California and the feds are already diverging on EVs

TWO ROADS DIVERGE: We’ve written about how California’s clean car rules are headed for a severe rupture with federal standards if former President Donald Trump wins in November.

But California and the feds are already drifting apart on electric vehicles even under a friendly administration.

Some of us are old enough to remember the 2009 Rose Garden ceremony between the Obama administration and the California Air Resources Board, where the two — flanked by 10 major automakers and the United Auto Workers — vowed to commit to parallel vehicle emissions standards through 2016 in the name of regulatory certainty and consumer choice.

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But last week’s car rules from EPA covering model years 2027-2032 envision automakers being able to meet them with 56 percent EV sales in 2032. That’s roughly two-thirds the percentage that California’s rules are shooting for by then.

And EPA’s truck rules expected out tomorrow could be met with 24-34 percent zero-emission vehicles for tractor trucks by 2032, according to a draft version — short of California’s target of 40 percent zero-emission tractor-truck sales by the same year.

Is the divergence on clean car rules a big deal — for automakers, drivers or the environment?

Maybe not as much as it once was.

While making engines for different pollution and fuel economy standards used to be a major pain in the side of the auto industry, the increasing emphasis on electric vehicles as a way of reducing transportation emissions lets manufacturers take a more one-size-fits-all approach.

“The big difference now compared to 10-plus years ago is that the car manufacturers don’t have to create two types of vehicles,” said John Boesel, CEO of Calstart, a group of automakers, regulators and trade groups. “It’s more just a question of how many EVs they’re going to sell.”

And the divergence might actually help automakers in the end. They’re allowed to use extra credits they generate from exceeding the California standards — where it’s easier to sell EVs because of the developed market — to make up for slower progress toward the federal target in other states.

“It helps to be able to monetize from your existing market as you try to move your capital expenditures around to the new markets,” said Craig Segall, a former CARB deputy executive officer who now serves as vice president of the environmental group Evergreen Action.

(Automakers are indeed trying to maintain a bifurcated market. The Alliance for Automotive Innovation, which represents over 40 car companies that produce almost all the new cars sold in the U.S., is asking EPA to consider whether California’s rule is only attainable for California as it weighs whether to grant the Golden State its Clean Air Act waiver to implement the rules that 12 other states also follow.)

But what about the charging infrastructure that the EVs will require? Will Californians be able to take their EVs on cross-country road trips to the nonallied states?

Segall said he expects the lumpiness that we currently see, with California home to nearly a third of the nation’s charging stations, to smooth out over time as program stringency increases over the years.

“What we’re likely to see is a concentration of effort” in the California-aligned states, said Boesel. “But at the same time, I don’t think it will be exclusive to those states.”

But with the threat of Trump looming, harmonization is back on the table, at least where trucks are concerned.

California adopted a rule in 2022 tightening conventional pollution standards for trucks, but the Truck and Engine Manufacturers Association negotiated a deal that will bring them closer to federal rules in 2027. In return, they agreed to abide by California’s EV sales targets.

GETTING PERSONAL: Put Consumer Watchdog and the Personal Insurance Federation of California in the same room, and you’re bound to get fireworks.

Representatives for the two organizations drew vastly different pictures of the spiraling property insurance market and took swings at each other at a Sacramento hearing today of the independent state oversight agency called the Little Hoover Commission, which is embarking on a study of the state’s property insurance problems.

PIFC President Rex Frazier blamed insurers’ retreat from California on what he called outdated regulations that don’t let rates reflect the increasing costs of natural disasters like wildfires.

Consumer Watchdog Executive Director Carmen Balber, meanwhile, cast insurers as using the admittedly real increase in costs hitting the entire country as an excuse to pressure officials to deregulate California, which has some of the country’s best consumer protections thanks to the voter-passed Proposition 103.

“This is the industry’s 30-plus-year-long campaign to find a way to get rid of this law and they’re really seeing the leverage point now,” said Balber.

Frazier denied there was any collusion and shot back.

“It’s easy to throw rocks,” Frazier said. “It’s an incredibly adversarial system with these outside groups. … We don’t have negotiating partners. We don’t have respectful conversations.”

Notably absent from the discussion was Insurance Commissioner Ricardo Lara, who released draft rules this month that are the cornerstone of his strategy to entice insurers back to the market. Little Hoover Commission Chair Pedro Nava said the commission invited Lara or his staff, but the requests were unsuccessful. Nava said he hopes to hear from Lara or staff at further hearings.

Insurance Department spokesperson Michael Soller said in an email that Lara had already been to oversight hearings and remains focused on his reform work. — CvK

STAR POWER: Gov. Gavin Newsom is the face of a new ad from the campaign fighting an oil-backed referendum on the state’s banning oil wells near homes, businesses and schools.

The 30-second spot launched Wednesday features clips of Newsom, as a narrator recounts his support for the setback bill and a law designed to cap oil industry profits.

“Why is Big Oil attacking Governor Gavin Newsom? It’s simple. Newsom joined community leaders to protect mothers and kids from cancer. … Demanding no new toxic drilling in our neighborhoods.”

The ad comes less than a week after his appearance at a Los Angeles rally in support of SB 1137. — AN

UNDER PRESSURE: We spotted Sen. Henry Stern ducking into a federal courthouse Wednesday to help file California’s motion to dismiss the U.S. Chamber of Commerce’s lawsuit against the state’s new corporate climate disclosure laws, SB 253 and SB 261.

Now, we have more from POLITICO’s Jordan Wolman on California’s response:

While the Chamber and other business groups are saying that California is seeking to regulate emissions outside its borders through “pressure,” the state argues that pressure coming not from the state but from third parties like investors and customers can’t be considered actionable injury.

California also argues that because CARB hasn’t yet adopted rules requiring the disclosures, claims of financial burden, “risk” and “stigma” are premature — we’re still not even sure what Newsom meant when he said the bills would require “cleanup.”

The district court judge is set to consider the case June 20, and the business groups have until May 1 to file an opposition to the motion to dismiss.

INNER PRESSURE: Meanwhile, the Chamber is coming under fire from some of its own members. At least 37 corporate members, including Microsoft, Meta, Pfizer, Ford and Shell, are airing concerns about the powerful trade association’s climate advocacy, according to a review of business filings by Corbin Hiar and Timothy Cama of POLITICO’s E&E News. — BB