How States Can Help EVs Win

Biden-era EV policies are on their last legs.

Last week, Congress voted to revoke California's authority to phase out the sale of new gas-powered cars by 2035. This action pulls the rug out from under California’s and other states' longstanding authority to adopt more protective pollution standards for cars and advance towards an EV future. Meanwhile, the EV charging initiative (NEVI) has been nipped in the bud, the popular federal EV tax credits and fuel economy standards are in grave peril, and the EV supply chain is being whipsawed by tariff games.

States cannot wait on the sidelines (quite possibly for years) hoping that the courts protect states’ regulatory authority while Trump and Congress prosecute a war on EVs. Rather, states must act promptly, boldly and decisively to maintain progress on EV sales.

 

The Path for States to Require A Shift to EVs

States have a pathway to enact electric vehicle mandates based on state authority over electricity regulation and other state-regulated fields. As explained in our 2020 law review article, Supreme Court decisions including the 2019 Virginia Uranium case require respect for a state’s stated regulatory purposes and a strong presumption against preemption.

States have compelling reasons to require that all new cars sold be electric that have nothing to do with regulating emissions or improving fuel economy standards. Legislation introduced in the Washington State legislature in 2020 with 27 legislative co-sponsors would have required that all cars of model year 2030 or later sold or registered in Washington State be electric vehicles.The bill was based on legislative findings related to the benefits of EVs on the state's electrical grid, technological and economic development, job creation, and consumer finances. None of these rationales are within the scope of federal preemption. The Washington legislation was silent on issues of air pollution, gasoline, or other fossil-fuel related rationale.

The bill passed into law, although during the legislative process the mandate was softened to a goal. The law has not been challenged on federal preemption grounds.

 

The Electricity Regulation Pathway

Since the beginning of the electrical age, states have had broad authority over the distribution, reliability, and pricing of electricity within their territory. The Supreme Court, in the PG & E v. State Energy Comm'n, 461 U.S. 190 (1983), upheld California’s moratorium on new nuclear plants based in significant part on states authority to regulate electricity, despite a federal statute giving the federal government preeminence in the regulation of nuclear safety.

The powerful and growing benefits of EV to the grid in terms of power storage, grid stability, and flexible load usage make them critical to the grid’s long term future, and have considerable impact on electricity pricing. As such, states have a critical interest in the growth of EVs as an electricity regulator.

States already use their electricity regulatory authority to advance transportation electrification without triggering federal preemption. State PUCs have broad authority to regulate utilities and electricity distribution, and many are using this power to boost EV adoption. For example, New York authorized a landmark "EV Make-Ready" program, allowing utilities to invest up to $701 million to prepare sites for EV chargers, later expanding this effort to $1.2 billion. California's PUC approved a five-year, $1 billion Transportation Electrification program to fund EV charging infrastructure statewide.

States have a good case for avoiding preemption. If the pathway is upheld, it could be a durable replacement for the regulation Congress revoked. If a high court does eventually strike down California’s authority to regulate vehicle emissions, then at least the OEMs will be kept guessing for years and incentivized to continue investment in EVs.

Given the coma that the traditional California regulatory pathway is in, what do states have to lose?

 

Moving Beyond Pollution Regulators: A New EV Regulatory Framework

Congress revoking the ACC II waiver surfaced a need for a new EV policy architecture. As Craig Segall, an architect at CARB of California's vehicle pollution standards, argues, "the environmental statutes that undergird our vehicle rules, though legally capable of requiring a shift to EVs, are not purpose-built to drive a wholesale economic transition, or to address the major power dynamics here. They are rooted in the logic of pollution reduction, not industrial policy."

Segall argues that EV regulation should be moved from environmental agencies to commerce and utility regulators with broader authority to manage industrial transitions. "Simply put, a pollution regime that primarily is designed to clean-up tailpipes can certainly legally embrace the new standards—but as a practical implementation matter does not generate a wholesale industrial policy shift without a theory of action focused on the reality that we are managing a geopolitical industrial transition, of which pollution laws are just one piece."

The shift from pollution agencies to agencies with more ability to act broadly in the economy counters the argument that the EV regulation is just pollution regulation in disguise.

In a real-world example of an approach to an industrial policy frame, Washington State has instituted an all-of-government implementation framework for reaching 100% of new cars being EVs based outside of the state’s pollution control agency. The Clean Cars 2030 legislation (at page 87) didn't just set a 2030 100% EV target—it directed all relevant state agencies to plan together for reaching the target.

 

Next Steps for States

States should take the following five actions to boost EVs.:

1. Enact EV Requirements Through Electricity Authority

States should enact legislation requiring all new vehicles sold after a certain date to be electric, grounding this requirement in electricity regulation and economic development rationales rather than emissions reduction.

2. Transfer EV Authority to Commerce and Utility Regulators and Involve the Entire Government

States should move EV policy from environmental agencies to state agencies such as energy offices that have broader tools for managing industrial transitions. States should require coordinated planning across transportation, utilities, economic development, workforce training, and infrastructure agencies to ensure comprehensive support for the EV transition.

3. Highlight and Maximize EV Fuel Cost Savings

States should support tailored digital marketing campaigns that focus on EV fuel savings, highlighting compelling stories about fuel cost burden and EV savings using real people. The goal of the campaign would be for all of a state’s high-mileage drivers to understand the money they can save with an EV.

4. Reform EV Incentives

States should steer EV incentives to lower and middle-income families using the most gasoline. This policy will stretch incentive dollars to be able to reach more families, and provide more relief to those who need it the most.

5. Build Economic Transition Infrastructure

Use state finance tools to support EV manufacturing, charging infrastructure deployment, workforce retraining, and purchasing.

 

The Path Forward

The federal government’s war on EVs has opened the opportunity for states to lead on EV policy. States can build a more robust, comprehensive, synergistic, and legally durable approach to electric vehicle adoption.

The race for America's electric vehicle future will be won by bold action, not seeking to revive sputtering pollution policy.

States that act decisively now will position themselves as leaders in the global clean energy economy and deliver major economic relief to families.