Minnesota new car dealers are all-in for the coming electric vehicle (EV) age. Our dealers are investing millions of dollars to improve our stores, and we’re ready to play an essential role in our customers’ EV buying experience, before and after they make their purchase.
But we’re not all-in for the mandate imposed by the Walz administration’s California Car proposal. Our frustration with the rule and the process used to create it has led us to this new action.
Currently, plug-in hybrid and battery electric vehicles make up 2.3% of total new car sales in Minnesota. However, the California rules imposed by the Walz administration would allow the California Air Resources Board (CARB) to make new rules of the road for Minnesota and create an artificial supply mandate that grabs our industry by the throat and doesn’t let up. In 2024 dealers will be forced to carry 7% electric vehicles, and by 2025 that number jumps to 35%, which is four times as many EVs as have been sold in Minnesota since 2011. And it only gets worse. CARB’s supply mandates escalate quickly, resulting in a complete ban on the sale of gas-powered vehicles by 2034. Minnesota has no ability to alter or deviate from the ban now that it’s decided to join the program.
The move to adopt the CARB standards, and their accompanying ban on gas-powered cars, runs in complete conflict with nearly three decades of state policy to build up a bio-fuels industry including ethanol and biodiesel.
Our concerns were ignored by the Minnesota Pollution Control Agency (MPCA), an organization that ran roughshod over our industry to promote this action. Despite multiple requests, Gov. Walz never met with us on the subject. And while the Legislature could weigh in, House Democrats ruled any debate on the issue out of order during the past two sessions. The Minnesota Court of Appeals may be our only hope for a fair hearing.
Our arguments in court are twofold and are simple. First, under Minnesota’s Administrative Procedures Act, one agency cannot write the rules for another agency. In this case, CARB is writing the rules for the MPCA. In fact, not only is CARB writing the rules, but the MPCA has decided that going forward changes to the CARB rules will be automatically incorporated in Minnesota as CARB amends its program.
Some groups have asserted that the Minnesota rule is “modeled” after California. But the MPCA knows better and so do we. Federal law does not allow states to adopt their own emissions rule or modify or amend the California rules. States have two choices: adopt California’s program or default to federal standards. There is no opportunity for Minnesota to modify or alter the rules handed down by CARB.
California is driving this bus, and Minnesota has jumped on as a passenger. This abdication to another agency – let alone another state – is not allowed under Minnesota law.
Our second argument is that under the Federal Clean Air Act, Minnesota does not qualify to be a part of the California program. Federal law only allows states that have identified geographic areas of non-attainment of clean air standards for greenhouse gasses to qualify for the California Rules. California has been grappling with these non-attainment areas for over 50 years and currently has 149 identified locations across their state that meet these criteria. Minnesota has exactly zero such areas of non-attainment and has not had any for over 20 years. CARB writes rules aimed at cleaning up their state’s air quality problems, a problem Minnesota simply does not have.
So why don’t we want to be a part of the California system? Because it interrupts the free-market approach that is rapidly unfolding. This interruption will cause dealers and consumers unnecessary economic harm. Under the plan only California-certified vehicles can be offered for sale in Minnesota and will be at least $2,000 more than like non-California-certified vehicles (MPCA numbers, not ours). Minnesota would be the only state in the Midwest with these standards.
Exacerbating this problem is the inexplicable fact that Congress has just recently killed the $7,500 tax credit on two thirds of the EVs currently on the market. A supply mandate with almost nonexistent consumer incentives simply won’t work.
CARB is trying to fix California’s problems. It will make no accommodation for Minnesota’s air quality, demographics, agricultural, economic or weather profiles.
From the start we have implored the Walz administration to work with us on creating demand instead of mandating supply. Build infrastructure, create incentives and work with the retailers. Unfortunately, the Walz administration’s approach has been to choose a stick instead of a carrot.
We hope a cool-headed panel of judges will put the brakes on this mistake.
Scott Lambert is the president of the Minnesota Auto Dealers Association, a non-profit organization dedicated to the advocacy of its 365 franchised new-car and -truck dealer members.