EPA moves to preserve gas mileage requirements before Trump takes office

Jan. 13, 2017 8:26 AM PT

The Environmental Protection Agency could have waited until April of next year to set fuel economy standards for cars and passenger trucks in stone. Instead, it did so Friday — exactly a week before President-elect Donald J. Trump is to be sworn into office.

The rules, announced Friday, require each automaker to achieve a fleet-wide average of about 50 miles per gallon by 2025. (That number is a bit misleading: Because of testing variations, it is equivalent to window-sticker EPA mileage numbers of about 40 mpg, up from the 24.8 mpg auto industry average now.)

Lobbyists for automakers and dealers are calling foul. Environmental groups are thrilled. EPA officials are defending the move, saying their motivation was to provide a set framework for automakers as they design new vehicles for future years.

Politically, however, it kicks up a thick dust of uncertainty about how the new Trump administration will respond. Any reversal could spark calls for a separate set of standards for California, where state lawmakers have pushed for environmentally friendly regulations.

Despite the hubbub, some analysts said automakers will have to ask themselves how hard they want to fight to change the rules.

The standards “are demanding and costly” for automakers to meet, said Michelle Krebs, senior analyst at AutoTrader.

But “automakers need clarity and consistency for planning as lead times in the industry are long. They also have to produce low-emissions vehicles for California and global markets.”

Those opposed to the EPA standards say they will raise prices and force automakers to continue building small fuel-efficient cars in the face of weak demand for such vehicles.

“The Obama administration just made new cars and trucks thousands of dollars more expensive for America’s working men and women,” said Peter Welch, chief executive of the National Automobile Dealers Assn. He urged the Trump administration to “withdraw today’s action.”

At the Alliance of Automobile Manufacturers, which represents most of the carmakers, a spokeswoman said: “We have the technology, but if sales aren’t there, we can’t meet the standards. That’s a regulatory-marketplace collision.”

And Lou Pugliaresi, president of the Energy Policy Research Foundation, funded in part by oil companies, said: “They promised we’d have a whole year to look at this thing. It shows how ideological they are about this.”

Those in favor said the EPA move means more clean air, a reduction in greenhouse gases and less dependence on foreign oil.

Fuel standards have been “a remarkable success,” said Ken Kimmell, president of the Union of Concerned Scientists. “We need to keep moving forward with this policy — the EPA made the right decision here.”

Dan Becker, director of the Safe Climate Campaign, said automakers have already been complying with stricter standards previously set by the Obama administration and, despite them, been making huge profits and selling record numbers of vehicles. Friday’s announcement just extends those efforts, he said.

“This is the biggest step any nation has taken to fight oil use and global warming,” he said.

The EPA action is likely to come up in next Thursday’s congressional hearing on Trump’s nominee to head the agency, Oklahoma Atty. Gen. Scott Pruitt.

The mileage goals for 2025 were first set in 2012 in the wake of the auto industry bailout, after automakers and suppliers pleaded with the Obama administration for financial help to prevent ailing General Motors from going under and setting off industry chaos.

The law called for a “midterm review” by April 2018 to assess whether the goals were technically feasible. The EPA said Friday that it had concluded that they were, and that it didn’t need to wait until next year.

Though Trump hasn’t talked much about fuel economy standards, he has railed against companies building cars in Mexico and selling them in the U.S., prompting Ford Motor Co. to cancel plans to build a new assembly plant there. Automakers have long argued that Mexico provides cheaper labor that allows them to afford building small, fuel-efficient cars — the kinds of cars needed to help them meet the standards.

At a hearing on Wednesday, Elaine Chao, Trump’s nominee to head the Department of Transportation, said the department’s regulations should be based on “sound science and true data.” Along with the EPA, the agency regulates mileage standards.

Whether the Trump administration can, as the car dealer lobby suggests, “withdraw” the EPA action is unclear. Analysts say any change would likely undergo a long bureaucratic process accompanied by environmentalist lawsuits, although Congress could theoretically reverse the decision with new legislation.

A reversal, however, could spark a reaction from California officials. Gov. Jerry Brown has said publicly that the state will go its own way on greenhouse gas reduction policy.

Under corporate economy fuel standards, first passed in 1975 after the Arab oil embargo, California was allowed to set emissions rules of its own. As a result, automakers had to manufacture separate cars for the California market. Under the 2012 regulations set by the Obama administration, the federal and state standards were harmonized.

If the Trump administration dialed back the regulations, California could decide to pass more stringent emission standards, again creating a separate market for automakers.

“We’re better off if we have a single standard,” Pugliaresi said. Otherwise, it “complicates how to navigate this whole thing.”

The Associated Press contributed to this report.

UPDATES:

12:50 p.m.: This article was updated throughout with staff reporting and additional details.

This article was originally published at 8:25 a.m.