Small businesses take on the EPA
On May 18, at the United States Court of Appeals for the Ninth Circuit in San Francisco, a three-judge panel will hear oral arguments in an epic confrontation between 10 small California businesses and the federal Environmental Protection Agency. In 2013, the EPA approved a stringent and unnecessary California air emissions regulation, applicable to thousands of businesses ranging from small yard cleaning operations to mega manufacturing firms. By approving the regulation, the EPA violated the Clean Air Act. After years of litigation on procedural issues, the appellate court will finally address the substantive merits of the case. The EPA’s illegal action should be reversed.
The California Air Resources Board issued its regulation ostensibly to address air pollution. In the process, the board ignored the deep economic and social adverse effects of the rule, which affects tens of thousands of vehicles used in industries as diverse as construction, air travel, landscaping, logging, ski resorts and public agencies. It will impact a warehouse with one diesel forklift, a local landscaper with a dozen lawnmowers, a county that maintains rural roads, and large firms operating hundreds of loaders, graders, scrapers and rollers. Small companies do not have the cash or credit required to comply with the stringent emissions standards and will be forced out of business, while larger companies will take over market share, thereby decreasing competition and increasing prices for all sorts of goods and services.
States outside California will also suffer because California is the largest single marketplace in the nation, and out-of-state firms seeking to continue doing business in the state will be required to comply with the strict emissions limitations.
This case is the culmination of a long history of federal and state motor vehicle regulation. Congress enacted the federal Clean Air Act in 1967 as an experiment in cooperative federalism. By and large, that experiment has been successful in cleaning up our nation’s ambient air, and California’s air quality in particular has improved dramatically. But, as with many regulatory initiatives, cooperative federalism has become a victim of its own success.
California’s victimhood stems from the structure of the Clean Air Act, coupled with the hubris of one of the state’s most powerful bureaucracies. In order to encourage the free flow of commerce, the federal EPA sets uniform national emissions standards for motor vehicles. California is the only state that is permitted to deviate from those standards if it has “compelling and extraordinary conditions” that require air emissions standards differing from the federal ones. Congress gave California that flexibility because of the vast numbers of cars and trucks in the state coupled with the state’s unique topography and geography that captures air pollutants in certain localized areas, and the EPA has approved dozens of California motor-vehicle emissions standards that are substantially more stringent than the EPA’s.
The problem is that the state’s Air Resources Board, in pursuing its hard-line agenda, has tightened emissions limitations on motor vehicles to such a draconian level that it is almost impossible for all but the largest and most well-heeled companies to comply. The EPA is complicit in this market-twisting process because it uniformly rubber stamps proposals for motor-vehicle emissions controls proffered by the state air board, regardless of need or cost. That violates EPA’s duty under the Clean Air Act to screen California standards before approving them. The broader public policy issue is whether the EPA and the California Air Resources Board should require air emissions standards that are so stringent that only the most well-heeled companies can remain in business, to the detriment of us all.
The petitioners in the case, Dalton Trucking vs. EPA, have joined together to say, “Enough is enough.” By any yardstick, the tight limitations in these regulations are not required to meet “compelling and extraordinary conditions.” This case sends a message to the EPA: You must comply with the law, just like everyone else.