California’s Radical Effort to Transform America’s Auto Industry: Not Your Forefathers’ Idea of Federalism

COMMENTARY Government Regulation

California’s Radical Effort to Transform America’s Auto Industry: Not Your Forefathers’ Idea of Federalism

Jan 30, 2023 18 min read
Steven G. Bradbury

Distinguished Fellow

Steven G. Bradbury is a Distinguished Fellow at The Heritage Foundation.
U.S. President Joe Biden (L) and California Gov. Gavin Newsom (R) talk on the tarmac at Mather Airport on September 13, 2021 in Mather, California. Justin Sullivan / Getty Images

Key Takeaways

In fed­eral­ism, citi­zens deal with their state gov­ern­ments on matters of local con­cern and with the fed­eral gov­ern­ment on matters of national inter­est.

The Con­sti­tu­tion grants Con­gress the power to ensure the con­sistent regu­la­tion of inter­state com­merce for the bene­fit of all Americans.

Cali­fornia should not be allowed to push aside the policy judgments of Con­gress and impose its will on the rest of the country.

Gov­. Gavin New­som and his cli­mate regu­lators at the Cali­fornia Air Resources Board, or CARB, have prom­ised to phase out all gas-pow­ered cars and force automakers to sell 100% elec­tric vehicles by 2035.

CARB’s pur­pose is not really to improve local air quality in any part of Cali­fornia but rather to fight the specter of global climate change by using the coer­cive power of one big state to achieve a com­plete trans­for­ma­tion of the U.S. auto industry.

CARB has issued regu­la­tory edicts to do just that: the so-called “green­house gas emis­sion stan­dards” in CARB’s Advanced Clean Car rules and its “zero-emission vehicle sales man­date.”

CARB is able to pur­sue this trans­forma­tional agenda only because the Biden admin­istra­tion has rein­stated an extra­ordi­nary waiver of fed­eral law—a waiver avail­able to Cali­fornia and no other state.

Cali­fornia’s initial request for per­mis­sion to set its own greenhouse gas auto stan­dards was denied by the Bush admin­istra­tion in 2008, but the Obama admin­istra­tion quickly reversed that deci­sion and later granted Cali­fornia an expanded waiver for auto­motive cli­mate change rules.

In 2019, under Presi­dent Donald Trump, the fed­eral gov­ern­ment with­drew all waiver auth­or­ity for Cali­fornia’s greenhouse gas auto emis­sions rules and zero-emission vehicle man­date after con­cluding that such a waiver con­flicted with fed­eral law.

Now, in a game of politi­cal ping pong, the Biden admin­istra­tion has reversed that 2019 deci­sion.

Don’t be fooled: The special waiver Presi­dent Joe Biden has approved for Cali­fornia and the regu­la­tory war on fossil fuels and the internal com­bustion engine that California is waging by virtue of it can­not be legally defended. Nor should they be dis­missed or ignored on the grounds that they are just an example of fed­eral­ism in action. They’re not.

In the American sys­tem of dual sov­er­eignty known as fed­eral­ism, citi­zens deal with their state gov­ern­ments on matters of state and local con­cern and with the fed­eral gov­ern­ment on matters of national inter­est.

The Founders recog­nized that issues uniquely or most dir­ectly affect­ing the resi­dents of one state are best handled at the state or local level—not just for efficiency’s sake, but more importantly because the exer­cise of self-gov­ern­ment over local affairs pro­motes the vir­tue and recognizes the dig­nity of the people, and there­fore nurtures the strength of our repub­lic.

A core prin­ciple of fed­eral­ism is that all 50 states—whether large or small, densely or sparsely pop­u­lated—are equal in dig­nity and in sov­er­eignty. Each state’s repre­sen­ta­tives are free to experi­ment with differ­ent policy approaches within their own local mar­kets: Some state legis­la­tures may choose to pro­hi­bit or restrict cer­tain types of behavior, while other states may allow the same con­duct to go on with little or no regu­la­tion.

In this way, through the so-called “labora­tories of demo­cracy,” one state’s inno­va­tive policies can inspire more effec­tive gov­ern­ment solu­tions for other states or the fed­eral government while still per­mitting the residents of each state to retain the right of gov­ern­ing them­selves in matters of local inter­est.

But the virtues of true fed­eral­ism are negated when one state’s regu­la­tions over­ride the policy judgments of other states and dic­tate the mar­ket con­di­tions and options avail­able to con­sumers through­out the nation. That’s exactly what will hap­pen if the Cali­fornia waiver and CARB’s “Green Dream” car man­dates are allowed to stand.

The Cali­fornia mar­ket is so big and important that auto­makers have little choice but to pro­duce cars, pick­ups, and SUVs that com­ply with the acti­vist climate edicts issued by CARB.

This coer­cive effect is com­pounded by the fact that the federal Clean Air Act allows other states to adopt Cali­fornia’s waivered regu­la­tions for use in their own local areas where air quality is poor. More than a dozen blue states, including major states like New York, New Jer­sey, Mass­a­chu­setts, and Penn­syl­vania, have already adopted CARB’s greenhouse gas-related man­dates.

Because auto­makers need to spread their costs of pro­duction across a nation­wide mar­ket and can’t eco­nomi­cally engi­neer differ­ent fleets for differ­ent regions of the country, families in Texas, Ohio, Florida, and other red states will inevitably find their choices for new vehicles (or, rather, their lack of choices) deter­mined for them by Cali­fornia.

Make no mis­take, the revo­lu­tionary new indus­trial policy that CARB is push­ing with the com­plicity of the Biden admin­istra­tion will have cala­mi­tous effects for all Ameri­cans, not just the resi­dents of the Golden State. By coercing the auto indus­try to acceler­ate its transi­tion to elec­tric vehicle, or EV, pro­duc­tion far sooner than mar­ket demand would support, the CARB man­dates will:

  • Elimi­nate con­sumer choice in every region of the country. Many of the vehicle models most pop­u­lar with Ameri­ca’s families will dis­appear under CARB’s rules. In 2021, the three top-selling new vehicle models in the U.S. were the Chevy Silver­ado/GMC Sierra family of light trucks, the Ford F-Series pick­ups, and the Ram line of pick­ups. CARB is aim­ing to elimi­nate all three, along with the many other models of gas-pow­ered vehicles that can­not realis­tically be designed to meet CARB’s greenhouse gas emis­sions limits in the near term and that even­tually will be out­lawed altogether under its zero-emission vehicle man­date.
  • Increase the cost of vehicles for all American families. CARB’s rules will impose a sharp increase in the average price of all new cars and trucks as auto­makers spend tens of billions of dollars to develop expen­sive elec­tric vehicle tech­nolo­gies to meet Cali­fornia’s require­ments. Ford Motor Com­pany alone has announced that it will spend $50 billion on EV devel­op­ment through 2026. Auto­makers will have no choice but to spread these mas­sive costs across their entire fleets of new vehicles. All Ameri­cans will be harmed by these price increases, but the big­gest losers will be low-income Ameri­cans who won’t be able to afford to buy an EV or to pay more for a gas-powered vehicle at the dealer­ship and those who live in rural areas who need to drive longer distances and for whom EVs are imprac­tical.
  • Destroy jobs in the U.S. auto industry. The loss of pop­u­lar new vehicle options and the sig­nif­i­cant price increases at the dealer­ship mean that far fewer new vehicles will be pur­chased. This drop-off in demand, com­bined with the enor­mous costs of EV develop­ment, will chal­lenge the profit­ability of the auto industry and lead to a loss of jobs for tens of thou­sands of America’s auto­workers. The United Auto Workers union has warned about the potential for job losses from the transi­tion to EVs, which have far fewer moving parts than gas-pow­ered vehicles and require on aver­age 30% fewer workers to assemble. As a bell­wether, Stellantis recently announced the closing of its Jeep Chero­kee plant in Belvidere, Illinois, and the indefinite lay­off of more than 1,200 plant workers due mostly to “the increasing cost related to the elec­tri­fi­ca­tion of the auto­motive mar­ket.” In con­trast, the transi­tion to EVs will increase employ­ment in China, which is the world’s lead­ing pro­ducer of batteries and other EV com­po­nents.
  • Trigger more deaths and injuries on America’s high­ways. As more Ameri­can families are priced out of the new car mar­ket, the average age of vehicles on U.S. roads will rise dramatically. More Ameri­cans will be forced to settle for older used cars and will be left driving older vehicles well beyond their use­ful lives. Not allowing people to upgrade to newer cars will lead to avoidable traffic deaths and injuries, since statistics show that newer vehicles are much more safe than older models. CARB ignores the deaths and injuries its man­dates will cause.
  • Worsen air quality and increase global carbon emissions. While CARB claims its zero-emission vehicle and greenhouse gas auto man­dates will bene­fit the global environ­ment by reducing car­bon diox­ide emis­sions from new motor vehicles, the over­all environ­mental con­se­quences of its rules, in fact, will be nega­tive. First, the older cars that will con­tinue using America’s high­ways because of CARB’s rules will pro­duce more smog and other tradi­tional air pollu­tants. Second, the Chinese batteries installed in the new EVs man­dated by CARB will be made with elec­tricity gen­erated mostly from less technologically advanced power plants in China that burn dirty coal and release large volumes of car­bon diox­ide and tradi­tional pollu­tants. Third, acceler­ating the tran­si­tion to an all-EV fleet will neces­sitate an enor­mous increase in elec­tricity gen­er­a­tion to power it, and much of this addi­tional elec­tricity will have to come from burn­ing fossil fuels, since there won’t be suffi­cient reliable sources of wind, solar, hydro­electric, and nuclear power to meet this need. The U.S. Energy Infor­ma­tion Admin­istra­tion’s Annual Energy Out­look 2022 fore­casts that in the year 2050, around 75% of total U.S. energy will still come from fossil fuels and nearly half of all U.S. elec­tri­city will still be gen­er­ated from fossil fuel-fired power plants. CARB pre­tends battery-electric vehicles equal zero emis­sions, but it totally over­looks the up­stream car­bon diox­ide emis­sions asso­ciated with producing and powering EVs.
  • Harm our national security. Finally, forcing a faster switch­over to EVs will reduce the nation’s security by (1) making us more depen­dent on China and other unfriendly nations for the pro­duc­tion and proc­essing of rare min­erals needed for battery systems, (2) putting a massive addi­tional strain on our already vul­ner­able national power grid, and (3) hold­ing hostage our ability to move people and property throughout the country to the need for huge new invest­ments in a nationwide elec­tric infra­struc­ture to support the mass conversion to EVs.

Thanks to the fore­sight and genius of our Founders, America’s con­sti­tu­tional scheme of dual sov­er­eignty was designed to amelior­ate the risk that one state’s regu­la­tory over­reach would inter­fere with the free­dom and sov­er­eign auth­ority of other states and could harm the nation as a whole.

Thus, Article I, Section 8 of the Con­sti­tu­tion grants Con­gress the power to ensure the con­sistent regu­la­tion of inter­state com­merce for the bene­fit of all Americans, and the Supre­macy Clause of Article VI declares that fed­eral require­ments enacted under the auth­ority of Con­gress have pre­eminence over state law.

Con­gress exer­cised its inter­state com­merce power in the Energy Policy and Con­ser­va­tion Act of 1978, or EPCA, when it dir­ected the secre­tary of trans­por­ta­tion to estab­lish uni­form national fuel econ­omy stan­dards for all new motor vehicles sold in the U.S., and it did it again when it auth­or­ized the Environ­mental Pro­tec­tion Agency to set fed­eral limits on emis­sions of danger­ous air pollu­tants from new vehicles in the Clean Air Act.

In both EPCA and the Clean Air Act, Con­gress required that the stan­dards set by the fed­eral agencies be feasible for gas-pow­ered vehicles to achieve using exist­ing tech­nolo­gies and that they be con­sistent with main­tain­ing jobs, pros­perity, safety, free mar­kets, and the security of the Ameri­can people. In fact, EPCA expressly forbids the Department of Transportation from con­sider­ing “alterna­tive fuel” vehicles, which include elec­tric vehicles, when setting federal fuel econ­omy stan­dards.

To ensure national uni­formity in fuel econ­omy and auto emis­sions regu­la­tion, Con­gress included broad pre­emp­tion pro­visions in both statutes: EPCA pro­hibits states from adopt­ing or enforcing require­ments different from the federal requirements “relating to fuel econ­omy stan­dards,” and the Clean Air Act pro­hi­bits all state regu­la­tions “relating to the con­trol of emis­sions” for any new vehicle covered by the fed­eral limits.

The internal com­bus­tion engine auto­mobile has long been cen­tral to the free­dom, mobility, and pros­perity of the American people, and domestic auto manu­fac­turing is critical to our economic and indus­trial strength, sus­tain­ing millions of good-paying jobs. It’s there­fore not sur­prising Con­gress con­cluded that fuel econ­omy require­ments and emis­sions limits for new cars must be stan­dard­ized and care­fully formu­lated to pre­serve the full range of afford­able vehicle options Ameri­can families demand and to enable the con­tinued health and dyna­mism of the tradi­tional auto indus­try.

More­over, Con­gress wanted to ensure the stan­dards reflected the cur­rent need of the nation to con­serve energy; that they didn’t sig­nifi­cantly impair traffic safety; and that they didn’t harm the national security interests of the United States, for example, by making us more depen­dent on unre­liable for­eign sources of fuel and raw materials.

As laid out above, CARB’s greenhouse gas auto rules and zero-emission vehicle man­date con­tra­dict every one of these con­gres­sional objec­tives.

Pre­dictably, but tragically, the Biden admin­istra­tion is try­ing to under­mine Con­gress’ direc­tives in pur­suit of the Left’s pre­ferred anti-fossil fuel agenda. By execu­tive order, Biden declared “a goal that 50 percent of all new pas­senger cars and light trucks sold in 2030 be zero-emis­sion vehicles.”

Like New­som and CARB, the presi­dent is push­ing this aggres­sive goal by order­ing the Environmental Protection Agency to issue strin­gent limits on car­bon diox­ide emis­sions from new motor vehicles under the Clean Air Act and by tell­ing the Depart­ment of Trans­por­ta­tion to use its EPCA auth­ority to set simi­larly strict fuel econ­omy stan­dards.

There’s a hitch, how­ever: Con­gress never auth­or­ized the Biden policy—no statute gives any fed­eral agency the power to com­pel such a momen­tous trans­forma­tion in the auto industry. And the rules issued by the Biden EPA and DOT in fur­ther­ance of the presi­dent’s goal can­not be squared with the require­ments of EPCA and the Clean Air Act.

So, on top of attempting to final­ize its own rules, which are cur­rently being chal­lenged in fed­eral court, the Biden admin­istra­tion took the extra step of empow­ering CARB to pile on with parallel but even more dra­conian state man­dates by giving Cali­fornia back its special waiver from pre­emp­tion.

Too bad for the Biden admin­istra­tion, but the special Cali­fornia waiver and the CARB edicts issued under it are them­selves flatly incon­sistent with fed­eral law:

  • EPCA’s broad pro­hi­bi­tion on states creating their own require­ments “relating to fuel econ­omy stan­dards” allows no excep­tion or possi­bility of waiver. CARB’s greenhouse gas and zero-emission vehicle man­dates clearly vio­late this pro­hi­bi­tion. They pur­port to restrict the amount of car­bon diox­ide new vehicles emit per mile driven, with greater restric­tions apply­ing over time, until even­tually, if enforced, they would require zero carbon dioxide emis­sions. Because there’s a direct mathe­mati­cal rela­tion­ship between the car­bon diox­ide a vehicle emits per mile traveled and the amount of gaso­line or diesel fuel it burns, the CARB man­dates un­avoid­ably relate to, or in fact con­sti­tute, fuel econ­omy stan­dards that differ from the stan­dards set by the Department of Transportation, and they are there­fore pre­empted—no ifs, ands, or buts.
  • It’s equally clear these CARB man­dates seek to con­trol emis­sions from new motor vehicles regu­lated by EPA, so they also vio­late the plain lan­guage of the Clean Air Act’s pre­emp­tion of state rules “relating to the con­trol of emis­sions.”
  • Unlike EPCA’s abso­lute pre­emp­tion, section 209(b) of the Clean Air Act does per­mit the EPA to grant Cali­fornia (and Cali­fornia alone) a waiver of Clean Air Act pre­emp­tion, but only to the extent neces­sary “to meet com­pelling and extra­ordinary con­di­tions” involving local air quality. This jus­ti­fi­ca­tion is lack­ing for Cali­fornia’s global cli­mate waiver:
    • The Clean Air Act’s Cali­fornia waiver pro­vi­sion is a rare example of special treat­ment for a single state under fed­eral law. Con­gress enacted this waiver pro­vi­sion based on a recog­ni­tion that Cali­fornia his­tor­ically has faced unique local air qual­ity prob­lems due to smog, especially in the Los Angeles basin. Con­sistent with that orig­inal justi­fi­ca­tion, most of the waivers pre­viously granted to Cali­fornia by the EPA allowed Cali­fornia to impose stricter con­trols on auto­mobile emis­sions of tradi­tional smog-gen­erating pollu­tants, like unburned hydro­car­bons, par­tic­ulate matter, car­bon monox­ide, and nitro­gen oxides. These pollu­tants can be con­trolled by adjust­ing a vehicle’s fuel mix or by the addi­tion of dis­crete pieces of equip­ment, like enhanced cata­lytic con­verters; their con­trol doesn’t neces­sitate the entire trans­for­ma­tion of the vehicle’s pow­er­train and a total con­ver­sion of the auto­maker’s pro­duc­tion plants.
    • CARB’s greenhouse gas auto man­dates are a differ­ent ani­mal. They will require an indus­try-wide re­engi­neer­ing of the auto­mobile and the entire auto manu­fac­turing pro­cess from soup to nuts. At the same time, they weren’t moti­vated by the need to reduce smog in L.A. or improve local air qual­ity any­where in Cali­fornia; their aim was far more gran­diose: to address the sup­posed global atmo­spheric effects of car­bon diox­ide, an other­wise benign mole­cule essen­tial to the exist­ence of green plants and a byprod­uct of all ani­mal life, including human life. Accord­ing to cli­mate science, the atmo­spheric effects of car­bon diox­ide emis­sions are global in nature, not local­ized and not unique to Cali­fornia; any release of car­bon diox­ide will have the same cli­mate effects whether it occurs in Cali­fornia or in any other state—or at any point on the globe, for that matter.
    • Earlier ver­sions of CARB’s low-emis­sion and zero-emis­sion vehicle sales require­ments, which involved rela­tively modest sales tar­gets as a per­cen­tage of an auto­maker’s over­all new car sales in Cali­fornia, were also dir­ected at reducing emis­sions of tradi­tional smog-related pollu­tants. CARB’s more aggressive recent zero-emission man­dates, including the latest ver­sion requiring 100% zero-emission vehicle sales by 2035, are another thing entirely. They’re intended to advance CARB’s Green Dream agenda of reducing carbon dioxide emis­sions to fore­stall global climate change, and they por­tend an end to the tradi­tional U.S. auto indus­try and the elimi­na­tion of nearly all the most pop­u­lar vehicle models America’s families need and demand.
    • Several states, including Ohio and Texas, as well as numer­ous industry organ­iza­tions, are chal­lenging the legality of the Biden admin­istra­tion’s Cali­fornia waiver order in the U.S. Court of Appeals for the D.C. Cir­cuit. Among other argu­ments, the chal­lenging states object to the waiver as a vio­la­tion of the con­sti­tu­tional prin­ciple of equal sov­er­eignty of the states. At a mini­mum, this prin­ciple requires that any deci­sion to give special treat­ment under fed­eral law to a single state alone—if ever allowed by the Con­sti­tu­tion—should be sup­ported by a clear show­ing that the treat­ment is war­ranted to address extra­ordinary local con­di­tions unique to that state. No such show­ing supports the Biden EPA’s Cali­fornia waiver deci­sion.

Con­gress decided the U.S. required uni­form fuel econ­omy and emis­sions stan­dards for new motor vehicles that achieve a balance among various interests of national importance. That choice was eminently sensible, especially given the eco­nomics of the auto industry, which drive the auto­makers to build their fleets to meet com­mon national stan­dards.

The question is whether those stan­dards will be estab­lished at the fed­eral level accord­ing to Con­gress’ direc­tives or by Cali­fornia bureau­crats in obe­di­ence to New­som’s radi­cal regu­la­tory agenda.

If left unchecked, the Cali­fornia waiver and CARB’s greenhouse gas and zero-emission vehicle man­dates—work­ing in close con­junc­tion with the rules issued by the Biden admin­istra­tion—will sweep away Con­gress’ con­sidered design for regu­lating the U.S. auto industry, with nega­tive con­se­quences for all Americans. This isn’t fed­eralism in action—it’s fed­eralism turned on its head.

The bottom line: It’s entirely con­sistent with a proper regard for fed­eralism and the rule of law to oppose vigorously the special waiver EPA has granted Cali­fornia and the over­reach­ing cli­mate man­dates CARB is pro­pound­ing under that waiver. Cali­fornia should not be allowed to push aside the policy judgments of Con­gress and impose its will on the rest of the country, especially at the cost of lives, jobs, the economy, and the law.

This piece originally appeared in The Daily Signal