Last Friday was not a particularly good day for Donald Trump.
After campaigning for months on promises to repeal and replace the Affordable Care Act, the president's attempt to follow through on those vows stalled on Friday afternoon. Though Democrats were strongly opposed to the American Health Care Act, the bill's failure has largely been attributed to irreconcilable differences within Trump's own Republican party.
But something else happened on Friday, something you might've missed due to all the healthcare headlines: the California Air Resources Board voted to maintain current emissions standards, which govern vehicles through the 2025 model year.
That, in turn, could set the stage for another damaging showdown for Trump, not to mention the new head of the Environmental Protection Agency, Scott Pruitt.
A brief recap
California has a reputation for prioritizing environmental concerns, and CARB is the embodiment of that stereotype.
For years, the agency lobbied the EPA for permission to set its own air quality standards. In 2009, the EPA gave in, and in doing so, it also gave other states the option of pegging their benchmarks to those established by CARB.
Today, companies doing business nationwide have to contend with two sets of air quality regulations: one for California and the states aligned with CARB (Arizona, Connecticut, Maine, Maryland, Massachusetts, New Jersey, New Mexico, New York, Oregon, Pennsylvania, Rhode Island, Vermont, Washington, and the District of Columbia), and one for the rest of the country.
Thankfully, CARB and the EPA have had a good relationship the past several years, and they've worked together to create policies that establish uniform (or uniform-ish) standards from coast to coast.
Earlier this month, though, Trump authorized a review of a controversial EPA decision on auto emissions that was finalized during the last few days of the Obama administration. It's widely presumed that Trump and Pruitt want to undo the decision--after all, both dislike regulation and at least one of them (Pruitt) doubts that human activity has anything to do with climate change.
Upending the Obama-era decision won't be easy. It will require a lot of lengthy discussions with automakers, economists, and engineers. And due to EPA policies, before changing anything, the administration will need to present plenty of scientific facts to support its arguments--facts that others are already prepared to counter.
But for the sake of argument, let's assume that the administration (a) wants to undo the EPA decision and (b) does so. Then, let's go a step further and assume that Pruitt & Co. soften emissions regulations on new cars through the 2025 model year. What then?
That's where things get sticky.
A thorn in Trump's side?
The same day that Trump announced the EPA policy review, California governor Jerry Brown sent a strongly worded letter to Pruitt, stating that California was very unhappy about the decision.
Last Friday, CARB went a step further as its 14 members unanimously voted to keep the current emissions standards in place--the same standards that may be rolled back following federal review. In doing so, agency officials criticized the Trump administration, with member Daniel Sperling saying that "if anything, these standards should be even more aggressive."
That, in turn, creates at least three possible scenarios:
1. Pruitt and the EPA could leave current federal emissions standards in place.
2. Pruitt and the EPA could roll back current federal emissions standards and leave CARB to do as it chooses.
3. Pruitt and the EPA could roll back current federal emissions standards and rescind CARB's waiver, forcing it to fall in line with federal benchmarks.
Given concerns expressed by automakers, option #1 seems the least likely scenario--though if the political calculus favors it, we suppose anything's possible.
Option #3, on the other hand, may be the most likely scenario, but it would trigger a massive lawsuit from the state of California. Whether Trump, Pruitt, and the EPA could prevail is a matter for legal minds, but let's just say, there's a lot of gray area in there.
Option #3 is also unattractive for another reason: it runs counter to the notion of states' rights favored by Trump and the GOP. The tension between states and the federal government is coming to a head in other areas, too--notably in the enforcement of federal laws around marijuana possession and use.
And that leaves option #2, which is perhaps the most politically savvy of the bunch.
Leaving CARB alone would allow states to set their own emissions standards, setting an interesting precedent on states' rights. It would also allow the Trump team to avoid a costly and potentially damaging lawsuit.
But perhaps most importantly, option #2 would make Trump and Pruitt look as if they're following through on promises while leaving the status quo in place.
Allowing CARB and affiliated states to maintain existing policies would essentially force automakers to adhere to CARB's stricter standards. After all, CARB rules currently govern one-third of American shoppers. It's difficult to believe that manufacturers would create one set of cars for CARB states and a second set of cars for the other two-thirds of the U.S.
We've said it before, and we'll probably say it many more times over the coming years: we don't know where things are going just yet, but it's going to be super interesting to watch.