Every federal law imposing environmental standards raises the question of whether the states are allowed to set stricter standards. In deference to states' rights, Congress's usual approach is to allow stricter state standards; for example, the Clean Air Act (CAA) allows stricter state standards for stationary sources of air pollution (power plants, refineries, etc.). For mobile sources of air pollution, however—cars, trucks, planes, etc.—a lack of national uniformity creates a problem, since manufacturers would potentially face the task of complying with different standards in each state. Such standards would fragment the national market, increasing costs and complicating the manufacture, sale, and servicing of the affected products. For this reason, the mobile source portion of the CAA (Title II) generally "preempts" states from adopting their own emission standards for new motor vehicles or engines. In general, it allows only federal standards for motor vehicle emissions. There is an exception to this rule of federal preemption, however, in CAA Section 209(b) — The [EPA] Administrator shall, after notice and opportunity for public hearing, waive application of this section [the preemption of State emission standards] to any State which has adopted standards (other than crankcase emission standards) for the control of emissions from new motor vehicles or new motor vehicle engines prior to March 30, 1966, if the State determines that the State standards will be, in the aggregate, at least as protective of public health and welfare as applicable Federal standards. Only California adopted such standards "prior to March 30, 1966," so only California can qualify for such a preemption waiver. (Although only California may be granted a waiver under this section, elsewhere in the Act, as discussed later in this report, there is a waiver of preemption for other states that have adopted California's standards, if EPA grants California a waiver.) Faced with severe air pollution problems, especially in Los Angeles and the San Joaquin Valley, California has regularly developed more stringent standards for motor vehicle emissions than those required by federal law. In order to impose its standards, the state has requested and been granted Section 209(b) waivers at least 54 times since 1967. Using Section 209(b) waivers, California has served as a laboratory for the demonstration of cutting-edge emission control technologies, which, after being successfully demonstrated there, were adopted in similar form at the national level. Catalytic converters, cleaner fuels, and numerous other advances were introduced in this way. Currently, waivers allow California to require that a portion of each manufacturer's sales meet Zero Emission Vehicle (ZEV) and Partial ZEV requirements, which has stimulated the sale of electric and hybrid vehicles. On July 22, 2002, California became the first state to enact legislation requiring reductions of greenhouse gas (GHG) emissions from motor vehicles. The legislation, AB 1493, required the California Air Resources Board (CARB) to adopt regulations requiring the "maximum feasible and cost-effective reduction" of GHG emissions from any vehicle whose primary use is noncommercial personal transportation. GHGs are defined by the state as carbon dioxide, methane, nitrous oxide, hydrofluorocarbons, perfluorocarbons, and sulfur hexafluoride, but for the purpose of this regulatory program, only the first four of these are subject to control. The reductions were to apply to motor vehicles manufactured in the 2009 model year and thereafter. Under this authority, CARB adopted regulations September 24, 2004, requiring gradual reductions in fleet average GHG emissions until they are about 30% below the emissions of the 2002 fleet in 2016. As illustrated in Figure 1 , the regulations set separate standards for two classes of vehicles. The first class consists of all passenger cars, plus light duty trucks and SUVs weighing 3,750 lbs. or less; these vehicles must reduce emissions by an average of 36.5% between 2009 and 2016. The second group consists of light trucks and passenger vehicles over 3,750 lbs., which must reduce emissions 24.4% over the same time period. The regulations require reductions in fleet averages, rather than compliance by individual vehicles. They provide substantial flexibility, including credit generation from alternative fuel vehicles and averaging, banking, and trading of credits within and among manufacturers. Credits—and debits for any year in which a manufacturer exceeds the standards—must be equalized within five years of their generation, with the first equalization required in 2014. Thus, manufacturers would not be subject to penalties for failure to meet the standards until 2014 at the earliest. Following adoption of these regulations by CARB, they were subjected to public comment and legislative review, and CARB submitted a request to U.S. EPA, December 21, 2005, for a preemption waiver under Section 209(b). EPA took two years, from late 2005 to late 2007, to respond to California's waiver request for its motor vehicle GHG emission standards. The agency's long response time was doubtless the result of intense debate over the waiver request within the Bush Administration, which from its arrival in Washington had opposed regulatory approaches to reducing GHG emissions. In addition, the agency was waiting for the U.S. Supreme Court to decide a case it had accepted that squarely presented the issue of whether GHGs are "air pollutants" under the CAA, and thus subject to EPA's regulatory authority. This case began when EPA, in 2003, denied a petition asking it to regulate GHG emissions from new motor vehicles under CAA section 202(a). The agency concluded it lacked authority under the CAA to regulate motor vehicle emissions based on their climate change effects. In its April 2, 2007 decision in Massachusetts v. EPA , the Supreme Court resolved this authority issue, finding 5-4 that— The Clean Air Act's sweeping definition of "air pollutant" includes " any air pollution agent or combination of such agents, including any physical, chemical ... substance or matter which is emitted into or otherwise enters the ambient air.... " ... Carbon dioxide, methane, nitrous oxide, and hydrofluorocarbons are without a doubt "physical [and] chemical ... substance[s] which [are] emitted into ... the ambient air." The statute is unambiguous. Thus, the Court's majority had no doubt that the CAA gives EPA authority to regulate GHGs from new motor vehicles, although the specifics of such regulation are subject to agency discretion. (See CRS Report RS22665, The Supreme Court's Climate Change Decision: Massachusetts v. EPA , by [author name scrubbed].) Following this decision, EPA announced that it would consider the California waiver request. The agency held public hearings on May 22, 2007, in Arlington, VA, and on May 30, 2007, in Sacramento, CA. Under pressure from California's Senator Boxer, who chairs the Environment and Public Works Committee, and other California leaders, including Governor Schwarzenegger and Attorney General Brown, EPA Administrator Johnson announced that he would decide whether to grant the waiver request by the end of 2007. During the public comment period, the agency received more than 60,000 comments, the vast majority of them urging it to grant the waiver. Support came from environmental groups, the Manufacturers of Emission Controls Association, the National Association of Clean Air Agencies (which represents state and local air pollution control departments), and a number of governors. As will be discussed further below, 14 other states and the District of Columbia have adopted regulations identical to California's, and 2 others have announced their intention to do so, but their ability to implement the regulations depends on California first being granted a waiver. Thus, many of them have weighed in in support of the waiver request. The auto industry and the U.S. Department of Transportation (DOT), among others, opposed a waiver grant. The auto industry maintains that there is effectively no difference between California and federal emission standards in their impact on criteria air pollutants (ozone, in particular), that the benefits of the GHG regulations are "zero," and that emissions from California's auto fleet will actually increase as a result of the regulations as consumers keep older, higher-emitting cars longer. On December 19, 2007, EPA announced its decision. EPA Administrator Stephen Johnson wrote California Governor Arnold Schwarzenegger to say, "I have decided that EPA will be denying the waiver and have instructed my staff to draft appropriate documents setting forth the rationale for this denial in further detail.... " According to press reports, the decision was taken against the unanimous advice of the agency's technical and legal staffs. His staff did subsequently draft a decision document, which the Administrator signed on February 29, 2008. It was published in the March 6, 2008 Federal Register , and will be referred to herein as the March 6 decision. It came as no surprise that the Administrator's denial of California's waiver petition was challenged in court. The first petitions for review were filed soon after the December 19 letter by California, 15 other states, and environmental groups, arguing that the letter itself constituted final agency action and was thus ripe for review. With the issuance of the March 6 decision document, these suits based on the EPA letter were dismissed (by the court or by stipulation) and replaced, on May 5, 2008, by a suit in the D.C. Circuit challenging that document. Petitioners in California v. EPA are California, 18 other states, and numerous environmental groups. Most of the California congressional delegation, including Speaker of the House Nancy Pelosi and Senators Boxer and Feinstein, are participating in the case as amici on behalf of the petitioners. The legal arguments of petitioners and respondent EPA are summarized in the "Waiver Criteria" section of this report, under the subsection discussing the "Compelling and Extraordinary Conditions" waiver criterion that is the focus of these arguments. Briefing in the case is now underway; a decision is likely in spring, 2009 (unless mooted by the Obama Administration EPA's possible reversal of the denial).