A trio of lawsuits are currently pending, one at each level of the federal court system, challenging, respectively, various lawsuits filed by the states of California, Connecticut, Minnesota, New Jersey, and Rhode Island; an EPA regulation broadly aimed at regulating truck emissions; and a similar California regulation. The lawsuits illustrate a continuation in the trend of states weighing in on energy policies and priorities, an uptick in the number of states willing to devote significant resources to these efforts, and an uncommon approach to impacting energy policies.
Each case, described briefly below, highlights the continued willingness of states to expend resources in an attempt to impact energy policy and protect the industries and priorities of their respective state economies. The outcome of each case could have a significant impact on the energy industry and related policies.
On May 22, 2024, the States of Alabama, Alaska, Florida, Georgia, Idaho, Iowa, Kansas, Mississippi, Missouri, Montana, Nebraska, New Hampshire, North Dakota, Oklahoma, South Carolina, South Dakota, Utah, West Virginia, and Wyoming filed a motion for leave to file bill of complaint. The motion seeks leave to challenge lawsuits filed by California, Connecticut, Minnesota, New Jersey, and Rhode Island (the defendant states) against various energy companies.
Specifically, the plaintiff states argue that the lawsuits filed by the defendant states in their respective state courts should be decided under federal law, not state. The plaintiff states assert three avenues for obtaining injunctive relief: (1) horizontal separation of powers, (2) exclusive federal authority over interstate emissions, and (3) the Commerce Clause. Based on each of the three theories, the plaintiff states seek the same relief, an injunction “prohibiting Defendant States from seeking to impose liability or obtain equitable relief premised on either emissions by or in Plaintiff States or the promotion, use, and/or sale of traditional energy products in or to Plaintiff States.”
In the first count, the plaintiff states argue that the defendant states’ attempts to use their own laws “to regulate activity or extract liability for emissions by or wholly within Plaintiff States” violates the separation of powers and exceeds the authority of the defendant states. In their second count, the plaintiff states argue that the Supremacy Clause prohibits the defendant states from having authority to apply their own laws to regulate interstate gas emissions. The third count likewise seeks the same relief based on the defendant states’ alleged discrimination against “interstate commerce in favor of local interests by seeking to regulate energy sources favored and promoted by Plaintiff States.”
The plaintiff states also seek declaratory relief “declaring that attempts by Defendant States to impose liability or obtain equitable relief from energy companies for emissions by or in Plaintiff States (including by targeting protected speech) is unconstitutional and beyond the competence of Defendants to prosecute.”
It is important to note that a motion for leave to file bill of complaint is not a frequently used tool. Over the last 30 years, fewer than 50 such motions have been filed. Since 2020, only a handful of these challenges have been filed, and none have involved challenges to lawsuits filed by another state, instead challenging legislation, regulations, permits, or orders either between states or groups of states or between state(s) and the US government. The defendant states filed their opposition on August 21 and the motion remains pending.
Also on May 22, the States of Nebraska, Alabama, Alaska, Arkansas, Florida, Georgia, Idaho, Indiana, Iowa, Kansas, Kentucky, Louisiana, Mississippi, Missouri, Montana, Oklahoma, South Carolina, South Dakota, Tennessee, Texas, Utah, Virginia, West Virginia, and Wyoming filed a petition challenging the US Environmental Protection Agency’s (EPA’s) Greenhouse Gas Emissions Standards for Heavy-Duty Vehicles—Phase 3 in the US Court of Appeals for the District of Columbia Circuit.
The petitioner states’ brief is due on October 16, 2024, and as such they have not yet fully defined their claims. However, the petitioner states generally ask that the court vacate the rule and declare it unlawful, arguing that the rule exceeds the EPA’s authority and “otherwise is arbitrary, capricious, an abuse of discretion, and not in accordance with law.”
A third lawsuit has been filed by the States of Nebraska, Alabama, Arkansas, Georgia, Idaho, Indiana, Iowa, Kansas, Louisiana, Missouri, Montana, Oklahoma, South Carolina, Utah, West Virginia, and Wyoming, along with the Arizona State Legislature and Nebraska Trucking Association, challenging California’s Advanced Clean Fleets regulation.
This regulation requires some heavy-duty-vehicle fleets to phase in zero-emission vehicles in the state of California and, by model year 2036, for manufacturers to be required to sell only zero-emission vehicles in California. The plaintiffs claim that the Advanced Clean Fleets regulation “masquerades as a rule for in-state conduct[, b]ut by leveraging California’s large population and access to international ports on the West Coast, Advanced Clean Fleets exports its ‘in-state’ ban nationwide, creating harms which are certain to reach Plaintiffs’ States.”
California’s Advanced Clean Fleets regulation regulates high-priority fleets that are defined as “any entity that owns or operates any number of trucks in California and (a) generates $50 million in total gross annual revenues or (b) owns or operates 50 or more vehicles in its fleet.” The policy applies to the fleet if even one truck drives in California in any given year. The regulation has two schedules that phase in a transition to a 100% ban on internal-combustion trucks.
The plaintiffs argue that the effects of California’s Advanced Clean Fleets regulation span nationwide as California “serves as a hub for interstate and international trade.” The plaintiffs cite a variety of harms that they will encounter due to the Advanced Clean Fleets regulation, including harm to the tax revenue that states receive from the sale of diesel, gasoline, and ethanol fuel; an increase in staff required to issue overweight truck permits; damage to roads caused by the increased weight of battery-electric trucks; increased demand for electricity; and harm to quasi-sovereign interests.
Based on these allegations, the plaintiffs assert three causes of action: (1) preemption under the Clean Air Act; (2) preemption under the Federal Aviation Administration Authorization Act of 1994; and (3) violation of the Dormant Commerce Clause. This case is still in the early stages of litigation. California has filed a motion to dismiss, and the plaintiffs’ response is due September 11, 2024.
These cases will be crucial to track as each has the potential for far-reaching impact. In particular, it will be important to follow the development of the challenge to California’s Advanced Clean Fleets regulation in tandem with the challenge to the EPA’s emissions standards for heavy-duty vehicles, and the pending motion for leave to file bill of complaint could have both significant procedural and substantive impacts.