Cars drive over the Golden Gate Bridge on Aug. 2 in Sausalito, California. Photo: Justin Sullivan via Getty Images

Last April, the Trump administration set the stage for a legal battle with California by nullifying the Obama administration's clean-car regulatory plan. Instead of requiring new vehicles to score an average of nearly 50 miles per gallon on lab tests by 2025, standards would flatline after 2020.

What's new: Formal public reaction to this plan was due on Oct. 26, and the comments show that none of the major stakeholders supports the administration's proposal. While the prospect of a compromise long looked slim, it now appears that the makings of a deal might be on the table.

The key parties:

  • California, allied states and major green groups have prepared to defend existing targets, with the Environmental Defense Fund calling the administration's proposal "arbitrary, capricious and illegal."
  • Automakers started this fight and praise the administration for reversing the Obama-era decisions. But even they say the proposal is too weak, and want to keep the peace by compromising on a single, national program that still offers regulatory relief.

Automakers have been vague about their preferred targets, stipulating only that they be in line with market realities. California has said it's open to greater flexibility, but insists on strong progress toward long-term greenhouse gas reduction goals, including rapid electrification of the state's vehicle fleet.

Between the lines: The key to a compromise may lie in regulatory credits. These would enable automakers to meet standards that look increasingly stringent on paper despite being weaker in practice. Such credits would give companies extra "brownie points" for adding popular technologies to their cars, whether or not they actually cut emissions.

  • The Auto Alliance calls for a "significant expansion" of credits for plug-in hybrid electric and battery electric vehicles as well as additional credits for gasoline-only hybrids across the entire fleet.
  • Automakers also want a raft of new credits for assorted safety technologies they claim will save fuel, such as driver assistance and automation features.

The bottom line: As proposed, many of the automakers' recommendations won't work for California and its allies. But if the parties can strike a deal that sets federal standards closer to the Obama administration's, allows California to keep authority to set its own and includes extra credits (especially for electric vehicles), they might be able to avoid a lengthy court battle with high risks for both sides.

John M. DeCicco is a research professor at the University of Michigan Energy Institute.

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