Regulating Automotive Emissions: Part IV – Emissions Litigation To Watch

01/16/2025|6 minute read

Key Takeaways:

• With several pending litigations challenging federal emissions and fuel economy standards, the automotive industry is likely to see continued disruption at a time when it seeks stability.
• With final briefing in most of the pending litigation actions not due until after President-elect Donald Trump is inaugurated, the incoming Trump Administration could stop defending those cases in court or switch sides, ceding them to the challengers.
• Automotive manufacturers have not joined cases challenging federal emissions standards, preferring instead to negotiate with the agencies during the rulemaking process to secure sensible provisions and regulatory stability.

In Part I of our series, we focused on what to expect under the incoming Trump administration. We expanded on two major areas in Part II discussing California's waiver and in Part III discussing the future of electric vehicles. In this Part IV, we will look at the multiple ongoing litigations challenging federal emissions and fuel economy standards that await the incoming Trump Administration. Similar to the Trump Administration's position on California's waivers, we would expect there to be a greater challenge by the incoming administration against emissions standards regulating greenhouse gases than traditional criteria pollutants.

The challenge for the automotive industry is how to create and implement forward planning in a regulatory environment that is not only unpredictable but also one in which the outcome of any number of litigations could set the planned course off track. Automakers typically plan manufacturing needs anywhere from two to five years in advance. While litigation affecting MY 2026 may have little impact given that many automakers will release and certify those vehicles this calendar year, litigation addressing emissions and fuel economy standards through MY 2032 is likely to disrupt an industry in search of stability.

Litigation over Emissions and Fuel Economy Standards Through MY 2026

In December 2021, the Environmental Protection Agency ("EPA") finalized revisions to its greenhouse gas emissions standards for light-duty vehicles for MY 2023-MY 2026.[1] This rule was challenged in the D.C. Circuit by a group of 15 states led by Texas in Texas v. Environmental Protection Agency.[2] A related case, Natural Resources Defense Council v. National Highway Traffic Safety Administration, petitioned for review of the National Highway Traffic Safety Administration's ("NHTSA") fuel economy standards for MY 2024-MY 2026.[3] Oral argument for both cases was held on September 14, 2023. Supplemental briefing was ordered by the D.C. Circuit in light of its decision in Ohio v. EPA and the Supreme Court's decision in Loper Bright.

How the D.C. Circuit ultimately resolves these cases is likely to affect more recently filed litigation that is set to challenge the next round of greenhouse gas and fuel economy standards. Petitioners argue that the rulemakings should be overturned on major questions grounds, which requires clear justification for transformative policies - such as what petitioners believe is the forced electrification of the automotive industry. EPA was joined by a coalition of states led by California, environmental groups and automotive manufacturers in defending the rulemakings. They argue that the now lapsed Chevron deference is not needed to establish that the Clean Air Act authorizes EPA standards that provide for emissions averaging, banking and trading.

Litigation over Emissions and Fuel Economy Standards Post-MY 2026

EPA Light- and Medium-Duty Multi-pollutant Emissions Litigation

In March 2024, EPA finalized a rulemaking providing criteria and greenhouse gas emissions standards for light-duty and medium-duty vehicles for MY 2027-MY 2032.[4] Twenty-five Republican-led states filed a petition in the D.C. Circuit to challenge the rule, in Kentucky v. Environmental Protection Agency, No. 24-1087. The states largely reiterate arguments noted in the previous litigation, alleging that the "final rule exceeds the Agency's statutory authority and otherwise is arbitrary, capricious, an abuse of discretion, and not in accordance with the law" because forcing a transition to electric vehicles would "devastate the American economy, threatening jobs, raising prices and undermining the reliability of the electric grid."[5] The states asked the Court to declare unlawful and vacate EPA's final action. Twenty Democrat-led states intervened on behalf of EPA because the regulation is an "urgently needed" part of other measures designed to curb the "substantial and growing" adverse effects of climate change and pollution.[6]

Notably, this litigation is continuing without a stay request from those opposing the rule. This is likely because petitioners face the difficulty of showing imminent harm for a rule that is not slated to take effect until MY 2027 and will not reach full effect until MY 2032. A further complication is that automotive manufacturers have declined to challenge this rule, which contrasts significantly with the position of the directly regulated industry members that have moved to stay other EPA regulations, such as its oil and gas methane emissions standards and greenhouse gas standards for power plants. Final briefing in the case is due March 17, 2025, nearly two months after the administration change.

EPA Heavy-Duty Vehicle Greenhouse Gas Emissions Litigation

Shortly after EPA finalized its greenhouse gas emissions for light- and medium-duty vehicles, it passed a separate set of greenhouse gas regulations for heavy-duty vehicles.[7] Multiple petitioners sought to challenge these regulations in Nebraska v. Environmental Protection Agency, No. 24-1129. More than 20 Republican-led states alleged that the rule "exceeds the agency's statutory authority and otherwise is arbitrary, capricious, an abuse of discretion, and not in accordance with the law."[8] Twenty-two Democrat-led states and four cities moved to intervene in defense of the rule and EPA's action, arguing that vacating the rule would lead to direct injuries to state lands and resources through the increase in harmful emissions that threaten public health and the environment.

On June 12, 2024, Ford Motor Co. asked the D.C. Circuit to intervene and defend EPA's authority to establish emissions standards and aspects of the rule that establish how automakers demonstrate compliance with those standards. In its Motion to Intervene, Ford explained that it plans to comply with emissions regulations for heavy-duty vehicles by selling both electric and hybrid vehicles.[9] Ford explained that "[c]omplying with emissions regulations requires lengthy advance planning, and Ford has taken steps to transform its business to ensure compliance with stricter emissions standards." This is why Ford "has a significant interest in securing the regulatory stability that the Final Rule will provide and preventing the possibility of flip-flopping or changing standards."[10]

EPA filed its brief in the case on January 14, 2025. EPA challenges Petitioners' status because they do not "claim to represent either the public or vehicle manufacturers," which are protected and directly regulated by the rulemaking.[11] EPA further challenges whether Petitioners' challenges are time-barred based on EPA adopting its structure of its heavy-duty vehicle greenhouse-gas standards in 2011.[12] On the merits, EPA argues that it is authorized by Title II of the Clean Air Act to regulate emissions "from any class or classes" of "motor vehicles" and that it did so reasonably.[13]

Briefs of amici curiae are due on January 21, 2025, with final briefing currently scheduled for March 10, 2025.

NHTSA CAFE Standards Litigation

In June 2024, NHTSA issued its final rulemaking for CAFE standards for passenger cars and light trucks for MY 2027-MY 2031.[14] The rulemaking also set fuel efficiency standards for heavy-duty trucks and vans for MY 2030-MY 2032. These regulations were challenged by 26 states, led by Kentucky and West Virginia, as well as by state Corn Growers Associations.[15]

Petitioners allege that NHTSA's standards are unlawful because it (i) inappropriately considered the fuel economy of electric vehicles, (ii) improperly incorporated state electric-vehicle mandates into its baseline and (iii) never showed that manufacturers could feasibly comply with the standards set.[16] NHTSA's response is due three days prior to Trump's inauguration. It is likely that President Joe Biden's Administration will move forward in defending NHTSA's regulations in that briefing. Amici curiae supporting respondents must file briefing by January 24, 2025, with final briefing due March 21, 2025.

Conclusion

Because final briefing for each of these sets of cases is not due until after Trump is inaugurated, the incoming administration will have several options available to it. The Trump administration could allow the litigation to proceed but reverse its position, therein applying pressure to have the courts vacate the regulations. Additionally, the Trump EPA could pause the litigation and reconsider the measure, but the agencies would be required to adhere to the requisite notice and comment period and would need to craft a reasoned explanation for any reversal. Still, pursuing litigation has its risks. While the Supreme Court is skeptical of agency overreach, it also has a preference for industry stability and frowns upon rampant agency flip-flopping.

[1] See "Revised 2023 and Later Model Year Light-Duty Vehicle Greenhouse Gas Emissions Standards,"86 Fed. Reg. 74,434 (Dec. 30, 2021).

[2] Texas, et al. v. U.S. Environmental Protection Agency, No. 22-1031.

[3] Natural Resources Defense Council, et al. v. National Highway Traffic Safety Administration, No. 22-1080.

[4] See "Multi-Pollutant Emissions Standards for Model Years 2027 and Later Light-Duty and Medium-Duty Vehicles," 89 Fed. Reg. 27842 (Apr. 18, 2024).

[5] Commonwealth of Kentucky, et al. v. United States Environmental Protection Agency, et al., No. 24-1087 (consolidated with 24-1100, 24-1132, 24-1158, 24-1195, 24-1196, 24-1197 and 24-1206).

[6] Motion for Leave to Intervene - States of California, et al., 04-22-2024, at 2.

[7] See "Greenhouse Gas Emissions Standards for Heavy-Duty Vehicles-Phase 3,"89 Fed. Reg. 29440 (Apr. 22, 2024).

[8] State of Nebraska, et al., v. United States Environmental Protection Agency, et al. No. 24-1129 (consolidated with 24-1133, 24-1157, 24-1207, 24-1208, 24-1209, 24-1210 and 24-1214).

[9] No. 24-1129; Motion for Leave to Intervene - Ford Motor Company, at 2. Filed Jun. 12, 2024.

[10] Id. at 4.

[11] Nebraska, et al. v. EPA, No. 24-1129, Respondent's Brief, at 3 (filed Jan. 14, 2025).

[12] See id.

[13] Id. at 4.

[14] "Corporate Average Fuel Economy Standards for Passenger Cars and Light Trucks for Model Years 2027 and Beyond and Fuel Efficiency Standards for Heavy-Duty Pickup Trucks and Vans for Model Years 2030 and Beyond," 89 Fed. Reg. 52540 (Jun. 24, 2024).

[15] MCP No. 189 Corp. Avg. Fuel Econ (NHTSA-2023-0022), No. 24-7001 (consolidated with 24-3539, 24-3560, 24-3572, 24-3601, 24-3603, 24-3605, 24-3606, 24-3658, 24-3664, 24-3698 and 24-3728).

[16] In Re: National Highway Traffic Safety Administration, No. 24-7001, Corrected Joint Petitioner Brief, Dkt. 102, (filed Nov. 19, 2024), at 20-21.

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