Automakers, Rejecting Trump Pollution Rule, Strike a Deal With California

Source: By Coral Davenport and Hiroko Tabuchi, New York Times • Posted: Friday, July 26, 2019

WASHINGTON — Four of the world’s largest automakers, including the Ford Motor Company, have struck a deal with California to reduce tailpipe pollution, in a setback to the Trump administration as it prepares to weaken national emissions standards and revoke states’ rights to set their own such rules.

While Trump administration officials in the White House and Environmental Protection Agency have been working on a plan to drastically weaken Obama-era rules on planet-warming vehicle pollution, four automakers — Ford, Honda, Volkswagen Group of America and BMW of North America — have been holding secretive talks in Sacramento on a plan to move forward with the standards in California, the nation’s largest auto market. And on Thursday, Gavin Newsom, the governor of California said he was “very confident” that more automakers would join the deal in the coming days.

The move is another blow in the battle between Mr. Trump and California, a state he seems to relish antagonizing and which has filed more than 50 lawsuits against his administration. “We in California see these regulations as a good thing. The Trump administration is hellbent on rolling back them back,” Mr. Newsom said. “They are in complete denialism about climate change.”

Spokesmen for the White House and the E.P.A. did not comment on the deal.

Environmental policy experts called it a powerful pushback against Mr. Trump’s efforts to unwind one of the central policies of the Obama administration to fight climate change. “I think this is a breakthrough,” said Daniel Lashof, the United States’ director of the World Resources Institute, a research organization. “This shows that state leadership is indispensable. That’s where the leadership is coming from right now in the U.S. on climate.”

The E.P.A. and Transportation Department are expected to announce this summer a new plan that would effectively eliminate the Obama-era rule, which requires passenger vehicles to achieve an average mileage of about 52.5 miles per gallon by 2025. That rule would have significantly lowered vehicle emissions of planet-warming greenhouse gas pollution.

The new Trump rule, which is expected to lower that standard to about 37 miles per gallon, is also expected to revoke the legal authority of California and other states to set their own, stricter, state-level standards.

Under the terms of the new deal with California, the four automakers, who together make up about 30 percent of the United States auto market, would comply with a slightly looser standard than the original Obama rule. Instead of reaching an average fuel economy of 52.5 miles per gallon by 2025, they would be required to reach a standard of about 51 miles per gallon by 2026.

The deal would also give automakers more leeway in meeting the fuel economy standards through other means, like earning credits for fuel-saving technology, and called on other automakers to join the agreement.

In a joint statement, the four automakers said the agreement with California would lead to “much-needed regulatory certainty.” The deal would let them “meet both federal and state requirements with a single national fleet, avoiding a patchwork of regulations while continuing to ensure meaningful greenhouse gas emissions reductions,” they said.

Mr. Trump has promoted his plan to roll back federal vehicle pollution standards as a gift to the auto industry. But automakers have said it could actually harm themby creating regulatory uncertainty as California and other states claimed the legal right to set their own standards and fought back in the courts.

Thirteen other states already follow the California pollution standards, and are expected to fight back in court if the Trump administration revokes their right to do so. Automakers fear that a mix of state and federal pollution standards could split the United States’ auto market, forcing them to make and sell entirely different types of vehicles in different states.

Last month, 17 automakers sent a letter to Mr. Trumptelling him that his plan to weaken tailpipe pollution standards threatened to cut their profits and produce “untenable” instability in a crucial manufacturing sector.

In response, a White House spokesman put the blame on California, saying the state “failed to put forward a productive alternative.”

After that letter, several auto companies approached California officials asking if they could work together on a separate deal. “It became clear very quickly that following up on that letter and the lack of response from the administration that they were ready to sit down with us,” said Mary D. Nichols, California’s top clean air official.

“We had several companies that came to us,” she said. “We hope and expect that in the coming days we’ll see other companies.”

Publicly rebuffing the president’s plan comes with risk for the automakers. The White House has courted their support for his moves, and, privately, some officials have said that they fear industry criticism could lead the president to retaliate by imposing tariffs on auto imports.

That, too, could be painful, because many cars and components are now made or partly assembled across the border in Mexico or Canada.

While two of the United States’ Big Three automakers, Ford and GM, signed the June letter to the White House, the third, Fiat Chrysler, did not.

In an emailed statement, Gloria Bergquist, a vice president of the Alliance of Automobile Manufacturers, wrote: “Uncertainty from protracted litigation is a major concern for an industry with long production cycles, so much capital investment and 10 million Americans dependent on auto paychecks. Individual companies may have different perspectives on how best to achieve greater certainty.”

Some environmental groups criticized the slower pace and expanded loopholes the deal awarded the automakers. “That means more pollution, less savings at the pump and a bad precedent for future standards,” said Daniel Becker, director of the Safe Climate Campaign at the Center for Auto Safety, a Washington-based nonprofit group.