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Federal Government and the State of California Intensify Fight Over the Regulation of Vehicle Emissions Standards

A confrontation that has been a year (or more) in the making has finally materialized. On September 18, 2019, via Twitter, President Donald Trump announced: “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.” The next day, the Trump administration announced its “One National Program Rule.”

The Trump administration’s actions came a few weeks after four major auto manufacturers agreed with the California Air Resources Board (CARB) to voluntarily reduce emissions under a framework that “can serve as an alternative path forward for clean vehicle standards nationwide.” The State of California has vowed to fight any action by the Trump administration to revoke California’s waiver.

Trump Administration’s 2018 SAFE Vehicles Rule

On August 1, 2018, the Trump administration announced its plan to freeze emission standards at model year 2020 levels as set forth in the Safer Affordable Fuel-Efficient (SAFE) Vehicles Rule for Model Years 2021-2026 Passenger Cars and Light Trucks (SAFE Vehicles Rule). At the time, Governor Jerry Brown called President Trump’s proposal “reckless” and vowed that “California will fight this stupidity in every conceivable way possible.” CARB responded to the proposed SAFE by proposing amendments to its vehicle emissions regulations and, close to one year later, it also reached the aforementioned agreement with Ford Motor Company (Ford), Honda Motor Company Ltd. (Honda), BMW of North America (BMW) and Volkswagen Group of America (VW).

California Air Resources Board’s Agreement with Ford, Honda, BMW and VW

On July 25, 2019, CARB announced that Ford, Honda, BMW and VW had agreed to the terms of a voluntary framework that supports a national program leading to:

. . .at least 30 percent more greenhouse gas emission reductions compared to splitting up the standards between those followed by California and 13 other states and the less stringent standards proposed by the Trump administration.

The framework allows gasoline and diesel cars and light trucks to continue at about the same rate as the current program through 2026 versus the Trump administration’s plan to roll back emissions standards, effectively freezing them at the 2020 level.

The framework’s terms include the following:

•Extend the current 2025 model year standard until 2026 and smooth out the interim years from 2022 through 2025 to provide additional lead time and slightly less aggressive year-over-year reductions. (That is, changing the original year-over-year 4.7 percent greenhouse gas (GHG) reduction over four years to 3.7 percent over five years.)

•Support the transition to electric vehicles by rewarding companies that sell more EVs with additional credits to meet the GHG standard for their entire fleet, while ensuring that gas and diesel vehicles also get progressively cleaner over time.

•Provide an incentive to car companies to install more GHG-reducing technologies (such as making the car more aerodynamic at highway speeds or improving the vehicle’s internal temperature control) by modestly revising limitations on their usage, and streamlining agency review and approval for new technologies.

•Simplify compliance by removing the requirement to consider upstream GHG emissions associated with the production of the electricity used by electric vehicles when calculating the GHG emissions for a car maker’s fleet.

Participating companies are choosing to pursue a voluntary agreement in which California accepts these terms as compliance with its program, given its authority, rather than challenge California’s GHG and zero emission vehicle (ZEV) programs.

The Trump administration responded to the framework in September by launching a Justice Department antitrust investigation against Ford, Honda, BMW and VW, seeking to determine whether the auto manufacturers violated federal law by entering into their agreement with California.

The ‘One National Program Rule’

One day after President Trump’s California waiver announcement, the National Highway Traffic Safety Administration (NHTSA) and the U.S. Environmental Protection Agency (EPA) announced the “One National Program Rule” to “enable the federal government to provide nationwide uniform fuel economy and greenhouse gas emission standards for automobile and light duty trucks.”

According to a fact sheet issued by the NHTSA and EPA, The One National Program Rule finalizes critical parts of the SAFE Vehicles Rule.

The One National Program Rule makes clear that federal law preempts state and local tailpipe GHG emissions standards as well as ZEV mandates.

The NHTSA is affirming its statutory authority to set nationally applicable fuel economy standards under the express preemption provisions of the Energy Policy and Conservation Act dictates that such state and local programs are preempted.

The One National Program Rule signals that EPA is withdrawing the Clean Air Act preemption waiver it granted to the State of California in January 2013 as it relates to California’s GHG and ZEV programs (the action does not affect California’s ability to enforce its Low Emission Vehicle program and other clean air standards to address harmful ozone-forming vehicle emissions).

The NHTSA and EPA continue work to finalize the remaining portions of the SAFE Vehicles Rule, to address proposed revisions to the federal fuel economy and GHG vehicle emissions standards.

Conclusion and Implications

For the past year, many stakeholders hoped that California and the Trump administration could reach some type of agreement to establish national vehicle emissions standards acceptable to all. The latest actions from the Trump administration appear to quash any remaining hope and now it appears that California and the Trump administration are entrenched for a long legal battle.

(Kathryn Casey)