California Plan Embraced by Ford, VW Had Been Rejected by EPA


(Bloomberg) -- A recent compromise between four major automakers and California’s clean-air regulator on fuel efficiency had already been rejected by the Trump administration months earlier as not “a productive alternative.”

The deal -- which Ford Motor Co., Honda Motor Co., BMW AG and Volkswagen AG announced on July 25 alongside the California Air Resources Board -- eases the pace of annual efficiency improvements required under current Obama-era rules but is tougher than the Trump administration’s proposal to cap mileage requirements at 2020 levels.

Key elements of the pact were contained in a November 2018 summary of California’s proposal that was prepared by Environmental Protection Agency staff for Bill Wehrum, then-assistant administrator for EPA’s Office of Air and Radiation, according to excerpts of the presentation viewed by Bloomberg.

CARB spokesman Stanley Young confirmed on Friday that the state had offered the plan to the EPA last November. The previously unreported detail sheds new light on the months-long battle between between Washington and Sacramento over the mileage rules that automakers urged President Donald Trump to re-evaluate during his first weeks in office.

“Looking back, it seems that they were never interested in negotiations or discussions,” Young said. He added that the four automakers’ support of California’s compromise “highlights the fact that our proposal is both feasible and realistic.”

Relations between EPA and CARB officials have become tense, with each side blaming the other for the breakdown of talks. In a June 20 letter to GOP lawmakers, EPA Administrator Andrew Wheeler said California’s counteroffer hadn’t yet been endorsed by the state’s governor and attorney general when it was presented to EPA. He accused CARB Chairman Mary Nichols of being “unable or unwilling to be a good-faith negotiator.”

The Trump administration’s 2018 proposal said capping fuel economy standards at 2020 levels would lead to less-expensive new cars than under the current rules. The agencies argued more-affordable cars would allow consumers to replace their older vehicles with newer, safer ones more rapidly and avoid thousands of traffic fatalities, claims that experts and EPA career staff have disputed.

In a Bloomberg TV interview in early February, the EPA’s Wheeler said the state’s proposal suggested “just taking the Obama numbers and stretching that an additional year. And that doesn’t really get to the lives saved or the reducing the price of the automobiles to where we would like it to be.”

The White House abandoned discussions with California officials a few weeks later, saying, “Despite the administration’s best efforts to reach a common-sense solution, it is time to acknowledge that CARB has failed to put forward a productive alternative” after the federal proposal was released.

The four-company pact with California also highlights a growing chasm between the Trump administration and the auto industry, which after urging the administration to retool Obama-era mileage standards has since pushed back on the resulting plan that recommended capping requirements after 2020.

That plan, put forth last year by the EPA and the National Highway Traffic Safety Administration, also proposed stripping California of its authority to regulate automobile greenhouse gas emissions. The state and others have vowed to fight in court to retain that power, and automakers fear that prolonged litigation will roil business plans that depend on predictable fuel economy standards.

In June, a group of 17 major carmakers unsuccessfully asked Trump to resume talks with California, saying a pact for unified California-U.S. standards will “enhance our ability to invest and innovate by avoiding an extended period of litigation and instability.”

California’s deal with the four carmakers -- and the one pitched to the EPA last fall -- pushes the 2025 efficiency target back to 2026, lowering the pace of gains each year compared to the current rules starting in 2022. Automakers would get more help to reach those targets from additional compliance credits earned by selling electric vehicles, and wouldn’t have to account for carbon emissions by the power plants that generate electricity used by battery-powered cars.

“For over a year and a half, the administration expended a serious amount of resources to achieve a workable deal with California,” EPA spokesman Michael Abboud said in an email, adding, “not once did California submit a meaningful alternative.”

Dave Cooke, a senior clean-vehicles analyst with the Union of Concerned Scientists, said California’s offer contained meaningful concessions.

“The fact that this was the deal that EPA called not serious is incredible to me,” he said. “This is a substantial reduction in stringency from the federal program.”

©2019 Bloomberg L.P.

BQ Install

Bloomberg Quint

Add BloombergQuint App to Home screen.