Will More States Follow California on Deal with Automakers?

BYPASSING THE TRUMP ADMINISTRATION, CALIFORNIA has reached agreement with four of the world’s largest automakers to improve fuel efficiency and reduce automobile emissions that contribute to global warming.

And more are likely to follow.

“This is about leadership, California asserting itself once again, and about automobile manufacturers, to their credit, doing the right thing,” California Gov. Gavin Newsom (D) said at a briefing announcing the deal struck with Ford, Honda, BMW, and Volkswagen.

The voluntary agreement, announced in July, notably “recognizes California’s authority.” It will allow the Golden State and 14 other states that accept its air pollution rules to continue with most of the regulations on auto emissions agreed to in 2012 by the Barack Obama administration, California, and the carmakers.

The Environmental Protection Agency (EPA) under President Donald Trump rejected California’s request to continue with the Obama-era standards. The agreement between California and the four automakers, which together have about 30% of the U.S. car market, is an end run around this rejection.

The agreement benefits the carmakers by enabling them to avoid a nightmare scenario of having to manufacture cars for multiple markets and gives them an extra year to reach the greenhouse gas emission standards agreed to in 2012.

“These terms will provide our companies much-needed regulatory certainty by allowing us to meet both federal and state requirements with a single national fleet, avoiding a patchwork of regulations while continuing to ensure meaningful greenhouse gas emissions reductions,” the automakers said in a joint statement.

The agreement was denounced by Michael Abboud, a spokesperson for the EPA, as “a PR stunt” that will have no impact on the agency’s plan to issue new relaxed national emissions standards. But climate experts and Gov. Newsom hailed the agreement as a game changer.

“I cannot recall another instance in which a state or state coalition has negotiated this kind of an arrangement with industry to out-flank the federal government,” said Barry Rabe, a professor of public policy at the University of Michigan and an expert on climate issues.

California Air Resources Board chief Mary Nichols said the agreement could set a precedent for further cooperation between states and industry.

“If other states take a strong line on environmental standards where they have a particular resource or sensitive area, they may be able to get industry to go along even when the federal government wants weaker standards,” said Nichols. “I am thinking about Florida and the Everglades where the Interior Department backed off on a proposal to lease oil drilling after the state objected and industry signaled they didn’t really want to bid on these leases.”

The states that accept California emissions standards are Colorado, Connecticut, Delaware, Maine, Maryland, Massachusetts, New Jersey, New Mexico, New York, Oregon, Pennsylvania, Rhode Island, Vermont, and Washington, as well as the District of Columbia. Canada has also agreed to abide by the California standards.

Under the Trump administration, the EPA and the National Highway Traffic Safety Administration want to freeze fuel economy standards at the current 37 mile-per-gallon fleet average target for 2020 through 2026.

The Obama administration in 2012 set a fleet average goal of 51 miles-per-gallon by 2026 although that number could be adjusted based on the mix of vehicles an automaker sold.

Under the agreement with California, Ford, Honda, Volkswagen, and BMW pledge to improve their fleet averages by 3.7% each year, or slightly less than the standards set under the Obama administration.

Rabe observed that the four companies had “already made a strong commitment to electric vehicles” (EV) and might therefore find the new agreement more attractive than firms which are not promoting fuel-saving electric cars. Ford and Volkswagen announced a new EV-based partnership days before the California announcement.

Days after the agreement was reached, a dozen states—California, Connecticut, Delaware, Maryland, Massachusetts, New Jersey, New York, Oregon, Illinois, Rhode Island, Vermont, and Washington—and the District of Columbia banded together to file suit against the Trump administration for easing penalties on carmakers that don’t meet the higher fuel standards. A second suit was filed by the Sierra Club and the Natural Resources Defense Council.

The auto industry as a whole is worried that the Trump administration’s standards, which have yet to be spelled out in EPA guidelines, will lead to lawsuits and the likelihood that car manufacturers will have to make one kind of vehicles for states that accept the California emission standards and another for states that do not. This prompted 17 automakers in June to send a letter to President Trump warning of “an extended period of litigation and instability” should his plans be implemented.

This conflict over fuel efficiency comes at a time when state climate policy is increasingly diverging along party lines. Democratic-controlled states are setting forward-looking clean energy goals, while Republican-controlled states are standing still or even reducing fuel efficiency goals.

A bill passed late in July in Ohio by a Republican-controlled legislature and signed into law by Gov. Mike DeWine (R) provides more than $1 billion in subsidies for power plant owners and reduces Ohio’s 12.5% renewable energy standard to 8.5%.

In contrast, New York State, where the legislature and the governorship are in Democratic hands, recently adopted one of the nation’s most ambitious climate targets. The Empire State’s goal is 100% carbon-free electricity by 2040 and economy-wide, net-zero carbon emissions by 2050.

In 2018 California and Hawaii established goals of relying entirely on zero-emission energy sources for electricity by 2045.

Other Democratic-controlled states that have since adopted targets of obtaining their electricity from carbon-free sources such as wind, solar, or nuclear by midcentury are Colorado, Maine, Nevada, New Mexico, and Washington.

Such state actions were encouraged during the Obama presidency by the Clear Power Plan, announced by the EPA in 2014, which sought to reduce emissions from the carbon sources by 32% below 2005 levels by 2030, which the Union of Concerned Scientists called “a modest but important first step.”

President Trump, who denies that the planet is warming, has replaced the Clean Power Plan with a rule that allows states to set their own power plant standards.

Historically, climate issues did not divide on party lines. In the 1960s smog had become so pervasive and even deadly in Southern California that Republican Gov. Ronald Reagan and legislators agreed to curb tailpipe emissions. In 1967 they created the California Air Resources Board (CARB).

Three years later Congress passed and President Richard Nixon signed the Clean Air Act, which recognized California’s efforts, and authorized the state to set its own separate and stricter-than-federal vehicle emissions regulations to address the unique circumstances of population, climate, and topography that generated what was then the worst air in the nation.

Under eight presidents from 1968 to 2017 California has been granted 107 waivers by the EPA to take actions to combat air pollution. Many of these actions became federal standards. Only nine waiver requests were denied, most for minor technical reasons, according to a study by Rabe. The refusal by the Trump administration to allow California to use the fuel efficiency standards of the Obama administration is the first reversal of a waiver request from the state.

In 2006, California Gov. Arnold Schwarzenegger, a Republican, signed the Global Warming Solutions Act, which made CARB responsible for monitoring and reducing greenhouse gas emissions that cause climate change.

There are current Republican officeholders who believe it is the government’s duty to address climate issues. These include the Republican governors of Maryland, Massachusetts, and Vermont, three of the 14 states that adhere to the California standards of fuel efficiency.

“We have many advantages in the fight against global warming, but time is not one of them,” another Republican said. “We stand warned by serious and credible scientists across the world that time is short and the dangers are great. The most relevant question now is whether our own government is equal to the challenge.”

This was John McCain, running for president in 2008.

McCain had the federal government in mind, but in 2019 it is state governments that are rising to the challenge he described.

States have long experimented with creative solutions to the public issues of the day, fulfilling their mission as “laboratories of democracy,” to use the famous phrase of Supreme Court Justice Louis Brandeis.

The agreement between California and the four carmakers is a different kind of experiment. If Mary Nichols is right, it could set a precedent for the way in which state governments can work with industry to address a global issue.

Lou Cannon, State Net Capitol Journal

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