to endanger 

public health or welfare. To the 

contrary, while California and others 

have provided a great deal of evidence 

regarding the dangers posed by GHGs, 

opponents of the waiver have not 

provided significant evidence that 

emissions of GHGs from motor vehicles 

do not cause or contribute to air 

pollution that can reasonably be 

anticipated to endanger public health or 

welfare. The recent EPA proposal to 

find that elevated concentrations of 

greenhouse gases in the atmosphere are 

reasonably anticipated to endanger 

public health and welfare, and to find 

that emissions of carbon dioxide, 

methane, nitrous oxide, and 

hydrofluorocarbons from new motor 

vehicles and new motor vehicle engines 

are contributing to this air pollution 

under section 202(a) of the Clean Air 

Act is further indication that opponents 

of the waiver did not meet their burden 

of proof on this issue.224 Thus, I cannot 

find that those opposing the waiver 

have met their burden of proving that 

California’s GHG standards are not 

consistent with section 202(a) for 

reasons of the endangerment test.225

G. Section 209(b)(1)(C) Conclusion 

Based on its review of the information 

in the docket of this proceeding, I have 

determined that the opponents have not 

met their burden to demonstrate that the 

CARB GHG standards are not consistent 

with section 202(a). Therefore, I am 

unable to find that the CARB motor 

vehicle GHG emission standards are not 

consistent with section 202(a) of the 

Act. 

VII. Additional Issues Raised 

A. EPA’s Administrative Process for 

Evaluating California’s Waiver Request 

1. Public Comment Process 

Section 209(b)(1) states in part that 

‘‘The Administrator shall, after notice 

and opportunity for public hearing, 

waive application of this section * * *’’ 

In response to this language, EPA has 

consistently announced in the Federal 

Register the opportunity for a public 

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Federal Register / Vol. 74, No. 129 / Wednesday, July 8, 2009 / Notice 32781 

226Alliance of Automobile Manufacturers, EPA– 

HQ–OAR–2006–0173.8994 at C–2 through C–4. 

227The Committee on Interstate and Foreign 

Commerce that drafted the amendments to section 

209 in 1977 stated that the amendment was 

‘‘intended to ratify and strengthen the California 

waiver provision and to affirm the underlying 

intent of that provision, i.e., to afford California the 

broadest possible discretion in selecting the best 

means to protect the health of its citizens and the 

public welfare.’’ (H.R. Rep. No. 294 301–302 

(1977)). 

hearing for any waiver request received 

from CARB. As a general matter EPA 

has also offered an opportunity for 

written comment which has opened on 

the date of the Federal Register notice 

and closed on a date after the public 

hearing. As part of EPA’s public 

hearings, the presiding officer has 

consistently stated that the hearing was 

being conducted in accordance with 

section 209(b) of the Clean Air Act and 

that any interested parties have the 

opportunity to present both oral 

testimony and written comments. 

EPA has received comment suggesting 

that EPA has failed to provide any 

systematic procedure for commenters 

opposing the waiver to rebut the 

comments of those commenters 

supporting the waiver. Because 

opponents bear the burden of proof, this 

commenter believes that EPA should 

not treat the waiver proceeding like an 

informal rulemaking but instead clearly 

announce what evidence is admissible 

and applicable burdens of proof and 

evidentiary procedures, such as order of 

proof and argument that parties must 

follow.226

EPA’s waiver proceedings and actions 

under section 209(b)(1) are informal 

adjudications. In a waiver proceeding, 

EPA receives a request from one entity 

(CARB) that is presenting an existing 

regulation established as a matter of 

California law. The request is for a 

waiver of preemption for that party, so 

it may adopt and enforce the specific 

regulations. In deciding this request, 

EPA interprets and applies the three 

specific criteria established by the Act, 

and under this provision EPA is 

required to grant the waiver unless EPA 

makes one of the three specified 

findings. EPA applies the pre-existing 

law, section 209(b), to a specific request 

covering a specific regulation or 

regulations, and applies the three 

statutory criteria to the facts of the 

specific request. The decision to grant or 

deny a waiver changes the legal rights 

of the party before EPA, California. If 

EPA grants the waiver, then CARB may 

enforce its state regulations. In that case, 

the rights and obligations of other 

parties, for example, the manufacturers, 

are affected by the operation of the state 

regulation that is no longer preempted. 

In addition, under a separate statutory 

provision, other States may then adopt 

and enforce California’s’ standards, 

under their state law. While these 

subsequent impacts clearly affect the 

legal rights and obligations of various 

parties, the only legal rights and 

obligations directly determined by EPA 

in the waiver proceeding are the rights 

of the State of California to adopt and 

enforce its state regulations. The other 

legal impacts flow from the operation of 

other laws, once the waiver is granted. 

Therefore EPA believes that its waiver 

proceedings and actions therein should 

be considered an informal adjudication 

rather than a rulemaking. EPA has been 

conducting its waiver proceedings in 

this manner for decades, and while 

Congress has amended provisions in 

section 209 on two separate occasions, 

Congress has not chosen to alter EPA’s 

administrative requirements. Instead, 

Congress has expressed support for 

EPA’s practice in applying and 

interpreting section 209(b).227

EPA disagrees with the suggestion 

that its waiver proceedings are governed 

by section 554 of the Administrative 

Procedure Act (APA) or any other 

provision of Title 5 of the United States 

Code, including sections 556, 557 and 

558. Section 554 of the APA, regarding 

formal adjudications, only applies to 

adjudications required by statute to be 

determined on the record after an 

opportunity for an agency hearing. 

Section 209(b)(1) merely states that the 

Administrator shall provide notice and 

opportunity for a public hearing and 

does not include language stating that 

EPA’s decision shall be on record after 

an opportunity for a hearing. 

Conversely, other provisions in the 

Clean Air Act, including section 

205(c)(1) specifically state that EPA’s 

actions shall be made on the record after 

opportunity for a hearing in accordance 

with sections 554 and 556 of title 5 of 

the United States Code. Section 

205(c)(1) also requires the Administrator 

to issue reasonable rules for discovery 

and other procedures for hearings. 

Any potential action on the waiver 

request is not subject to the 

requirements of APA section 558(c). 

Any potential action by EPA would not 

constitute granting a ‘‘license’’ to 

California. The fundamental purpose of 

section 209(b) is to waive application of 

the preemption set forth in section 

209(a) of the Act, and is not a formal 

approval of the type contemplated in 

the APA. As noted previously, CARB 

must merely submit its regulations to 

EPA with a finding that its standards, in 

the aggregate, are as protective of public 

health and welfare as applicable federal 

standards. Unlike a license or permit 

applicant, the burden of proof is on the 

opponents of the waiver and EPA must 

make an affirmative finding of one of 

the three waiver criteria in order to deny 

California’s waiver request. On the face 

of the Act, what California receives from 

EPA is a waiver, not a license or permit. 

Contrary to commenter’s claim, APA 

section 558 does not require the 

‘‘adversary process’’ described in 

sections 556 and 557 for this action. 

APA section 558 requires the agency to 

‘‘complete proceedings required to be 

conducted in accordance with sections 

556 and 557 of [the APA] or other 

proceedings required by law.’’ 5 U.S.C. 

558(c) (emphasis added). By complying 

with the procedural requirements of 

section 209(b) of the Act, EPA is 

complying with both the CAA and any 

relevant standards set in the APA. 

Regardless, the approval provision in 

APA section 558 was not meant to 

establish additional procedural 

requirements beyond those required by 

law. Instead, the goal of the approval 

provision of the section is to ensure 

‘‘that an agency shall hear and decide 

licensing proceedings as quickly as 

possible.’’ Attorney General’s Manual of 

the APA (1947), 89. Horn Farms is not 

applicable to this situation, as the dicta 

statement regarding APA section 558 

applied only to section 558’s provisions 

regarding revoking a previously granted 

license, which is not at issue here. 

EPA believes that only those actions 

or sections of the Clean Air Act that 

specifically reference section 554 or 

otherwise state that EPA’s decision must 

be determined on the record after an 

opportunity for a hearing are subject to 

the formal adjudication requirements of 

the Administrative Procedure Act. EPA 

nevertheless, as part of good 

administrative practice, provides every 

interested party the opportunity to 

present oral testimony and provide 

written comment based on a Federal 

Register notice that clearly sets out the 

criteria by which EPA will evaluate 

CARB’s waiver requests. EPA believes 

all commenters, including opponents of 

the waiver, have had ample opportunity 

to comment and meet their applicable 

burdens of proof. Opponents of CARB’s 

GHG regulations and of its waiver 

request have had ample opportunity to 

present their viewpoints during the 

course of CARB’s rulemaking and EPA’s 

waiver proceeding. First, as noted in the 

March 6, 2008 Denial, in response to 

several requests to extend the comment 

period during EPA’s initial 

consideration of CARB’s waiver request 

EPA indicated that consistent with past 

waiver practice, it would continue, as 

appropriate, to communicate with any 

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32782 Federal Register / Vol. 74, No. 129 / Wednesday, July 8, 2009 / Notice 

228 73 FR 12156, 12157 (March 6, 2008). 

229Utility Air Regulatory Group, EPA–HQ–OAR– 

2006–0173–8690 at 2–5. 

230See Motor Vehicle Manufacturers Association 

v. New York Dept. of Environmental Conservation, 

17 F.3d 521, 533–34 (2d Cir. 1994)—‘‘[T]he plain 

language of 177, coupled with common sense,’’ 

leads to the conclusion that other states ‘may adopt 

the [California] standards prior to the EPA’s having 

granted a waiver, so long as [the state] makes no 

attempt to enforce the plan prior to the time when 

the waiver is actually granted.’’ 

231 72 FR 12261. 

stakeholders in the waiver process after 

the comment period ended and that it 

would continue to evaluate any 

comments submitted after the close of 

the comment period to the extent 

practicable.228 EPA did not receive any 

request to extend the written comment 

period during the reconsideration of 

CARB’s request. Opponents have also 

had the opportunity to submit lengthy 

comments during two separate comment 

periods (one of which occurred well 

after CARB had submitted all of their 

initial comments) and to testify at three 

separate public hearings. The regulated 

industry has in its possession, along 

with CARB, the necessary information 

to adequately comment on whether the 

GHG emission standards are 

technologically feasible and also what 

CARB has said about the protectiveness 

of its standards from both CARB’s 

rulemaking phase and from earlier 

comments. Opponents have the same 

access to the necessary information in 

order to formulate comments in regard 

to the second waiver criterion at section 

209(b)(1)(B). 

2. EPA’s Reconsideration Process 

Upon receiving CARB’s January 21, 

2009 request for reconsideration of the 

March 6, 2008 waiver Denial, EPA 

published a notice on February 12, 2008 

notifying the public that EPA was 

reconsidering its March 6, 2008 Denial, 

and was providing an additional hearing 

and the opportunity to submit comment 

on all issues relevant to the waiver, 

including inviting comment on certain 

specific criteria and questions. 

EPA received comment suggesting 

that the February 12, 2009 notice failed 

to inform the public of relevant issues 

and contained misleading statements 

and, therefore, the Agency must issue a 

new notice before proceeding with any 

reconsideration of the denial.229 This 

commenter notes the EPA fails to 

discuss the legal standards EPA believes 

it must meet to justify reconsideration of 

a major policy action including the legal 

standards EPA believes governs how it 

is to reopen a previously decided 

matter. EPA believes this commenter 

fundamentally misunderstands the 

purpose of the February 12, 2009 notice. 

EPA’s February 12, 2009 notice did not 

constitute a final decision to change the 

Agency’s position with regard to 

California’s greenhouse gas waiver 

request, and did not implicate any 

arguable requirement to supply a 

justification for changing previous 

interpretations of law or evidentiary 

findings. The Agency set forth sufficient 

reason for initiating a reconsideration 

process, and is under no obligation to 

provide anything further in the Notice 

announcing the process. EPA clearly set 

forth the criteria and issues it would 

review in the notice for reconsideration, 

which covered all of the issues relevant 

under section 209(b). It was unnecessary 

to provide any further justification for 

its reconsideration beyond that which 

was supplied in the notice. Commenters 

have failed to disclose that any 

procedural error by EPA prejudiced 

them in any way, or that EPA’s February 

12, 2009 notice limited their ability to 

fully comment on any of the issues 

relevant to California’s request for a 

waiver. 

3. Is a Waiver Required Before 

California or Section 177 States Adopt 

California’s Motor Vehicle Emission 

Standards? 

lllSeveral commenters have 

suggested that section 209(a), which 

provides that no ‘‘political subdivision 

shall adopt or enforce any standard,’’ 

should be read to mean that neither 

California nor any Section 177 state may 

‘‘adopt’’ a motor vehicle emission 

emissions regulation before EPA grants 

a waiver. Since lead time is an issue 

under section 209(b)(1)(C), see section 

VI, EPA believes it appropriate to clarify 

this issue especially since EPA has 

previously stated that lead time runs 

from the date of adoption of the 

regulation. Similarly, because of the 

number of states that have already 

adopted CARB’s GHG emission 

standards EPA believes it appropriate to 

clarify this issue for purposes of section 

177 as well. 

EPA believes that section 209(b) on its 

face provides the necessary clarification 

as to whether California should adopt 

its regulations before or after receiving 

a waiver from EPA. Section 209(b)(1) 

clearly envisions EPA commencing a 

waiver process after California has 

submitted standards that have been 

adopted. Section 209(b)(1) states in part 

‘‘The Administrator shall, after notice 

and opportunity for public hearing 

waive application of this section to any 

State which has adopted standards 

* * *’’ (Emphasis added). It would be 

illogical, if not impossible, for EPA to 

analyze the criteria in section 209(b) if 

it does not have a final regulation upon 

which to do the analysis. It would not 

be appropriate for EPA to analyze nonfinal documents that may or may not 

become final and that may or may not 

be revised prior to becoming final. 

Similarly, the courts have long 

interpreted the Clean Air Act to 

authorize pre-waiver adoption of 

California standards by an opt-in 

state.230

B. Scope of EPA’s Waiver Review 

1. Relevance of the Energy Policy and 

Conservation Act (EPCA) to the Waiver 

Decision 

In EPA’s initial Federal Register 

notice of California’s request for a 

waiver, we requested comment on 

whether the Energy Policy and 

Conservation Act (EPCA) fuel economy 

provisions are relevant to EPA’s 

consideration of the request and to 

California’s authority to implement its 

vehicle GHG regulations.231

EPA received many comments 

regarding EPCA and its effect, or lack 

thereof, on this proceeding. Several 

commenters stated that the provisions of 

EPCA are not relevant to EPA’s waiver 

determination. They note that the 

language of section 209(b) limits the 

authority of EPA to deny a waiver to 

three criteria and does not reference 

inconsistency with EPCA (or with any 

other statute, other than section 202(a) 

of the Clean Air Act) as a basis for 

denial. One commenter noted that EPCA 

was already in existence when Congress 

strengthened California’s authority to 

adopt motor vehicle emission standards, 

and Congress indicated no intent to 

limit such authority based on EPCA. 

Some commenters noted the Supreme 

Court decision in Massachusetts v. EPA, 

which stated that EPCA does not license 

EPA to shirk its environmental 

responsibilities under the Clean Air Act. 

Several commenters also provided 

arguments regarding their view that 

California’s GHG standards were 

consistent with the provisions of EPCA. 

Other commenters stated that 

California’s standards violate EPCA. 

Several of these commenters noted that 

EPA and court precedent regarding 

section 209(b) indicate that EPA cannot 

rule on EPCA preemption under section 

209(b). However, the commenters state 

that if EPA does consider EPCA-related 

issues in this waiver proceeding, it must 

rule that California’s standards violate 

EPCA. One commenter states that recent 

court cases have created confusion 

regarding the scope and effect of EPA 

waivers. The commenters state that if 

EPA decides not to address the issue of 

EPCA preemption in this proceeding, it 

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Federal Register / Vol. 74, No. 129 / Wednesday, July 8, 2009 / Notice 32783 

232 74 FR at 12159. 

233See Motor and Equipment Manufacturers 

Ass’n v. Nichols, 142 F.3d 449, 462–63, 466–67 (DC 

Cir. 1998), Motor and Equipment Manufacturers 

Ass’n v. EPA, 627 F.2d 1095, 1111, 1114–20 (DC 

Cir. 1979). 

234 36 FR 17458 (August 31, 1971). 

235 43 FR 1829, 1833 (January 12, 1978), LEV I 

waiver decision document at 185–186. 

needs to explicitly state that it is not 

addressing the issue of express 

preemption under EPCA or conflict with 

EPCA, and that those issues are best left 

to the courts. 

As EPA has stated on numerous 

occasions, section 209(b) of the Clean 

Air Act limits our authority to deny 

California’s requests for waivers to the 

three criteria therein, and EPA has 

refrained from denying California’s 

requests for waivers based on any other 

criteria. As EPA noted in its initial 

decision denying California’s waiver 

request, the decision was ‘‘based solely 

on the criteria in section 209(b) of the 

Clean Air Act and this decision does not 

attempt to interpret or apply EPCA or 

any other statutory provision.’’ 232

Where the Court of Appeals for the 

District of Columbia Circuit has 

reviewed EPA decisions declining to 

deny waiver requests based on criteria 

not found in section 209(b), the court 

has upheld and agreed with EPA’s 

determination.233

As many of the commenters note, 

evaluation of whether California’s GHG 

standards are preempted, either 

explicitly or implicitly, under EPCA, is 

not among the criteria listed under 

section 209(b). EPA may only deny 

waiver requests based on the criteria in 

section 209(b), and inconsistency with 

EPCA is not one of those criteria. In 

considering California’s request for a 

waiver, I therefore have not considered 

whether California’s standards are 

preempted under EPCA. As in the 

March 2008 decision, the decision on 

whether to grant the waiver is based 

solely on the criteria in section 209(b) 

of the Clean Air Act and this decision 

does not attempt to interpret or apply 

EPCA or any other statutory provision. 

EPA takes no position regarding 

whether or not California’s GHG 

standards are preempted under EPCA. 

2. Do California’s GHG Emission 

Standards Create an Impermissible 

‘‘Patchwork’’? 

Under section 177 of the Act, other 

states may adopt California new motor 

vehicle emission standards under 

certain conditions. In this waiver 

proceeding EPA received comment 

suggesting that sections 202(a), 209(a) 

and 177 of the Act establish a regulatory 

framework designed to foster a national 

marketplace for vehicles while 

recognizing California’s ability to 

establish its own program which can be 

adopted by other states. EPCA however, 

sets a single national fuel economy 

standard and is designed to prevent a 

fracturing of the marketplace into 

individual state programs. Commenters 

argue that manufacturers will have at 

least 15 different fleets they will have to 

balance for purposes of fuel economy 

and greenhouse gas emissions flowing 

from the fleet-average emission 

requirements of each state. 

Manufacturers also are concerned that 

there are significant differences between 

manufacturers’ fleets in California and 

those in individual section 177 states 

creating unnecessary compliance 

burdens. The commenters suggest that 

the federal government should establish 

a single, national program for regulation 

of vehicle greenhouse gas standards and 

fuel economy. 

EPA also received comment stating 

that to the extent the auto industry is 

arguing that a patchwork is created 

because of differences between fleet 

composition in different states, that 

argument lacks merit and is irrelevant to 

this waiver proceeding. Citing an EPA 

waiver decision from 1971, this 

commenter notes that claims such as the 

patchwork issue are not appropriate in 

a waiver proceeding since EPA’s 

consideration of evidence submitted 

during a waiver proceeding is limited by 

its relevance to the three waiver criteria 

EPA must consider under section 209. 

This has led EPA to previously reject 

arguments that are not specified in the 

statute as grounds for denying a 

waiver.234

Similar to EPA’s response to the 

EPCA claims noted above, EPA may 

only deny waiver requests based on the 

criteria in section 209(b). The actions of 

other states relating to the adoption of 

the California GHG emission standards 

is not a factor I may consider under 

section 209(b). The actions of such 

states are authorized under a separate 

section of the Act, section 177, and must 

conform to the requirements of that 

section, including identicality. Section 

209(b) does not authorize me in 

reviewing a waiver request to consider 

the impact of actions or potential 

actions taken by other states under 

section 177 of the Act.235 I therefore will 

not consider this claim in determining 

whether to grant California’s waiver 

request. 

It is important to note that on May 19, 

2009, EPA and the Department of 

Transportation (DOT) issued a ‘‘Notice 

of Upcoming Joint Rulemaking to 

Establish Vehicle GHG Emissions and 

CAFE Standards’’ announcing EPA and 

DOT’s intent to work in coordination to 

propose standards for control of 

emissions of greenhouse gases and for 

fuel economy, respectively. If proposed 

and finalized, these standards would 

apply to passenger cars, light-duty 

trucks, and medium-duty passenger 

vehicles (light-duty vehicles) built in 

model years 2012 through 2016. EPA 

believes that if these standards are 

ultimately adopted, they would 

represent a harmonized and consistent 

national policy pursuant to the separate 

statutory frameworks under which EPA 

and DOT operate. 

3. What Impact Does Granting California 

a Waiver for Its GHG Emission 

Standards Have on PSD Requirements 

for GHGs? 

Several commenters suggest that there 

would be a major consequence if an 

EPA waiver were to trigger other 

requirements under the Act, including 

Prevention of Significant Deterioration 

(PSD) requirements, and should it grant 

the waiver, EPA should state clearly that 

the waiver does not render GHGs 

‘‘subject to regulation’’ under the Act. 

EPA also received comment suggesting 

that the question of when and how 

GHGs should be addressed in the PSD 

program or otherwise regulated under 

the Act should instead be addressed in 

separate proceedings dedicated to 

evaluating the complicated issues and 

impacts associated with those issues. 

EPA agrees that these issues are not 

relevant to the waiver decision criteria, 

and are most appropriately addressed in 

a separate forum. EPA is not addressing 

these issues in today’s decision. 

VIII. Decision 

After review of the information 

submitted by CARB and other parties to 

this Docket, I find that those opposing 

the waiver request have not met the 

burden of demonstrating that 

California’s regulations do not satisfy 

any of the three statutory criteria of 

section 209(b). For this reason, I am 

granting California’s waiver request to 

enforce its motor vehicle GHG emission 

regulations. 

My decision will affect not only 

persons in California but also persons 

outside the State who would need to 

comply with California’s GHG emission 

regulations. For this reason, I hereby 

determine and find that this is a final 

action of national applicability. 

Under section 307(b)(1) of the Act, 

judicial review of this final action may 

be sought only in the United States 

Court of Appeals for the District of 

Columbia Circuit. Petitions for review 

must be filed by September 8, 2009. 

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32784 Federal Register / Vol. 74, No. 129 / Wednesday, July 8, 2009 / Notice 

Under section 307(b)(2) of the Act, 

judicial review of this final action may 

not be obtained in subsequent 

enforcement proceedings. 

As with past waiver decisions, this 

action is not a rule as defined by 

Executive Order 12866. Therefore, it is 

exempt from review by the Office of 

Management and Budget as required for 

rules and regulations by Executive 

Order 12866. 

In addition, this action is not a rule 

as defined in the Regulatory Flexibility 

Act, 5 U.S.C. 601(2). Therefore, EPA has 

not prepared a supporting regulatory 

flexibility analysis addressing the 

impact of this action on small business 

entities. 

The Congressional Review Act, 5 

U.S.C. 801 et seq., as added by the Small 

Business Regulatory Enforcement 

Fairness Act of 1996, does not apply 

because this action is not a rule, for 

purposes of 5 U.S.C. 804(3). 

Dated: June 30, 2009. 

Lisa P. Jackson, 

Administrator. 

[FR Doc. E9–15943 Filed 7–6–09; 8:45 am] 

BILLING CODE 6560–50–P 

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