White House Appears Poised to Roll Back Obama-Era Fuel Efficiency Standard

With an April 1 regulatory deadline looming, the Trump administration appeared poised to roll back Obama-era fuel efficiency standards for passenger cars and light trucks, a move that would set it on a collision course with California and the dozen or so other U.S. states that have adopted the higher standard.

The U.S. Alliance of Automobile Manufacturers and the Association of Global Automakers had lobbied for relaxed standards in February 2017, in the early days of the Trump administration. Now, some of them are wishing they’d been careful what they asked for, fearing that the White House will go too far in its deregulatory zeal and fragment the North American auto manufacturing market.

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“I don’t think they were expecting the Trump administration would roll back the standards” as far as now seems likely, said Margo Oge, a former senior official with the U.S. Environmental Protection Agency (EPA) who helped to negotiate the previous guidelines with automakers and California. “Sometimes you dance with the devil, then you don’t really like the dance.”

And now, “some of the same companies that had pressed for action worry that they will be forced to comply with two standards: the stricter specifications that California imposes on its massive auto market and a separate requirement for the rest of the country,” the Washington Post reports. “The internal negotiations over relaxing carbon emissions limits for cars and SUVs slated to be sold in model years 2022 to 2025 underscore the challenge officials face in trying to fulfill [Donald Trump’s] 2017 promise to ease the regulatory burden on Detroit.”

The New York Times reported Thursday that EPA Administrator Scott Pruitt had sent a draft of the 16-page plan to the White House for approval. “According to two people familiar with the EPA’s plans, Mr. Pruitt was scheduled to formally announce his proposal on Tuesday at an auto dealership in the Virginia suburbs,” the Times wrote, “but the schedule remained in flux.”

[As this story went to (virtual) press Sunday evening, there was no word that Pruitt had initiated the rollback by the April 1 deadline, but plenty of speculation that his term as EPA administrator might be coming to an abrupt end over a deal with a Washington, DC energy lobbyist that got him a coveted Capitol Hill condo rental for US$50 per night. “I don’t know how you survive this one, and if he has to go, it’s because he never should have been there in the first place,” former New Jersey governor and erstwhile Trump ally Chris Christie told ABC News Chief Anchor George Stephanopoulos.]

In what now looks like an exaggerated response to the automakers’ initial complaints, the U.S. National Highway Traffic Safety Administration (NHTSA) “is looking at a range of options to lower future targets, including one that would permit an average fleet-wide fuel economy standard of 35.7 miles per gallon by 2026, down from the 46.6 miles per gallon under rules charted by the Obama administration,” Bloomberg News reported in February. At that relatively early stage, NHTSA also appeared set to reduce the required proportion of hybrid and plug-in electric vehicles from 61% to 10% of new vehicle sales in 2030.

But negotiations between Pruitt’s Environmental Protection Agency, NHTSA, and the White House “have been complicated by the fact that California sets the pace for nearly 35% of the nation’s auto market,” the Post notes. “California has threatened to press ahead on its own if the administration weakens the federal targets significantly, prompting some automakers to lobby for the current standards to mainly be kept.”

“We support increasing clean car standards through 2025 and are not asking for a rollback,” Ford Motor Co. Executive Chair Bill Ford and CEO Jim Hackett wrote last week on Medium. “We want one set of standards nationally, along with additional flexibility to help us provide more affordable options for our customers,” and “we believe we must deliver on CO2 reductions consistent with the Paris Climate Accord.”

On Thursday, Honda echoed the call for “flexibilities” in meeting the 2025 standard, “without a reduction in overall stringency.” The company added that “these policy options help minimize costs to automakers and ultimately consumers. This balanced approach could succeed in satisfying key objectives of EPA, California, and industry, and retain the one national program concept which is important to all.”

While the White House has kept an open channel for negotiations with California, the state is giving every sign of defending a tougher standard.

“We feel strongly that weakening the program will waste fuel, increase emissions, and cost consumers more money. It’s not in the interest of the public or the industry,” wrote Stanley Young, a spokesperson for the powerful California Air Resources Board (CARB).

“We’re prepared to take whatever action, legal or otherwise, that we must to protect our economy, our environment, and the public health of people of California,” agreed state Attorney General Xavier Becerra (D). “What we do, we do because we think it’s the right thing,” he added. “We’re not interested in participating in a race to the bottom.”

Much the same sentiment was in evidence in early March, when five associations representing major U.S. auto parts suppliers came out in favour of the tougher standard. “While they stopped short of directly criticizing automakers, which the parts suppliers rely upon for business, they came down clearly on the side of stringent emissions rules,” the New York Times reported. The groups said vehicle standards should “continue to make progress on reducing emissions and oil consumption while saving consumers money at the gas pump.”

Oge, the former EPA negotiator, made similar points last week in a Times op ed. “The standards in question, put in place by the Obama administration, make cars cleaner to drive and cheaper to own,” she wrote. “This fuel efficiency would result in a reduction of as much as six billion tons of carbon dioxide pollution and, through better fuel efficiency, $1.7 trillion in savings at the pump through 2025, good deals for the environment and consumers alike.”

Therese Langer, transportation program director at the American Council for an Energy-Efficient Economy (ACEEE), placed fuel savings under the Obama standard at 10.4 billion gallons per year by 2035 and stressed that a rollback “would be in direct conflict with the [EPA’s] mission to protect human health and the environment, and with the administration’s promises of economic prosperity and a resurgence in domestic manufacturing.”

She added that “putting the brakes on these standards would be a costly mistake with long-lasting economic and environmental impacts. In giving their tacit support to the move, domestic automakers could ultimately undermine their own competitiveness globally, as they are facing similar or more stringent standards in major markets around the world.”

Center for American Progress Senior Fellow Greg Dotson agreed that the “reprieve” for automakers “could yield global leadership in the auto sector to the Chinese,” adding that “the EPA’s expected proposal defies the simple narrative that businesses and environmentalists are butting heads. Over the last half-century, tailpipe emissions rules have helped the nation develop a vibrant, globally competitive automotive sector.”

Already, he added, “is leapfrogging the U.S. policy,” designating “new energy vehicles” as a “strategic emerging industry” and a tool for urban smog reduction and industrial development.

“It helps Chinese industry capture domestic market share while establishing Chinese automakers as global leaders in the technology,” he wrote. “China’s recently-adopted goals for plug-in vehicles overtake California’s program by requiring an aggressive deployment of plug-in vehicles beginning in 2019, with a target of seven million new plug-in cars sold per year by 2025. The Chinese government is even openly discussing the appropriate date to discontinue sales of internal combustion engine vehicles within China.”