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United States District Court for the District of Vermont Case 2:05-cv-00302-wks Document 533 Filed 09/12/2007 Page 1 of 244 UNITED STATES DISTRICT COURT FOR THE DISTRICT OF VERMONT GREEN MOUNTAIN CHRYSLER PLYMOUTH DODGE : JEEP; GREEN MOUNTAIN FORD MERCURY; : JOE TORNABENE’S GMC; ALLIANCE OF : AUTOMOBILE MANUFACTURERS; : DAIMLERCHRYSLER CORPORATION; and : GENERAL MOTORS CORPORATION, : : Plaintiffs, : : v. : Case No. 2:05-cv-302 : GEORGE CROMBIE, Secretary of the Vermont: Agency of Natural Resources; JEFFREY : WENNBERG, Commissioner of the Vermont : Department of Environmental : Conservation; and RICHARD VALENTINETTI, : Director of the Air Pollution Control : Division of the Vermont Department of : Environmental Conservation, : : Defendants, : : CONSERVATION LAW FOUNDATION; SIERRA : CLUB; NATURAL RESOURCES DEFENSE COUNCIL;: ENVIRONMENTAL DEFENSE, VERMONT PUBLIC : INTEREST RESEARCH GROUP; STATE OF : NEW YORK; and DENISE M. SHEEHAN, in her : official capacity as Commissioner of : Environmental Conservation of the State : of New York, : : Defendants-Intervenors. : consolidated with THE ASSOCIATION OF INTERNATIONAL : AUTOMOBILE MANUFACTURERS, : : Plaintiff, : : v. : Case No. 2:05–cv-304 : GEORGE CROMBIE, in his official capacity: as Secretary of the Vermont Agency of : Natural Resources; JEFFREY WENNBERG, in : his official capacity as Commissioner of: Case 2:05-cv-00302-wks Document 533 Filed 09/12/2007 Page 2 of 244 the Vermont Department of Environmental : Conservation; RICHARD A. VALENTINETTI, : in his official capacity as Director of : the Vermont Air Pollution Control : Division, : : Defendants, : : CONSERVATION LAW FOUNDATION; SIERRA : CLUB; NATURAL RESOURCES DEFENSE COUNCIL;: ENVIRONMENTAL DEFENSE; VERMONT PUBLIC : INTEREST RESEARCH GROUP; STATE OF : NEW YORK; and DENISE M. SHEEHAN, in her : official capacity as Commissioner of : Environmental Conservation of the State : of New York, : : Defendants-Intervenors. : OPINION and ORDER TABLE OF CONTENTS Page INTRODUCTION 1 BACKGROUND 6 I. Clean Air Act 6 II. Environmental Policy and Conservation Act 12 III. Massachusetts v. EPA 17 EVIDENTIARY ISSUES 24 I. Daubert Challenges 24 A. James Hansen, Ph.D. 29 1. Hansen’s Qualifications 29 2. Hansen’s Testimony 31 3. Reliability of Hansen’s Testimony 38 4. Relevance of Hansen’s Testimony 47 B. Admissibility of Testimony of Dr. Barrett N. Rock 48 1. Dr. Rock’s Qualifications 48 2. Dr. Rock’s Testimony 49 3. Reliability of Dr. Rock’s Testimony 51 4. Relevance of Dr. Rock’s Testimony 59 i Case 2:05-cv-00302-wks Document 533 Filed 09/12/2007 Page 3 of 244 C. Admissibility of Testimony of K.G. Duleep 59 1. Duleep’s Qualifications 60 2. Duleep’s Testimony 64 a. Methodology 64 b. Validation of Results With Lumped Parameter Model 67 c. Duleep’s Cost Analysis 69 3. Evaluating the Reliability of Duleep’s Testimony 69 4. Relevance of Duleep’s Testimony 78 II. Discovery Violation 78 FINDINGS AND CONCLUSIONS 86 I. The State Regulations 86 A. Implementation of California’s AB 1493 86 B. Adoption of Vermont’s GHG Emissions Standards 90 C. The Global Warming Connection 92 D. The GHG Regulation Provisions 98 II. Preemption 102 A. The Preemption Doctrines Do Not Apply 104 B. Express Preemption 120 1. De Facto Fuel Economy Standard 122 2. “Related to” Fuel Economy Standard 127 C. Field Preemption 130 D. Conflict Preemption 132 1. Frustration of Congressional Intent to Maintain Nationwide Fuel Economy Standards 134 2. Technological Feasibility and Economic Practicability, Including Restricting Consumer Choice, Reducing Employment and Decreasing Traffic Safety 135 a. History of Technology-forcing Regulations 137 b. Austin’s Testimony 140 c. Manufacturers’ Testimony 146 d. Duleep’s Testimony 152 e. Conclusions 155 (1) Austin’s baseline assumptions and methodology 155 (2) Alternative fuels 166 ii Case 2:05-cv-00302-wks Document 533 Filed 09/12/2007 Page 4 of 244 (a) Diesel 169 (b) Ethanol 175 (c) Hydrogen 182 (d) Plug-in hybrids 184 (3) Other technologies 185 (a) GDI/turbo 187 (b) Camless valve actuation 190 (c) Rolling resistance improvements 191 (d) Reductions in aerodynamic drag 192 (e) Continuously variable transmission (“CVT”) 193 (f) Electronic power steering 195 (g) A/C credits 195 (h) Credit trading 196 (i) Efforts to promote technology generally 198 (4) Consumer choice 203 (5) Product withdrawal and job loss 207 (6) Safety 216 II. Foreign Policy Preemption 222 A. National Foreign Policy on GHG Emissions 223 B. Zschernig Preemption 228 C. Garamendi Preemption 230 CONCLUSION 234 ORDER 240 iii Case 2:05-cv-00302-wks Document 533 Filed 09/12/2007 Page 5 of 244 Introduction In these consolidated cases, Plaintiffs, a collection of new motor vehicle dealers, automobile manufacturers and associations of automobile manufacturers, seek declaratory and injunctive relief from regulations adopted by Vermont in the fall of 2005 that establish greenhouse gas (“GHG”) emissions standards for new automobiles. The Plaintiffs in Docket No. 2:05-cv-3021 brought six claims for declaratory and injunctive relief: express and implied preemption under the Energy Policy and Conservation Act of 1975, 49 U.S.C. §§ 32901-32919 (“EPCA”) (Count I); preemption under the Clean Air Act as amended, 42 U.S.C. §§ 7401-7671q (“CAA”) (Count II); violation of the CAA (Count III); foreign policy preemption (Count IV); violation of the dormant Commerce Clause (Count V); and violation of the Sherman Act (Count VI). The Plaintiff2 in Docket No. 2:05-cv-304 alleged preemption under EPCA (Count I) and under the CAA (Count II).3 On May 3, 2006, 1 Green Mountain Chrysler Plymouth Dodge Jeep, Green Mountain Ford Mercury, Joe Tornabene’s GMC, Alliance of Automobile Manufacturers, Daimler Chyrsler Corporation, and General Motors Corporation. 2 Association of International Automobile Manufacturers. 3 Some of the plaintiffs in this lawsuit have filed a similar suit in the Eastern District of California challenging California’s regulations and the state law directing the California Air Resources Board to implement the regulations. See Central Valley Chrysler-Jeep, Inc. v. Witherspoon, No. 1:04-cv- 06663-REC-LJO (E.D. Cal. filed Dec. 7, 2004) (“Central Valley Chrysler”). Similar plaintiffs have also filed similar lawsuits in Rhode Island. See Ass’n of Int’l Automobile Mfrs. v. Sullivan, No. 06-cv-69 (D.R.I. filed Feb. 13, 2006); Lincoln Dodge, Inc. v. Sullivan, No. 06-cv-70 (D.R.I. filed Feb. 13, Case 2:05-cv-00302-wks Document 533 Filed 09/12/2007 Page 6 of 244 five non-profit environmental advocacy groups4 were permitted to intervene as defendants in the cases, and on July 27, 2006 the State of New York was also permitted to intervene as a defendant. Prior to trial, Defendants twice sought to stay these cases, pending resolution of the related case filed in California, Central Valley Chrysler-Jeep, Inc. v. Witherspoon, No. 1:04-cv- 06663-REC-LJO (E.D. Cal. filed Dec. 7, 2004), and the Supreme Court’s review of Massachusetts v. EPA, 415 F.3d 50 (D.C. Cir. 2005), rev’d 127 S. Ct. 1438 (2007). The requests were denied, on May 3, 2006, and February 15, 2007. Defendants also sought to obtain dismissal of these cases for lack of ripeness via motions to dismiss for lack of subject matter jurisdiction (Doc. 48) and judgment on the pleadings (Doc. 162), because their regulation had not received a waiver from EPA, a necessary antecedent to enforcement. The Court concluded that the cases were constitutionally and prudentially ripe, given that the Vermont regulation had been formally enacted, those affected by the regulation had to begin now to comply with it, the constitutional challenges were currently as concrete and fit for decision as they would be in the future, and Plaintiffs’ demonstration of hardship tipped the balance in favor of 2006). 4 Conservation Law Foundation, Sierra Club, Natural Resources Defense Council, Environmental Defense, and Vermont Public Interest Research Group. 2 Case 2:05-cv-00302-wks Document 533 Filed 09/12/2007 Page 7 of 244 exercising jurisdiction on prudential grounds. Mem. Op. & Order 17-19 (Doc. 165). Defendants moved for judgment on the pleadings on all counts of both complaints, and the ‘304 plaintiff moved for partial summary judgment on the ground that the regulations are preempted by EPCA. Although Defendants initially agreed with the ‘304 plaintiff that the case was appropriate for summary adjudication (although differing on the appropriate outcome), at oral argument they took the position, shared by the ‘302 plaintiffs, that significant material facts remained in dispute. Accordingly, the Court deferred ruling on the motions and allowed the case to proceed to trial. The ‘302 plaintiffs dismissed their Counts III, V and VI, and the consolidated cases proceeded to trial on the remaining claims. The trial was conducted over sixteen days in April and May, 2007. This opinion constitutes the Court’s findings of fact and conclusions of law pursuant to Rule 52(a) of the Federal Rules of Civil Procedure. Presented as a challenge to the validity of a state statute on preemption grounds, this case involves the degree of interplay and overlap between two federal statutes, the Clean Air Act, 42 U.S.C. §§ 7401-7671q, and the Energy Policy and Conservation Act, 49 U.S.C. §§ 32901-32919. Section 202 of the CAA requires the Environmental Protection Agency (“EPA”) to establish standards for the control of any air pollutant emitted from new motor 3 Case 2:05-cv-00302-wks Document 533 Filed 09/12/2007 Page 8 of 244 vehicles or new motor vehicle engines which in its judgment causes or contributes to air pollution that may endanger public health or welfare. 42 U.S.C. § 7521(a)(1). Section 209(a) preempts a state from adopting its own motor vehicle emission control standards, while Section 209(b) requires EPA to waive preemption for a California-adopted standard that meets certain conditions. 42 U.S.C. § 7543(a), (b). Other states may adopt a California standard for which a waiver has been granted, as long as the states adopt the standard at least two years before the commencement of the model year.
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