Environmental groups back US government in legal battle over federal vehicle GHG standards

Seven national environmental groups have joined a legal battle that 16 states including a Texas-led coalition of 15 states, soybean farmers and corn growers, oil and gas producers, and a free-market think tank are waging over federal GHG emissions standards for motor cars and pickup.

The groups asked permission from the US Court of Appeals for the District of Columbia Circuit's permission (DC Circuit) on 2 March to defend the US Environmental Protection Agency (EPA) GHG regulation that took effect 28 February.

In that rule, EPA revised current GHG standards beginning with model year (MY) 2023 that increase in stringency year over year through MY 2026.

The nonprofits that include the Sierra Club, Environmental Defense Fund, and the Union of Concerned Scientists said their goal is to protect their members "from the effects of harmful air pollution, including effects traceable to climate change."

Noting that transportation is the largest source of GHGs in the US, the groups said they have an interest in increasing availability of a broader range of cleaner automobiles in the marketplace that would be driven by EPA's regulation.

Transportation top emitter

Prior to pandemic-induced lockdown, EPA's draft GHG inventory shows that transportation sector was the top emitter in 2019 with 1.87 billion metric tons (mt), and that passenger cars were responsible for 40% and light trucks for nearly 18% of those emissions. Even during the pandemic when most people hunkered down, most GHG emissions came from passenger cars in this sector, notably from burning fossil fuels.

Compared with vehicle standards EPA set in 2020 for MY 2021 through MY 2026, known as the Safer Affordable Fuel Efficient Vehicles Act, EPA estimated its 2021 rule will reduce CO2 emissions by 3.1 billion mt, methane emissions by 3.3 million mt, and ozone-forming nitrogen oxide emissions by 97,600 mt.

Absent this rule, the groups said increased GHGs would exacerbate the intensity and frequency of climate-fueled effects such as wildfires, droughts, heat waves, and sea-level rise affecting properties of its members, not to mention health effects from increased ground-level ozone.

Lacking congressional authorization

Leading the legal challenge against the EPA regulation is Texas Attorney General Ken Paxton who accused the Biden administration in a 28 February lawsuit of promoting electric vehicles and waging a war against fossil fuels "at a time when American gas prices are skyrocketing at the pump, and the Russia-Ukraine conflict shows again the absolute need for energy independence."

Drawing on the same federal overreach argument that a West Virginia-led coalition that includes Texas made to the US Supreme Court justices during oral arguments on 28 February about EPA's authority to set power plant GHG standards, Paxton said EPA is exceeding its authority by seeking to "promote the Biden Administration's radical climate change agenda by promoting electric vehicle usage over other, superior means of transportation that use abundant fossil fuels."

He said the rule would stress the state's electric grid, and it also would "decreas[e] the need for gasoline billions of gallons, effectively destroying Texas's robust energy industry."

But Paxton was not alone in accusing the Biden administration of favoring EVs over conventional fuels as well as biofuels. The 2021 rule is facing at least four separate legal challenges from the nonprofit Competitive Enterprise Institute (CEI), which describes itself as an advocate for the free market movement; trade group American Fuel and Petrochemical Manufacturers; the state soybean associations of eight states and Texas-based oil and gas exploration firm by the name of Diamond Alternative Energy; and corn-growing associations of six states, joined by Valero Renewable Fuels Company, a subsidiary of Valero Energy, and Clean Development Fuels Coalition (CDFC).

Preferring EVs

In a 28 February statement, CEI attorney Devin Watkins accused the EPA of transforming the motor vehicle market from gas-powered to electric vehicles by making gas-powered automobiles more expensive.

Moreover, he observed that the EPA has jointly issued automobile rules with the National Highway Transit Safety Administration (NHTSA) for the past 12 years. He contended that only NHTSA has the authority to issue fleet-wide average automobile standards, but in its rule, "the EPA attempts on its own to establish fleet-wide automobile standards with credit trading and enhanced credits for electric vehicles."

The two separate groups representing biofuels—the corn growers and soybean associations—were likewise miffed because the EPA has given short shrift to their low-carbon products at the expense of EVs.

In their petition for review, the soybean associations representing the states of Illinois, Iowa, Indiana, Michigan, Minnesota, North Dakota, Ohio, and South Dakota, along with Diamond Alternative Energy, said they supported EPA's goal of reducing GHGs consistent with congressional directives in the Energy Independence And Security Act of 2007, which they said created the current Renewable Fuel Standard program to compel the agency to expand the nation's renewable fuel sector in support of US energy, environment, and climate policies.

"However, the final rule exceeds EPA's authority by favoring one technology, electric vehicles, over others, including the comparably clean renewable fuels produced by Petitioners," they wrote.

They too said the EPA is seeking to "unilaterally alter" the transportation mix in the US without congressional authorization and without adequately considering "the vast greenhouse gas reduction benefits provided by renewable fuels."

Automakers on sideline

Joanne Spalding, acting director of Sierra Club's environmental law program, told S&P Global Commodity Insight's Net-Zero Business Daily that, in her opinion, it's significant that no automakers have filed challenges to the rule. They are the most directly affected, she said in an interview on 2 March.

Instead, "it's … those with special interests to keep the US hooked on oil are attacking the EPA's authority to regulate climate emissions and protect public health," Spalding said.

Spalding also questioned the basis for Paxton's claim that EPA lacks the authority to regulate GHGs in automobiles.

Starting with the 2007 ruling in Massachusetts v. EPA, the EPA's authority to regulate GHGs has been upheld multiple times, Spalding said. "The Texas Attorney General has it backwards. The authority is well within EPA's wheelhouse," she added.

Even the West Virginia attorney general conceded that point during the recent power plant arguments before the Supreme Court justices, she added.

Posted 03 March 2022 by Amena Saiyid, Senior Climate and Energy Research Analyst

This article was published by S&P Global Commodity Insights and not by S&P Global Ratings, which is a separately managed division of S&P Global.