Obama looks to change California's EPA waiver status; big changes could follow
by Sebastian Blanco on Jan 26th 2009 at 11:02AM 
Photo by BohPhoto. Licensed under Creative Commons license 2.0.
Big news on the emissions regulation front today. For years, California has been in the driver's seat (or at least the co-pilot's chair) when it comes to American emissions regulations thanks to the grandfathered ability of the state to define its own rules. These rules were almost always stricter (i.e., cleaner) than the federal government's. Since about a dozen states then adopt California's regulations as their own, something the auto industry just hates, there are basically two sets of regulations in play in the U.S. In December 2007, the Bush Administration stopped California's ability to enforce its own laws by denying the state a waiver that would have allowed it to regulate greenhouse gas emissions. The Bushies really didn't like what California was doing.
Four years ago, California enacted a law that required automakers to reduce their average fleet greenhouse gas emissions by 30 percent in a decade. While the dozen states have been waiting to implement the California law, everyone needed to wait until EPA issued that waiver in order to start. With the Obama Administration now in charge, it looks like the waiver may finally come.
Our inboxes were flooded this morning with press releases and reader tips about reports that Obama would reevaluate the waiver denial, something he promised during his campaign. The LA Times writes that at least 17 other states, with about 40 percent of the U.S. population, are looking at adopting (or have already adopted) the California rules, so this decision could affect vehicle sales for almost half of all Americans.
Meanwhile, on NPR this morning, the Auto Alliance repeated its opposition to the state-by-state (or even two-tier) regulation system. The Alliance's Charles Territo told NPR that, "At this difficult time for the industry, and for the economy as a whole, what we need is certainty and consistency, not confusion and chaos." In the same NPR piece, California Attorney General Jerry Brown said that the automakers came begging for a government bailout after people stopped buying their big vehicles, but they continue to fight rules that call for smaller, cleaner vehicles.
The National Auto Dealers Association released a study last week that found that, "state-by-state regulations would have 'little or no environmental benefit' but would erratically harm the economy." Their email is pasted after the jump. We'll be in D.C. for that city's auto show next week and will be paying close attention to the regulatory atmosphere when we get there. Without a doubt, there will be more to come. Thanks to everyone who sent this in.
UPDATE: more here.
[Source: LA Times]
NADA EMAIL:
NADA (the Nat'l Auto Dealers Assn) did a study that concluded that a patchwork of state fuel standards based on the CARB (California Air Resources Board) rule would be needlessly destructive compared to a single national fuel efficiency standard.
That is, state-by-state regulations would have "little or no environmental benefit" but would erratically harm the economy. Not exactly a good political bargain for environmentalists.
Among the conclusions of the study:
* Almost no analysis or scrutiny has been given on how CARB's rule will actually work in practice or why such regulation is still necessary since Congress hiked the national fuel economy standard by 40 percent in 2007. [The proposed CAFE standard that the Obama admin will finalize by April is actually 0.3 mpg higher than California's.]
* An automaker could comply in California and offer the exact same choice of vehicles in another CARB state, and yet still not be in compliance, solely due to differing consumer demand for different types of vehicles.
* The patchwork would create the "cross border sales loophole," as CARB's regulation does not regulate cars imported from non-CARB states that are registered in CARB states.
* The patchwork reopens the SUV loophole; and
* Several automakers and potentially new entrants from China and India would be exempt from CARB's regulation until 2016, provided they limit their sales in California.
Those are all quotes from the press release, which is here.
And the 34-page study is here.
Reader Comments (Page 1 of 2)
mapoftazifosho 11:11AM (1/26/2009)
I'm all for saving the environment, but I don't want to make the current automotive market any worse...this is very shortsighted...
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noz 12:47PM (1/26/2009)
The world's problems are slightly bigger than the current automotive market. Not acting is more short-sighted than worrying about the auto market.
jharlan 11:28AM (1/26/2009)
I would expect Obama to negotiate with California a comprehensive new code for the whole country. I just heard his speech this morning and that seems to be the way he is headed. It would be unpopular to restrict California, but adopting the California plan nation wide would keep the feds in complete control. They like that. Since California is a huge auto market, it would be preferable to allowing every state to adopt differing regs.
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mapoftazifosho 11:44AM (1/26/2009)
Yes, but all of the major auto manufacturers have stated that they cannot meet the current CAFE regulations for fuel economy...
I can't imagine that any of the auto manufacturers will be all too pleased about this...
I understand the problems that plague California and places like Salt Lake City, Utah...but the geography of those areas is a major contributing factor to their smog issues.
I don't have the answer, but pushing the auto companies to drive the cost of new autos up even higher will cause additional trouble for them. And in an already down economy this is NOT the answer...
Great strides have been made with new car emissions, but without nationwide emissions testing for older vehicles...this will be a moot point...
If it doesn't make dollars, it doesn't make sense. Lately, no politician seems to understand this concept...
Anthony 12:07PM (1/26/2009)
Higher regulations have been in place for years in other countries. I don't think it's too crazy to suggest that auto makers selling cars in the US can meet these requirements.
In response to the association's claim that a mish-mash is difficult to manage: Just make 'em all like we want in CA. That'll meet the strictest to the least stringent.
mapoftazifosho 12:14PM (1/26/2009)
Well, fine, California can have its own emissions; but I hope you're ready for considerably higher new car costs, an increase in the sale of older cars that meet older emissions standards (people will keep older cars running for longer because it will be economically viable to do so), in addition to people buying used from nearby states and bringing them in past the required date of initial sale.
From what I've read about what California wants...well...the market just won't allow for it...
Dave 11:31AM (1/26/2009)
I don't understand how a simple lawsuit under the commerce clause would send power back to the feds to regulate all emissions. Assuming a lawsuit happens (and I think it will), the power goes to Congress or the regulating administrative agency. This one will go the way Obama wants it to--back to stricter regs. But these must be applied across the board; period (in other words, one standard). That raises the question whether to apply CA's standards to everyone. We all think it will happen--and likely the end result would be CA's regs applied to ALL States.
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JRS 4:21PM (1/27/2009)
A good compromise would be for congress to pass tougher legislation that meets Calif. halfway and at the same time includes language that would give the federal government exclusive rights to set the standards. The country would see a net improvement since all 50 states would get the stricter requirement (rather than just those that follow Califs. lead)and we would eliminate once and for all the problem automakers face with differing regs.
As much as I hate to see tax increasees of any kind the next step needs to be an increase in the gas tax. This will improve demand for the new and more expensive, more fuel efficient vehicles. Hopefully the gas tax can be somewhat revenue nuetral with an offsetting credit on our income tax.
Personally I would be satisfied if as an example an additional $500 tax paid at the pump translated into a $400 tax credit. That gives the govt. an extra $100 to spend on roads and development of renewable energy. As cars become more efficient our individual gas consumption would decrease and the IRS could reduce the tax credit. The higher gas cost (eventual year end tax credit notwithstanding) would prompt us to conserve whether we bought new vehicles or kept driving our old ones.
oollyoumn 11:40AM (1/26/2009)
This argument that it is too difficult to meet two different requirements for different states is wrong. CA cars can be sold in every state. Car makers only need to meet one requirement. The get the added benefit of being able to sell cars that do not yet meet the CA standard in other states.
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Serryl 11:52AM (1/26/2009)
I agree with oollyoumn. While I recognize the incredible challenge is having to sell cars in a market with 50 unique emissions requirements, I don't think the new head of the EPA would allow that to happen. These states all sound like they're adopting the same, stricter regulations. If so, the automakers will only have to deal with two sets of regulations. They can choose the more cumbersome route of have a two tiered approach, or they can simply meet the strictest requirements, ensuring that their cars and trucks can be sold everywhere.
I know it's a burden, but these companies have shown a past unwillingness to improve in this area, waiting till they are nearly bankrupt to start aggressively rolling out more efficient vehicles. I feel like a strong push is neededto keep them on the right path.
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mapoftazifosho 11:54AM (1/26/2009)
Not that it surprises me, but the people on here are blinded by their environmental wishes over what actually keeps a company profitable...
PeterG 12:38PM (1/26/2009)
There is nothing going on that has anything to do with allowing 50 states to have unique standards.
There are already two standards. Federal EPA and CARB in the California following states.
This is only about allowing the CARB states to regulate CO2 emissions.
This is already done in the Europe. It tends to mean more smaller cars will be produced as they can meet standards without added expense.
Ford and GM are very successful in Europe so these regulations alone should not be problematic.
Phil L. 2:13PM (1/26/2009)
PeterG:
"Ford and GM are very successful in Europe so these regulations alone should not be problematic."
Yes, Ford and GM have a number of small, efficient models that have been popular in Europe. But we don't get them because...
...wait for it...
They don't meet US emissions (often because they're diesels)!
Emissions regulations often have a specific slant; it isn't just that they're "tight" or "loose". Europe believes carbon emissions are more important than other pollutants; their regulations encourage diesel for this reason. California wants to reduce pollutants that cause smog; it's difficult to get a diesel engine to meet their standards. Sadly, this means that some of GM and Ford's successful European models can't yet help them in the US.
Throwback 11:53AM (1/26/2009)
So what happens if Cali changes their emissions standards 2 years down the line, again? You could have multiple different standards since every state would be able to regulate their own emissions. Will states restrict cars from other states coming into their states? Not just as people relocate, but to vacation? This has disaster written all over it. ONE national standard is what is required. States will next want to regulate their own crash standards.
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JGoh 12:27PM (1/26/2009)
@mapoftazifosho: Yes, and we all saw how well it turned out for them cranking out 'profitable' gas guzzling monstrosities. Toyota and Honda have been managing okay, and they've made some of the most fuel efficient vehicles out there. Ford looks like it's the closest to really being back in the game, and they're leveraging all sorts of good technology that they've either been sitting on or been using in Europe for years.
Profitability at the cost of principle and good sense doesn't do anyone any good, and is unbelievably short sighted.
Just meet the higher standard. If you can actually meet that standard (which they've been able to, obviously, since they've been selling vehicles in california just fine these last few years), just produce that one conforming model, and dump the crap models that you're selling elsewhere. What you lose in up-front profitability because you can make something cheap you might be able to make up for in economy of scale and unified production.
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mapoftazifosho 12:51PM (1/26/2009)
What CA wants is NOT currently economically viable. We're not talking about what CA currently has, but what they want in the very near future. It isn't as simple as you think...trust me...if it was, it would be built...
Gosh, what was that vehicle that posted a 31.5 percent increase for Toyota in 2008...ah yes the Toyota Sequoia...with an EPA estimated 18 mpg highway...
Please, spare the holier than thou Toyota being the antithesis of gas guzzler garbage.
Does something need to be done to prompt the consumer to buy more fuel efficient and clean vehicles...absolutely, but many Americans, including many CA residents, love their V8's and if gas stays as low as the Saudis say they want to lock it in at, which is $70 a barrel...well good luck with your fuel economy and emissions regulations.
Obama just doesn't want to tax fuel because it will make him look evil...so he'll forgo that by pushing the responsibility onto the auto manufacturers...
Mark my words, when the economy bounces back, and the cost fuel is low...gas guzzlers will sell well again...
JGoh 1:06PM (1/26/2009)
I'm not gonna give Toyota and Honda a free pass, don't worry. Every manufacturer is guilty. The ones that managed best, though, are the ones that diversified their product lines best. The fact of the matter is that if nothing else, the Prius gave a great halo effect.
I'm all for raising taxes on fuel. The Europeans manage okay. It's expensive, and we're all responsible for the cost on the planet of this bad behaviour. I think your prediction has already been borne out, as well; bigger vehicles are selling a bit better now that gas prices have come down.
I think the car companies can do better, and I don't see a problem with holding them to a reasonable standard. They protest, but I think they protest a bit too much. I understand that they're beholden to their investors, but it's gotta start somewhere. :/
(Frankly, I wish Canadian lawmakers had the balls to impose Californian standards. :P)
Josh 12:30PM (1/26/2009)
I'm glad I don't work for a car manufacturer. Can you imagine trying to meet 50 different state's requirements? This sounds like it will drive prices through the roof for minimal advancements in fuel economy at a time when the market is already demanding higher fuel economy. Why is this necissary when the market is already demanding it?
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gorr 12:57PM (1/26/2009)
I said to keep the price of gasoline toward 79cents/gallon and stop these destructive laws. Poor peoples like obama, bush, banks, politicians, state employees, big oil etc are poor peoples following jesus and nostradamus because there been hit harder by him and me because they are poor folks without energy of their own and just jesus make sence for them.
green energy mean for them the ability of moving their corpse and mind by their own. That's why they accepted public welfare jobs, they tought that when the time come, bums in the streets liberate by jesus will give them some friendship and understanding because in their actual understanding of life itself they are the poorest and bums in the streets are powerful. That's why in the bible it was written that the first will be the last, so logically bums in the streets understand better what energy is then the president of the biggest country in the world.
So let me repeat it: i want a car powered by the same water electrolyser currently in use since 1968 in phillipine for no fuel cost and no pollution and bigger h.p. Put that car in a showroom in canada with any cheap brand name like gm, honda, subaru, volvo, ford, tata, fisker, byd, tesla, eco-fueler, etc. And stop these stupids regulations and by the way open 1 station selling fuels done with green algae fuel too.
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jeffzekas 1:06PM (1/26/2009)
This is a no-brainer: raise standards to 30 mpg, and we won't need Saudi (aka terrorist) oil? Go for it! Yes, California standards, if raised, WOULD have an effect, because TEN PERCENT OF THE US POPULATION LIVES IN CALIFORNIA! So, emission cut in the Golden State means a ten percent cut for the whole USA! Oh, the US car makers "can't meet fuel standards? Just like when they said "we can't make safer cars" (and then, the Japanese brought out airbags, the Swedes side-beam protection, the Germans ABS) and "we can't lower emissions" and then Honda made the CVCC clean-burn motors and catalytic converters appeared "out of nowhere"! Sorry, no more excuses. The ice caps are melting folks. Time has run out.
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