"Truck manufacturers assert 'untenable predicament' in court case against California"
In a significant legal move, Daimler Truck (OTC: DTRUY), PACCAR (NASDAQ: PCAR), Volvo Group North America, International Motors (owned by Volkswagen), and the Engine Manufacturers Association have filed a lawsuit against the California Air Resources Board (CARB) to halt the enforcement of the California Advanced Clean Trucks (ACT) mandate. The lawsuit, filed in the U.S. District Court for the Eastern District of California on August 8, 2023, argues that California is violating the preemption provisions of the Clean Air Act by creating stricter standards than in the act without a waiver.
The manufacturers claim that recent federal actions, including the revocation of waivers granted by the Environmental Protection Agency to CARB by the Trump administration, have made it impossible for them to comply with the ACT. This puts them in an "impossible position," as they risk penalties and exclusion from the California market if they do not comply with CARB, but also face legal risks if they do.
The Clean Truck Partnership (CTP), signed by the Engine Manufacturers Association in 2023, aimed to give manufacturers more leeway to meet the ACT requirements in exchange for greater alignment between California and EPA rules. However, the manufacturers contend that the CTP is now unlawful due to federal preemption.
The lawsuit also targets a provision in the CTP that prohibits challenges to steps CARB might have taken in connection with the partnership. The manufacturers are seeking court injunctions that would bar California from enforcing the ACT, the Advanced Clean Fleets rule, and other regulations that the state had approved and sought a waiver from the EPA.
The manufacturers are not alone in their stance. The U.S. Department of Justice (DOJ) has intervened in support of the truck manufacturers’ position by filing motions to join the lawsuit. DOJ asserts that under the Clean Air Act, California’s vehicle emissions regulations require EPA waivers, which were revoked, thus CARB's enforcement of these standards through the CTP is unlawful.
California insists that the federal action to overturn the waivers is illegal and that the engine manufacturers must abide by the rules of the CTP. California has filed a lawsuit against the federal action.
The Advanced Clean Fleets rule, which included a buy-side requirement for zero emission vehicles (ZEVs), has been withdrawn by CARB. The manufacturers are seeking clarity and certainty about where their products need to be certified for sale and by which regulatory authority.
The legal charges in the lawsuit could have far-reaching implications for the trucking industry, as the manufacturers are essentially challenging CARB’s authority to impose emissions standards. The current situation has led to a pause in the enforcement of the ACT, potentially affecting the sales of ZEVs in California.
Meanwhile, the Federal Trade Commission (FTC) has resolved antitrust concerns related to the CTP agreement, noting that the manufacturers have since disclaimed the CTP agreement following the federal legal and regulatory developments.
The road to the current situation began when the Engine Manufacturers Association signed the Clean Truck Partnership (CTP) in 2023, which gave manufacturers more leeway to meet the ACT requirements in exchange for greater alignment between California and EPA rules. However, the manufacturers now argue that this alignment is no longer possible due to federal actions.
As the lawsuit progresses, it will be interesting to see how the courts rule on the matter and whether the manufacturers will be able to continue selling their products in California without facing legal risks. Stay tuned for updates on this developing story.
[1] Daimler Truck North America, PACCAR, Volvo Group North America, and International Motors file lawsuit against California Air Resources Board [2] Truck manufacturers sue California over clean air rules [3] Truck makers sue California to halt clean truck mandate [4] DOJ joins truck manufacturers' lawsuit against California [5] FTC clears truck manufacturers' move to withdraw from Clean Truck Partnership
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