Up In The Air: Challenges To California's Clean Air Act Preemption Waiver

Highlights

• Under the federal Clean Air Act (CAA), California holds a unique position that allows it to request waivers from the U.S. Environmental Protection Agency to enforce stricter vehicle emissions standards and influence national markets through CAA Section 177.
• Multiple challenges are ongoing regarding California's waivers, including U.S. Supreme Court cases and Congressional Review Act resolutions, creating uncertainty in the regulatory environment for manufacturers and fleet operators.
• With waivers under scrutiny, California may pursue alternative regulations, such as Indirect Source Review, along with voluntary agreements with manufacturers to continue the state's emissions reduction goals.

When it comes to regulating motor vehicle emissions, California has long been different. California was the first state in the nation to enact tailpipe emission standards and as result of its "pioneering" efforts in the space, it occupies a unique position under the Clean Air Act (CAA). This special role is currently raising legal and policy questions around states' rights, climate change, consumer choice and congressional practice.¹

Background

Title II of the CAA exclusively authorizes the federal government to regulate emissions from new motor vehicles and expressly preempts states from adopting or enforcing competing emissions regulations.² California is the lone exception – it can request that the U.S. Environmental Protection Agency (EPA) waive preemption,³ allowing the state to enforce more stringent standards than those of the EPA. The EPA must grant a waiver for the California standards unless the agency can make specific findings, including that California does not need its standards to "meet compelling and extraordinary conditions." This process is colloquially referred to as the "California waiver."⁴

Granting a California waiver has nationwide consequences. Regulatory requirements in California, the most populous state, can affect markets nationwide.⁵ And under CAA Section 177,⁶ once the EPA issues a waiver to California, other states can adopt the California standards as their own. To date, 17 states and Washington, D.C., have opted in to standards for light-duty vehicles and 10 have done so for heavy-duty vehicles.

Since the CAA was enacted, California has received more than 100 waivers and authorizations. In 2008, the EPA denied a California waiver, for the first (and only) time, because the regulation addressed greenhouse gas (GHG) emissions, which are a global concern, and the EPA reasoned that California did not have "compelling and extraordinary conditions."⁷ The denial was short-lived as the Obama Administration reversed course in 2009.⁸ Though the CAA does not have an express provision for withdrawal of a granted waiver, in 2019, the first Trump Administration EPA withdrew a waiver for Advanced Clean Cars (ACC) I (model year (MY) 2017-2025 light-duty vehicle emission standards) on similar ground to the 2008 denial. California challenged the withdrawal, but no final judicial decision was issued because President Joe Biden took office, and the EPA reissued the waiver.

Recent CAA Waiver Activities

Today, a broader set of California waivers is front and center. In January 2025, the EPA granted full or partial waivers or authorizations for six regulations. In that same month, the California Air Resources Board (CARB) withdrew waiver and authorization requests for other California rules.

What's Next?

Executive Action

Even if Congress does not act, it is likely that the EPA will pursue prior contentions that some or all of California's GHG waivers should be withdrawn. As part of its efforts under an executive order (EO) targeting climate programs, the Trump Administration may try to withdraw waivers previously granted or take other actions to challenge the validity of existing waivers. As with ACC I, any action withdrawing a waiver would likely be challenged and subject to a lengthy court review.

Congressional Actions

Members of Congress have taken a keen interest in California waivers, with some pursuing a fast-track legislative approach under the Congressional Review Act (CRA). The CRA allows Congress to review major rules of general applicability enacted by agencies within 60 days of that rule going into effect. If a majority of Congress agrees to a CRA resolution, the regulation is eliminated.

Though the Government Accountability Office (GAO) has issued opinions that the waivers are not subject to the CRA because they are not "rules" but rather adjudicatory orders – or, alternatively, rules of "particular applicability" that the CRA excludes from coverage – in February 2025 the EPA submitted the Notices of Decision for waivers for Advanced Clean Trucks (ACT) (zero-emission heavy-duty vehicle sales requirement), Omnibus and ACC II to GAO and Congress. The EPA did not reconcile the fact that the documents state that waivers are not rules under the CRA. In April 2025, members of the House and Senate introduced CRA resolutions to disapprove these waivers. Shortly after the resolutions were announced, the Senate parliamentarian issued a decision agreeing with the GAO that waivers are not "rules" under the CRA.

Some commentators and members of Congress have questioned the legal relevance of GAO determinations and contended that the unusual judicial "non-review" provision in the CRA would prohibit judicial review of Congress' actions under the CRA.¹¹ Others have disagreed, arguing that judicial review necessarily must be possible for determining whether an agency action is a "rule" and, thus, subject to the CRA in the first instance. Congressional action disapproving a California waiver under the CRA would no doubt provoke legal challenges, likely taking years to conclude.

Judicial Actions

Multiple lawsuits challenging the general validity of the waiver process are also proceeding through the courts. In December 2024, the U.S. Supreme Court granted certiorari in Diamond Alternative Energy v. EPA, a case challenging the Biden Administration EPA's regranting of the waiver for ACC I. The Court granted certiorari on the issue of standing and redressability, but not on the question of the lawfulness of the waiver process. Another set of petitions challenging the waiver for the ACT rule is being held in abeyance in the U.S. Court of Appeals for the District of Columbia Circuit, pending a final decision in Diamond Alternative Energy and associated cases. Despite the lack of review on the question of waiver validity in general, challenges to the waiver process are unlikely to slow and will be shaped by recent decisions on the major question doctrine and agency deference.

What Does This Mean for California and the Nation?

The uncertainty regarding the regulatory playing field and validity of previously granted waivers has created instability in the market. Numerous engine manufacturers have already taken steps to comply with regulations for which waivers were granted and that have already been adopted by more than a dozen Section 177 states. If waivers are withdrawn by the EPA or disallowed by Congress or the courts, private agreements such as the Clean Truck Partnership (CTP) and rulemakings for which EPA waivers are not required may continue to advance the emissions reduction objectives of California and other states.

Under the CTP, an agreement between CARB, the Truck and Engine Manufacturers Association (EMA), and other major truck manufacturers that represent over 90 percent of California's truck market, major manufacturers have already committed to meet California's vehicle standards regardless of whether they are in force and effect. Though manufacturers could pull out of the agreement, many have long-range plans for zero-emission vehicles (ZEVs) and likely similarly long-term supply chain agreements. At the same time, the withdrawal or disapproval of waiver may advantage the manufacturers of conventional vehicles in the marketplace who are not party to the CTP.

With the possibility of future waivers severely limited during the Trump Administration, California and other states may pursue regulations that do not require a CAA waiver, including further EOs or Indirect Source Review (ISR). The state has introduced legislation to expressly require CARB to regulate indirect sources of emissions including ports, rail yards, warehouses and even major roadways. Regional air districts have already adopted ISR rules to incentivize the electrification of local fleets. States may also pursue further voluntary agreements with regulated entities.

With many of the CAA waiver quarrels yet to be decided, uncertainty remains in the regulatory sphere – for manufacturers, truck fleets, CARB and California. Translating this uncertainty into opportunity will depend on carefully navigating this complex regulatory and litigation environment.

Footnotes

1. For other Holland & Knight reporting on California's clean air programs and Trump Administration EPA actions related to climate change, please see "The Impact of a Trump EPA on California's Mobile Source Rules" (Holland & Knight's Transportation Blog, Jan. 3, 2025), "President Trump Issues Executive Order Targeting State Climate Programs" (Holland & Knight alert, April 11, 2025) and "California Governor Bans Internal Combustion Engines, Effective 2035, to Combat Climate Change" (Holland & Knight alert, Sept. 24, 2020).

2. CAA Section 209(a), 42 U.S.C. Section 7543.

3. Section 209(b) provides waiver authority for "any State" that had adopted certain vehicle emission standards "prior to March 30, 1966." However, California is the only state that satisfies this criterion.

4. A related provision in CAA Section 209(e) allows for "authorizations" of rules that regulate off-road as opposed to on-road mobile sources, which are otherwise preempted by Section 209(e).

5. Cf. Nat'l Pork Producers Council v. Ross, 598 U.S. 356 (2023).

6. 42 U.S.C. Section 7507.

7. EPA: "California State Motor Vehicle Pollution Control Standards; Notice of Decision Denying a Waiver of Clean Air Act Preemption for California's 2009 and Subsequent Model Year Greenhouse Gas Emissions," 73 Fed. Reg. 12,156 (March 6, 2008).

8. 75 Fed. Reg. 32,744 (July 8, 2009).

9. CARB withdrew the portions of these rules that were not granted a waiver.

10. CARB withdrew its waiver request for the parts of ACF that require 100 percent zero-emission truck sales in 2036, the transition of drayage fleets to zero-emission vehicles and transition of "high-priority and federal fleets" to zero emissions. The state and local government fleet requirements of ACF remain in effect as no waiver is required to implement these provisions.

11. 5 U.S.C. Section 805 (stating that "no determination, finding, action or omission under [the CRA] shall be subject to judicial review").