Obama: Let California Set Its Own Auto Emissions Standards

Jan. 25 (Bloomberg) — President Barack Obama is set to allow California to regulate greenhouse-gas emissions for autos, reversing a Bush administration ruling, people familiar with the matter said.

More than a dozen other U.S. states may then adopt the same standards, which are opposed by automakers. Obama, who will discuss his energy and environmental plans tomorrow, also will start finalizing new rules requiring cars and light trucks to be more fuel-efficient, the people said.

The Bush administration denied California a waiver to begin a state program intended to cut gases tied to global warming by 30 percent by 2016. Obama pledged during his campaign to reverse that decision.

General Motors Corp., Ford Motor Co., Chrysler LLC and companies represented by the Alliance of Automobile Manufacturers trade group sued to block California’s rules, arguing that developing vehicles that comply would cost billions of dollars.

Automakers also say the program creates regulatory chaos and will reduce the types of models they can sell in California and other states that want to adopt the rules.

GM, Ford and Chrysler last month got government pledges for as much as $17.4 billion in emergency loans to stave off bankruptcy. The three companies said this weekend that about 988 of their dealerships closed or were consolidated last year because of the lowest sales rate of light trucks and cars in the U.S. last year since 1992.

Bush Decision

The Transportation Department earlier this month said the Bush administration would delay setting new fuel-economy rules, postponing action on an agreement between Congress and Bush to boost Corporate Average Fuel Economy, or CAFE, rules for the first time in three decades.

That left it up to Obama’s new administration to set guidelines for 2011 models before a March 31 deadline.

Obama is making an overhaul in the U.S. energy economy a key part of an economic stimulus package he is pushing lawmakers to approve by the middle of next month. His goals include doubling renewable energy generating capacity in three years and accelerating an overhaul of the nation’s power transmission system.

On the campaign trail, Obama promised to end U.S. dependence on oil from the Middle East and Venezuela within 10 years.

To contact the reporter on this story: Kim Chipman in Washington at•••@••.•••.

Last Updated: January 25, 2009 18:45 EST