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Major Automakers Cave to California on Trump Auto Rule

The Washington Post reported on July 25th that Ford, Honda, Volkswagen, and BMW North America have “struck a deal with California to produce fleets that are more fuel-efficient in coming years, undercutting one of the Trump administration’s most aggressive climate policy rollbacks.”
 
Well, that’s one way to spin it. The administration’s Safer Affordable Fuel-Efficient (SAFE) motor vehicle rule leaves automakers free to meet any California-blessed, cost-inflating, virtue-signaling fuel economy standards they want. It just doesn’t coerce them to do so regardless of how many middle-income households would be priced out of the market for new motor vehicles.
 
According to the Post, the deal “came after weeks of secret negotiations and could shape future U.S. vehicle production, even as White House officials aim to relax gas-mileage standards for the nation’s cars, pickups and SUVs.” In a joint statement, the four automakers said the deal “will provide our companies much-needed regulatory certainty by allowing us to 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.”
 
More spin. The threat of a market-balkanizing “patchwork” of state-by-state fuel economy requirements exists because in 2009 the Obama administration authorized California to establish greenhouse gas emission standards for all new cars sold in the state, allowing other states to opt into the California program. Greenhouse gas motor vehicle standards closely and directly regulate fuel economy. Almost 95 percent of vehicular greenhouse gas emissions is carbon dioxide from motor fuel combustion (75 FR 25327), and “there is a single pool of technologies . . . that reduce fuel consumption and thereby reduce CO2 emissions as well” (75 FR 25424).
 
The problem is not that each California-allied state would have its own unique motor vehicle standards, but that (1) motor vehicle carbon dioxide standards, like the fuel economy standards they mimic, apply to entire auto fleets on average, and (2) consumer preferences differ from state to state. Thus, to meet the same Sacramento-approved fleet average carbon dioxide/fuel economy standards, automakers would continually have to reshuffle the mix of vehicles they sell in each “California” state.
 
The patchwork has never materialized because Obama climate czar Carol Browner brokered a secret deal whereby California and its allies agreed to accept automakers’ compliance with the Environmental Protection Agency’s greenhouse gas standards as compliance with their own. In return, automakers agreed never to challenge California’s authority to regulate vehicular emissions.
 
However, the patchwork hangs like a sword of Damocles over the auto industry as long as California wields the power to prescribe motor vehicle greenhouse gas standards. As the current controversy shows, whenever California does not get its way, it threatens to “decouple” from the so-called One National Vehicle Program and, along with its state allies, impose separate state carbon dioxide/fuel economy standards on automakers.
 
The good news is that state regulation of motor vehicle greenhouse gas emissions is plainly unlawful. The federal Energy Policy and Conservation Act prohibits states from adopting or enforcing laws or regulations “related to” fuel economy standards. If the automakers truly want regulatory certainty and an end to the patchwork threat, they should embrace the SAFE rule, which proposes to rescind California’s unlawful power to regulate fuel economy.