The Crafting of the National Low-Emission Vehicle Program: a Private Contract Theory of Public Rulemaking

Abstract

I. INTRODUCTION Under the Clean Air Act Amendments of 1990 (CAA),(1) the United States Environmental Protection Agency (U.S. or EPA) is expressly prohibited from enforcing more stringent motor vehicle emissions standards until the year 2004.(2) However, Congress granted the State of California a preemption waiver permitting that state alone to adopt stricter standards.(3) Congress further granted other states the authority under the CAA to adopt any emissions standards adopted by California.(4) Thus, while states other than California cannot choose to implement their own vehicle emissions standards, they do have the power to adopt the California standards in place of the applicable federal standards. In 1990, California adopted the Low-Emission Vehicle (CAL LEV) program.(5) Following its adoption, a number of states in the Northeast, as well as Texas, Michigan, Illinois, and Wisconsin, began to consider adopting California's standards. The Northeast states, empowered to act together under the CAA as the Ozone Transport Commission (OTC), adopted a Memorandum of Understanding agreeing to adopt the CAL LEV program.(6) Of these states, only Massachusetts and New York actually succeeded in implementing the program. Auto manufacturers (both U.S. and foreign industry groups) protested the OTC's actions and, in response, proposed an alternative to regional adoption of the California LEV program. The U.S. EPA reacted by supporting compromise negotiations between the states and the auto industry. These negotiations resulted in the creation of the National Low-Emission Vehicle (NLEV) program.(7) The NLEV program, if implemented, would apply in all 49 states other than California. Since the program incorporates requirements for more stringent auto emissions standards prior to 2004 (contrary to the CAA ban), the U.S. EPA seems to lack authority under the CAA to enforce the NLEV program. Provisions of the NLEV program purport, however, to create independent contract mechanisms, outside the realm of the CAA, that would permit the U.S. EPA to enforce the more stringent emissions standards. The U.S. EPA, in sum, has collaborated with state governments and auto manufacturers to negotiate a rule that neither was contemplated by Congress nor is suggested in the language of the CAA. Adoption of the NLEV program raises several fundamental legal issues. First, does the U.S. EPA have the authority to implement and enforce a regulation that appears, on its face, unauthorized under federal statute? Second, does the EPA have the authority to utilize a rulemaking procedure that is inconsistent with statutory guidelines, such as those established in the Negotiated Rulemaking Act. Third, if the EPA does have the authority to use novel rulemaking procedures, do the U.S. EPA and the states have the legal authority to reach an agreement on a national regulation through informal negotiations between select states and auto manufacturers? Fourth, what is the efficacy of substituting private negotiation in place of public rulemaking? A discussion of these legal questions begins with a survey of the path that the EPA, the states, and the auto manufacturers have traveled to arrive at the novel NLEV plan. To understand the negotiating stances of all parties involved in the NLEV rulemaking, it is important first to have a sense of the legislative, regulatory, and general political history that laid the groundwork for the NLEV negotiations. After describing the negotiating backdrop, this comment summarizes the substance of the NLEV program, followed by a discussion of the unorthodox rulemaking procedure that the EPA has used in crafting the rule. Finally, this comment considers the link between the EPA's unorthodox negotiating procedure and the unconventional NLEV rule. This comment concludes that the 1990 CAA excessively restricts the EPA's ability to react to changing air pollution control needs and technological advances. …