WASHINGTON—The Biden administration is moving to end a legal battle with California over the state’s authority to regulate motor-vehicle emissions, setting the stage for stricter regulations on the auto industry, according to people briefed on those plans.
Administration officials could announce their first steps as early as Friday, these people said, as President Biden concludes a two-day international summit via videoconference to address climate change. It would be the latest in a series of efforts to unwind Trump administration policies that eased environmental rules.
California, the nation’s biggest car market, has long set emissions standards that exceed requirements set by the federal government, an exception that was allowed under a waiver to the Clean Air Act. As a result, California’s standards became the de facto national standard.
That became a source of conflict during the Trump years as auto makers asked the Trump administration for relief from a deal the Obama administration negotiated with California and the industry to increase fuel-economy standards.
The Trump administration moved to relax the Obama standards, saying easing the regulations would lower consumer costs and boost auto sales. To do it, the administration’s Transportation Department adopted a new policy that said California didn’t have the legal authority to set its own fuel-economy standards. The move kicked off a long legal battle that auto makers worried would complicate their planning for future models.
Mr. Biden’s Transportation Department will first move to undo that decision, possibly as soon as Friday, the people said. That would mean withdrawing its legal defense against a suit from California, 22 other states and the District of Columbia that had sued the Trump administration to preserve California’s power.
Auto companies like General Motors Co. , Toyota Motor Corp. and Stellantis N.V. initially sided with the Trump administration in the lawsuit, arguing that the standards should be set by federal regulators. Those companies withdrew their support in the wake of Mr. Biden’s election.
The Biden administration has made stronger regulations on car makers central to the president’s agenda for reducing greenhouse-gas emissions, which contribute to climate change. Passenger vehicles account for roughly 16% of such emissions, according to the Environmental Protection Agency.
After the Transportation Department reverses its challenge to California’s authority, the EPA is expected to follow with its own new policies as soon as next week, the people said. The likely outcome is to reinstate California’s authority to set its own rules.
The White House and the EPA declined to comment. The Transportation Department didn’t immediately respond to a request for comment.
Mr. Biden signed an executive order on his first day as president that called on federal agencies to review a series of Trump administration environmental rules. The order mandated that the government review Mr. Trump’s efforts to relax more stringent emissions regulations set by his predecessor, including the rule revoking the waiver allowing California to set its own standards.
The Trump administration also eased tailpipe-emissions standards nationwide, saying the move would boost car sales and lower new-car prices.
Those rules require auto makers to achieve 1.5% annual increases in fleetwide fuel efficiency through 2026, using an industry measure that takes both gas mileage and emissions reductions into account. That requirement is down from a 5% annual increase in efficiency mandated by the Obama administration. It has been under court challenge from several states and environmental groups.
California, through its Air Resources Board, had been working to craft a compromise between the Obama-era standards and a Trump rollback, agreeing with several auto makers on a state-based framework. That deal was to increase efficiency by 3.7% annually from model years 2022 to 2026.
The Biden administration is considering new rules that would codify those requirements nationwide, two of the people said.
Through its orders, the White House has set a July timetable for proposing a new rule that would re-raise the standards. The process to set those standards will accelerate in the weeks to come as the agencies push to get a proposal to the White House for review, probably by June, the person said.
The Biden administration’s new moves on vehicles come as the president is hosting 40 world leaders later this week for a virtual summit on climate change. During the event, Mr. Biden is expected to unveil a new climate change target that calls on the U.S. to lower its emissions 50% below 2005 levels by 2030.
—Ben Foldy contributed to this article.
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