The Course Ahead: Legal and Regulatory Updates for Emissions and Electric Vehicles in the Biden-Harris Administration

Morgan Lewis
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Morgan Lewis

Just over 100 days into the Biden-Harris administration, the course being charted by the government for automobile emissions and emerging automotive mobility technologies is becoming clearer. It includes retooling the current approach toward emissions regulations, including the Corporate Average Fuel Economy (CAFE) standards and the California Waiver, as well as revitalizing the federal government’s sustainability efforts to achieve or facilitate clean and zero-emission vehicles for federal, state, local, and tribal government fleets. But with new and existing legal and regulatory pitstops along the way, companies attempting to leverage these developments should consider the updates below before shifting into gear.

CLEARING THE AIR: TAILPIPE EMISSIONS REGULATIONS AND STANDARDS

Meaningful regulatory activity has occurred with respect to addressing automobile emissions over the last 10–15 years. But the prior administration oversaw a relaxing of the emissions targets and an effort to end California’s separate and leading role in this arena. It is anticipated that the Biden-Harris administration will actively seek to restore more aggressive CAFE standards and the California Waiver, both of which the administration has had in its headlights as early as President Joseph Biden’s first day in office.

Among one of many initial executive orders issued by the administration following the inauguration ceremony, President Biden signed Executive Order (EO) 13990, making it clear that through its efforts on the CAFE standards and the California Waiver, a material change in the approach toward regulations and emissions reductions as they relate to mobile sources in the automobile sector was on the way, along with encouragement and promotion of the use of electric and zero-emissions vehicles.

EO 13990 directed federal agencies to review the rollback of the California Waiver, a right granted to the state by the Clean Air Act allowing it to seek a waiver of the preemption that prohibits states from enacting emission standards for new motor vehicles. California will likely continue to push on the technology forcing and emissions reducing efforts it has undertaken in the last 75 years, and the current administration will seek to reverse the last administration's efforts that relaxed certain standards and prevented California from driving a more aggressive agenda. Currently negotiations are underway with US automakers to try and reach a deal that would impose stricter tailpipe emissions on cars and light trucks through the model year 2026.

In what may be a harbinger of things to come with respect to the regulation of emissions from mobile sources, on April 5, the US Court of Appeals for the DC Circuit granted the Bide-Harris administration’s request to vacate an 11th hour Trump administration rule that would have prevented the Environmental Protection Agency (EPA) from setting standards to reduce greenhouse gas (GHG) pollution from stationary sources. The Trump rule exempted stationary sources from regulation unless they emitted 3% or more of the total amount of US GHG emissions. This decision allows the Biden-Harris administration to bypass the otherwise lengthy process to repeal the old rule and begin new rulemaking.

A GREEN LIGHT FOR ELECTRIC VEHICLES

In the runup to the 2020 presidential election, then candidate Biden’s campaign publicly supported a transition to clean transportation, including the widespread use of electric vehicles (EVs), through a stated intention to use the power of federal procurement to increase demand for American-made, American-sourced clean vehicles and public support of a nationwide installation effort of 500,000 chargers. Since then the elected administration has signaled support for EVs not only through its nomination of Jennifer Granholm as secretary of energy, (who, in her prior capacity as Michigan’s attorney general, governor, and board member of an EV infrastructure company, publicly advocated for the development of EV technology) but in two other moves encouraging EV deployment: EO 14008 and the subsequent development of a roughly $2 trillion plan for improving the nation's infrastructure and shifting to greener energy.

Through EO 14008 President Biden mandated the development of a comprehensive plan to stimulate clean energy industries by revitalizing the federal government’s sustainability efforts. Combined with the Buy American mandate, this EO would conceivably lead to direct support for the deployment of more than 600,000 American-made EVs that would replace the existing federal government combustion engine fleet of around 650,000 vehicles. Now having taken shape as the American Jobs Plan, here’s what’s included to support EV deployment:

  • A monetary investment of $174 billion for the development of a 500,000-strong charging station network
  • Electrification of the federal fleet of vehicles, including US Postal Service vehicles, and the replacement of 50,000 diesel transit vehicles and 20% of existing school buses nationwide with EVs or electrified vehicles
  • A $46 billion investment in federal procurement authority
  • The continuation of select tax incentives and new point-of-sale rebates for purchasers of EVs made in America

Even with this direction and support, there are still unique considerations for companies that plan to develop, own, or operate charging infrastructure as well as the utilities whose grids are going to be impacted by EV development and whose load profiles and rate-related issues will have to be addressed.

STATE-LEVEL SIGNALS

To date, a considerable amount of EV policy and EV-related investments have occurred at the state level, driven by decarbonization and transportation electrification or other environmental goals whose success aligns with increasing the use of EVs.

There are multiple state-level policy issues relevant to EV growth and transportation electrification, including the threshold question of whether EV charging is a utility function. The characterization of EV charging is important as utilities must meet important technical and financial fitness requirements as well as comply with public utility laws, regulations, and administrative orders.

Over half of the nation’s states and Washington, DC, have determined through a statutory amendment, a regulatory clarification, or an administrative order that EV charging is not a public utility function that requires regulation by the state utility commission.

New Jersey, for example, where the transportation sector accounts for more than 40% of the state’s net GHG emissions, has set a goal of achieving an 80% reduction in its 2006 CO2 levels by 2050. In January 2020, New Jersey adopted S. 2252, establishing statewide goals of raising the number of EVs in New Jersey to 330,000 by 2025 and rolling out a statewide charging infrastructure. The legislation authorized the New Jersey Board of Public Utilities (BPU) to support these efforts with $300 million in state incentives and the installation of a specific number of fast and Level 2 chargers by 2025 with a goal of reaching certain charging percentages in multifamily residential properties and hotels, with those expectations increasing in the future. In developing and finalizing the proposal for the rollout of this charging infrastructure, the BPU raised and addressed several key policy issues about ownership, access, and rate structure—all issues that many different states have to wrestle with as they develop their EV policies. Just 12 months after passing the legislation, the New Jersey Department of Environmental Protection announced that it planned to propose to adapt California’s Clean Truck Rule this spring, indicating the state would be advancing in the medium- and heavy-duty space as well.

New Jersey provides just one example of the increased activity occurring at the state level to support the growth of EVs across the country.

For more on this topic, including an update the US Department of Transportation’s autonomous vehicles initiatives, check out the Automotive Hour program, Capitalizing on Emerging Technology in the Automotive and Mobility Space: A 100-Day Report on Biden Administration Opportunities.

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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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