LawFlash

California Orders Phase-Out of Gas Cars and Expedited Regulation of Oil Extraction, Production Facilities

September 25, 2020

With a recent executive order, California is the first state in the nation to commit to ending the sale of fossil fuel–powered vehicles. The order also directs the expedited regulation and closure of oil extraction and production facilities.

California Governor Gavin Newsom signed an executive order on September 23 calling for a statewide transition away from fossil fuels as part of his effort to address climate change. The executive order directs state agencies to take concrete steps to phase out gas and diesel-powered passenger cars and trucks, medium- and heavy-duty vehicles, and off-road vehicles, and to work on shutting down and repurposing oil and gas extraction and production facilities in the state. Citing the need to reduce greenhouse gas emissions and toxic air pollutants, Governor Newsom’s order commits California to a goal of 100% zero-emission new passenger cars and trucks by 2035. The executive order also states that, “where feasible,” California will move to 100% zero-emission drayage trucks and off-road vehicles by 2035 and 100% zero-emission medium- and heavy-duty vehicles by 2045.

Governor Newsom’s order directs various state and local agencies to begin formulating regulations and strategies to transition away from reliance on fossil fuels. Specifically, it calls for the following:

  • California Air Resources Board (CARB) to develop and propose regulations requiring increasing the volumes of zero-emission vehicles, and strategies to further reduce the carbon intensity of fuels beyond 2030.
  • State agencies, local agencies, and the private sector to develop a “Zero-Emissions Vehicle Market Strategy” to coordinate and implement a system of policies, programs, and regulations by January 31, 2021, and to update the plan every three years.
  • CARB, the California Energy Commission (CEC), the California Public Utilities Commission, and other state agencies to accelerate deployment of affordable fueling and charging options for zero-emission vehicles.
  • CEC, in consultation with CARB, to update the biennial statewide assessment of zero-emission vehicle infrastructure to support the levels of electric vehicle adoption required by the executive order.
  • California State Transportation Agency, the California Department of Transportation, and the California Transportation Commission to identify near-term actions and investment strategies to improve clean transportation, sustainable freight, and transit options by July 15, 2021.
  • California Labor and Workforce Development Agency and the Office of Planning and Research to implement a “Just Transition Roadmap” by July 15, 2021.
  • California Environmental Protection Agency and the California Natural Resources Agency to develop strategies, recommendations, and actions to manage and expedite the responsible closure and remediation of former oil extraction sites, and to repurpose and transition existing oil production facilities by July 15, 2021.
  • California Department of Conservation to strictly enforce bonding requirements for the proper closure and remediation of oil extraction sites and, by December 31, 2020, to propose a stringent, science-based health and safety draft rule intended to protect communities and workers from the effects of oil extraction activities.

California is the first state in the nation to commit to ending the sale of fossil fuel–powered vehicles. Given California’s size and its historic leadership in setting statutory and regulatory air quality standards, this move may signal a new phase in the implementation of climate change–related regulations and zero-emissions goals. This executive action will also likely tee up additional issues regarding California’s Clean Air Act waiver.

While such action is likely to be opposed by the current administration—earlier this year California was stripped of its ability to set its own vehicle emissions and mileage standards as well as the mandate to produce more zero-emissions vehicles, a decision currently the subject of litigation—California appears undaunted in moving forward with its carbon neutral strategy. The true impact of the executive order will depend on the precise action California agencies take and likely subsequent challenges, but automotive, oil and gas, and other industries should continue to closely monitor the forthcoming regulatory developments.

Contacts

If you have questions or would like more information on the issues discussed in this LawFlash, please contact any of the following Morgan Lewis lawyers:

Los Angeles
Rick R. Rothman
David K. Brown

San Francisco
Ella Foley Gannon
Thomas F. Gede