Battle Lines Drawn Over California Auto Air Rules, EVs

As promised, President Trump this week announced he’s revoking California’s right to set its own auto emissions standards. And as promised, California Gov. Gavin Newsom is headed to court because he doubts the President’s standing to unilaterally undo an act of Congress, the Clean Air Act passed in 1970 and signed by then-President Richard Nixon. So much is riding on the outcome that the case is almost certainly headed to the Supreme Court.

California says its authority to set stricter emissions and fuel economy standards is well-established and, besides, automakers have world standards to meet that will be tougher than US standards. The President says California rules raise costs across the rest of the country, a 2009 Obama administration waiver allowing California to also regulate greenhouse gases was over-reaching, and buyers of combustion-engine cars in all 50 states will pay more in order to subsidize money-losing EVs that (critics say) cost $12,000 more than a comparable gasoline-powered vehicle.

Wednesday President Trump said a single emissions standard would lower car prices. Outside of this week’s orders, federal regulators have been working on easing tailpipe emissions rules set in motion by the Obama administration in 2012. Pollution levels would continue to decrease, but not as dramatically as the slope dictated in 2012.

Trump also said uniformity of standards would create jobs and make for safer cars. The latter claim is especially in doubt because it assumes automakers will producer lighter cars that will fare less well in collisions with heavier cars. Some experts say the difference in big-versus-small-car safety is less of an issue, and that as more cars downsize, there are fewer big cars to collide with smaller cars.

How Much Is Politics?

There are 12 states, including California, that use California’s emissions rules, with Colorado set to make it 13 in 2021. Many of the states are coastal (Atlantic and Pacific, not Gulf). All but one of the 13 went for Clinton over Trump in the 2016 election (Pennsylvania went for Trump by 0.72 percentage points), so the administration’s actions aren’t alienating his voter base. The 13 states represent 26 percent of the 50 states, but 36 percent of the vehicles sold last year. Because many are densely populated, they’re more likely to have more small, high-mpg vehicles and fewer big pickups.

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

President Trump tweeted Wednesday “revoking” California’s emissions permission granted by the 1970 Clean Air Act. The multi-part tweet (with the first part above) continued:

…advantage, and also due to the fact that older, highly polluting cars, will be replaced by new, extremely environmentally friendly cars. There will be very little difference in emissions between the California Standard and the new U.S. Standard, but the cars will be…. [third tweet:] ….far safer and much less expensive. Many more cars will be produced under the new and uniform standard, meaning significantly more JOBS, JOBS, JOBS! Automakers should seize this opportunity because without this alternative to California, you will be out of business.”

The Clean Air Act of 1970 was expanded by Congress in 1977 to allow other states to legally adopt California’s standards. But they couldn’t set their own standards; they had to choose the US or the California standard. Even then, there was some automaker unhappiness with having dual standards, so the Obama administration set in a glide path toward a single set of standards that would result in a 54.5 mpg target — the corporate average fuel economy, or CAFE, standard — by model year 2025. Which all of a sudden is not that far off, given that automakers are starting to lock in the 2021 models.

It should be noted that 54.5 miles per gallon as a standard is a formula that involves more than how far the average car goes on a gallon of gas. It equates very roughly to about 40 actual miles per gallon, which is still a big step forward. The Trump administration is likely to push mpg and clean air standards higher, but more slowly than the regulations currently call for.

Also note that when it comes to controlling carbon dioxide, CO2 emissions are a proxy for higher mpg. Unlike carbon monoxide or nitrogen emissions, CO2 emitted directly relates to how much gasoline or diesel is burned. If you get a vehicle to emit half as much CO2, it’s because the car used half as much fuel.

What Others Say

Congress and the media are weighing in. Fans of the President and of less federal (or state) regulation support him and want a single US standard; supporters of cleaner air and alternatives to the combustion engine want to stick with the option of a higher standard for states that need to deal with pollution or congestion.

The New York Times (“Mr. Trump Muddies the Air”) editorialized that

President Trump finds himself arrayed against the plain language of the Clean Air Act, California’s historical role as a laboratory for tough new environmental rules and the express wishes of several major automakers and two-thirds of the American people. …

Over time, strategies adopted in California to control smog-producing pollutants became standard across the country. So, too, with carbon dioxide, the main greenhouse gas. California’s decision in 2002 to add greenhouse gases to the list of pollutants it wanted to control — a decision approved by the Obama administration seven years later — arguably accelerated the push for zero-emission and low-emission vehicles like plug-in hybrids. (Tailpipe emissions are now the nation’s single biggest source of greenhouse gas emissions.

Over at The Wall Street Journal (“California Can’t Go Its Own Way,” with the headline probably annoying Fleetwood Mac), the focus was whether the 2009 Obama administration waiver is as soundly rooted in law as the 1970 legislation:

The Trump Administration now has strong economic, regulatory and constitutional reasons to revoke the waiver. California has used its waiver to impose electric car quotas that will raise costs for consumers across the country. Manufacturing an electric car costs $12,000 more than an equivalent gas-powered vehicle. Despite generous federal and state consumer subsidies, auto makers will probably have to sell EVs below cost in California and raise prices on gas-powered cars everywhere else.

The state’s EV mandate doesn’t even account for all CO2 emissions since it awards more credit for longer-range batteries, even though they require more energy (and fossil fuels) to manufacture. A Tesla Model S, for instance, receives almost twice as much regulatory credit as a Nissan Leaf. It also provides credit for hydrogen fuel-cell vehicles that derive energy mostly from natural gas. This scheme encourages regulatory arbitrage.

Fair-weather liberal federalists are complaining that the Trump Administration is running over states’ rights. Yet the Commerce Clause prohibits states from burdening interstate commerce, and the California rules discriminate against consumers in other states. If California’s waiver is allowed to stand, its rules would become the de facto national standard. …

Are EVs Getting a Free Ride?

This next part may not wind up in court, or at least may not figure into the ultimate reasoning behind the rulings, but conservatives are unhappy with what they see is the current huge cost of creating EVs and their batteries. Nor will the case hinge on Gov. Newsom’s claim: “California will prevail because we’re leaders in this space.”

EV opponents say the cost-adder for an EV is about $12,000 per vehicle. They’re deathly opposed to extending the EV tax credit of up to $7,500 from 200,000 cars per automaker to 600,000. They also say, as the WSJ notes, “Most auto makers are already increasing investment in electric cars to comply with regulations in China and Europe. The Trump Administration isn’t prohibiting them from manufacturing more fuel-efficient and electric cars.”

The discussion outside the court case may continue along the lines of how clean do we want our air, how much greenhouses should be emitted given the vast-majority opinion that greenhouse gases from transportation are hastening global warming, and how long should the government underwrite subsidies to encourage alternative cars — plug-in hybrids and pure EVs — and whether certain parts of the country should have tougher standards — California for sure, but also places ringed by mountains such as Denver, or the densely packed BosWash corridor.

There certainly will be uncertainty for the next year as the issue winds into and through the courts. Depending on how quickly or slowly it moves, a non-Trump President in January 2021 might back away from the lawsuit, but it also might be stuck with a partly unfavorable lower-court ruling.

It was uncertainty about future rules that led four automakers to go directly to the state of California to establish known standards for fuel efficiency and emissions regardless of what happens at the federal level. The agreement by BMW, Ford, Honda, and Volkswagen (and their subsidiaries such as Mini, Lincoln, Acura, Audi, etcetera) also angered the President and perhaps led him to advance the plans to revoke, if it’s in his power, the existing California mileage and emissions rules.

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