Inside the Draft Auto Rule Rollback

July 30, 2018

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by Alex Guillén (Politico's Morning Energy) The Trump administration is expected to formally roll back vehicle fuel economy and emissions requirements later this week, and a draft version of the EPA-NHTSA rule posted Friday evening by The New York Times offers up details that confirm the many of the changes previously reported. The draft it promises it will save auto companies and car buyers "half a trillion dollars" by overriding the Obama administration standards while having only a "minimal" effect on climate change and air pollution. Under the frozen standards, the combined car and light truck requirements would be up to 37 miles per gallon and 241 grams of CO2 per mile. That represents a significant drop from the GHG targets set under Obama. (NHTSA, of course, never set mileage standards for those years, but the mpg goals are also lower than what would have been expected.)

Expect some unease from the auto industry: Carmakers have called on the Trump administration to continue to increase Corporate Average Fuel Efficiency standards and to maintain one national program. The new proposal rejects the first part and sets up a nasty legal battle with California on the second part, meaning potentially years of regulatory uncertainty for an industry already starting to design future cars.

There are caveats: The 700-page draft is undated, and an environmental source told ME it appears to be a month old, so this week's release could be different to the version the NYT published.

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THE MAJOR TAKEAWAYS: Under the proposal, NHTSA will freeze auto standards for 2021-2026 model years at 2020 levels for several economic, technological and safety reasons. That in turn causes EPA to roll back its own greenhouse gas standards for those years in order to harmonize the two rules. Meanwhile, EPA plans to revoke California's waiver that allows the state to enforce its own higher standards to prevent a confusing market schism, a potentially risky legal move that the Golden State has promised to fight tooth and nail. Some details that caught ME's eye:

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It also argues that freezing the standards will help improve air quality because consumers are more interested in buying cheaper, less fuel efficient vehicles, and thus would buy more new cars and dump older, dirtier models.

California authority: The proposal dismisses two court rulings from 2007 that said California's rules are not preempted by a law barring states from setting their own fuel economy standards .... The agencies say they "do not agree" with the rulings, and note that NHTSA "was not a party to those cases and is not bound by these decisions." The draft is unusually blunt about this issue: "Eliminating California's regulation of fuel economy will provide benefits to the American public. ... A consumer buying a pickup truck in Texas or Kentucky should not be on the hook to pay for the heavily subsidized lease of an electric vehicle by a wealthy Californian."

Safety: The previous rule used a "skewed" safety analysis "so as to reduce the projected risk to safety associated with aggressive fuel economy targets," the proposal argues. It projects that freezing the standards "would yield the lowest number of vehicle fatalities" compared to current rules — 12,903 lives over the lifetime of cars made through 2029. This analysis in particular was said to be a sticking point between EPA and NHTSA. Reducing vehicles' weight is one of the more hotly contested contributors to the safety analysis, and the draft cites a NHTSA-contracted study from George Washington University that says lightweighting increases traffic deaths. The auto parts industry hotly disputes that making cars any lighter affects safety, thanks to new materials and technology.

Oil use: The agencies project their proposal will mean U.S. consumption will ultimately increase by 500,000 barrels of oil per day, or about 182 million barrels a year. That increase, the draft says, is "dwarfed by the cost savings" associated with the rest of the proposal.

REMINDER: Acting EPA chief Andrew Wheeler is scheduled to appear before the Senate Environment and Public Works Committee on Wednesday morning. Even if the rule isn't out, nine of the panel's 10 Democrats are from states that follow California's rules. READ MORE

New EPA head: Obama 'jumped the gun' on vehicle emissions standards (The Hill)

17 states sue Trump administration over rolling back vehicle emission standards (The Hilll)

Trump Auto Plan Would Increase Fuel Use by 500,000 Barrels a Day (Bloomberg)

Why Trump Attacks California’s Anti-Pollution Powers (Bloomberg)

The Energy 202: Reagan fought for California’s right to require tough fuel standards. Trump might try to reverse it. (Washington Post)

US says driving would be riskier if fuel standards tougher (Associated Press)

The Interaction of the Clean Air Act, California’s CAA Waiver, Corporate Average Fuel Economy Standards, Renewable Fuel Standards and California’s Low Carbon Fuel Standard (Advanced Biofuels USA)

Let’s Regulate CO2 Emissions, and Forget the 55.4 MPG 2025 Corporate Annual Fuel Economy Standard: The Inexpensive Way to Quickly Reduce Green House Gase s (Advanced Biofuels USA)

Excerpts from The Washington Post: First, a little history. Smog in Los Angeles had become crippling at times throughout the 1950s and into the 1960s. As scientists focused on motor vehicle exhausts as a key culprit of air pollution, state officials sprung into action, developing the nation’s first vehicle emissions standards in 1966. The following year, the state’s new Republican governor, Ronald Reagan, established the California Air Resources Board (CARB) to undertake a statewide effort to address widespread air pollution.

Around the same time as it crafted clean air legislation for the country, Congress granted California special status, saying the state could request a “waiver” to require stricter tailpipe standards if it provided a compelling reason such regulations were needed. The auto industry, then as now, expressed concern over the idea of having to meet different standards in different states, but California eventually prevailed.

“It was very controversial, and it was very close,” David Vogel, a professor emeritus at the University of California at Berkeley, who has written about the state’s environmental history, said of the 1967 legislation that first gave the state its waiver ability. “But every California legislator in Washington uniformly supported the waiver request. Every official in the state, from Reagan on down, wanted California to be able to address its very bad pollution.”

Congress has repeatedly reaffirmed California’s right to request its waiver, and in 1977 said other states could adopt the state’s stringent car emissions standards. Along the way, emissions control strategies first adopted by California — catalytic converters, nitrous oxide regulations and “check engine” systems, to name a few — have become standard across the country.

“It’s had a transformational impact,” said Jody Freeman, an expert in environmental law and a professor at Harvard Law School. “It was directly responsible for many advancements that make cars better, stronger and more efficient.”

Over the decades, the Environmental Protection Agency has repeatedly approved waivers for California under the Clean Air Act, with the exception of late 2007, when the agency during the Bush administration denied the state a waiver for its tailpipe standards on the grounds that capping carbon dioxide emissions did not address a specific air pollution problem for California. California has applied for and received more than 130 waivers over the past 50 years, according to CARB.

California, along with other states, challenged the denial in court. In July 2009, after President Barack Obama took office, the EPA granted the state its waiver. That same year, the Obama administration reached a deal with California and the auto industry, setting the first carbon limits on tailpipe emissions and maintaining nationwide fuel economy standards.

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(S)tate officials including the governor and attorney general have vowed to lead a fierce legal battle.

That fight would likely center, in part, on a 1975 energy law that gave the Department of Transportation authority to set fuel economy standards. Two federal district courts in 2007 rejected the argument that the 1975 Energy Policy and Conservation Act prohibits California from setting its own tailpipe standards, but the law remains unsettled on the matter.

In separate cases in Vermont and California, where two different Chrysler dealers had challenged California’s emissions limits, judges concluded that the state was allowed to impose its own standards, given the fact that it had received a waiver from EPA. “Congress has consistently acknowledged interplay and overlap between emissions reductions regulations and fuel economic regulations, and could not have intended that an EPA-approved emissions reduction regulation did not have the force of a federal regulation,” Judge William K. Sessions III wrote in Green Mountain Chrysler Plymouth Dodge v. Crombie. READ MORE