(Bloomberg) -- The White House said it’s abandoned talks with California officials over nationwide annual fuel mileage standards for cars to curb carbon emissions, setting up a likely court battle that may leave requirements on automakers under a cloud of uncertainty for years.

The Trump administration announced on Thursday it had decided to halt discussions with the California Air Resources Board, citing insufficient progress after months of deliberations.

General Motor Co. and Ford Motor Co., the two largest U.S. automakers, said in separate statements they were disappointed the talks broke down without an agreement on a nationwide fuel economy standard that are set to go into effect in just two years.

“A coordinated program with every stakeholder is in the best interest of Ford’s customers, and is the best path forward to achieve reductions in carbon dioxide emissions and support critical investments in new technologies,” Joe Hinrichs, president of global operations at Ford, said in a statement. “The auto industry needs regulatory certainty, not protracted litigation.”

GM said it hoped the Trump administration and California officials can still find a way to maintain the so-called national program of fuel economy and greenhouse gas emissions standards that apply across the country. “Regardless of the standards, we are committed to a future of zero crashes, zero emissions, and zero congestion,” GM said.

California v. Washington

The Trump administration said the Department of Transportation and the Environmental Protection Agency will move forward to finalize new standards later this year without input from California.

“Despite the administration’s best efforts to reach a common-sense solution, it is time to acknowledge that CARB has failed to put forward a productive alternative” since federal regulators in August proposed weakening mileage requirements adopted by the Obama administration, the White House said in a statement on Thursday.

The move comes as Sacramento and Washington increasingly clash on policy matters and along ideological lines. The Republican White House on Wednesday announced it will cancel more than $900 million in federal grants for a high-speed rail project in the nation’s most populous state. On Monday, California’s Democratic leadership led a group of more than a dozen states in a lawsuit to block President Donald Trump from diverting funds from the federal budget to pay for his promised wall on the U.S.-Mexico border.

‘Targeted Attack’

California Governor Gavin Newsom said on Twitter that the move on auto emissions was “another targeted attack on CA by the Trump administration.”

The federal agencies released a proposal in August that recommended capping mileage requirements at a 37 miles per gallon fleet average after 2020, instead of raising them to about 47 mpg under rules adopted by the Obam a administration. It also recommended revoking California’s authority to set tailpipe greenhouse gas emissions standards for new autos.

Automakers have urged the Trump administration to broker a compromise with California to maintain nationwide uniformity in fuel economy requirements. Roughly a dozen other U.S. states adhere to California’s vehicle emissions standards, a bloc that represents more than a third of U.S. auto sales.

California officials didn’t immediately respond to a request for comment. However, earlier in the week, CARB spokesman Stanley Young said in an email that the administration had broken off communications before Christmas, “and never responded to our suggested areas of compromise -- or offered any compromise proposal at all.”

‘Never Serious’

“We concluded at that point that they were never serious about negotiating,” he said.

Fuel economy standards have significant influence over the mix of vehicles and engines that automakers sell, several years before new models arrive in showrooms. A court battle over mileage rules could upend technology development and investment plans for the U.S. while the other major auto markets of Europe and China press on with tougher requirements, said Brett Smith, director of propulsion technology at the nonprofit Center for Automotive Research.

“I hear companies say, ‘Well we’re going to go down this path regardless.’ And they will, but they’ll do it elsewhere, and they’ll implement it elsewhere,” said Smith.

Impact on Suppliers

Auto parts suppliers, which develop much of the fuel-sipping technology that automakers use in their cars, will feel even more impact, said Alan Baum, an independent auto analyst in West Bloomfield, Michigan. “If you’re the supplier, you make an investment and if all of a sudden your customer says, ‘never mind,’ you’ve got an issue,” he said.

Environmental and consumer advocates said the breakdown signals that the Trump administration intends to move ahead with plans to significantly weaken the standards that they said have already saved drivers $70 billion or more in fuel costs.

“The Trump administration’s decision to walk away from discussions with California proves they would rather blow things up than negotiate in good faith,” said Simon Mui, a senior scientist at Natural Resources Defense Council who works on vehicles and fuels. “Gutting national clean car standards would be bad for jobs, bad for drivers who would pay more at the pump, and bad for the climate we will leave our children. The irony is that nobody likes this outcome, not even the auto industry.”

‘Superficial and Scant’  

Senator Tom Carper said the Trump administration’s recommendation to cap mileage requirements after 2020 is more aggressive than carmakers sought. The Delaware Democrat also questioned the seriousness of administration’s effort to seek a deal with California, saying in a statement that the talks “have been superficial and scant at best, or duplicitous and designed to fail at worst.”Responding to reports that the talks had been abandoned, California Attorney General Xavier Becerra on Wednesday tweeted that said states would fight to preserve the existing auto standards.

“States representing 40% of the auto market stand strong in defense of our nation’s existing #cleancar standards that should continue to be the law of the land,” he wrote.

Most carmakers have expressed support for higher fuel economy requirements over time, but also have lobbied the Trump administration to ease current requirements amid surging SUV sales, sustained low gasoline prices and limited demand for electrified vehicles.

Representatives for Toyota Motor Corp. and Fiat Chrysler Automobiles NV deferred comment to the Alliance of Automobile Manufacturers, an industry trade association, which said “automakers support year-over-year improvements in fuel economy that align with the marketplace.”

Honda Motor Co. also expressed disappointment at the outcome of the California talks, and said federal and state policies to support lower emissions should be coordinated.

“The industry requires certainty about future regulatory obligations to avoid unnecessary cost and complexity,” Honda said in a statement. “There is a credible middle ground that could accommodate the objectives of NHTSA, EPA and CARB, and we encourage all parties to keep trying.”

--With assistance from Gabrielle Coppola.

To contact the reporter on this story: Ryan Beene in Washington at rbeene@bloomberg.net

To contact the editors responsible for this story: Jon Morgan at jmorgan97@bloomberg.net, Elizabeth Wasserman, Ros Krasny

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