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Fuel Economy: California's Empty Suit

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California, joined by 16 states and the District of Columbia, have petitioned the D.C. Circuit Court of Appeals to “review,” i.e. overturn, EPA Administrator Scott Pruitt’s decision to revise the Obama EPA’s greenhouse gas emission standards for model years 2022 to 2025 motor vehicles. This meritless lawsuit is designed to rally progressives to defend California’s purloined power to regulate fuel economy.

Why is the suit meritless? Under Section 704 of the Administrative Procedure Act, courts may review an agency action only when it is “final.” Accordingly, California and its allies describe Pruitt’s decision as a “final action.” That does not pass the laugh test.

As the Supreme Court held in Bennett v. Spear, to be final, an agency action must both mark the “consummation” of the agency’s decision-making process and determine “rights or obligations.” Far from consummating agency policy, Pruitt has simply decided to “further consider appropriate standards for model years 2022 to 2025 light-duty vehicles” through a future notice and comment rulemaking (83 FR 16077). His decision does not affect the legal rights or obligations of any stakeholders because the Obama standards “remain in effect” until the future “rulemaking has been completed.”

That Pruitt’s action is not final is also evident from the 2012 joint EPA/National Highway Traffic Safety Administration (NHTSA) greenhouse gas/fuel economy regulation petitioners claim to be defending.

Pruitt’s summary of the issue could not be clearer: “This Determination is not a final agency action. As EPA explained in the 2012 final rule establishing the Midterm Evaluation process, a determination to maintain the current standards would be a final agency action, but a determination that the standards are not appropriate would lead to the initiation of a rulemaking to adopt new standards, and it is the conclusion of that rulemaking that would constitute a final agency action and be judicially reviewable as such.”

The California-led coalition’s press release claims their “lawsuit is based on the fact that the EPA acted arbitrarily and capriciously.” How so? The release asserts that Pruitt “offered no evidence” to support his decision to revise the Obama standards.

Rubbish.

Pruitt cites considerable new information about fuel prices, projected vehicle costs, consumer preferences, and other relevant factors. His very credible and legitimate concern is that the Obama standards could price many households out of the market for new motor vehicles.

Ironically, it was the Obama EPA, in cahoots with California, that acted arbitrarily and capriciously when it finalized its Midterm Evaluation of the 2022-2025 motor vehicle greenhouse gas standards 14 months ahead of schedule, and defied its legal obligation to finalize those standards “concurrently with” NHTSA’s Midterm Evaluation of fuel economy standards for those years.

The Obama EPA told automakers in July 2016 that it would propose its Midterm Evaluation in mid-summer 2017 and finalize it by April 1, 2018. Ditching those plans without warning, EPA instead published its proposed evaluation on November 30, gave the public only 30 days during the holiday season to comment on the 268-page proposal and 719-page technical support document (TSD), and the finalized the evaluation only two weeks later despite receiving more than 100,000 comments.

Abandoning regular order in this manner was an abuse of discretion. Stakeholders did not have adequate time to prepare detailed technical comments on the proposal and TSD, and the agency did not have adequate time to review all significant comments. Changing plans at the last minute constituted a lack of transparency at best and misrepresentation at worst. It was a political maneuver to confront the incoming Trump administration with a regulatory fait accompli.

Worse, the Obama EPA, abetted by California, made a mockery of the so-called harmonized national vehicle program petitioners claim to support. As the Alliance of Automobile Manufacturers explained to former EPA chief Gina McCarthy, EPA’s “early action” compelled NHTSA to choose between two unacceptable options: produce an independent evaluation that “may be substantially different and not at all harmonized with EPA’s determination,” or “align itself with EPA’s determination regardless of the existence of facts and analyses that would suggest the need for a different outcome.”

There would be no need to harmonize federal and California greenhouse gas standards if the Obama administration had not authorized Sacramento to regulate motor vehicle greenhouse gas emissions in the first place. The national fuel economy statute, the 1975 Energy Policy and Conservation Act, specifically preempts states from adopting or enforcing laws or regulations “related to fuel economy standards.” Motor vehicle greenhouse gas standards are strongly related to fuel economy standards.

As the Obama EPA and NHTSA explained in their first joint rulemaking in May 2010, 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 carbon dioxide emissions as well.”

Moreover, the alleged “harmony” of the so-called National Vehicle Program — a Rube Goldberg scheme in which three agencies, EPA, NHTSA, and the California Air Resources Board (CARB), effectively regulate fuel economy through three sets of rules under three statutes — was never more than an uneasy truce primed to fall apart whenever California does not get its way.

It is now painfully obvious that “harmony” exists only as long as EPA and NHTSA dance to CARB’s tune. If any subsequent administration dares to relax the Obama standards to safeguard affordability and consumer choice, California will threaten to de-couple from the “harmonized” program and balkanize the U.S. auto market.

Although the forthcoming rulemaking will at most propose to freeze greenhouse gas and fuel economy standards at the 2020 levels, it reportedly will also invite public comment on the legal basis of California’s pivotal role in fuel economy regulation. Public debate on that issue is long overdue.

This piece was originally published in The Hill