Minnesota District Court Stays Challenge to Minnesota’s Vehicle Emissions Standards

Originally published in the December 2023 issue of Bench & Bar of Minnesota Environmental Law Update, Minnesota State Bar Association.

On August 24, 2023, a District of Minnesota Court issued an opinion granting a portion of a motion to dismiss arising from a challenge to Minnesota’s vehicle emissions standards for greenhouse gases by staying the case pending resolution of a similar challenge before the D.C. Circuit. Clean Fuels Development Coalition v. Kessler, D. Minn. (Aug. 24, 2023) Slip Copy 2023, WL 5487498.

Plaintiffs, composed of the Clean Fuels Development Coalition, Minnesota Soybean Growers Association, ICM, Inc., Minnesota Service Station & Convenience Store Association, and National Association of Convenience Stores, challenged emissions rules instituted by the Minnesota Pollution Control Agency (MPCA) that govern greenhouse gas emissions for motor vehicles. Plaintiffs asserted that the MPCA’s rules were preempted by two federal statutes: (1) the Clean Air Act (CAA), which requires the Environmental Protection Agency (EPA) to set national vehicle emissions standards; and (2) the Energy Policy and Conservation Act of 1975 (ECPA), which directs the National Highway Traffic Safety Administration to set national fuel-economy standards.

Under the CAA, states are expressly preempted from creating their own emission standards. However, the state of California is allowed to apply for a waiver of preemption from the EPA because it had its own emissions program in place when Congress enacted the CAA. The CAA allows other states to adopt California’s standards as long as their standards are identical to California's and provide at minimum two years of lead time to automakers. This exception is often referred to as the “California Waiver.” Minnesota is one of 17 states to adopt some or all of California's emission standards for vehicles.

Similar to the CAA, the EPCA contains an express preemption provision, prohibiting any state from adopting or enforcing their own fuel economy standards. However, unlike the CAA, the EPCA does not provide an exception to its express preemption clause for California or states that adopt California's standards.

In December 2020, the MPCA published proposed rules which incorporated by reference California's low-emission vehicle (LEV) and zero-emission vehicle (ZEV) standards. These rules were adopted by the agency in July 2021 and are set to take effect on January 1, 2024, for vehicle model year 2025. Plaintiffs sued in March 2023, seeking to enjoin the enforcement of Minnesota's LEV and ZEV rules. Count I of their complaint alleged that the Minnesota rules are preempted by EPCA, and Count II alleged that the California Waiver is unconstitutional per the equal sovereignty doctrine, and as a result the Minnesota rules are preempted by the CAA.

In response to the two preemption arguments, the MPCA filed a motion to dismiss the complaint with the argument that the plaintiffs’ injuries were not traceable to the Minnesota rules, the injuries were not capable of redress by the district court, and the district court lacked jurisdiction over Count II because Section 307 of the CAA requires that challenges to final EPA actions be filed in a United States Court of Appeals. In the alternative, the defendants moved for the court to stay the case until a similar case before the D.C. Circuit was resolved.

The court agreed with the MPCA that a stay of proceedings was appropriate for a few reasons: (1) there are comparable constitutional issues and questions of law before the D.C. Circuit in Ohio v. EPA, No. 22-1081 (D.C. Cir. May 12, 2022) and there is potential for the decision from the D.C. Circuit to “narrow and simplify” the issues before the court in this case; (2) the stay of proceedings would conserve judicial resources because the issues would be more extensively briefed by the thirty-five states participating in Ohio v. EPA; (3) there would be little impact on the length of the case because it is in its early stages, discovery has not started, and a trial date has not been set; (4) any prejudice to Plaintiffs is minimal because the federal emissions standards, which also affect Plaintiffs, are similarly as stringent as the Minnesota rules at issue in this case, and (5) a temporary stay is unlikely to cause incremental injury to plaintiffs because automakers have already finalized their plans for their model year 2025 vehicles.