California Governor Issues Executive Order Requiring Transition to 100% Zero-Emission Vehicle Sales

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On September 23, 2020, California Governor Gavin Newsom issued Executive Order N-79-20 (the "Order"), setting new statewide goals for phasing out gasoline-powered cars and trucks in California. Under the Order, 100% of in-state sales of new passenger cars and trucks are to be zero-emission by 2035; 100% of in-state sales of medium- and heavy-duty trucks and busses are to be zero-emission by 2045, but only where feasible; and 100% of off-road vehicles and equipment sales are to be zero-emission by 2035 where feasible. The Governor also directed the California Air Resources Board ("CARB") and other state agencies to develop regulations or take other steps within existing authority to achieve these goals. The Order builds on a series of emission reduction legislation and executive orders in recent years intended to drastically reduce greenhouse gas ("GHG") emissions from sources within the state. For example, in 2016, Senate Bill 32 set a statewide target to reduce GHG emissions to 40% below 1990 levels by 2030. The 100 Percent Clean Energy Act of 2018 set a statewide target that all retail sales of electricity in California come from eligible renewable energy and zero-carbon resources by 2045. Executive Order B55-18, also issued in 2018, set a statewide target to achieve carbon neutrality no later than 2045.

CARB has not yet proposed any regulations to implement the Order. Although new programs are possible, CARB can be expected to rely upon, and expand, existing programs in its attempt to reach the new targets. For example, CARB currently is working on a new Advanced Clean Cars regulation to set GHG emission standards for vehicle model years after 2025, with a goal of meeting the state's 2045 carbon neutrality target. A draft regulation is expected in December 2021. Adopting new emission standards will require California to obtain a waiver from the U.S. Environmental Protection Agency under the federal Clean Air Act. The feasibility of this approach to meeting the targets thus will depend upon cooperation at the federal level.

CARB also might seek to strengthen the existing Low Carbon Fuel Standard to create further market pressure favoring electric and other low- or zero-emission vehicles. It also could build on its existing ZEV Action Plan, strengthen existing credit and incentive programs, create new ones, and adopt measures to promote development of charging stations or other zero-emission vehicle infrastructure. The Order directs CARB to partner with the Governor's Office of Business and Economic Development and other agencies to develop a Zero-Emissions Vehicle Market Development Strategy by January 31, 2021, which should be a preview of the likely strategies CARB and other agencies will adopt to meet the targets.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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