*

EPA decision comes in last weeks of President Biden's

administration

*

Trump has vowed to rescind EPA approvals for California's

vehicle regulations

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Automakers argue California's rules will increase costs

and

limit vehicle choice

(Updates headline)

By David Shepardson

WASHINGTON, Dec 18 (Reuters) - The U.S. Environmental

Protection Agency said on Wednesday it has approved California's

landmark plan to end the sale of gasoline-only vehicles by 2035.

The decision in the final weeks of President Joe Biden's

administration sets up a fight over the future of California's

vehicle regulations. President-elect Donald Trump has vowed to

rescind approvals granted by the EPA to California to require

more EVs and tighter vehicle emissions standards.

EPA Administrator Michael Regan granted a waiver under the

Clean Air Act to California to implement its plan -- first

announced in 2020 -- to require that by 2035 at least 80% of new

cars sold be electric and up to 20% plug-in hybrid models.

California's rules have been adopted by 11 other states,

including New York, Massachusetts and Oregon.

The EPA also granted another waiver for California's

"Omnibus" low-NOx, or low-nitrogen oxide, regulation for

heavy-duty highway and off-road vehicles and engines, while six

others are pending.

"Clean cars are here to stay," California Governor Gavin

Newsom said. "Naysayers like President-elect Trump would prefer

to side with the oil industry over consumers and American

automakers, but California will continue fostering new

innovations in the market."

Newsom said last month that if Trump eliminates a $7,500

federal EV tax credit, he will propose creating a new version of

the state's Clean Vehicle Rebate Program.

The Alliance for Automotive Innovation, a trade group

representing General Motors ( GM ), Volkswagen,

Toyota Motor ( TM ) and other automakers, said they expect

Trump will revoke the waiver next year, arguing California's

vehicle rules "will depress economic activity, increase costs

and limit vehicle choice" and will require automakers to sell

fewer vehicles in the 12 states to comply.

"Most of the states that follow California are not ready for

these requirements," the group said. "Achieving the sales

mandates under current market realities will take a miracle.

There needs to be balance and some states should exit the

program."

California's rules require 35% of vehicles in the 2026 model

year to be a zero-emission model, rising to 68% by 2030. The

state says the rule is crucial to meeting greenhouse gas

emission reduction targets and cutting smog-forming pollutants.

On Friday, the Supreme Court agreed to hear a bid by fuel

producers to challenge the waiver California received in 2022

for vehicle emissions rules.

The EPA in March 2022 reinstated a waiver for California to

set its own tailpipe emissions limits and zero-emission vehicle

rules through 2025, reversing a 2019 decision under Trump's

first administration.