S.D.N.Y.: NYC mileage rule preempted

A New York federal district court barred enforcement of a progressive environmental regulation promulgated by the City of New York, concluding that the city law was preempted by federal law.

The court held that:

• -- the Supremacy Clause creates an independent cause of action to assert federal preemption (apparently the first citation to ILC v. Shewry);

• -- taxi owners, drivers and users had standing to challenge NYC taxicab mileage standards, regardless of whether the assertedly preemptive federal laws were intended to benefit them;
• -- the likely lack of a § 1983 damages remedy under the Energy Policy and Conservation Act (EPCA) established irreparable harm, because costs to the owners could not be recouped from the government;
• -- EPCA preempts local mileage standards for taxicabs; and
• -- the Clean Air Act (CAA) does not preempt mileage standards.

Metro. Taxicab Board of Trade v. City of New York, 2008 WL 4866021 (S.D.N.Y. Oct. 31, 2008) (No. 08-cv-7837).

            Plaintiffs are the city’s taxi trade group and individual taxi owners and customers. They ought to enjoin NYC’s new taxicab mileage standards, which in effect require that all taxi services convert to hybrid vehicles. EPCA, 49 U.S.C. §§ 32901 et seq., sets corporate average fuel economy (CAFE) standards, while CAA, 42 U.S.C. §§ 7401 et seq., sets federal emissions standards.

Standing/Cause of action

The court began its analysis by stating that that the Supremacy Clause “provides a plaintiff with a cause of action to seek injunctive relief from allegedly preempted state action,” citing Shaw v. Delta Air Lines, 463 US. 85, 96 (1983), and Indep. Living Ctr. Of S. Cal. V. Shewry, (9th Cir. 2008) (summary here).

The City argued that the plaintiffs lacked standing, because “any legally protected interest under the EPCA and the CAA belongs exclusively to the automobile manufacturers.” The court flatly rejected this theory that “there is ordinarily little question” that parties who are the object of a challenged government action have a justiciable injury-in-fact. Lujan v. Defenders of Wildlife, 504 U.S. 555, 561 (1992). Thus, plaintiffs could assert preemption based on federal statutes that were not intended to benefit them, but which preempt state law that causes them injury.

Irreparable harm

This case presents the unusual tactic of plaintiffs themselves arguing that they lack a cause of action under 42 U.S.C. § 1983. Plaintiffs contended that they were entitled to injunctive relief because the mileage standards would cause them irreparable monetary harm. Monetary losses do not normally call for injunctive relief, but plaintiffs pointed out that they would likely be barred from recovering damages, on the ground that the federal laws at issue do not create enforceable rights under Section 1983.

The court agreed, saying that “there is no indication that Congress intended the EPCA to benefit the individual vehicle owner or user. Without discussing any specific statutory language, the court said that “the focus of the EPCA is on regulating fuel economy standards across an entire fleet of manufacturer vehicle models.” Because the law “focuses on the regulated parties and does not put an emphasis on the individual,” the court found it likely that a court would not permit a § 1983 action under ECPA. The court did not discuss a possible CAA claim under § 1983.

EPCA preemption

The EPCA expressly preempts any state “law or regulation related to fuel economy standards,” except for a state or locality’s rules for vehicles “obtained for its own use.” The court easily concluded that the NYC rules “set standards that relate to an average number of miles that New York City taxicabs must travel per gallon,” i.e. fuel economy. EPCA preempts such standards regardless of whether they are directed to purchasers or manufacturers. Engine Mfers. Assn. v. S. Coast Air Quality Mgmt. Dist., 541 U.S. 246 (2004).

The court rejected as “torture[d]” and “fanciful” the City’s argument that the City’s privately-owned cabs fall under the “own use” exception, supposedly because they “are uniquely part of the city’s public transportation system.”  The City clearly does not own or operate taxicabs, but acts as a regulator of them.  The City noted that the Engine Manufacturers case was ultimately settled on terms that permitted economy standards for private entities “under an exclusive license” with local government. The court said that this settlement was not a decision on the merits and had no precedential value.

The court also noted that state and local entities generally escape preemption when they act as “market participants.” However, the court said that the “market participant” exception to preemption did not apply here for the same reason the “own use” exception did not apply: the City is not in fact in the taxicab business, but merely licenses it.

CAA preemption

The CAA expressly preempts “any standard relating to the control of [vehicle] emissions.” The court, however, held that while a fuel economy standard might be intended to reduce emissions, CAA only preempts actual emissions standards. It looked to two decisions holding that EPCA preemption of fuel economy standards did not extend to emissions standards. Green Mtn. Chrysler Plymouth v. Crombie, 508 F.Supp.2d 295 (D.Vt. 2007); Centr. Valley Chrysler-Jeep v. Goldstene, 529 F.Supp.2d 1151 (E.D.Cal. 2007). The court reasoned that the reverse it also true, saying that “the preemption provisions of the EPCA and the CAA relate specifically to their defined categories” of fuel economy and emissions. The practical impact of this distinction appears limited, however, since – as seen here – state or local regulation of either area will likely be preempted by one federal law or the other.