## Facts

- The Minnesota Pollution Control Agency (MPCA) proposed the Clean Cars Minnesota Rule, Minnesota Rules chapter 7023, to set greenhouse-gas (GHG) emission standards for certain new passenger cars, light-duty trucks, and specified medium-duty vehicles sold in Minnesota.
- The proposed rule adopted standards identical to California’s Low-Emission Vehicle (LEV) and Zero-Emission Vehicle (ZEV) programs, using California certification and a credit-based compliance framework for manufacturers.
- The MPCA relied on the federal Clean Air Act (CAA) structure: although the CAA generally preempts state new-vehicle emission standards, California may receive an EPA waiver under CAA § 209(b), and other states may adopt standards identical to California’s under CAA § 177.
- The rule required manufacturers to offer for sale in Minnesota only covered vehicles certified by California as meeting applicable LEV standards, and required manufacturers to meet ZEV percentage requirements (through sales and credits) to increase the number of vehicles with zero tailpipe emissions.
- The MPCA stated that transportation was a leading source of Minnesota GHG emissions and that lowering vehicle GHG emissions was necessary to reduce statewide emissions and mitigate climate-related harms.
- In its Statement of Need and Reasonableness (SONAR) and related record materials, the MPCA evaluated economic effects, including concerns that LEV-certified vehicles often have higher upfront prices and that dealers could face added burdens tied to electric-vehicle marketing, staff training, and charging-related readiness.
- The MPCA assumed costs borne by manufacturers and dealers would largely be passed through to consumers, but also concluded that consumers could realize lifetime savings from reduced fuel and maintenance expenses, especially for electric vehicles.
- The MPCA also considered broader sector effects: reduced demand for vehicle maintenance (potentially affecting mechanics), increased electricity demand (benefiting utilities), decreased gasoline and diesel demand (affecting petroleum-related revenues), public-health and environmental benefits, and effects connected to environmental-justice priorities.
- The proposal drew support from consumers seeking more electric-vehicle options, environmental and public-health organizations, religious and spiritual groups, many businesses, some governmental entities, and electric-vehicle manufacturers (including Tesla and Rivian). It drew opposition or concern from many automobile manufacturers and dealers, and from representatives of biofuel, trucking, agricultural, and related industries.
- The Minnesota Office of Administrative Hearings (OAH) held public rulemaking hearings remotely on February 22–23, 2021, and an Administrative Law Judge (ALJ) reviewed the record under the Minnesota Administrative Procedure Act (MAPA), Minn. Stat. §§ 14.05–.20, to determine whether the proposed rules were authorized, procedurally proper, and needed and reasonable.

## Issues

1. Whether the MPCA had statutory authority to adopt vehicle GHG emission standards by incorporating California LEV and ZEV requirements into Minnesota Rules chapter 7023.
2. Whether the proposed rule was barred by federal law, including the CAA’s preemption provisions, or otherwise conflicted with the CAA’s waiver and § 177 opt-in framework.
3. Whether the MPCA complied with MAPA rulemaking requirements, including notice, hearing, and preparation of an adequate SONAR and rulemaking record.
4. Whether the MPCA showed, on the record, that the proposed rule was needed and reasonable, including consideration of costs, benefits, and feasible alternatives.
5. Whether any changes made after notice were within the scope of what the public had fair notice to comment on.

## Decision

- The ALJ approved the proposed rules and recommended that the MPCA adopt them.
- The ALJ concluded that the MPCA had statutory authority to regulate air pollution and adopt rules addressing vehicle emissions, including GHG emissions, through the Clean Cars Minnesota program.
- The ALJ determined that the proposed rule fit within the CAA structure because Minnesota may adopt standards identical to California’s standards under CAA § 177 when California’s program operates under the CAA waiver pathway.
- The ALJ found the MPCA satisfied MAPA procedural requirements, including notice, opportunity for public comment at the hearings, and development of a sufficient rulemaking record supported by a SONAR.
- The ALJ found that the MPCA adequately justified the need for the rule and explained why the program’s requirements were reasonable in light of anticipated emission reductions, costs, and benefits described in the record.
- The ALJ determined that post-notice adjustments did not require a new notice because they remained within the scope of the proposed rule as noticed.

## Legal Principles

- Under MAPA, an ALJ reviewing a proposed rule evaluates whether the agency has statutory authority, followed required procedures, and established that the rule is needed and reasonable on the rulemaking record.
- “Needed and reasonable” requires an identified problem within the agency’s jurisdiction and a reasoned explanation connecting record evidence to the rule’s requirements; the agency must consider relevant economic effects and alternatives raised in the record.
- The CAA generally preempts state standards for new motor-vehicle emissions, but California may receive an EPA waiver under CAA § 209(b), and other states may adopt standards identical to California’s under CAA § 177.
- For a § 177 program, a state’s standards must remain identical to California’s standards as required by federal law; adopting non-identical standards risks conflict with the CAA.
- Modifications after notice do not require a new notice when the changes are within the scope of the subject matter and impacts that were fairly disclosed in the original notice and record.

## Conclusion

In this OAH rulemaking report, the ALJ approved and recommended adoption of the MPCA’s Clean Cars Minnesota rules in Minnesota Rules chapter 7023, concluding that the MPCA had legal authority to adopt California-identical LEV and ZEV standards under the CAA § 177 framework, satisfied MAPA procedural requirements, and supported the rule’s need and reasonableness with record evidence addressing emissions reductions, costs, and benefits.


In re Proposed Rules of the Minnesota Pollution Control Agency Adopting Vehicle Greenhouse Gas Emission Standards (Clean Cars Minnesota), Minnesota Rules Chapter 7023, OAH-71-9003-36416 (2021)