The Trump administration is moving to strip California of its authority to set stricter pollution limits for cars and trucks, the most aggressive step yet in its efforts to deregulate and water-down the nation’s fuel economy standards.
At the start of President Trump’s term, major automakers saw an opportunity to ask the incoming president for weaker fuel economy standards. But they got a lot more than they bargained for. Not only did Trump’s EPA propose drastically weaker standards, but it has now decided to go to war with California, which has refused to play ball.
California has long been afforded the authority to set its own standards, a situation that dates back decades to horrifically smoggy days in some California cities. Typically, the state has harmonized its standards with the federal government.
But California balked when the Trump administration proposed an aggressive rollback. Trump’s EPA proposed cutting standards to just 37 miles per gallon for model years 2020-2025, down from the 54.5 mpg on the books from the Obama era.
That led to a nightmare scenario for automakers, who faced a bifurcated market. There would be little benefit of manufacturing dirtier cars for some parts of the U.S. if they still had to build cleaner cars for California. Moreover, 13 states and the District of Columbia have promised to follow California’s standards.
So, in recent months, the top automakers cut a deal with California, agreeing to an average fuel economy standard of 50 mpg by 2026. They announced their decision to adhere to the state’s standards despite the prospect of weaker federal requirements.
That decision reportedly angered President Trump so much that he considered abandoning the whole effort in order to punish the automakers, leaving them with the stricter Obama-era standards, the New York Times reported in August.
Instead, he decided to punish both them and California by pressing forward with the federal rollback while also proposing to take away California’s unique authority. He announced his decision on twitter. The Trump Administration is revoking California’s Federal Waiver on emissions in order to produce far less expensive cars for the consumer, while at the same time making the cars substantially SAFER. This will lead to more production because of this pricing and safety......
— Donald J. Trump (@realDonaldTrump) September 18, 2019
California’s Attorney General has vowed to sue. Legal experts say that the battle could ultimately find itself before the Supreme Court, and the outcome would have broad and far-reaching implications. If the Trump administration prevailed, it could take away states’ ability to regulate greenhouse gases from cars and trucks.
The Trump administration is facing a ticking clock – they’d want the case to reach the Supreme Court before the 2020 election because if Trump loses, the deregulatory effort would presumably be killed by a Democratic president.
But Trump’s dirty car campaign is not popular. A Washington Post-Kaiser Family Foundation poll found that 66 percent of Americans oppose Trump’s plan to water-down fuel efficiency standards, and 67 support state governments being allowed to set their own stricter standards.
Meanwhile, another prong of the Trump administration’s attack on fuel economy standards came from the U.S. Justice Department, which opened an antitrust inquiry earlier this month into the four automakers that cut a deal with California – Ford, Honda, BMW and VW. The Trump administration accuses them of colluding, while environmental groups and California officials view the move as an abuse of power – the use of the Justice Department as a way of scaring automakers into backing down. The move may have already scared away other automakers from joining the California pact.
The move comes as the EPA’s effort to set its own weaker federal standards has fallen into disarray. The New York Times reported in August that some technical experts at the EPA involved in writing the new weaker rules left the agency. The agency says that its formal proposal will be released by the end of the year.
Meanwhile, it’s hard not to notice the odd timing of fuel economy rollback. It comes the same week that the global oil market is wondering about the security of global supply. The world seems poised to have dodged a major bullet with Saudi Arabia scrambling to make repairs to the Abqaiq facility, which may prevent a sustained price spike. Trump took to twitter to boast about how the U.S. doesn’t need oil from the Middle East, but that misses the fact that an oil price spike would affect drivers everywhere.
In that context, a ratcheting up of fuel economy standards is one of the more powerful tools the U.S. government can deploy for energy security. “The best way to insulate drivers from inevitable oil price shocks is to reduce how much oil we use in the first place. In this light, the Trump administration’s decision to roll back fuel-economy standards is also misguided,” Jason Bordoff of Columbia University wrote in Foreign Policy.
By Nick Cunningham of Oilprice.com
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