Updated Sept. 20 with California and 22 other states suing. 

President Donald Trump’s administration on Thursday stripped California of its authority to enact the nation’s toughest auto pollution standards, setting the stage for an epic legal battle that could squelch the nascent U.S. market for petroleum-free vehicles at a critical time.

The long-anticipated move, which Trump himself touted on Twitter just days before a United Nations summit on climate change, could prove to be his administration’s most consequential policy retreat from efforts to rein in greenhouse gas emissions. When coupled with the administration’s planned freeze on fuel-economy improvements, it will negate one of the largest steps that any nation has made to cut carbon emissions.

Trump’s Transportation Department and Environmental Protection Agency called the California action the “One National Program Rule,” but that is a misnomer. On greenhouse gases, there has been one national program, which the Trump administration is now trying to weaken and California is seeking to retain.

California has led the nation in a slow, but steady move toward electric vehicles—a turnover that experts believe is essential for gaining control of rising U.S. carbon emissions from transportation. Ten other states had adopted its rules requiring automakers to sell a certain number of electric cars and trucks, based on each manufacturer’s overall in-state sales.

But California and those other states now lose the power to enforce those zero-emissions vehicle requirements—at least temporarily.

On Friday, 23 states, the District of Columbia and the cities of New York and Los Angeles sued the federal government over the move, arguing that its “preemption rule” was unlawful and asking a federal court to strike it down.

Auto industry experts and analysts expect that the uncertainty the administration’s move creates will dampen the market for zero-emissions vehicles.

Improvements in U.S. fuel economy so far have not been sufficient to curb carbon emissions from transportation, which grew 1.2 percent in 2017 even as the nation’s overall carbon emissions fell 0.5 percent, according to the latest figures from the Environmental Protection Agency.

As long as more consumers are driving more miles each year, only electric and other zero-emissions vehicles can reverse the trend that has made transportation the largest source of U.S. greenhouse gas emissions.

“You can’t get serious about climate change unless you get serious about vehicle emissions,” California Gov. Gavin Newsom said Wednesday at a news conference in Sacramento. “This is such a pivotal moment in the climate change debate, not just for California, but for our leadership around the world. It is a legacy moment.”

Newsom vowed to fight the Trump administration’s move in court. “We will prevail,” he said. “It may take years, more uncertainty and more anxiety.”

In August, four automakers, comprising 30 percent of the market, struck a deal with California to voluntarily implement annual fuel economy improvements across their fleets if the federal rules were weakened.

Under that agreement, made in anticipation of Trump’s action, Ford, Honda, BMW and Volkswagen would continue to improve gas mileage—although at a slower rate than under the Obama administration’s rules. The deal, which served to isolate the Trump administration in its battle with California, reportedly enraged the president. And although California has continued talks with the remaining automakers, the Trump Justice Department has been using the threat of antitrust enforcement to dissuade automakers from cooperating with the state, Newsom said.

“The innovation genie is out of the bottle,” the governor said. “Every single one of these companies knows where the country is going, and where the world is going … and that’s the elimination of the internal combustion engine.”

A Long History of Waivers for California

California’s role as a leader in the nation’s air pollution laws dates back to the beginnings of federal environmental law in the late 1960s.

When Congress got around to creating a program to control air pollution, it sought not to disrupt the steps that already had been taken by California to deal with its legendary urban smog. Congress gave California authority to set its own standards, and gave other states the option of following California’s program.

But each time California sets a new, tougher air standard, it must receive a “waiver” from the federal government, certifying that the standard is at least as protective as the federal standard, that it is not arbitrary and capricious, and that the state has a compelling need to act. Over the years, California has received hundreds of such waivers. As a result, it has led the nation in control of carbon monoxide, smog-forming pollutants and other tailpipe emissions.

The waiver that Trump revoked was granted by President Barack Obama and governed California’s authority to control greenhouse gas emissions from vehicles. Obama then brought federal rules in line with California’s standards in a landmark deal negotiated with the U.S. automakers as part of the $80.7 billion bailout of their industry in 2009.

Soon after Trump won the 2016 election, automakers sent him a letter asking him for additional flexibility under the fuel economy and greenhouse gas rules. Even though they are making large investments in electric cars, automakers’ most profitable vehicles are still the gas-guzzling SUVs and pickup trucks that are making up an increasing portion of their sales in the United States.

But Trump went even farther. The carmakers did not want a legal battle with California, and they have pleaded for the Trump administration to reach a deal with the state.

A Claim About Jobs, and an Analysis

In his tweet effectively rejecting that plea, Trump asserted that the revocation of California’s waiver will result in less expensive and safer vehicles. “Many more cars will be produced under the new and uniform standard, meaning significantly more JOBS, JOBS, JOBS!” Trump tweeted.

But last year, the Trump administration’s own analysis of its proposed rollback projected that it would result in 50,000 to 60,000 fewer jobs.

“For over 50 years, California has played a leadership role in advancing vehicle standards and air quality policies that created a market for clean vehicle technologies,” the Manufacturers of Emissions Controls Association wrote in a plea it filed with the Environmental Protection Agency to retain the California standard.

The association said more than 300,000 people at more than 1,200 facilities across North America are employed in design and manufacture of emissions control and efficiency technology. “The Clean Air Act viewed California as a laboratory for innovative policies that drive early technology introduction,” it said.

Nearly Half EV Growth Was in California

California’s impact on the market is clear in the sales figures for electric vehicles.

New registrations of EVs in the United States more than doubled in 2018 to 208,000, with nearly 46 percent of that growth occurring in California. An additional 13 percent were in the first nine states to adopt California’s zero-emissions rules, according to IHS Markit, a consulting firm. Colorado became the 10th state last month.

EVs are on track to grow from 2 percent of the total U.S auto fleet in 2020 to more than 7 percent by 2025, IHS Markit said in April. But the consulting firm added, “The greatest headwind for EV sales in the U.S. may soon be any elimination or delay to California’s Zero Emission Vehicles (ZEV) mandate by the federal government.”

“Simply put, the California Waiver has enabled greater EV penetration in markets nationwide,” said ChargePoint, the world’s largest EV charging network, in comments it filed with the federal government last year. Revoking the California waiver would “stifle EV markets across the country at a time of rapid growth,” ChargePoint said.

Groups from the ideological right and supporters of the fossil fuel industry have been urging the Trump administration to withdraw California’s authority.

Grover Norquist’s Americans for Tax Reform urged the administration to “[restore] proper federalism by removing California’s ability to dictate national policy.” The fossil fuel industry-supported American Energy Alliance said, “Consumers, not unelected bureaucrats in Sacramento, should decide what cars they want to buy.”

The Trump Administration’s Argument

The Trump administration unveiled its proposal to roll back fuel economy standards last year. In that notice, it signaled it plans to make the legal argument that the greenhouse gas emissions standards are, in effect, fuel economy standards—and that Congress prohibited states from setting their own fuel economy standards when it established a national auto efficiency program in 1975.

Two federal courts—in Vermont and in California—rejected that argument when President George W. Bush’s administration tried to deny California authority to set its own greenhouse gas emissions standards in 2007. That same year, the U.S. Supreme Court rejected the same notion when it decided that carbon dioxide is a pollutant under the meaning of the Clean Air Act.

“Sure it’s true that one of the ways you limit greenhouse gas emissions is by improving fuel economy. But that doesn’t turn those standards into fuel economy standards,” said Jack Lienke, regulatory policy director at New York University’s Institute for Policy Integrity. “Their purpose is to limit pollution and protect health.”

The Environmental Protection Agency and the Department of Transportation are expected to finalize the weakening of federal fuel economy standards later this year, but it decided to act on the California waiver first.

It is not yet clear how the Trump administration’s plan would affect global warming emissions. The Obama administration’s rules were designed to cut more than 6,000 million metric tons of greenhouse gases—more than one year’s worth of total U.S. emissions—over the lifetime of vehicles sold from model years 2011 to 2025. The Obama administration had estimated that the fuel economy standards would account for 8 percent of the cuts needed to meet the U.S. pledge under the Paris climate accord.

Correction: This story has been corrected to reflect that 10 states had adopted California’s ZEV standard. On Aug. 16, Colorado joined Connecticut, Maine, Maryland, Massachusetts, New Jersey, New York, Oregon, Rhode Island and Vermont.