With the Trump administration set to weaken Obama-era fuel economy standards for passenger cars and trucks, a chasm is opening between red and blue states.

EPA is expected to propose a rule in the coming days to prevent the standards from rising past the 2020 levels established under former President Obama, who hailed those increases as a major step toward addressing rising temperatures.

Also in the crosshairs is a California waiver under the Clean Air Act that allows it and more than a dozen other states to surpass federal car rules. EPA is expected to ask for comment on rescinding the waiver, a move that many see as a signal of the administration's intent to do just that (E&E News PM, July 19).

Here are five ways that EPA's move could reverberate around the country and the world:

Huge legal battle

Pulling back Obama's fuel economy standards will trigger a massive legal fight with California, which developed the original standards with the White House back in 2009. It followed a drawn-out battle with the George W. Bush administration.

California has already begun defending its authority to implement the rules on its own. Under the Clean Air Act, California is allowed to set stricter-than-federal pollution standards on account of its persistent air quality problems. But in order to do so, it needs a waiver from EPA—which is now up in the air.

Next week's proposal isn't expected to explicitly revoke California's and other states' ability to set tougher tailpipe standards, but it will take comments on the waiver, setting the stage for a first-ever attempt to revoke it.

California is ready for the fight. Along with 16 other states and the District of Columbia, it filed suit in May over EPA's initial move to undo the Obama-era tailpipe standards. That suit didn't speak to California's own authority. If EPA does target the waiver, more fights are on the way.

"The backup plan is divorce," California Air Resources Board Chairwoman Mary Nichols said Tuesday after meeting with EPA acting Administrator Andrew Wheeler. "I don't mean we're going to secede from the Union. We will reassert our Clean Air Act authority and move forward with our program, possibly with some improvements. We will do that, and if EPA tries to block us, we'll be in court. Everyone is trying to avoid that, mostly because we don't think it's good for the industry or the consumers" (Climatewire, July 18).

Emissions could go up

Transportation is the biggest contributor of greenhouse gases in the United States, and the clean car standards were a major tool in slashing those.

Nationwide, the standards were estimated to cut oil consumption by 200 billion gallons through 2040 and reduce greenhouse gases by 2.2 billion metric tons, according to Don Anair, deputy director of the Union of Concerned Scientists' Clean Vehicles Program. That's assuming EPA does decide to challenge California's authority to enforce its own standards and is successful.

"Indications are that they are going to try and undermine California's authority, so that's how we did the numbers," Anair said.

One outstanding question is whether the Trump administration plans to take aim just at California's tailpipe standards, or go beyond that and also target the state's goal for zero-emission vehicles. It sets a sales quota for electric, fuel-cell and plug-in hybrid passenger cars and trucks of roughly 15 percent by 2025. Nine other states have joined that push, for an overall goal of 3.3 million ZEVs.

Observers assume both programs are on the feds' chopping block. "I would think they're also talking about it for the ZEV mandate," said Dan Sperling, a member of California's Air Resources Board and director of the Institute of Transportation Studies at the University of California, Davis.

The tailpipe standards have driven improvements in gasoline-fueled vehicles, while the ZEV standards are slowly boosting electric vehicles. Battery EVs made up 1.41 percent of California's auto market in 2014, with smaller shares in other participating states, according to IHS Automotive.

And if California loses its ZEV targets, it could have a ripple effect on conventional air pollution in heavily polluted places like Los Angeles and the Central Valley. Many of the state's federally approved plans for local air pollution, like ozone, rely on switching to zero-emissions vehicles as a major emissions-reduction tool.

"If D.C. starts taking this away, I don't know what the region's going to do," said Paul Cort, a staff attorney at environmental group Earthjustice.

Auto market could split

Since California and the Obama administration agreed on their joint fuel economy standards in 2009, 13 other states and the District of Columbia have signed onto the rules—representing nearly half the country's population. That means auto manufacturers are facing their ultimate nightmare: a patchwork of regulations.

Trump's draft plan would have manufacturers selling cars to reach an average target of 40 mpg by 2025. California's rules still require an average of 54.5 mpg by then. If the country splits into two auto markets, experts say, manufacturers will likely meet the requirements by manipulating prices in the near term, because technological changes take more time to develop.

"There's going to be some shuffling," John DeCicco, a research professor at the University of Michigan Energy Institute, said recently. "If they have to sell a more efficient mix of cars in California, they'll have to price the more fuel-consumptive cars higher, to suppress their sales. They'll have to put more incentives, discounts, dollars on the hood for more fuel-efficient vehicles, to press those, compared to Ohio and Nebraska" (Climatewire, May 4).

U.S. auto industry declines globally

In the longer term, U.S. automakers could see further market fragmentation if they lose ground to companies in other countries that have to comply with stricter rules, as in Europe and, increasingly, China. China's burgeoning EV manufacturing sector, in particular, could suck up market share.

Observers see a looming bifurcation not just between red and blue U.S. auto markets, but between the United States and other countries, which could lead to American companies being shut out of higher-efficiency markets.

"There's going to be a dragon breathing down the neck of the U.S. automakers, and that dragon is going to be going after U.S. and European markets with very fuel-efficient products and electric vehicle products, as well," said Simon Mui, a senior scientist at the Natural Resources Defense Council. "Automakers stand to lose out if all of a sudden their product lines become the gas hogs of the '90s again."

"This is going to slow down the U.S. market," Sperling said in agreement. "We're going to encourage the Chinese and the Europeans to build up their battery industries and invest more in EV companies and industries—even more than they would have otherwise."

State-federal relationship breakdown

California has already begun to write its rules with an unwilling federal partner in mind. It passed rules enforcing Obama-era emissions rules for "glider" trucks back in February, and in May, it began considering whether to specify that its clean car enforcement program applies only to the Obama-era standards, not any future Trump program (Climatewire, May 8).

But EPA's pending move challenges the most basic assumptions about the Trump administration's behavior. Observers had been reasoning that EPA would reach a compromise with California, given that most automakers had been lobbying to keep one national standard. They are now grasping at ideological theories to explain the feds' failure to negotiate.

"At some level, it feels like there was this recognition that even if the federal government was going to do nothing, that the states were prepared to step up and fill that void—California in particular," Cort said. "This almost feels like the oil industry kind of freaking out and saying, 'We've got to figure out a way to stop the states.'

"This sort of commitment to protecting the oil industry will trump any other traditional conservative principles," Cort said.

Mui agreed that EPA's attack on California reflects a pared-down ideology.

"They're going against their own stated values, trying to take away state authority," he said. "They're going against innovation and competitiveness, and they're basically handicapping the U.S. auto industry. It is weird, but it is very ideologically driven. Anything that says 'standards' is interfering with the natural laws, the laissez-faire sort of invisible hand of the market."

"What groups like the Competitive Enterprise Institute, which is really driving a lot of this ideological attack on standards, doesn't realize is in the rest of the world there is a hand that is pushing towards fuel-efficient vehicles and electric vehicles," Mui said. "We're either in the game or we're out, and what this is doing is essentially handicapping the U.S. auto industry going forward."