EPA Urged to Reconsider Last-Minute Obama Mileage Rules

The Alliance of Automobile Manufacturers petitioned Environmental Protection Agency Administrator Scott Pruitt this week to re-evaluate greenhouse gas emission standards for new cars that were adopted in the final days of the Obama administration. The standards, for model years 2022 through 2025, were originally adopted in a joint rulemaking with the National Highway Traffic Safety Administration (NHTSA) in 2012, with the understanding that they would receive a “mid-term” review before they went into effect. Instead of conducting that review properly, however, agency officials rushed the process so that they could be finalized before President Obama left office in January.

The EPA’s “Final Determination” document, which approved the new rules, is a big deal because vehicular greenhouse gas standards are de facto fuel economy (miles per gallon) standards, and while fuel-economy technology saves money on gas, it also increases the cost of new vehicles. Make the standards too stringent, and millions of motorists can be priced out of the market for new cars. That, in turn, could destroy lots of auto industry jobs.

The Alliance is asking Pruitt to withdraw the agency’s Final Determination and resume a proper Mid-Term Evaluation (MTE) process for the standards, in accordance with the EPA and NHTSA’s original plan to propose their respective evaluations in mid-2017, and finalize them by April 2018. Indeed, the 2012 joint rulemaking commits the agencies to complete their assessments on the same schedule. But the Obama EPA could not wait for NHTSA because it wanted to tie the Trump administration’s hands. So the EPA proposed its MTE on November 30, 2016, opened a 30-day comment period, and announced the results on January 13, 2017—one week before Inauguration Day.

The 30-day comment period was too brief for the public to evaluate the EPA’s 186-page proposal and 719-page Technical Support Document. Moreover, it is highly doubtful the EPA could review hundreds of pages of expert comments in the two weeks between the close of the comment period on December 31 and January 13.

But the EPA was in such a rush that the MTE Final Determination has apparently still not been published in the Federal Register. According to the Alliance, that means the determination is not yet a final rule, rendering it subject to the “regulatory freeze” President Trump announced upon taking office.

What follows are two excerpts from the Alliance’s letter to Pruitt that succinctly state the policy case for withdrawing the EPA’s MTE Final Determination:

Based on the projections of the 2012 rule, manufacturers must achieve an average 54.5 miles per gallon equivalent across their new vehicle fleets by 2025. Even today, no conventional vehicle meets that target, and conventional vehicles comprise 96.5% of the new light-duty vehicle fleet. Only some non-conventional vehicles (i.e., hybrid, plug-in electric, and fuel-cell vehicles), which comprise fewer than 3.5% of today’s new vehicles, currently can do so. Even under EPA’s optimistic estimates, the automotive industry will have to spend a staggering $200 billion between 2012 and 2025 to comply, making these standards many times more expensive than the Clean Power Plan. . . .

Furthermore, EPA’s Final Determination that the MY 2022-2025 greenhouse gas standards should remain unchanged, is riddled with indefensible assumptions, inadequate analysis, and a failure to engage with contrary evidence. Here are just a few examples:

  • EPA estimated that these standards will cost industry at least $200 billion. But EPA underestimated the burden. Contrary to EPA’s assumptions, manufacturers will have to rely on much more expensive electrified technologies (i.e., hybrids and plug-ins), driving up vehicle prices and depressing auto sales.
  • EPA refused to conduct an analysis of consumer acceptance and technology affordability needed for compliance, claiming this was too difficult.
  • EPA refused to analyze substantively the economic impact of the MY 2022-2025 standards, instead making cursory assumptions that downplayed the impact of its mandate on auto sales and employment.