Obama Moves to Let States Set Own Rules on Emissions

By STEPHEN POWER and LAURA MECKLER
President Barack Obama plans to call on the Environmental Protection Agency on Monday to consider allowing states including California to regulate automobile greenhouse-gas emissions, said people familiar with the administration's thinking.
The move will signal a major policy break from his predecessor on an issue that has divided key Democratic Party constituencies. Mr. Obama's announcement is almost certain to spark a war between two key Democratic constituencies: environmentalists and state officials who want power to set greenhouse-gas rules, and auto makers and unions who say such rules would exacerbate the industry's woes following the worst year of U.S. vehicle sales in more than a decade.
Mr. Obama also plans to direct the Department of Transportation to complete automobile fuel-economy standards by March so that they can take effect for the model year 2011. Mr. Bush's administration had pledged to take such a step before the end of his term but ultimately punted the issue to Mr. Obama.
Mr. Obama's plans were described to The Wall Street Journal by three people familiar with the administration's thinking, including one administration official. Mr. Obama was expected to outline his plans in directives to the agencies to be released at a White House event Monday.

Mr. Obama's memorandum to the EPA wasn't expected to direct the agency to allow California to regulate greenhouse-gas emissions, but rather to undertake the legal process to reconsider a 2007 decision by the EPA's then-administrator, Stephen Johnson, to block California from implementing its state-level curbs on such emissions. A final decision by the EPA isn't expected for several months.
The directive on fuel-economy standards won't change federal policy, which already calls for tougher mileage standards. But it assures that those new standards will be in place for the 2011 model year.
Environmental advocates welcomed the planned moves. "President Obama, with these actions, will have done more for oil independence in one week than George Bush did in eight years," said Daniel J. Weiss, senior fellow and director of climate strategy at the Center for American Progress, a liberal think tank in Washington.
Mr. Obama's directive to the EPA will set in motion a process that could ultimately require auto makers to produce cleaner-burning vehicles to sell in states that adopt the tougher standards. Seventeen states, including California, have already signaled that they want to adopt tougher standards, Mr. Weiss said.
The planned moves come less than a week after California Gov. Arnold Schwarzenegger formally asked the president to let California enforce a 2002 state law that its officials estimate would require that vehicles achieve mileage equivalent to 35 miles per gallon of gasoline by 2017 -- three years earlier than a 2007 federal law would require.
Mr. Obama expressed support during his campaign for California's bid to regulate automobiles' greenhouse-gas emissions, so called because they trap the sun's heat in the earth's atmosphere, contributing to global warming. But he had not said publicly how quickly his administration intended to act on the state's request.
Under a 2007 Supreme Court decision, Mr. Obama's administration must determine whether greenhouse-gas emissions "endanger" public health or welfare, the legal trigger for regulating them under the federal Clean Air Act.
Technically, both decisions will fall to the new administrator of the Environmental Protection Agency, Lisa Jackson.
Ms. Jackson supported an effort to adopt an emissions law modeled on California's when she headed New Jersey's environmental agency from 2006 until 2008. At a Senate hearing last week, she promised to immediately revisit the 2007 decision that blocked California from implementing its law.
A decision in favor of the request would clear the way for more than a dozen other states to enforce laws they modeled on California's. But it also would risk antagonizing the United Auto Workers, which has complained that the law unfairly discriminates against companies whose product mix is skewed toward larger and less fuel-efficient pickup trucks, sport-utility vehicles and minivans.
Write to Stephen Power at stephen.power@wsj.com and Laura Meckler at laura.meckler@wsj.com