Auto Dealers Challenge Rulemaking for Vehicle Emissions Standards

CADA claims the state skipped economic impact studies, rushed rulemaking

Colorado auto dealers are suing the state, saying it didn’t follow rulemaking processes when it set its vehicle emissions standards last year. 

The Colorado Air Quality Control Commission within the Department of Public Health and Environment put the new emissions standards in place in November with an 8-0 vote. The commission was acting under an executive order from Gov. John Hickenlooper to adopt California’s emission standards with the goal of lowering greenhouse gas emissions and helping correct the Front Range’s poor air quality. 

The Colorado Automobile Dealers Association is arguing to the Denver District Court that the governor lacked the authority to order the commission to set the regulations and that the commission didn’t conduct a proper rulemaking process in carrying out that order. CADA claims that the rulemaking harms its auto dealer members because of the expected increase in the cost of new vehicles.

The commission put the regulations in place according to a June executive order from Hickenlooper. The standards apply to new light-duty and medium-duty vehicles sold in Colorado beginning in the 2022 model year. According to the commission, the regulations are estimated to reduce carbon dioxide emissions by nearly 2 million tons annually by 2030.

In adopting the regulations, Colorado joined 12 other states and the District of Columbia. 

Paul Seby, a shareholder at Greenberg Traurig and attorney for CADA, said Colorado should have given more consideration, though, in the decision of whether to adopt California’s standards.

“We’re a heavy agriculture state and a heavy rural state, and vehicle needs and performance vary in Colorado because of the nature of our residents. Vehicles behave differently given the altitude and climate,” Seby said. “We want to think through those things and make informed decisions.”

Despite acknowledging the differences between California and Colorado in vehicle demands, CADA’s complaint does point out that the only choices in emissions standards are either those of the federal government or of California. California is the only state to have received a waiver exempting it from federal Clean Air Act regulations. Other states wishing to break from federal regulations have no choice other than adopting California’s standard wholesale.

In its announcement of the regulations in November, the commission said a proposed rollback of federal emission standards would make it harder for Colorado to meet its clean air goals, which drove the state to adopt California’s standards. The California standards were described as a “backstop” in the event of a rollback.

“Under CAA, there is no ‘third vehicle’ path for the regulation of new motor vehicle emissions,” the lawsuit states. “States can either adopt the federal standards or the California waiver standard.”

Seby said the commission, however, still needed to follow state laws regarding the rulemaking process, which he said would have been informational about whether to follow California’s lead. According to the complaint, the commission used a shortened rulemaking process and did not conduct vehicle emission control studies focused on the social and economic impacts and deliberated for only one hour after hearing public comment in November. 

The Air Pollution Control commission had conducted an economic impact study and presented the results at a November stakeholder meeting. According to that commission, vehicle costs would rise, but consumers would also see savings by having better gas mileage over the life of the vehicle. The auto dealers claim the state had a foregone conclusion, though.

CADA said in the complaint that none of Colorado’s neighbor states have adopted California’s standards, which the association said means dealers will have to get inventory from coastal states thousands of miles away while consumers will seek cheaper vehicles in border states.

The Colorado Department of Public Health and Environment, which houses the defendant Air Quality Control Commission, was unable to comment on the pending litigation. 

Seby said he believes the case filed against CADA is significant also because of the echoes of Hickenlooper’s executive order in another one issued by Gov. Jared Polis earlier this month. On Jan. 19, Polis issued an executive order directing the Department of Public Health and Environment to develop a rule to establish a zero emission program and propose that rule no later than May.

According to Seby, the pending litigation “will have huge consequences for [the low emission vehicle standard] but also determine whether the [zero emission vehicle] program is dead in the water.” He indicated he believed that process will run into the same issues as the low emission vehicle standards — and one can assume would also draw a similar lawsuit. Seby said he believes any rulemaking process conducted before May would indicate the agency will “just go through the motions” in its rulemaking. 

— Tony Flesor

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