ILMA Compoundings – October 2019 - 48

WASHINGTON LANDSCAPE

How Automakers Deal
With California May
Spread to Other States
By Matthew Levetown

A

s part of my duties for ILMA, I
regularly read a broad crosssection of news, looking for and
then reporting on items that are important to members. The sources I check
range from regulatory actions to court
decisions to geopolitical situations affecting base oil pricing. Back in July, I wrote a
piece about something I find particularly
interesting as a young lawyer: automakers
bypassing looser federal regulations to
deal directly with state regulatory bodies
for more stringent requirements.
The article back then, "California
Signs Deal with Automakers to Produce
Fuel-Efficient Cars"1 detailed four major
automakers' (Ford, BMW, Honda and
Volkswagen) agreement with California
to adhere to strict vehicle emissions
requirements. The deal followed the
Trump administration's announcement
of a plan to freeze Obama-era emissions
rules, and California was unsurprisingly
unable to convince the EPA otherwise.
The Obama-era rule was designed to
prevent confusion over dueling state and
federal requirements, which are allowed
under the provisions of the Clean Air Act.
HONING THE RULE
California's agreement requires the four
automakers to reach a mileage standard
of around 50 miles per gallon (mpg)
by 2026 through a combination of climate-friendly technology adaptation and
the development of new vehicle parts.
The California plan is less restrictive

48

OCTOBER 2019

| COMPOUNDINGS | ILMA.ORG

than the Obama EPA rules, which did
not provide credits and required a corporate average of 54.5 mpg by 2026.
Under the Clean Air Act, California
is able to implement its own emissions
rules, which since then have been
adopted by about a dozen states. The
Trump administration's proposal
would freeze the federal emissions
standards at 37 mpg for autos built
after 2020, far below the agreement.
Instead, by working with the state,
the automakers came out somewhere
between the Obama and Trump emissions standards, with more options
and alternatives to meeting the rule
with purely increased engine efficiency.
Negotiating with a state or local
regulatory body is nothing new. After

all, it was ILMA's work with the South
Coast Air Quality Management District that led to a Rule 1144 that was
more finely tuned than the agency's
original proposal. If a governing entity
is going to regulate anyway, it makes
sense to work with it to craft a rule
that meets everyone's objectives -
the agency regulates, and businesses
manufacture without undue burden.
The question is whether subnational
governments and coalitions will
continue to take the lead in passing
environmental rules, similar to states
forming the U.S. Climate Alliance
after the federal government left the
2015 Paris Agreement.
In California's case, it manages
to make deals because it is the most
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