Truck manufacturers are “in an impossible position” under the California Advanced Clean Trucks (ACT) mandate, and several of them have asked a federal court to get them out of it.
In a lawsuit filed Monday in the U.S District Court for the Eastern District of California, Daimler Truck (OTC: DTRUY), PACCAR (NASDAQ: PCAR), Volvo Group North America and International Motors (owned by Volkswagen), the companies are asking the court to immediately halt the California Air Resources Board (CARB) from enforcing the ACT against them, using the “impossible” term to describe their predicament.
In the summary of that position, the manufacturers spell out the squeeze that many people in the industry saw coming as soon as the federal government, following this past spring’s Congressional action and a Presidential approval of that action, invalidated the waiver granted by the Environmental Protection Agency to CARB that allowed the ACT and other California regulations to proceed.
Groundwork for squeeze laid in 2023
The road to that squeeze began when the companies’ trade group, the Engine Manufacturers Association (EMA), signed the Clean Truck Partnership (CTP) in 2023 that gave the manufacturers more leeway to meet the ACT requirements in exchange for greater alignment between California and EPA rules. That deal also included restrictions on what the engine manufacturers could do to challenge the ACT going forward.
On one side of the squeeze is California, insisting 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 suit against the federal action, with its key argument being that EPA waivers are not subject to the Congressional Review Act that Congress used to overturn them. The engine manufacturers’ lawsuit says there is a conference on the California suit September 16 and that nothing else has occurred with it since the state filed the suit. )
On the other side is the federal government, which the lawsuit says sent a letter August 7 to a Daimler executive, Sean Waters, telling him that signatories to the CTP must “cease and desist your compliance with both the Clean Truck Partnership and its preempted state vehicle emissions regulations.” The letter was sent by Adam R.F. Gustafson, acting assistant attorney general of the Environmental and Natural Resources Division of the Department of Justice, and is an attachment in the engine manufacturers’ lawsuit.
The lawsuit says the engine manufacturers, along with the EMA, “sought clarification from CARB regarding OEMs’ legal obligations under the Clean Truck Partnership and CARB’s underlying emission standards,noting that the Clean Truck Partnership’s requirements were invalid for several reasons, including that they were preempted under the Clean Air Act.” CARB has not responded to that request, according to the lawsuit.
California seen as threatening action
But the lawsuit points to a Manufacturers Advisory Correspondence issued by CARB on May 23 that says the engine makers “must continue to follow CARB’s preempted standards, including the certification requirement, to ensure ‘lawful’ sales of vehicles and engines in California.”
That was followed by an executive order from Gov. Newsom that, the lawsuit says, threatened the manufacturers with “unfavorable regulatory treatment, as well as exclusion from government purchase and incentive programs,” if the companies didn’t adhere to the ACT mandates.
CARB has made some changes in the ACT since the preemption. In a July 24 press release that announced the changes, CARB chair Liane Randolph was quoted as saying that they provided “flexibility.” But she also referred to “commitments made in the Clean Truck Partnership.”
EMA signaled last month, in a comment to CARB during the process that led to the changes, that it was unhappy with the situation it faced. It was the first public declaration of its views since the federal action set the grounds for the current dispute.
Given the pushes coming at them from two sides, according to the lawsuit, “the OEMs are subject to two sovereigns whose regulatory requirements are irreconcilable and who are openly hostile to one another. Each wields a hammer to enforce its will on industry, leaving OEMs—who simply seek to sell heavy-duty trucks in compliance with the law—unable to plan with the necessary certainty and clarity where their products need to be certified for sale and by which regulatory authority.”
But it is only one side of the divide that is the target of the lawsuit: California.
“California has taken the position that Congress’s waiver-disapproval resolutions were ‘reckless, politically motivated, and illegal attacks on California’ (citing wording in a Newsom press release) and has made clear that it will continue to attempt to enforce the requirements included in Advanced Clean Trucks, Omnibus Low NOx and Advanced Clean Cars II.”
For the trucking industry, a softening of the California Omnibus Low NOx rule and aligning it with federal law was a key part of the deal. The federal waivers that allowed the ACT to proceed also permitted the Omnibus NOX rule (which tightened rules on emissions of nitrogen oxide) and the Advanced Clean Cars II rule, which affects passenger vehicles.
CTP didn’t impact ZEV rules
One thing that didn’t change under the CTP: the ACT schedule for truck manufacturers to sell an increasing percentage of zero emission vehicles (ZEVs) into the state.
But the lawsuit notes that another conundrum the engine manufacturers have is that the matching mandate to buy ZEVs that was built into the now largely defunct Advanced Clean Fleets rule has disappeared, with CARB killing the rule when it didn’t think it was getting an EPA waiver for it.
“In other words, CARB has removed the buy-side requirement corresponding to the sales mandates imposed on manufacturers by Advanced Clean Trucks, thereby making manufacturer compliance with Advanced Clean Trucks even more challenging,” the lawsuit says.
The engine manufacturers “urgently need clarity regarding the law and emission standards that apply to its vehicles and engines for model year 2026,” the suit says. “To adequately plan product production and allocation, Plaintiff OEMs must know which vehicles they are authorized to sell, and where, well in advance of the start of a model year on January 1.”
The legal charges in the lawsuit are that California, with the waivers gone, is violating the preemption provisions of the Clean Air Act that prohibit a state–absent a waiver–from creating stricter standards than in the act.
It also challenges a provision in the CTP–which the EMA signed–that prohibited challenges to steps CARB might have taken in connection with the partnership.”Government officials cannot, without violating the First Amendment, require their citizens to follow unlawful standards,” the suit says.
The suit also says the CTP violates various California state regulations.
The manufacturers are seeking court injunctions that would bar the state from enforcing “or attempting to enforce” not only the ACT but other regulations that the state had approved and sought–and in most cases–received a waiver from the EPA. That includes the Advanced Clean Fleets rule, which was withdrawn before a waiver decision was made by EPA.
A spokeswoman for CARB declined comment, citing the pending litigation.
Groups make their voices heard
But other comments came rapidly.
The Clean Freight Coalition is a group of carriers and other trucking related businesses that has mostly pushed back against some emission technologies while backing others.
Its executive director (and former FMCSA administrator) Jim Mullen said the group “commends the truck OEMs for bringing this lawsuit against CARB.”
“It is an absolute disgrace that this action is necessary.” CARB is holding the trucking industry hostage by its refusal to acknowledge the obvious: that the actions by Congress and the President nullified the CTP. “
On the other side of the divide, Craig Segall, former deputy executive officer and assistant CARB chief counsel, asked whether the manufacturers “have any idea how to sell their own products?”
“Imagine being a truck company, working for years towards an agreement with the world’s fourth largest economy that helps you sell electric trucks and finance infrastructure despite federal uncertainty… and then burning your regulators and destroying shareholder value by blowing up that agreement,” he said in a prepared statement. “Red flags abound.”
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