Coral Davenport and Hiroko Tabuchi

In coming weeks, the Trump administration is expected to all but eliminate an Obama-era regulation designed to reduce vehicle emissions that contribute to global warming. California and 13 other states have vowed to keep enforcing the stricter rules, potentially splitting the United States auto market in two.

With car companies facing the prospect of having to build two separate lineups of vehicles, they opened secretive talks with California regulators in which the automakers — Ford Motor Co., Volkswagen of America, Honda and BMW — won slightly less restrictive rules that they can apply to vehicles sold nationwide.

The agreement provides “much-needed regulatory certainty,” the companies said in a joint statement, while enabling them to “meet both federal and state requirements with a single national fleet, avoiding a patchwork of regulations.”

Under the agreement, the four automakers, which together make up about 30% of the U.S. auto market, would face slightly looser standard than the original Obama rule: Instead of reaching an average 54.5 mpg by 2025, they would be required to hit about 51 mpg by 2026.

The Trump administration has said it plans to roll back the Obama-era standard to about 37 mpg.

Although California won the backing of the four companies in its showdown with the federal government, the Trump administration is still expected to try to revoke California’s right to set its own auto emissions standards. The state has vowed to fight that effort all the way to the Supreme Court if necessary, and the four automakers, by siding with California, are in effect voting that they expect California to win that battle.

On Thursday, Gov. Gavin Newsom of California said he was “very confident” that more automakers would join the deal in coming days.

One auto executive familiar with the negotiations agreed that was likely.

On Thursday morning, a wider group of automakers held a meeting to consider joining the pact, the executive said, although there were no immediate sign-ons. Ford, Honda, BMW and Volkswagen initially decided to keep the group small, he said, because a wider group would have been more difficult to bring together, raising the prospect that word would get out and the deal would collapse.

An executive at another large automaker said his company was considering joining the agreement because it included meaningful concessions by California. The executive, who spoke on the condition that neither he nor his company be identified, said the Obama-era fuel economy standards were difficult for the industry to meet because car buyers increasingly prefer sport utility vehicles and pickup trucks that tend to have much lower fuel economy than sedans.

Margo Oge, a former senior EPA official who worked on auto emissions policy and now serves as an informal adviser to several auto companies, said, “I have been calling all these companies and telling them to cut a deal with California. I think GM and Toyota will also have the courage to sign on.”

Trump administration officials said the California deal would not stop their plans to put forward a new federal rule to allow more tailpipe pollution. The deal “has no impact on EPA’s regulation of greenhouse gas emissions under the Clean Air Act,” Michael Abboud, an EPA spokesman, wrote in an email. “This voluntary framework is a PR stunt that does nothing to further the one national standard that will provide certainty and relief for American consumers.”

The new agreement would also give automakers more leeway in meeting the fuel economy standards through other means, like earning credits for fuel-saving technology.

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 nonprofit group based in Washington.

The carmakers are addressing a crisis that is partly of their own making. Soon after Trump was elected, the chief executives of the United States’ Big Three auto companies — Ford, General Motors and Fiat Chrysler — met with Trump in the Oval Office and asked him to loosen the Obama emissions rules. But the automakers have since grown alarmed at the expanding scope of the administration’s plan.

But the gasoline refining industry, which would benefit from continued gasoline sales, lobbied hard for a rollback alongside groups that deny the science of climate change. One of those groups called automakers the “opposition” in policy debates over fuel economy and urged the Trump administration to stay its course.

The fight over emissions rules is just one of many between Trump and California, a state he seems to relish antagonizing and which has filed more than 50 lawsuits against the administration.

California has been looking for allies far and wide. In June, Canada, which has historically followed U.S. federal auto pollution rules, signed a clean-car deal with California in what was seen as a step toward formally adopting the state’s standards.

Describing the deal with automakers, Daniel Lashof, U.S. director of the World Resources Institute, a research organization, said: “This shows that state leadership is indispensable. That’s where the leadership is coming from right now in the U.S. on climate.”

For the automakers, siding with California against the Trump administration comes with risks. One auto executive familiar with the talks said that, particularly for foreign automakers, striking a deal with California risked retaliation, for example, in the form of tariffs. But that could be painful for domestic manufacturers as well, because many cars and components are now made or partly assembled across the border in Mexico or Canada.

Last month, 17 automakers sent a letter to Trump telling him that his plan to weaken tailpipe pollution standards threatened to cut their profits and produce “untenable” instability in a crucial manufacturing sector. In particular, automakers said they feared a situation in which they would be forced to sell entirely different kinds of cars in different states and be subject to fines and litigation if consumers crossed state lines to buy gas-guzzling SUVs that were legal in some states but not others.

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.

This article originally appeared in <a href="https://www.nytimes.com/2019/07/25/climate/automakers-rejecting-trump-pollution-rule-strike-a-deal-with-california.html" id="c7c1afc9-916a-37ea-a53a-51feb0f84361">The New York Times</a>.

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

WASHINGTON — Four of the world’s largest automakers have struck a deal with California to reduce automobile emissions, siding with the state in its fight with President Donald Trump over one of his most consequential regulatory rollbacks.

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 talks in Sacramento on a plan to move forward with the standards in California, the nation’s largest auto market.

The EPA and the Transportation Department are expected to announce this summer a new rule that would effectively eliminate the Obama-era rule, which would have required passenger vehicles to achieve an average mileage of about 52.5 mpg by 2025. The rule, which would have significantly lowered vehicle emissions of planet-warming greenhouse pollution, was a cornerstone of President Barack Obama’s policies to combat climate change. The new Trump rule is also expected to revoke the legal authority of California and other states to set their own, stricter state-level standards.

Although Trump has promoted his plan as a gift to the auto industry, automakers have said it could actually harm them by creating regulatory uncertainty as California and other states claimed the legal right to set their own standards and fought back in the courts. Automakers feared 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.

In striking a deal with California, the automakers are publicly rejecting the Trump plan and following the legal advice of some industry experts who say that it is California, rather than the Trump administration, that is more likely to win the legal battle over climate change pollution. Under the terms of the new deal with California, the automakers selling cars in that state would comply with a slightly looser standard than the original Obama rule. Instead of reaching an average fuel economy of 52.5 mpg by 2025, they would be required to reach a standard of about 51 mpg by 2026.

In a joint statement, the four automakers said the agreement with California would lead to “much-needed regulatory certainty.” The deal would allow the companies 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,” they said.

California said that the terms of the deal would give automakers an extra year to improve their fleetwide fuel economy to levels laid out in the Obama-era plan. The deal would also allow them more leeway in meeting those standards through other means, like earning credits for fuel-saving technology.

“This agreement represents a feasible and acceptable path to accomplishing the goals of California and the automobile industry,” Mary D. Nichols, chair of the California Air Resources Board, said. “If the White House does not agree, we will move forward with our current standards but work with individual carmakers to implement these principles,” she said.

“Few issues are more pressing than climate change, a global threat that endangers our lives and livelihoods. California, a coalition of states, and these automakers are leading the way on smart policies that make the air cleaner and safer for us all,” California’s governor, Gavin Newsom, said in a statement. “I now call on the rest of the auto industry to join us, and for the Trump administration to adopt this pragmatic compromise instead of pursuing its regressive rule change. It’s the right thing for our economy, our people and our planet.”

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.

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

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Coral Davenport and Hiroko Tabuchi

Articles written by the author

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

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