COURT RULING UPHOLDS CLEAN VEHICLE FLEET RULES

LOS ANGELES (May 9, 2005) -- In a major victory for Southland air quality, a federal judge ruled Friday that the South Coast Air Quality Management District may enforce its seven clean fleet rules.

U.S. District Judge Florence-Marie Cooper issued her 24-page opinion in Los Angeles in response to a motion filed in January by the Engine Manufacturers Association and Western States Petroleum Association seeking to invalidate AQMD's fleet rules in their entirety.

"This lifts a legal cloud cast by the U.S. Supreme Court over a large portion of our fleet rules," said Dr. William A. Burke, Governing Board Chairman of the South Coast Air Quality Management District. "We can now continue to implement major portions of our fleet rules, which are essential to our strategy for reducing both smog-forming and toxic emissions in the Southland."

"After years of improving air quality, progress is slowing, and we need these rules to bring the region clean air," said Gail Ruderman Feuer, director of the Southern California Air Project at NRDC (Natural Resources Defense Council). NRDC, along with the environmental organizations Coalition for Clean Air, Communities for a Better Environment, Planning and Conservation League and the Sierra Club were AQMD's co-defendants in the lawsuit.

In her ruling, Judge Cooper stated that in requiring state and local government fleet operators to purchase the cleanest available vehicles, AQMD was acting as a market participant, not a regulator. In the case of state and local government agencies, the fleet rules are not preempted by the federal Clean Air Act, Cooper ruled. "The Fleet Rules, as applied to state and local governments, fall within the market participant doctrine," Cooper said in the conclusion to her opinion. "They are not preempted. Plaintiff's challenge fails. Plaintiff's motion is denied."

AQMD, the environmental groups and the State of California maintain that most applications of the rules to private fleets involve government contracts, such as for street sweeping, trash pickup and school buses, and therefore also survive preemption under the market participant doctrine. Judge Cooper did not rule on that issue specifically, but nevertheless rejected the engine manufacturer's challenge to the private as well as to the public fleets because the engine manufacturers had brought a "facial challenge" to the rules in their entirety.

In August 2000, following the AQMD's adoption of the first six fleet rules, the Engine Manufacturers Association filed suit in federal District Court, claiming the rules were preempted because they violated Section 209 of the federal Clean Air Act.

That section states that "No state or any political subdivision thereof shall adopt or attempt to enforce any standard relating to control of emissions from new motor vehicles or new motor vehicle engines subject to this part."

AQMD argued that its fleet rules did not set emission standards for new vehicles or engines, but rather placed purchase requirements on fleet operators requiring them to buy the cleanest vehicles commercially available.

Judge Cooper agreed, and ruled against the Engine Manufacturers Association in August 2001. The association appealed to the Supreme Court of the United States, which agreed to hear the case in June 2003. The Bush Administration argued in favor of the engine manufacturers and oil companies and against AQMD in oral arguments before the court in January 2004.

In April 2004, the Supreme Court reversed the lower court's decision and ruled that purchase requirements do not escape preemption under Section 209 of the Clean Air Act. The Court went on to note, however, that its holding did not resolve the validity of the fleet rules, and it remanded the case to Judge Cooper's court to consider several issues, including "whether some of the fleet rules can be characterized as internal state purchase decisions (and, if so, whether a different standard for pre-emption applies.)"

Attorneys for AQMD and the environmental groups, supported by a friend-of-the-court brief from the State of California, argued that most applications of the fleet rules fall under a so-called market participant exemption and therefore are not preempted by the federal Clean Air Act.

Judge Cooper agreed and said that the fleet rules, at least as applied to state and local governments, are procurement requirements, not emission regulations.

AQMD's Governing Board adopted its fleet rules in 2000 and 2001 following a landmark AQMD study showing that about 70 percent of the total cancer risk from air pollution was due to diesel exhaust. The seven fleet rules target primarily diesel-powered vehicles, including transit buses, school buses, trash trucks, airport shuttles and taxis, street sweepers and heavy-duty utility trucks. The rules generally require fleet operators to buy clean-fueled models when they replace vehicles or add to their fleets of 15 or more vehicles. As a result of the rules, more than 5,500 clean-burning heavy-duty vehicles, powered by natural gas and other clean fuels, have been added to the region's fleets.

AQMD is the air pollution control agency for Orange County and major portions of Los Angeles, San Bernardino and Riverside counties.