Negotiations over vehicle standards stall as politicians posture

Source: Camille von Kaenel, E&E News reporter • Posted: Tuesday, April 24, 2018

Talks between California and the Trump administration over auto rules have stalled since EPA Administrator Scott Pruitt said he would weaken the Obama-era climate regulations.

A group of officials that had been holding regular closed-door meetings on the standards since December has not picked those talks up again since Pruitt announced he would weaken the federal rules last month. The people in those discussions were Mary Nichols, the head of California’s Air Resources Board; Bill Wehrum, EPA’s air chief; Heidi King, chief of the National Highway Traffic Safety Administration; and Mike Catanzaro, the outgoing White House aide for domestic energy policy.

As of last week, there were no further meetings scheduled, according to California Air Resources Board spokesman Stanley Young.

Catanzaro, who brought Nichols, Wehrum and King together to talk, is slated to step down from the White House this week. It’s unclear whether any other White House officials will assume the role of smoothing over the negotiations on the car rules. Francis Brooke, Trump’s new energy aide, could take up the gig, but some see him as inexperienced.

“Having some lack of clarity in the White House will probably slow it down a little bit,” said Bob Perciasepe, president of environmental group the Center for Climate and Energy Solutions, who was EPA’s deputy administrator during the Obama administration.

Pruitt last month decided to officially loosen the Obama-era targets to double fuel efficiency of cars and trucks by 2025. The administration will now have to decide on the extent of the rollback.

That could come down to choosing between agencies. Negotiators are considering numbers provided by NHTSA, a safety-focused agency that cited the link between small cars and accidents to justify a possible reduction in tailpipe requirements. EPA’s data have found that manufacturers could meet the Obama standards with new technology and special credits.

Officials may be eyeing June as a time frame for the release of a new rule.

Good cop, bad cop

If a deal fails, California has vowed to keep moving forward with the strict Obama-era requirements, setting up a legal fight and years of uncertainty for manufacturers.

Some officials working behind the scenes want to avoid a clash between California and the White House. Nichols has offered a compromise to the federal government: Extend the rules through 2030, and California might agree to some tweaks loosening the targets for 2022 to 2025.

“We think there’s a way you could give some recognition to the concerns of the auto companies have raised that would not do fundamental damage to those standards,” Nichols told Reuters.

Wehrum, EPA’s air chief, has also said his priority is to avoid two sets of standards, striking a more conciliatory tone than his boss.

But even when California and the Trump administration were talking, the negotiations didn’t yield a compromise.

Young said the latest meeting was “not substantive.” No firm proposal ever came to the table. When Pruitt was ready to announce he would loosen the Obama-era targets, Wehrum gave Nichols a heads-up — but no copy of the document making the decision formal.

Meanwhile, politicians like Calif. Gov. Jerry Brown (D) and Pruitt have talked tough about their disagreement over the rules.

“Clearly, she is the good cop in the Brown-Nichols axis of things, and the governor is the bad cop,” said Dan Becker, director of the Safe Climate Campaign.

Taking the clash to the courts could score either some political points. Pruitt is mired in ethics scandals that have tarnished his reputation, and he may be angling for a possible run for office. Brown has not backed down from the possibility of an all-out legal fight that would pit California’s liberal credentials against the Trump administration.

“Between California and China, Mr. Pruitt has met his match,” Brown said during a visit to Washington, D.C., last week (Climatewire, April 18). “I believe we have the legal horsepower to block the immediate legal moves by the Trump administration.”

The governor did admit he would be open to a compromise, giving a nod to Nichols, but added that he would not want to weaken the rules.

Xavier Becerra, the Democratic attorney general of California, has promised to sue if the Trump administration moved to weaken the rules in any way. He’s backed by a dozen other attorneys general.

Pruitt has also ruffled feathers by saying California should not “dictate” the rules to the rest of the country. He declared EPA would outline the one national standard.

That shows a gap, at least in public discourse, with his air chief, Wehrum, who has reached out to California to include them in negotiations. Wehrum, who worked in EPA during the George W. Bush administration, is seen as more receptive to staff input.

The tough talk could backfire: Pruitt’s camp is likely to lose in the courts if it decides to go after California’s special authority to set its own rules, according to some legal experts. The litigation could easily drag on past Pruitt and Trump’s tenure in office.

A vacuum for manufacturers?

Auto manufacturers might be the biggest losers in an all-out clash, which could lead to years of uncertainty as the courts battle out jurisdiction and the possibility of two sets of requirements — one for cars sold in California and the 12 states that adopted its rules, and one for the rest of the country.

“At some point, the automobile manufacturers will have to bring these parties together if they’re going to keep pointing at each other from across the country,” said Perciasepe.

Recently, some manufacturers have been increasing pressure on officials to preserve one set of requirements, albeit with a few additional flexibilities to ease costs.

“I think there’s a reasonable deal to be had,” said Robert Bienenfeld, assistant vice president of environment and energy strategy at American Honda Motor Co. “All we can do is advocate for the best policy options out there.”

Honda outlined its proposal in a perspective published online Friday. The company wants EPA to keep the Obama-era stringency, which would bring average fuel economy to a projected 50.8 mpg in 2025, or about 36 mpg in the real world.

The company also wants to expand flexibilities, primarily to incentivize electric technologies. For example, it wants EPA to eliminate automakers’ responsibility for upstream emissions from the electric grid, which would phase in during the 2022-25 time frame. It also wants more credit for technologies that aren’t counted in EPA’s test cycle but that reduce fuel consumption, like start-stop systems.

That aligns with California’s position. It differs from the one pushed by the Alliance of Automobile Manufacturers, which represents domestic heavyweights like Fiat Chrysler Automobiles that want to see the Obama-era stringency reduced. Honda is represented by Global Automakers.

Mark Reuss, a General Motors executive vice president who heads product development, told the Associated Press that two sets of rules would be “just waste,” and he would prefer “one good one” instead.

“There is still time to do that before there is train wreck,” said Margo Oge, EPA’s transportation office head under Obama. “Otherwise, industry will live with uncertainty for several years through the regulatory process and courts.”