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AMERICAN AUTO. MFRS. ASS'N & ASS'N OF INT'L AUTO.

August 5, 1997

AMERICAN AUTOMOBILE MANUFACTURERS ASSOCIATION and ASSOCIATION OF INTERNATIONAL AUTOMOBILE MANUFACTURERS, INC., Plaintiffs
v.
JOHN P. CAHILL, Acting Commissioner of the New York Department of Environmental Conservation and DENNIS C. VACCO, Attorney General of the State of New York Defendants



The opinion of the court was delivered by: KAHN

 This action was originally filed on February 10, 1997 in the Southern District of New York. Upon the defendant's application, the action was transferred to the Northern District of New York on March 31, 1997.

 Presently before the Court is the plaintiff's motion for partial summary judgment on the first, second, third, and fourth counts of the complaint. Also before the Court is the defendants' motion to dismiss or in the alternative for summary judgment on all counts.

 I. BACKGROUND

 This action is not the first conflict between the parties regarding the issue of automotive emissions and the Clean Air Act (the "Act" or "CAA"). 42 U.S.C. §§ 7401-7671q (1995). The parties in the present action were involved in a prior action which led to several published opinions including: Motor Vehicle Mfr.'s Ass'n *fn1" v. New York State Dep't of Envtl. Conservation, 810 F. Supp. 1331 (N.D.N.Y. 1993) ("MVMA I "); the reconsideration of that order in Motor Vehicle Mfr.'s Ass'n v. New York State Dep't of Envtl. Conservation, 831 F. Supp. 57 (N.D.N.Y. 1993) ("MVMA II "); and the subsequent appeal Motor Vehicle Mfr.'s Ass'n v. New York State Dep't of Envtl. Conservation, 17 F.3d 521 (2d Cir. 1994) ("MVMA III "). Upon remand from MVMA III, the fourth opinion Motor Vehicle Mfr.'s Ass'n v. New York State Dep't of Envtl. Conservation, 869 F. Supp. 1012 (N.D.N.Y. 1994) ("MVMA IV ") was rendered which was also appealed; Motor Vehicle Mfr.'s Ass'n v. New York State Dep't of Envtl. Conservation, 79 F.3d 1298 (2d Cir. 1996) ("MVMA V "). For those wishing a detailed background of the Act and its relationship to automotive emissions, the Court refers to the Second Circuit decision of MVMA III. For purposes of this action, a brief overview of the Act as discussed in MVMA III should prove helpful.

 A. The Clean Air Act

 "The original Clean Air Act, passed by Congress in 1955, was aimed primarily at increasing federal research and assistance in air pollution prevention." MVMA III, 17 F.3d at 524. "It made no provision for federal motor vehicle emission standards." Id. (citing Air Pollution Control-Research and Technical Assistance Act of 1955, Pub. L. No. 84-159, 69 stat. 322). Since several individual states, had begun to adopt motor vehicle emissions standards, Congress decided it would be prudent to establish a national standard to avoid "'chaos insofar as manufacturers, dealers, and users are concerned.'" Id. (citing S.Rep No. 192, 89th Cong., 1st Sess. 5-6 (1965)). Federal standards were passed in 1965 and in 1967 and states were preempted from developing their own motor vehicle emission standards. 17 F.3d at 525. However, an exception from preemption was made for California due to what was characterized as "'unique problems and pioneering efforts'" in the area of motor vehicle emissions. Id. (citing S.Rep. No. 403, 90th Cong., 1st Sess. 33 (1967); see also 42 U.S.C. 7542 (b), CAA § 209 (b)).

 In 1970, sweeping revisions were made to the Act and national ambient air quality standards ("NAAQS") were created. NAAQS were established for carbon monoxide, ozone, lead, nitrogen dioxide, sulfur dioxide and particulates. See 40 C.F.R. Part 50. The Act also "required even more stringent uniform emission standards for new motor vehicles." Id. In the continuing effort to reduce nationwide air pollution and to aid states in meeting NAAQS, in 1977, Congress saw fit to allow individual states to "'piggy back' onto California's [automotive emissions] standards, if the state's standards 'are identical to the California standards for which a waiver has been granted for such model year." *fn2" MVMA III, 17 F.3d at 525 (citing Publ. L. No. 95-95, § 129 (b), 91 Stat. 685, 750; see 42 U.S.C. § 7507, CAA § 177). While eager to reduce air pollution, Congress still held the "desire not to burden manufacturers unduly with myriad state emissions regulations." Id. at 531. As a result, in order for an individual state to utilize the more stringent automotive emissions standards, "California must adopt its standards two years in advance of such year, California must receive a waiver for its standards, and the adopting state must adopt California standards at least two years before the model year." Id. at 525 (citations omitted).

 The Act was amended once again in 1990. Under Title I of the 1990 Act which is primarily concerned with stationary pollution sources, "the several states are vested with the primary responsibility for attaining and maintaining the NAAQS through the development and operation of a state implementation plan (SIP)." Id. (citing 42 U.S.C. § 7408(a)(1)(a), CAA Title I § 108). Each state's SIP is submitted to the EPA and must explain how the state plans on reducing or maintaining the concentration of pollutants in order to meet the NAAQS. Id. State implementation plans discuss both stationary and mobile sources of pollution.

 Title II of the Act deals with mobile sources, primarily motor vehicles, and seeks to regulate the "emissions of carbon monoxide (CO), hydrocarbons or volatile organic compounds (VOCs) and nitrogen oxides (NO subx)." *fn3" Id. The preemption of state regulation of new automobiles survived the 1990 amendments. Id. (citing 42 U.S.C. § 7543 (a), CAA § 209 (a)). As before, California enjoys the only exception to the preemptive effect of the Act but must still seek approval from the EPA in order to obtain a waiver. *fn4" Id. at 527. "The effect of the Clean Air Act is that motor vehicles manufactured for sale in the United States must be either 'federal cars' -- certified to meet federal vehicle emission standards as set by the EPA -- or 'California cars' -- certified to meet that state's standards." Id. at 526-27.

 "Many states, including New York, are in danger of not meeting increasingly stringent federal air pollution limits." *fn5" Id. In order to ensure enforcement, Congress has directed that the EPA impose mandatory sanctions on states that fail to meet NAAQS. *fn6" 42 U.S.C. § 7509, CAA § 179. As discussed earlier, the "piggy-back" provision of § 177 was designed to provide states with another tool in their efforts to meet the NAAQS. "This opt-in authority . . . is carefully circumscribed to avoid placing an undue burden on the automobile manufacturing industry." Id. In order take advantage of § 177, "(1) an opt-in state must adopt standards that are identical to California's; (2) California must receive a waiver from the EPA for the standards; and (3) both California and the opt-in state must adopt the standards at least two years before the beginning of the automobile model year to which they apply." Id. (citing 42 U.S.C. § 7507, CAA § 177). In 1990, Congress added two more restrictions to the opt-in requirements. "First, Congress added new language providing that § 177 shall not be construed as authorizing an opt-in state to limit the sale of California-certified vehicles." Id. at 527-28. "Second, it forbade opt-in states from taking any action that has the effect of creating a car different from those produced to meet either federal or California emission standards, a so called 'third vehicle.'" *fn7" Id. (citing Clean Air Act Amendments of 1990, Pub. L. No. 101-549, § 232, 104 Stat. 2399, 2529).

 B. California's Emission Regulations

 The California Air Resources Board ("CARB") is the entity responsible for emissions regulations for the State of California. In order to achieve the California legislature's goal of a 55 percent reduction in organic emissions by the year 2000, CARB established two programs, one being a low-emission vehicle program ("LEV") and the other a clean fuels ("CF") program which became effective in 1991. Id. at 528. While both of these programs were the subject of the prior actions before this Court and the Second Circuit, the present case involves only the LEV program.

 CARB's LEV program divides the covered motor vehicles into four classes: "(1) Transitional Low-Emission Vehicles ("TLEVs"), (2) Low Emission Vehicles ("LEVs"), (3) Ultra Low Emission Vehicles ("ULEVs"), [and] (4) Zero-Emission Vehicles ("ZEVs")." Id. (citing Cal. Code Regs. Title 13 § 1960.1 (g)(2)). Each category is progressively more strict in standards for non-methane organic ("NMOG") emissions, and a ZEV, produces no emissions directly from the vehicle. *fn8"

 A manufacturer has the option of selling automobiles from each category but must meet an NMOG "fleet average" for the vehicles sold during a given model year. Each year the standards become more stringent. Id. In addition, manufacturers can meet the required fleet average standard through a credit system which allows manufacturers to earn additional credit for selling more LEVs than required to meet the fleet average. Id. "Credits [may] be banked internally to offset future short-falls or sold to other manufacturers unable to meet their fleet average." Id.

 While manufacturers have flexibility in deciding upon a mix of the four categories of vehicles they wish to sell under the California plan, the only limitation on that flexibility is the ZEV sales percentage requirement. Under the 1991 CARB regulations, beginning in the model year 1998, "2 percent of all vehicles certified for sale in California must be ZEVs, with the rate increasing to 5 percent in 2001 and to ten percent in 2003." *fn9" Id. The ZEV requirement also has a credit system that works in the same way as the credit system for fleet average discussed above which allows manufacturers to accumulate credits and buy or sell credits with other manufacturers. Id. In March of 1996, California abandoned its ZEV sales mandate for the years 1998 to 2002. *fn10" CARB replaced the sales mandate with individual Memorandums of Agreement ("MOAs") with the seven largest manufacturers. The MOAs are binding agreements with the manufacturers which fall outside of the realm of the Act and require specific numbers of ZEVs to be sold during the model years 1998 through 2002. Substantial penalties will be levied against manufacturers that fail to meet the requirements under the MOAs.

 C. The Present Action

 On April 28, 1992, the New York State Department of Environmental Conservation ("DEC") adopted the New York Low Emissions Vehicle Program, 6 N.Y.C.R.R. Part 218, which spurred the earlier litigation between the present parties discussed earlier. The New York ZEV legislation is essentially identical to the California emissions standards which were adopted by CARB in 1991.

 The specific section of the Low Emission Vehicle Program at issue in this case is the "Zero Emission Vehicle Sales Mandate" (the "ZEV regulations" or "ZEV sales mandate") codified at 6 N.Y.C.R.R. § 218-4.1. Specifically, the ZEV regulations provide: "Commencing in model year 1998, each manufacturer's sales fleet of passenger cars and light-duty trucks from 0-3750 lbs. [] shall, at minimum, contain the following percentage of ZEV's . . . ." Id. The statute further sets forth that for the model years 1998 through 2000, ZEV sales must comprise 2% of the new vehicle sales in New York. Id. The percent requirement is based upon the number of sales and leases during the model year 1998. As an approximation, the covered manufacturers sold or leased approximately 390,000 vehicles in New York during the model year 1996. Flint aff. P13. Therefore, taking 2% of that figure, the manufacturers would be required to sell approximately 7,800 ZEVs during the model year 1998. Id. The percentage rises to 5% during the 2001-2002 model years and up to 10% from 2003 and beyond. Id.

 Also within the New York regulations is the marketable credit system discussed earlier which enables manufacturers to accumulate and purchase or sell ZEV credits. 6 N.Y.C.R.R. § 218-4.2 (a) and (e). "Manufacturers which sell fewer ZEVs than required, in New York State, in a given model-year shall make up the deficit by the end of the next model-year, by selling an additional number of ZEVs in New York State, equal to their deficit . . . ." 6 N.Y.C.R.R. § 218-4.2 (b). Manufacturers who fail to meet the New York ZEV requirement for a given model year can carry over the deficit forward to the following year without penalty. A deficit can be made up during the next year through increased production or the purchase of credits.

 Plaintiffs allege a total of six causes of action. First, the manufacturers contend that New York State's ZEV regulations are preempted by § 209(a) of the Clean Air Act. 42 U.S.C. § 7543(a). Second, the plaintiffs assert that New York's ZEV regulations are not identical to the California emission standards for the same model year and are therefore in violation of § 177 of the Act. 42 U.S.C. § 7507. Third, AAMA and AIMA allege that the ZEV regulations are preempted by § 249 of the Act. 42 U.S.C. § 7589. The fourth count claims that New York's ZEV regulations are subject to implied preemption because they stand as an obstacle to the objectives of Congress when § 177 was enacted. 42 U.S.C. § 7507. In the fifth claim brought under 42 U.S.C. § 1983, the plaintiffs contend that New York's regulations violate the Due Process Clause of the Fourteenth Amendment. Finally, the manufacturers allege that the ZEV regulations violate the Commerce Clause of Article I, Section 8 of the United States Constitution.

 Both the plaintiffs and defendants have moved for summary judgment. Pursuant to Fed. R. Civ. P. 56, the manufacturers have moved for summary judgment on the first four counts of the complaint. The defendants have moved to dismiss all counts, or in the alternative, moved for summary judgment on all counts pursuant to Fed. R. Civ. P. 12(b) and 56. The Commissioner and the Attorney General assert that the plaintiffs' claims are barred by the applicable statute of limitations, Res Judicata, and Collateral Estoppel. Defendants further contend that the plaintiffs have failed to follow the necessary statutory prerequisites for this Court to exercise jurisdiction over claims arising under the Citizen suit provision of the Act. 42 U.S.C. § 7604.

 II. DISCUSSION

 A. Jurisdictional Issues

 The defendants argue that this Court lacks jurisdiction to hear this action under the doctrines of Res Judicata, Collateral Estoppel, and due to the plaintiff's failure to follow the necessary statutory prerequisites. Because a lack of jurisdiction would prevent this Court from considering this action, the jurisdictional claims will be addressed first.

 1. Statute of Limitations

 Defendants contend that the plaintiffs' claim is barred by the statute of limitations of three years for all civil rights actions. See 42 U.S.C. § 1983. New York adopted the LEV program on April 28, 1992, over five years ago, and since that time, it has remained unchanged. Defendants further argue that the changes made by California were done within the scope of the existing EPA waiver and has no effect upon New York. Thus, defendants contend that the statute of limitations has passed. Plaintiffs contend that this action is not challenging the adoption of the April 28, 1992 ZEV mandate. Rather, plaintiffs assert that they are challenging the power of New York State to enforce the ZEV mandate since California, the acknowledged model state, has changed its ZEV sales requirement.

 It is undisputed that the statute of limitations applicable to this § 1983 action is three years. Owens v. Okure, 488 U.S. 235, 251, 102 L. Ed. 2d 594, 109 S. Ct. 573 (1989). Furthermore, it is undisputed that a § 1983 claim accrues when a plaintiff "'knows or has reason to know of the injury which is the basis of his action.'" Barrett v. United States, 689 F.2d 324, 333 (2d Cir. 1982)(quoting Singleton v. City of New York, 632 F.2d 185, 191 (2d Cir. 1980), cert. denied, 450 U.S. 920, 67 L. Ed. 2d 347, 101 S. Ct. 1368 (1981)). The central issue to be determined here is whether or not New York State is bound to eliminate its ZEV requirement for the model years 1998 to 2002 because California has changed its policy. CARB did not abandon its ZEV sales requirement until March 28, 1996. The Court holds that the plaintiffs had three years from that date in which to file this action and therefore this action has been commenced in a timely manner.

 2. Citizen Suit Provision

 Defendant's second jurisdictional challenge involves the citizen suit provision of the Act. See 42 U.S.C. § 7604. Under the Act,

 
(1) against any person (including (i) the United States, and (ii) any other governmental instrumentality or agency to the extent permitted by the Eleventh Amendment to the Constitution) who is alleged to have violated (if there is evidence that the alleged violation has been repeated) or to be in violation of (A) an emission standard or limitation under this chapter or (B) an order issued by the Administrator or a State with respect to such a standard or limitation.

 42 U.S.C. § 7604 (a)(1). The Act further provides that plaintiffs who wish to bring an action under the above section may not file the action "prior to 60 days after the plaintiff has given notice of the violation (i) to the Administrator, (ii) to the State in which the violation occurs, and (iii) to any alleged violator of the standard, limitation, or order . . . ." 42 U.S.C. § 7604 (b). Defendants contend that the plaintiffs have failed to follow the requirements of the citizen suit provision. Furthermore, defendants argue that the subject matter of the action does not fall under those permitted by the citizen suit provision of the Act. Plaintiffs do not dispute the defendants' assertions. However, the manufacturers contend that the second jurisdictional basis, 42 U.S.C. § 1983, is not challenged by the defendants and provides a sufficient jurisdictional foundation for the claims asserted.

 Under 28 U.S.C. § 1331, the "district courts shall have original jurisdiction of all civil actions arising under the Constitution, laws, or treaties of the United States." 42 U.S.C. § 1983 provides:

 
Every person who, under color of any statute, ordinance, regulation, custom, or usage, of any State or Territory . . . subjects, or causes to be subjected, any citizen of the United States or other person within the jurisdiction thereof to the deprivation of any rights, privileges, or immunities secured by the Constitution and laws, shall be liable to the party injured in an action at law, suit in equity, or other proper proceeding for redress.

 Counts Five and Six of the complaint seek relief under 42 U.S.C. § 1983 and allege that the actions of the defendants violate the Due Process clause of the Fourteenth Amendment as well as the Commerce Clause. Furthermore, this action involves a novel question of federal law since the Court must interpret various sections of the Clean Air Act. Therefore, jurisdiction exists and the Court will now turn to the merits.

 3. Res Judicata

 The defendants contend that all six of the claims raised by the plaintiffs were previously argued or could have been raised in the prior court actions and therefore these claims are barred by the doctrine of res judicata. Alternatively, the defendants contend that count three involving § 249, count five involving Due Process, and count six involving the Commerce Clause should be dismissed under Fed. R. Civ. P. 12(b)(6) on res judicata grounds. In response, the manufacturers argue that the claims arising under §§ 209 and 177 are not the same as those raised in the prior proceedings and therefore, ...


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