Tensions rise with Pruitt’s ‘amazing’ remarks on car rules

Source: Zack Colman and Camille von Kaenel, E&E News reporters • Posted: Thursday, March 15, 2018

A key battle over the Trump administration’s climate policy grew more contentious due to comments from U.S. EPA Administrator Scott Pruitt, who might have scrambled delicate negotiations on vehicle fuel efficiency standards, according to observers.

At issue are fuel economy rules approved in the Obama administration’s waning days. The White House must decide by April 1 whether to change the targets for 2022 through 2025.

All signs point to the Trump administration reviewing and eventually weakening those standards. But Pruitt’s comments aimed at California, which plays a major role in the vehicle program, threaten to upset the balancing act the White House is trying to maintain to avoid a legal mess or a regulatory patchwork.

“California is not the arbiter of these issues,” Pruitt told Bloomberg, adding that California’s own fuel standards “shouldn’t and can’t dictate to the rest of the country what these levels are going to be.”

His comments stand to sharpen tensions between the White House and California over a federal waiver that allows California to exceed national standards on fuel economy. Uncertainty around the continuation of the waiver, granted under President Obama, has threatened to roil relations between California officials and the Trump administration for more than a year.

The White House has also tried to calm tensions between EPA and the National Highway Traffic Safety Administration, the two agencies that share responsibility for the car program. At the same time, it has had to juggle the desires of California, which has legal authority to require more stringent efficiency targets to clean its notoriously smoggy skies (Climatewire, Sept. 27, 2017).

It’s not the first time that Pruitt and California have been at loggerheads over the fuel program. The EPA chief has hinted before at possibly ending its waiver. That aroused cries from the environmental community, noting that 12 other states and the District of Columbia have opted into the Golden State’s standard. That amounts to about one-third of the U.S. vehicle market. That’s potentially significant for climate change, because the transportation sector emitted more carbon dioxide last year than power plants for the first time.

“There will be undoubtedly more posturing before this comes to an end,” said Bob Perciasepe, a former EPA official who is president of the environmental group Center for Climate and Energy Solutions. The goal, he said, is “having them all be together so that the automobile industry has the pathway and clarity it needs to make the innovations that they’re making.”

Posturing may be all Pruitt’s comments amount to. The Trump administration and California are working behind the scenes to address the Obama-era targets, which would have brought average real-world fuel efficiency to 36 mpg in 2025.

One needle the White House is trying to thread is how far the standards should be extended into the future, if at all. Mary Nichols, the head of the California Air Resources Board, has signaled a willingness to compromise on the stringency of the standards in earlier years if officials came to an agreement for rough targets through 2030, offering a window of opportunity for a deal. Automakers have also endorsed that position.

Pruitt said yesterday that he’s not “presently” looking to extend standards beyond 2025.

“Being predictive about what’s going to be taking place out in 2030 is really hard,” Pruitt told Bloomberg. “I think it creates problems when you do that too aggressively. That’s not something we’re terribly focused on right now.”

California officials said they would not back down. Regulators there are already working on their own set of rules through 2030.

“We absolutely need advanced clean cars, including electric vehicles, to meet California’s challenging air quality challenges and climate goals,” Stanley Young, a spokesman for the Air Resources Board, said in an email yesterday. “Given this compelling need to protect public health, California will continue with development of post-2025 vehicle standards — to ensure we reach our air quality and climate goals, and to align with plans by car manufacturers to significantly increase production of electric cars.”

Pruitt’s comments contrasted with the nuance sought by day-to-day negotiators, including EPA air chief Bill Wehrum. Many are hoping Wehrum, an experienced Clean Air Act lawyer who has served as a high-ranking EPA official before, will strike a conciliatory tone. But he has also aggressively sought to limit California’s authority before, successfully arguing for the denial of its waiver in 2006.

Nichols told E&E News in February that the conversations with Wehrum have been “good.”

Some worried that Pruitt’s comments yesterday could push California away. Many inside and outside the industry want to avoid long court battles that breed uncertainty for automakers.

“It’s pretty clear they’re trying to strong-arm California into a negotiating position. I don’t have a sense that it will be successful because regardless of what or how the administrator characterizes the standard, California has always set the standard based on its state’s needs,” an industry source said. “By removing the issue of post-2025 off the table, it’s removed any real incentive for California to discuss the situation in any substantive way with EPA.”

Janet McCabe, the air chief in Obama’s EPA, who fought to maintain the targets in the final days of the administration, suggested Pruitt’s refusal to develop long-term standards could wreak havoc for the auto industry.

“It has always been super-critical that the emphasis be put on one national car program and one car program that looks forward and gives automakers plenty of lead time to plan ahead,” she said. “The idea that discussion beyond 2025 would be cut off seems to be an unfortunate direction.”

Others were not as concerned.

Pruitt’s remarks simply called California’s bluff, said Jeff Holmstead, a former EPA air chief under President George W. Bush. He also said he thinks any uncertainty resulting from litigation wouldn’t significantly alter automakers’ production plans and that they’re comfortable with the risk, given that they rejected the current fuel economy schedule.

“I don’t really view this as an indication that there’s not going to be some deal, but I view this as signaling that California doesn’t have as much leverage as it thinks it has,” said Holmstead, who is now at Bracewell LLP. “Can California walk away? Sure. But they run a big risk, and if they all stay at the table and get something they’re comfortable with, then California doesn’t lose completely their ability to regulate greenhouse gases.”

Spokespeople from the Alliance of Automobile Manufacturers and Association of Global Automakers, which represent domestic and international automakers, respectively, yesterday reiterated their goal of a unified, nationwide set of rules. They have worked behind the scenes for tweaks that could erode the climate benefits regardless of the deal struck with California on top-level targets.

And last week, General Motors Co. CEO Mary Barra said at an oil and gas industry conference that her firm supports “one common standard” that can “comprehend new developments in the industry” such as ride-sharing and technology advancements.

Margo Oge, who negotiated the Obama rules as the head of EPA’s Office of Transportation and Air Quality, said the high-level discussions would be a “train wreck” without input from individual car manufacturers. She said the technical compromise that was ultimately adopted by the regulators in her time came from an automaker.

“Amazing!” she wrote when told of Pruitt’s comments yesterday. “That’s one more reason why industry has to be on the front of this.”

Reporter Debra Kahn contributed.