California once had federal approval to set its own emissions standards, and the feds also allowed any other states to adopt California's standards instead of much weaker federal standards if they wanted. Seventeen states now either have or are considering adopting California's emissions standards, which means automakers are faced with the dilemma of possibly building two versions of every vehicle to meet both standards, go bankrupt trying to meet California's standards in time, or even not selling vehicles in those 17 states at all.
The federal government's new energy bill that calls for a raised Corporate Average Fuel Economy standard of 35 mpg by 2020 is what the AAM wants to talk to the Governator about. The AAM hopes to convince Arnold that meeting the new federal standards will be difficult but doable, while California's proposed standard of 40.5 mpg by 2016 is impossible to achieve without losing thousands of jobs and possibly bankrupting vulnerable automakers.
Schwarzenegger is not likely to buy the alliance's argument, however, and this conflict between the automakers and California will likely be settled in federal court a long time down the road.
[Source: Detroit Free Press, Photo by David McNew/Getty]