Inflection Point: California Is Really Big, and Important

Photo of traffic on freewayWith major policy changes coming from Washington, D.C., the 50 states will increasingly be important players in actual outcomes.  Their attorneys general have already demonstrated this, with their successful judicial challenges of President Trump’s executive orders on immigration, from Washington state and Hawaii.

Big states will also be important for policy reasons. One out every eight Americans lives in California.  Two major policy issues will soon be greatly influenced by California-level decisions.  With a solid Democratic legislature and a good chance of having a governor in 2018 who supports a single-payer state health plan, wherever the U.S. then stands on ACA and AHCA in 2018, California could change the health insurance and policy situation radically by moving to single payer (at a scale that Colorado could not have influenced, had Amendment 69 passed in fall 2016).

Also consider environmental issues.  In the federalism/state regulation literature, scholars talk about a potential “race to the bottom” – where states want business expansion and are willing to reduce labor or environmental standards (to the extent they can).  This is sometimes called the “Delaware effect,” because Delaware has the most pro-corporate chartering laws –hence about half of American corporations get their charters in Delaware (which collects fees and employs lawyers to deal with corporate issues).

On the opposite side, the “California effect” is an environmental “race to the top.”  Almost 50 years ago, California set higher fuel standards for automobiles than the federal standards, now known as CAFE (Corporate Average Fuel Economy).  Since so many cars are sold in California, auto manufacturers were not going to produce 2 separate of cars, so opted for the higher standards.

So, as this LA Times article notes, as the Trump administration seeks to reduce CAFE mileage standards, California’s rules may make that change moot.  As if often the case, the courts may decide some of these issues, but states have critical roles.

As the LA Times notes: “Under the Clean Air Act, the state can impose emissions standards stronger than those set by the federal government, and a dozen other states have embraced the California rules. About 40% of the vehicles sold in America are subject to the rules California sets. Automakers have said repeatedly that it is untenable to manufacture separate fleets of vehicles to meet different standards.  The state had refrained from charting its own course on mileage goals as part of a compromise with auto companies and the EPA early in the Obama administration. That agreement will start to unravel with Trump’s action. If, as environmental and auto lobbyists anticipate, the administration ultimately decides to weaken the rules, California will almost certainly move to invoke its authority under the waiver to keep higher standards.”

Categories: Commentary

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