Obama's EPA Move Likely to Spur Fight

By STEPHEN POWER
WASHINGTON -- President Barack Obama opened the door to state-level regulation of greenhouse gases, kicking off the first round of what promises to be a lengthy fight between major industries and his administration over how to combat global warming.

In ordering the Environmental Protection Agency to consider allowing states such as California to regulate automobile emissions of greenhouse gases, Mr. Obama served notice that his administration doesn't intend to let the worst year of U.S. auto sales in more than a decade deter him from his goals of reducing emissions and U.S. dependence on Mideast oil.
The announcement drew cheers from California's Republican governor, Arnold Schwarzenegger, and many environmental groups. It drew condemnation from congressional Republicans, who said it would allow the Golden State effectively to set fuel-efficiency standards for much of the country. Some Rust Belt Democrats said California's law would fall hardest on domestic auto makers, who sales mix skews toward pickup trucks, sport-utility vehicles and minivans.
How much California's regulations would cost consumers has been a point of contention. In 2007, when the industry sought to persuade a federal judge to block Vermont's adoption of the California rules, its lawyers presented estimates by an industry consultant that the rules would add several thousand dollars to the cost of some models; a witness for the state put the cost at closer to $1,500. California regulators have estimated that the rules would save low-income families about $300 a year in lower gas prices.
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Mr. Obama directed the EPA to consider granting California a waiver from the federal Clean Air Act that would let the state enforce a law requiring a 30% reduction in greenhouse-gas emissions from new cars by 2016. Auto makers have unsuccessfully challenged the law in court. The waiver request reaches beyond California. Thirteen states and the District of Columbia have adopted California's standards;others are considering following.
At a White House event Monday, Mr. Obama said, "Our goal is not to further burden an already-struggling industry. It is to help America's auto makers prepare for the future."
The new president's twin goals of reducing greenhouse-gas emissions and U.S. oil imports have been complicated by shifting consumer tastes and volatile gas prices. The national average price for a gallon of regular unleaded gasoline is now $1.84, less than half what it was in July. The decline in gas prices has, in turn, revived demand for vehicles whose emissions and gas consumption tend to be much greater than cars. Last month, light trucks accounted for nearly half of all automobiles sold in the U.S., compared with 40.5% in May, according to Edmunds.com, a Web site that tracks auto sales.
"This is another example of 'the federal government knows best,'" said Rep. James Sensenbrenner of Wisconsin, the senior Republican on the House Select Committee on Energy Independence and Global Warming. He called Mr. Obama's move a "further dagger in the heart of the auto industry," and predicted the effect would be "higher car prices and bigger bailouts."

General Motors Corp. said in a statement that it hopes to engage the Obama administration and Congress in a broader discussion of "meaningful and workable solutions and targets that benefit consumers from coast to coast." Several other large auto makers declined to comment. The subdued reaction partly reflects the political weakness of the domestic car makers, which had to ask Congress and the Bush administration late last year for a sweeping rescue package.
A final decision by the EPA isn't expected for several months. If the agency grants California's request, it would 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. Under a 2007 Supreme Court decision, Mr. Obama's administration must also determine whether greenhouse-gas emissions "endanger" public health or welfare, the legal trigger for regulating them under the federal Clean Air Act.
Business groups, led by the National Association of Manufacturers and the U.S. Chamber of Commerce, are already gearing up to fight such a move, fearing it would lead to costly new mandates across a range of industries.
Some industry lobbyists also fear that a decision in favor of California's request would lead the EPA to impose its own regulations on greenhouse gases.—Laura Meckler contributed to this article.
Write to Stephen Power at stephen.power@wsj.com