The Obama Administration is poised to announce a major deal on tailpipe emissions standards, bringing the whole country under one federal standard that fairly closely appropriates what California passed in 2002 and has been trying to get a waiver from the feds about ever since.

President Obama will announce as early as Tuesday that he will combine California’s tough new auto-emissions rules with the existing corporate average fuel economy standard to create a single new national standard, the officials said. As a result, cars and light trucks sold in the United States will be roughly 30 percent cleaner and more fuel-efficient by 2016.

The White House would not divulge details, but environmental advocates and industry officials briefed on the program said that the president would grant California’s longstanding request that its tailpipe emissions standards be imposed nationally. That request was denied by the Bush administration but has been under review by top Obama administration officials since January.

But Mr. Obama is planning to go further, putting in place new mileage requirements to be administered by the Department of Transportation that would match the stringency of the California program.

Under the new standard, the national fleet mileage rule for cars would be roughly 42 miles a gallon in 2016. Light trucks would have to meet a fleet average of slightly more than 26.2 miles a gallon by 2016.

This is a major victory for California, as well as a step forward for all sides of this debate.  Auto companies, who apparently signed off on the deal, can now have certainty about their future production needs.  The states can get out of court and provide a better environment for their constituents.  And we all can breathe cleaner air while using less oil.

But the hilarious postscript must be highlighted.  Politico reports that this deal will be announced tomorrow, with California Governor Arnold Schwarzenegger in attendance.  As CapAlert notes, there’s just one problem: California has a statewide election tomorrow, and Arnold is not an absentee voter.  Yes, the Governor, the head cheerleader and supporter of the special election, might miss out on voting in it (although, if the announcement takes place early enough, he could be reasonably expected to make it home before the polls close at 8pm).

You know Arnold can’t resist the lure of the spotlight.  And better for him to stand at the side of a popular President than try in vain to rescue a flawed set of ballot measures which have probably already failed, given the 2 million vote-by-mail ballots already cast.  It probably appeals to him to leave town on Election Day and hide out in Washington.  That’s par for the course for him, failing to ever accept responsibility for the damage he’s caused.

…in fact, Arnold will get an emergency absentee ballot and miss his own special election.  Too perfect.

This was expected, but President Obama is setting in motion a process that would finally allow California to set its own emissions standards.

President Obama will direct federal regulators on Monday to move swiftly on an application by California and 13 other states to set strict automobile emission and fuel efficiency standards, two administration officials said Sunday.

The directive makes good on an Obama campaign pledge and signifies a sharp reversal of Bush administration policy. Granting California and the other states the right to regulate tailpipe emissions would be one of the most emphatic actions Mr. Obama could take to quickly put his stamp on environmental policy.

Mr. Obama’s presidential memorandum will order the Environmental Protection Agency to reconsider the Bush administration’s past rejection of the California application. While it stops short of flatly ordering the Bush decision reversed, the agency’s regulators are now widely expected to do so after completing a formal review process.

Just to pre-empt the whining from the right, the EPA had never before in its history denied California a waiver under the Clean Air Act.  The courts have looked at this from the perspective of the automakers and have ruled repeatedly in favor of California and other states, agreeing that they are well within their rights to regulate greenhouse gas emissions.

Not only did the Bush Administration deny California the right to implement their tailpipe emissions law, they slow-walked the fuel efficiency standards passed by the Congress and signed by the then-President in 2007.  President Obama will direct the Transportation Department to finalize those standards as well.

This will be announced in the East Room tomorrow.  We now have a President who understands the need to act swiftly to combat the worst effects of climate change.  California will finally be allowed to lead this effort.

It’s worthwhile every so often to look for the silver lining in the storm clouds over this state.  After all, we do have a new President!  That seems to be working out!  And his pick for EPA Administrator, Lisa Jackson, was confirmed last night.  Which means that it’s probably only a matter of days before California gets its long-sought waiver to regulate tailpipe emissions.

With a new occupant in the White House, California could soon start enforcing its landmark 2002 law requiring a sharp reduction in vehicle emissions.

State leaders and environmentalists are pressing for quick approval of a waiver that would let California and at least 13 other states impose tougher air-quality standards than allowed under federal law. The Bush administration rejected the request a year ago, but that could be reversed by President Barack Obama and his environmental team.

During the presidential campaign, Obama said he backed the California law. Last year, he co-sponsored a bill by Democratic Sen. Barbara Boxer of California to approve the waiver.

“If I’m confirmed, I will immediately revisit the waiver,” Lisa Jackson, Obama’s choice to head the Environmental Protection Agency, told Boxer at her confirmation hearing last week.

This would set in motion a program to reduce emissions from vehicles by 30 percent over the next seven years.  It would spur alternative transportation development like SUPERTRAINS out of necessity, and force the production of clean-energy vehicles.  Industry was not going to innovate on their own; they had 30 years to recognize this problem but they sat on their hands.  It’s not a question of whether or not we can afford to implement this; given the natural disasters like wildfires that hit the state with increasing frequency, given the melting of the Sierra snowpack which decreases our access to water resources, given the public health effects of dirty air (a recent report showed that clean air increases lifespans by up to three years), given all the ancillary costs of climte change, we can’t afford not to.

The Governor and state leaders have been lobbying for the waiver since President Obama’s inauguration, and I’m confident that we’ll see granting within the next week.

As the special session gets underway, the new “Budget Nun” Mac Taylor, and since it’s a he this time I think we’ll go with “Budget Priest”, has released an overview of the Governor’s proposals.  The first thing that pops out is we now have a new shortfall number: $28 billion for the next 20 months, and an unsustainable long-term deficit thereafter.

State Faces $27.8 Billion Shortfall. We concur with the administration’s assessment that the state’s struggling economy signals a major reduction in expected revenues. Combined with rising state expenses, we project that the state will need $27.8 billion in budget solutions over the next 20 months.

Long-Term Outlook Similarly Bleak. The state’s revenue collapse is so dramatic and the underlying economic factors are so weak that we forecast huge budget shortfalls through 2013?14 absent corrective action. From 2010?11 through 2013?14, we project annual shortfalls that are consistently in the range of $22 billion, as shown below.

Overall, Taylor is generally supportive of the Administration’s proposals for closing the gap, but I think that has a lot to do with the fact that the Governor is finally using realistic numbers and not employing any borrowing gimmicks.  Compared to the 2008-09 budget, this is extremely welcome.  However, Taylor makes the point that a short-term increase in the sales tax cannot possibly be the backbone of a long-term solution, and three years out we’d still see deficits in the range of $9-11 billion.  Instead, he offers a couple points.  First is one that I’ve been making a lot, that California needs to lobby hard for state and local government relief in the second stimulus package:

In the coming months, there is a good chance that Congress will pass economic stimulus measures in an effort to boost the national economy. In the past, some components of such measures have directly provided state fiscal relief. To date, the administration has not built any estimates of such relief into its budget numbers.  For the time being, this is appropriately cautious to avoid counting on relief that may never come.  The state, however, should continue to press the federal government for economic stimulus measures that will provide California with flexible fiscal relief. While such relief would not solve the state’s budget problem, it could provide several billions of dollars in budgetary solutions.

(While we’re at it, we could also recoup the $2 billion giveaway to Wells Fargo precipitated by the Treasury Department illegally changing the tax code to allow banks to avoid corporate taxes.  Any California Congresscritters want to hop right on that?)

He also rightly notes that the Governor’s tax proposals are regressive in nature, and offers one final solution – fix the VLF that you broke as your first act in Sacramento.

Alternative Program Realignment. As noted above, raising the VLF tax rate to 1 percent has merit from a tax policy perspective. If the Legislature made it the foundation of a program realignment with local governments, programmatic outcomes could be improved as well. Under this approach, $1.6 billion of state criminal justice and mental health programs could be realigned to counties and supported by (1) the revenues raised by the increase in the VLF rate and (2) most of the VLF fee revenues currently retained for administrative purposes by the DMV. By consolidating these program responsibilities at the county level, and giving counties significant program control and an ongoing revenue stream, we think California could achieve greater program outcomes and significant budgetary savings.

You can see the total savings chart at the end of this PDF, but clearly the VLF raise is the big story here.  The LA Times picked it up as a news story and also on their op-ed page today.  For those who counter that the VLF is just as regressive as the sales tax, it doesn’t have to be.

Right now the VLF is a flat rate on the assessed value of a vehicle, which is based on its purchase price and a fixed schedule of depreciation (basically 10% per year). It’s true that if all you did was raise the VLF to its old rate of 2% it would remain about as regressive as a sales tax (see Table 5 here), but that’s not the only way you can do it. Unlike a sales tax, which needs to be a flat rate for administrative reasons, the VLF could easily vary by assessed value. It could stay at its current rate of 0.65% up to, say, $10,000 in assessed value, increase to 2% for more expensive cars, and increase still further to 4% for top end cars. The average rate would still be about 2%, but the incidence of the tax would be more progressive.

You can also build progressivity into the VLF by having it function as a carbon tax, essentially. You could set the VLF at a higher rate for cars that produce greater emissions, and at a lower rate for cars that are cleaner. As California is about to get a waiver to regulate tailpipe emissions under the Clean Air Act in a new Obama Administration, they would certainly be empowered to do so.

This is a repudiation of the very issue Schwarzenegger ran on in 2003.  We’ll see if he’s inclined to own up to his mistake.

Among the many executive orders that Barack Obama will seek to overturn to rack up some quick victories at the beginning of his term, none may have a more lasting impact than granting the waiver to California to regulate their tailpipe emissions.

The president-elect has said, for example, that he intends to quickly reverse the Bush administration’s decision last December to deny California the authority to regulate carbon dioxide emissions from automobiles. “Effectively tackling global warming demands bold and innovative solutions, and given the failure of this administration to act, California should be allowed to pioneer,” Obama said in January.

California had sought permission from the Environmental Protection Agency to require that greenhouse gas emissions from vehicles be cut by 30 percent between 2009 and 2016, effectively mandating that cars achieve a fuel economy standard of at least 36 miles per gallon within eight years. Seventeen other states had promised to adopt California’s rules, representing in total 45 percent of the nation’s automobile market. Environmentalists cheered the California initiative because it would stoke innovation that would potentially benefit the entire country.

“An early move by the Obama administration to sign the California waiver would signal the seriousness of intent to reduce the nation’s dependence on foreign oil and build a future for the domestic auto market,” said Kevin Knobloch, president of the Union of Concerned Scientists.

There are two reasons this is a major change.  One, by granting that carbon dioxide emissions threaten human welfare, you open up a whole toolkit of innovative policy choices to follow to restrict them.  Cap and trade or a carbon tax becomes not just a policy option but a madate under the EPA.  The second, as noted in the article, is that dozens of states will seek to follow the California ruling on tailpipe emissions over the federal government.  And once you have 45% of the market mandating a higher fuel efficiency standard, it is unlikely that automakers will create a secondary market at the lower standard.  You will have raised the CAFE number by default.

All of this is a recognition that the dangers of global warming is real, and that an Obama Administration will not stand in the way of sound science that declares the danger and seeks to mitigate it.  For all of the effort by polluters to save John Dingell’s chairmanship from the clutches of Henry Waxman (and they’re enlisting all the legislators they’ve bought off to that end), this executive order would have lots of reach regardless who controls global warming legislation in the Congress.  It would mean that California can control its own destiny and regulate its own air.  It will force innovation and create economic opportunity and improve public health and possibly save lives.

And it’s all a stroke of the pen away.

Measure R on the Los Angeles ballot would impose a 1/2 cent sales tax on county residents to pay for increased transit lines and services.  This couldn’t come at a more crucial time, as the MTA is poised to become a casualty of the financial crisis:

The next potential victims of the nation’s credit crunch: nearly 1.5 million people who ride buses and trains each weekday in Los Angeles County. Transit officials say riders could soon be facing serious service cuts.

That’s because the Los Angeles County Metropolitan Transportation Authority might have to quickly come up with hundreds of millions of dollars to pay investors under terms of deals it made involving American International Group, the troubled financial and insurance giant.

“I’ve lost a lot of sleep over this,” said Terry Matsumoto, the chief financial service officer and treasurer for the MTA. He said it was “absolutely” certain the agency would have to cut service if the deals sour.

The state is already cutting transit funding in the budget, and sales tax revenues, which already partially fund the MTA, are seizing up, as the economy slows and job loss increases (fortunately unemployment flattened out in September, albeit at 7.7%).

This is not the time for cutbacks in service at the MTA.  Ridership is at record highs, as people both avoid still-high gas prices (historically speaking) and more attention is paid individually to greenhouse gas emissions.  The Air Resources Board just released their final draft for compliance with AB32, and I can’t see how they could possibly reach their goals for greenhouse gas emission cuts without an increase in transit.  That includes passing high-speed rail, of course, but obviously the existing transit structures, can’t be pulled back at this important time.

Speaker Bass has been calling for the Governor to prioritize a federal stimulus package and has also been making noises about a state-based stimulus as well.  That has to include protections for transit concerns like the MTA, and increased funding flowing to them as well.  It’s a job creation engine, an economic sustainability engine, and an engine to a better environment.

We can all do our part in Los Angeles County by passing Measure R as well.

A few nuggets for you:

• A Superior Court judge in Alameda County has ruled that cell phone companies cannot charge early-termination fees, and has ordered that Sprint return $18.2 million dollars to consumers.  This will probably get fought on appeal, but right on.  The concept of fee for service has worked pretty well for most of consumer capitalism, as has being nice to your customers instead of bullying them into compliance.

• There’s been a lot of outrage at the LA City Council’s ruling banning new fast-food restaurants from breaking ground in South LA for a year.  Actually, far from being an issue of infringing on freedom, it’s a little thing called land use, and every city has them – even the one that the outraged Will Saletan lives in.  

I’m pretty skeptical that these proposed South LA regulations will do any good. But it’s not unique or unusual for land use regulations to exist. And working class people around the country suffer dramatically larger concrete harms from the sort of commonplace suburbanist regulations that Saletan’s been living with, without apparent complaint, in Chevy Chase. Those kind of regulations are bad for the environment, bad for public health, and serve to use the power of the state to redistribute upwards. So if you’re going to rail against land use regulations, maybe pick the ones that really hurt people.

• In environmental news, Senate leaders like Barbara Boxer are calling for the resignation of EPA Administrator Stephen Johnson for his preferring ideology over science, defying the advice of his own staff, evading oversight and misleading Congress, particularly about refusing the California waiver to regulate tailpipe emissions.  They’re also asking the Attorney General to investigate whether Johnson perjured himself at one of the California waiver hearings in Congress.  In addition, Jerry Brown is suing the EPA for their refusal to regulate greenhouse gas emissions at the nation’s ports.

• And this is pretty interesting, turns out the Sarah of “Sarah’s Law” (parental notification) doesn’t have the squeaky-clean image her sponsors claim:

Backers of a ballot measure that would require parents to be notified before an abortion is performed on a minor acknowledged Friday that the 15-year-old on which “Sarah’s Law” is based had a child and was in a common-law marriage before she died of complications from an abortion in 1994 […]

A lawsuit co-sponsored by Planned Parenthood Affiliates and filed Friday in Sacramento County Superior Court asks the Secretary of State to remove the girl’s story and other information it deemed misleading, including any reference to “Sarah’s Law,” from the material submitted for the official voter guide.

“If you can’t believe the Sarah story, there’s a lot in the ballot argument you can’t believe,” said Ana Sandoval, a spokeswoman for Planned Parenthood and the campaign against Proposition 4.

Using someone’s life story for political means, and wrongly at that.  Good people.

Ok, your turn.

Building on Bob’s report about the San Francisco Clean Energy Act, the California Air Resources Board has released its draft blueprint designed to fall in line with the mandate of AB 32, the Global Warming Solutions Act, by cutting emissions 30% by 2020.  

The 75+ page plan includes a range of policy recommendations.  Chief among them is increasing the state’s renewable electricity standard.  The plan also contains provisions for a regional cap-and-trade program that could work in harmony with other more specific policies to reduce pollution economywide.  The plan also says CARB will consider a vehicle “feebate” program that would provide incentives to consumers to buy cleaner cars.

In addition, the proposal includes plans to reduce emissions from heavy-duty trucks with hybrid engine technology and better fuel economy.  Like many of CARB’s proposals, the heavy-duty truck provisions would improve public health by also reducing smog-forming pollution.  The plan also advocates for a high-speed train system in California.

Jim Downing at the SacBee has more here.  Analysis on the flip:

There’s no question that California needs to do what is within its control to act immediately.  Climate change is already imperiling two-thirds of the state’s unique plants, and Los Angeles is trying dubious ideas like seeding the clouds with silver iodide particles to force it to rain.  The only sustainable solution is to demand mandatory emissions caps to fight a runaway climate.

Some of their ideas are top-notch.  Robert in Monterey, as his High Speed Rail blog, notes that CARB endorsed HSR to reach their targets:

Transportation is one of the capped sectors of the economy – meaning we can no longer just fly around or drive around endlessly; there will be increasing limits and at the same time rising costs as the cost of the credit purchase is passed on to consumers. To achieve the required lower emissions, and to provide sustainable and cleaner forms of transportation CARB endorsed high speed rail as one of its recommendations.

Their explanation was not particularly detailed – basically an endorsement of the concept of HSR and a projection that it would save around 1 million metric tons of CO2 in 2020. That’s around 22 billion pounds per year, close to the figure of 17.6 billion pounds that Quentin Kopp has been quoting.

I also really like the feebate idea that is part of the plan:

CARB also identified a feebate program as one avenue for reducing vehicle pollution. Such a program would establish one-time rebates and surcharges on new passenger cars and light trucks based on the amount of global warming pollution they emit.  This program would deliver benefits on its own, but also would complement California’s tailpipe standards if both were implemented.  According to a University of Michigan study, implementing a clean car discount program would deliver an additional 21 percent reduction in global warming pollution beyond the tailpipe standards.

The worry, of course, is that by the time the lobbyists and special interests get through with these targets, they’ll blow loopholes in them so wide that their impact will be meaningless.  But since the hard target of a 30 percent reduction is state law, I think there will be more backbone to actually reach those targets.  Builders and design specialists have already seen this coming and are producing innovative solutions to reduce emissions and save money.  At its best, carbon reduction is both efficient and cleaner, so really nobody loses except giant polluters.  They’re going to use the state’s budget problems to raise all kinds of fears about cost, but they’re really separate issues.  Plus, as the Bee article notes:

The air board’s mission may already have been made easier by changes in the economy. Today’s high energy prices are driving many of the sorts of emissions-cutting changes called for under the plan.

Sales of fuel-efficient cars are up, transit ridership is breaking records and businesses are investing in ways to save fuel and electricity.

Many have raised concerns about the cap and trade system, but CARB chair Mary Nichols is clearly invested in it, having presided over the most successful cap and trade system in history while in the Clinton Administration, the one that virtually eliminated acid rain.  It may be insufficient to have a few states in the West implement a trading system, but some industries, like energy production, aren’t likely to up and leave California – the market of 38 million people is too lucrative.  Anyway this gives momentum and support for a national system.

What I would like to see is a progressive cap and trade setup, which recognizes that higher energy costs disproportionately impact the poor, and seeks to balance that.  This is easier said than done:

Two things are worth noting. First, utility costs are a bigger problem than gasoline. On a percentage basis, the poor pay 7x as much for utilities as the well off, while they pay only 4x as much for gasoline. What’s more, unlike gasoline, there are seldom any reasonable alternatives for utility expenditures.

Second, there are always tradeoffs. Using the money from permit auctions (or carbon taxes) to rebate other taxes is indeed progressive if the rebate is fairly flat, but only if you pay taxes in the first place – which many of the poor don’t. For the very poorest, then, a tax rebate scheme would still be regressive: you’d essentially be hitting them with a big new energy tax without any offset at all. Conversely, a more targeted approach, like expanding funding for the Low Income Home Energy Assistance Program, helps the poor more directly but removes the incentive to use less energy.

The answer, then, is almost certainly a bit of this and a bit of that. No single solution targets assistance to the poor ideally, but a basket of solutions (payroll tax rebates, energy assistance, more funding for mass transit, etc.) can do a pretty good job. It won’t be perfect, but a well-designed program can make a cap-and-trade program pretty progressive.

Hopefully this will guide the CARB as they seek to work through the policy grinder and implement their reductions.  Right now the board is considering auctioning off few permits and giving away the rest, gradually eliminating the giveaway over time.  This kind of hair-splitting is wrong, and I hope they come to understand that.