Here’s how California could fight Trump’s move on cars

Source: Anne C. Mulkern, E&E News reporter • Posted: Thursday, August 2, 2018

California is weighing how to fight back as the Trump administration readies to weaken vehicle pollution rules while potentially stripping the state’s ability to set its own standards.

A major court fight with the nation’s most populous state seems inevitable, said legal experts and those familiar with California’s strategy.

The Golden State also would look at negotiating with car companies to agree on voluntary standards, in order to avoid years of litigation. The state as well might consider new climate programs to compensate for the increase in greenhouse gas emissions, inevitable if California loses the Clean Air Act waiver allowing it to enforce state rules.

The state plans to continue acting on its own until EPA intervenes, Mary Nichols, chairwoman of the California Air Resources Board, has said (Climatewire, July 18).

“We will reassert our Clean Air Act authority and move forward with our program, possibly with some improvements,” she told E&E News earlier this month. “We will do that, and if EPA tries to block us, we’ll be in court. Everyone is trying to avoid that, mostly because we don’t think it’s good for the industry or the consumers.”

Nichols’ spokesman said she declined to comment further until EPA acts. A spokesman for Gov. Jerry Brown (D) also declined comment.

What can Calif. do?

California, home to nearly 40 million people, already has sued EPA over its initial move to undo Obama-era tailpipe standards. That suit in May, joined by 16 other states and the District of Columbia, didn’t speak to California’s authority under the Clean Air Act, which the Trump administration has threatened to weaken.

A separate court fight over that Clean Air Act waiver is likely. In addition, California probably would seek a stay by asking the court to keep current vehicle standards in place pending the outcome of litigation, said Ann Carlson, co-director of UCLA’s Emmett Institute on Climate Change and the Environment.

“What the state is going to want is to have the ability to continue to move forward and not have these standards slip because time passes as the courts decide on whether the waiver is valid,” Carlson said.

To go further, the state could file another lawsuit arguing that EPA isn’t meeting its obligation to protect human health. The agency under former President Obama determined that greenhouse gas emissions are dangerous to people. Transportation is the largest source of greenhouse gases, accounting for about 28 percent in the United States.

That type of lawsuit would ask, “What is EPA doing to carry out its obligation to reduce endangerment?” Carlson said. Trump’s EPA under its favored scenario would freeze standards at 2020 levels through 2026.

The state could also try to negotiate directly with automakers, said an official familiar with California’s thinking, who asked not to be identified to speak freely. California has some power, he said, because the automakers need to plan future models. If California eventually wins a lawsuit over the standards, those carmakers could be in trouble.

Ethan Elkind, climate research fellow at the University of California, Berkeley, School of Law, said it could “take years to resolve this.”

“We may have the politics of this resolved before the legal questions,” Elkind said. “By the time this ends up at the Supreme Court, which it seems like it would have to end up there, we may have a new president.

“California vowing to fight it means that the industry is basically guaranteeing itself multiple years of litigation and uncertainty,” Elkind added.

Because of that, California officials might ask automakers to lobby EPA and key lawmakers for a friendlier resolution.

Some carmakers that met with EPA and others at the White House reported that the administration seemed eager to go after California aggressively, and the White House seemed surprised that not everyone in the car industry agreed.

It was very clear that the White House had an animosity toward California, said the official familiar with California’s efforts, who knew of the talks. Some officials in the Trump administration couldn’t understand why the car companies would want to defend or collaborate with California, the person said.

What’s the legal outlook?

The Clean Air Act gives California an avenue to adopt its own requirements in order to address local pollution, like smog, legal experts said.

To strip California of that ability, EPA would need Congress to amend the Clean Air Act, and “that would be very hard” to accomplish, said Dan Sperling, an automotive expert on the California Air Resources Board and director of UC Davis’ Institute of Transportation Studies.

EPA appears likely to argue that the Energy Policy and Conservation Act of 1975, or EPCA, applies. It says that only the federal government can set energy-related rules with an interstate effect.

A draft EPA rule published in The New York Times stated that with EPCA, “when an average fuel economy standard” under the law “is in effect, a State or a political subdivision … may not adopt or enforce a law or regulation related to fuel economy standards.”

Unlike the Clean Air Act, “EPCA does not allow for a waiver of preemption,” the draft said. “Nor does EPCA allow for states to establish or enforce an identical or equivalent regulation.”

Sperling, however, said that California has been “very careful to not write any of the rules in a way that would indicate they’re based on energy.”

Clean Air Act language says that a state must show it has special circumstances that prompt the need for the waiver.

“We have the two dirtiest air basins in the country,” in the Los Angeles region and in the San Joaquin Valley, Carlson said. “The federal government just tightened the ozone standards. California can’t meet those without clean cars.”

Carlson and other legal experts said there’s no precedent for revoking a state’s waiver.

“It’s not written into the Clean Air Act in any way that is an action that could be taken,” Sperling said. “That’s new legal ground.”

What’s the effect on state climate goals?

California has some of the most aggressive goals in the nation for cutting greenhouse gases in order to limit climate change. It wants to reduce emissions 40 percent below 1990 levels by 2030, and 80 percent by 2050.

If EPA revokes the California waiver to set tailpipe emissions, “that’s disastrous,” Sperling said.

The tailpipe emissions rules are “the most important policy that we have for the transportation sector,” he said. “They are the binding long-term policy for achieving reductions from the transportation sector.”

Transportation accounts for nearly 40 percent of the state’s greenhouse gas pollution. If emissions from oil refineries, which make gasoline, are included, it’s nearly 50 percent, Elkind said.

And although the state just announced that it had already met its 2020 emissions goal, those cuts came from renewable energy, Elkind said. Emissions in the transportation sector are on the rise.

“This is the big hurdle for California right now,” Elkind said.

An important initiative being used by California to tackle its transportation pollution is the zero-emissions vehicle program, or ZEV. It forces automakers that sell in the state to offer increasing numbers of clean cars. If that’s targeted, Sperling said, “the near-term effect on the greenhouse gases reduction would be relatively small, but the long-term effect would be huge.”

The ZEV mandate is aimed at accelerating investments in electric drive technology.

To counteract the losses if ZEV and the tailpipe rules are killed, the state could use tax incentives to get people to buy more electric vehicles, Carlson said, perhaps funding the effort with revenues from the state’s carbon cap-and-trade program. Auctions for environmental permits under that program are expected to total $3 billion this year.

The state could also consider a kind of “feebate program.” It would charge a fee for buying cars with poor fuel economy and give that same amount back as a rebate to people who purchase low-emissions vehicles, Sperling said.

However, the Legislature likely would need to approve it. That could require a two-thirds majority, as state law requires a supermajority vote for imposing a new fee or tax.

The state could also seek to use more renewables in the electricity sector, Elkind said, though the state’s current goals are already steep. California might also try to clamp down on industrial emissions; that’s also a challenge.

“It’s not a pretty picture for California if EPA is successful here,” Elkind said.