Trump’s California War Is Fueled by Oil and Rage

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(Bloomberg Opinion) -- After much saber-rattling, the battle of California has begun.

President Donald Trump on Wednesday launched his long-awaited attack on the Golden State’s right to regulate its own tailpipe emissions. But this is about so much more than tailpipes.

California got the ability to secure waivers to set its own vehicle-emission standards under the Clean Air Act of 1970, due to its particular problems with smog and gridlock. In practice, the state has also pulled along the rest of the U.S., as other states adopt its approach and the thin margins of car-making don’t allow room for multiple versions of the same vehicle.

When this involved modifications such as adding catalytic converters, the auto industry grumbled but lived with it. The shift in concern away from just particulates toward greenhouse gases presents a much bigger challenge. “Carbon is different,” says David Bookbinder, an environmental lawyer involved in several landmark cases over California’s waiver and now chief counsel at the Niskanen Center, a policy think tank. “This isn’t just a piece of equipment; you have to redesign the car.” So the automakers, along with oil companies, have lobbied hard for Trump to roll back the tightening standards set under his predecessor.

The administration aims to rescind the last waiver granted California in 2009 on several grounds. It argues emissions are inextricably linked with fuel economy, so California’s right to set its own emissions standards under the Clean Air Act are preempted by another piece of federal legislation, the Energy Policy and Conservation Act of 1975, under which the National Highway Traffic Safety Administration regulates Corporate Average Fuel Economy, known as CAFE standards.

The administration also argues California’s special status doesn’t meet the criteria laid out in the Clean Air Act, as climate change isn’t state-specific, plus the state’s requirements are too difficult and costly to meet. Finally, the Department of Justice has also launched an antitrust probe against four automakers who came to their own arrangement with California in order to defuse the whole conflict. The DoJ insists this has nothing to do with the waiver fight, so I guess it just displays a level of coincidence typically encountered in the movies.

The reason for this barrage is that Trump’s officials are on shaky legal ground here. The waiver has been litigated before and withstood the challenge. Two cases in particular – Green Mountain Chrysler Plymouth Dodge v. Crombie and Central Valley Chrysler-Jeep v. Goldstene – found that while there is some overlap between the two federal laws, the EPA’s duties to protect public health by regulating emissions effectively supersede the later law on fuel-economy standards. As the court ruled in the Goldstene case:

Congress intended that DOT [Department of Transportation], through NHTSA, is to have the burden to conform its CAFE program under EPCA [Energy Policy and Conservation Act] to EPA’s determination of what level of regulation is necessary to secure public health and welfare … Given the level of impairment of human health and welfare that current climate science indicates may occur if human-generated greenhouse gas emissions continue unabated, it would be the very definition of folly if EPA were precluded from action simply because the level of decrease in greenhouse gas output is incompatible with existing mileage standards under EPCA.

That same reasoning also undercuts the argument relating to cost, as the EPA’s waiver process affords opponents the opportunity to make their case on that. And the Crombie ruling specifically rejected the argument that emissions standards are essentially the same as fuel-economy standards, which is central to the Trump administration’s position.

Plus, while climate change is obviously not state-specific, the fact that California’s standards can be adopted by other states facing the same challenge argues against a narrow interpretation of the waiver’s remit. California will also no doubt emphasize the specific challenges it faces today, with wildfires offering a potent and ongoing example.

Take a moment to consider the bad-faith spectacle of this administration trying to use the global impact of a climate-change phenomenon it largely ignores in order to block action against it. Then there’s its desire to assert federal primacy against state efforts to limit tailpipe emissions while simultaneously stepping back on regulating methane emissions from the oil and gas industry. Consider, too, that Wednesday’s announcement came days after an attack on Saudi Arabia that should remind everyone that true energy security comes not just from domestic supply, but from efficiency and diversifying our energy-consumption options

As for the DoJ’s miraculously timed effort, it seems hard to argue some companies negotiating a deal with California’s regulators are colluding while the automakers and oil companies collectively lobbying the federal administration to change the law are not.

Trump’s decision to relaunch this battle anyway would appear to rest largely on the assumption it will inevitably head to a more conservative Supreme Court. He may well be right on this; and, given the increasing interest in climate change on the part of voters, a sympathetic judiciary has become, like the Senate, something of a redoubt for the fossil-fuel lobby. That said, absent a split decision in lower courts and the weight of precedent, it would still be unusual for the justices to consider this. It would also likely rely on Trump winning another term.

On a certain level, though, the outcome of the war is less important than the mere act of having it. California, pushing buttons on everything from sanctuary cities to the perceived condescension of politically correct coastal elites, provides a neat target ripe for stereotyping by Trump and his base.

This particular fight also taps into long-simmering resentments on the part of certain conservative interests and fossil-fuel and automobile lobbyists in particular. For them, it’s just galling that California played a huge role in getting federal environmental legislation passed in the first place and effectively secured the ability to push it further. The advent of climate-change awareness and increasingly affordable technologies challenging incumbent energy and transportation companies have added a dose of existential fear.

I tend to think the administration’s aggressive approach ultimately presents a risk to the very industries it supposedly champions, which is presumably why some auto and oil companies have called for restraint. Make no mistake, though, the struggle is real, and California is the front line.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Liam Denning is a Bloomberg Opinion columnist covering energy, mining and commodities. He previously was editor of the Wall Street Journal's Heard on the Street column and wrote for the Financial Times' Lex column. He was also an investment banker.

©2019 Bloomberg L.P.

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