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Can Trump, Congress Undo EPA's Midnight Fuel Economy Regulation?

The U.S. Environmental Protection Agency (EPA) today finalized—14 months ahead of schedule—its Mid Term Evaluation (MTE) of greenhouse gas emission standards for model year (MY) 2022-2025 passenger cars and light trucks. The EPA was in such a rush to dump a fait accompli on the incoming Trump administration that it apparently forgot to post anything about this multi-billion dollar decision on the agency website’s landing page.

The EPA’s action locks in greenhouse gas (GHG) standards the agency tentatively adopted in 2012—more than a decade before millions of the covered vehicles are even manufactured. GHG standards are de facto fuel economy standards, because, as the EPA and the National Highway Traffic Safety Administration (NHTSA) acknowledge, carbon dioxide constitutes 94.9 percent of vehicular greenhouse gas emissions, and “there is a single pool of technologies ... that reduce fuel consumption and thereby CO2 emissions as well” (75 FR 25372).

On December 8, 2016, the Auto Alliance, representing 12 leading manufacturers of passenger cars and light trucks, asked the EPA to withdraw the proposed Mid Term Evaluation, which the agencies in July 2016 told automakers would not be proposed until mid-2017. The Alliance cautioned that the EPA’s proposed GHG standards ignore consumer acceptance and are based on “several technical and modeling errors that lead to an overly optimistic view of both technology effectiveness and cost to manufacturers and ultimately to consumers.”

The Alliance additionally noted that the proposed MTE conflicts with the EPA’s regulatory obligation to implement a “harmonized single national GHG/Fuel Economy program in which the EPA and NHTSA, along with California’s Air Resources Board (‘ARB’), would issue their draft TAR [Technical Assessment Report] and subsequent MTE determinations at the same time.”

Nonetheless, on this Friday before a three-day weekend, the EPA basically told automakers to go pound sand. The affected industries responded with releases today calling on the incoming Trump administration to yank or at least reconsider the EPA’s action.

Global Automakers President and CEO John Bozella stated:

The Environmental Protection Agency has still failed to state a compelling reason for rushing its final determination. It unnecessarily truncated public comment and prevented scrutiny of an important policy decision that will affect consumers, investment, public health, and the environment. This can only undermine confidence in the objectivity of policymaking. It merits a serious look by the incoming administration.

National Automobile Dealers Association President and CEO Peter Welch stated:

The Obama Administration today just made new cars and trucks thousands of dollars more expensive for America’s working men and women. Expensive and unaffordable new cars will drive Americans into less efficient, less clean and less safe used cars—undermining the very goals of this policy. We urge the incoming Trump Administration to withdraw today’s action, and we look forward to working with the new Administration to ensure that working families can choose the cleaner, safer new cars and trucks they need at prices they can afford.

What is to be done?

The EPA’s action is either a rule or it is not. If it is a rule, then it is vulnerable to quick repeal via the Congressional Review Act (CRA), which enables Congress to veto regulations adopted within the previous 60 legislative days. CRA resolutions of disapproval cannot be filibustered, as they require only simple majorities to pass. If both chambers of Congress pass the resolution and the President signs it, the targeted rule is overturned.

The EPA and its allies, predictably, claim the MTE is not a rule, only the evaluation of a rule. However, the CRA definition of rule includes any agency statement of particular or general applicability and future effect that interprets, implements, or prescribes policy or law. The MTE easily fits within that capacious definition.

While denying the MTE is a rule, the EPA and its allies also claim President Trump cannot legally withdraw it. Why? Because it has gone through the public notice and comment process. But isn’t that tantamount to saying it is a rule?

But let’s assume it is not a rule. How then does it legally bind anyone to do or forbear from doing anything?

Also, how does the EPA’s premature finalization of the MTE excuse the agency from fulfilling its regulatory commitment under the 2012 joint rulemaking to coordinate its final MTE with NHTSA’s? Either the EPA’s action is simply unlawful, or the Trump administration would have an opportunity to modify the EPA’s MTE in the process of coordinating it with NHTSA’s.

Finally, even if we assume the Trump EPA cannot simply nix the MTE by fiat, it would certainly be within its rights to accept a petition to reconsider the MTE. The Trump EPA could then restore the schedule for proposing and finalizing the MTE that the agencies published in July. And on the basis of those additional public comments and technical reviews, it would have until April 2018 to finalize new coordinated MTEs that the agencies consider more consistent with consumer acceptance, technology costs, fuel prices, and employment impacts.