Lincoln-Dodge, Inc. v. Sullivan

Page 224

588 F.Supp.2d 224

LINCOLN-DODGE, INC.; Smithfield Chrysler Jeep, Inc.; Simon Chevrolet-Buick, Ltd.; Paul Masse Chevrolet, Inc.; Paul Masse Pontiac-Cadillac-GMC, Inc.; Deluxe Auto Sales, Inc.; Tasca Automotive Group, Inc.; Hurd Chevrolet, Inc.; Hurd Buick-Pontiac-GMC Truck, Inc.; Alliance of Automobile Manufacturers; Daimlerchrysler Corporation; and General Motors Corporation, Plaintiffs, v. W. Michael SULLIVAN, in his official capacity as Director of the Rhode Island Department of Environmental Management, Defendant.

The Association of International Automobile Manufacturers, Plaintiff, v. W. Michael Sullivan, in his Official Capacity as Director of the Rhode Island Department of Environmental Management, Defendant.

No. 06-70T.

No. 06-69T.

United States District Court, D. Rhode Island.

November 21, 2008.

Charles H. Haake, Raymond B. Ludwiszewski, Gibson, Dunn & Crutcher, LLP, Washington, DC, Joseph V. Cavanagh, Jr., Kristin Rodgers, Mary C. Dunn, Blish & Cavanagh, LLP, Providence, RI, for The Association of International Automobile Manufacturers.

Andrew B. Clubok, Stuart C. Drake, Kirkland & Ellis, LLP Washington, DC, for Alliance of Automobile Manufacturers; DiamlerChrysler Corporation; General Motors Corporation.

Patricia K. Rocha, Adler, Pollock & Sheehan, Providence, RI, for Alliance of Automobile Manufacturers; Diamler-Chrysler Corporation; General Motors Corporation; Deluxe Auto Sales, Inc,; Hurd Buick Pontiac-GMC Truck, Inc.; Hurd Chevrolet, Inc.; Lincoln Dodge, Inc.; Paul Masse Chevrolet, Inc.; Paul Masse Pontiac-Cadillac-GMC, Inc.; Simon Chevrolet-Buick, Ltd.; Smithfield Chrysler

Jeep, Inc.; Tasca Automotive Group, Inc.; The New Bay Buick, Inc.

Tricia K. Jedele, Rhode Island Department of Attorney General, Providence, RI, for W. Michael Sullivan, in his official capacity as Director of the Rhode Island Department of Environmental Management.

Bradford W. Kuster, Cynthia J. Giles, David J. Bookbinder, Stephen J. Hinchman, Conservation Law Foundation, Providence, RI, for Conservation Law Foundation; Environmental Defense; National Resources Defense Council; Sierra Club.

MEMORANDUM AND ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS' MOTION FOR JUDGMENT ON THE PLEADINGS

ERNEST C. TORRES, Senior District Judge.

Two automobile manufacturers; two manufacturers' associations; and a number of Rhode Island automobile dealers brought these consolidated actions for declaratory judgment against the Rhode Island Department of Environmental Management ("RIDEM")¹ seeking a declaration that Rhode Island Air Pollution Control Regulation 37 ("Regulation 37" or the "Rhode Island regulation"), which sets greenhouse gas emissions standards for new automobiles, is invalid because both it and the California regulation (the "CARB Regulation") on which it is modeled have been preempted by the Energy Policy and Conservation Act of 1975, ("EPCA"), 49 U.S.C. §§ 32901-32919, and the Federal Clean Air Act,("CAA"), 42 U.S.C. §§ 7401-7671(q), as amended in 1990.

RIDEM has moved for judgment on the pleadings contending that the plaintiffs' claims are barred by the doctrine of issue preclusion, also known as collateral estoppel, because the preemption issues raised were decided in previous cases brought by the plaintiff manufacturers and associations in United States District Courts for the Districts of Vermont and California.

For the reasons hereinafter stated, the defendants' motion for judgment on the pleadings is granted with respect to the manufacturers and associations but is denied with respect to the dealers.

Background

The Clean Air Act

The CAA requires the Administrator of the Environmental Protection Agency ("EPA") to adopt regulations establishing standards applicable to the emission of air pollutants from new motor vehicles. 42 U.S.C. § 7521(a)(1). The CAA expressly preempts the adoption or enforcement of different standards by any state, 42 U.S.C. § 7543(a), except that California is permitted to promulgate more stringent standards if it, first, obtains a waiver from EPA. 42 U.S.C. § 7543(b)(1). The CAA also provides that in the event that California obtains such a waiver, other states may adopt regulations identical to California's. 42 U.S.C. § 7507.

The Energy Policy and Conservation Act ("EPCA")

EPCA, 49 U.S.C. §§ 32901-32919, establishes Corporate Average Fuel Economy ("CAFE") standards that require a manufacturer's fleet of new motor vehicles to average, at least, 27.5 miles per gallon. 49 U.S.C. § 32902(b). In December 2007, Congress passed the Energy Independence and Security Act, Pub.L. 110-140, 121 Stat. 1492 (2007), which increases the CAFE mileage requirements beginning with the 2011 model year.

Like the CAA, EPCA contains a preemption provision that prohibits states from "adopt[ing] or enforce[ing] a law or regulation related to fuel economy standards" for new motor vehicles. 49 U.S.C. § 32919(a). Unlike the CAA, EPCA does not contain a waiver provision.

California's Waiver Application

In December 2005, California applied for a CAA waiver with respect to the CARB Regulation which establishes more stringent standards for emissions of "greenhouse gases" that are defined to include carbon dioxide, methane, nitrous oxide and hydro fluorocarbons. Cal.Code Regs. tit. 13 § 1961.1. The CARB Regulation provided that it would take effect beginning with the 2009 model year.

Before EPA issued a decision with respect to California's waiver application, Rhode Island and several other states promulgated regulations that were virtually identical to the CARB Regulation. RDEM concedes that it cannot enforce the Rhode Island Regulation unless California's waiver application is granted.

After the Rhode Island Regulation was promulgated, EPA denied California's waiver application. California's petition for review of the denial is pending before the Court of Appeals for the D.C. Circuit. State of California v. EPA, No. 08-1178 (D.C.Cir. September Term 2008).

The Previous Decisions

Before this action was commenced, the plaintiff manufacturers and the plaintiff associations, together with a number of automobile dealers located in California and Vermont respectively, brought similar lawsuits in the United States District Courts for the Eastern District of California and the District of Vermont (the "previous cases"). The plaintiffs in those cases alleged that California's CARB Regulation and a Vermont regulation modeled on it were preempted by EPCA and the CAA.

1. The Vermont Decision

The Vermont case was decided first. After a sixteen day bench trial, the Court issued a written decision rejecting the plaintiffs' EPCA preemption claim for several reasons. Green Mountain Chrysler Plymouth Dodge Jeep, et al. v. Crombie, 508 F.Supp.2d 295 (D.Vt.2007).

First, the Court held that a regulation promulgated pursuant to a waiver specifically authorized by federal law would not be a state law subject to EPCA preemption. Green Mountain, 508 F.Supp.2d at 343-350.

The Green Mountain Court also held that, even if the CARB regulation were treated as a state law, it would not be preempted by EPCA because greenhouse gas emissions standards do not "relate to" fuel economy standards or otherwise conflict with the purposes and objectives of EPCA. Id. at 350-355, 398. That holding was based on findings that greenhouse gas emissions can be reduced without increasing vehicle mileage; that such reductions were technologically feasible; and that any effect that reductions might have on fuel economy would be only incidental.

With respect to CAA preemption, the Vermont Court found that the statute did not prohibit mere adoption of the CARB standards; and that enforcement was a moot question because the standards could not be enforced unless California obtained a waiver. Id. at 343 n. 50.

Accordingly, judgment was entered against the plaintiff manufacturers, the plaintiff associations, and the Vermont dealers who joined in that action. An appeal from that judgment is pending before the Second Circuit. Green Mountain Chrysler Plymouth Dodge Jeep v. Crombie, Nos. 07-4342 and 07-4360 (D. Vt. filed Oct. 5, 2007)

2. The California Decision

After the Vermont case was decided, the District Court for the Eastern District of California entered summary judgment against the plaintiff manufacturers, the plaintiff associations and the California dealers who joined in that action. Central Valley Chrysler-Jeep, Inc. et al. v. Goldstene, 529 F.Supp.2d 1151 (E.D.Cal.2007). The Court held that EPCA did not preempt the CARB Regulation because the undisputed facts established that at least partial compliance could be achieved in ways that would not affect fuel economy standards and that any impact on fuel economy was only incidental and did not amount to de facto regulation of vehicle mileage requirements. Central Valley Chrysler-Jeep, 529 F.Supp.2d at 1176.

The California court also dismissed the CAA claim as moot. Central Valley Chrysler-Jeep, Inc. v. Witherspoon, 2007 WL 135688 (E.D.Cal. Jan.16, 2007). The California court rejected the plaintiffs' claim that mere adoption of the Regulation violated the CAA and, since it, previously, had enjoined enforcement of the CARB regulation until a waiver was obtained, the Court dismissed the CAA claim as moot. Central Valley Chrysler-Jeep v. Goldstene, 2008 WL 2600786 at *3-4 (E.D.Cal. June 24, 2008)

This Case

In this case, the plaintiffs claim that California's CARB Regulation and, by extension, the Rhode Island regulation that tracks it are preempted by EPCA and the CAA.² The defendants argue that these issues were raised and decided in the Vermont and California cases and that the doctrine of issue preclusion bars the plaintiffs from relitigating them.

Standard of Review

The standard for ruling on a Rule 12(c) motion for judgment on the pleadings is the same as the standard for ruling on a Rule 12(b)(6) motion to dismiss. Marrero-Gutierrez v. Molina, 491 F.3d 1, 5 (1st Cir.2007)....