The Trump administration will announce as early as next week a set of options that will offer alternatives to the tough Corporate Average Fuel Economy, or CAFE, standards enacted under former President Barack Obama.
The current president has made clear his intentions to ease back on the rules, which would require automakers to reach a fleet average of 54.5 mpg by 2025, despite strong opposition from consumer and environmental groups. The administration is also expected to try to eliminate the special waiver to the Clean Air Act that allows California to set CO2 emissions standards tougher than those set for the rest of the country. If the exemption were to remain in effect it could effectively be used to counter any fuel economy reductions on the federal level.
Scott Pruitt, who was forced out of the EPA earlier this month in the wake of a series of corruption scandals, took the first major step towards a CAFE rollback in April. His successor, acting EPA chief Andrew Wheeler, said the agency could have “a list of options” ready to reveal as early as next week.
“We have a preferred option but I don’t want to get ahead of the actual proposal before it goes out,” Wheeler, a former coal industry lobbyist, said in an interview with USA Today.
(EPA, DOT eliminating California’s Clean Air Act exemption. Click Here for the story.)
The 54.5 mpg fuel economy target was set in 2025, the result of an unusual compromise between federal and state regulators, environmentalists and the auto industry. It was the second increase in CAFE achieved by the Obama administration and brought the mileage target to 34.5 mpg by 2016 before steadily ratcheting it up over the next decade. Due to credits and adjustments, the actual target for the industry, however, would actually be somewhere in the low to mid-40 mpg range.
The deal that created the 2025 target included a “mid-term review” process at which point it was to be decided if the 54.5 mpg goal could still be met and, if so, at what cost. Before that review began, auto industry officials began lobbying for a rollback, insisting the challenge was too difficult and the cost too high. Environmentalists challenged that position and, in the final weeks before the White House changed guard, former Obama EPA Administrator Gina McCarthy ruled that the target would stay in place.
But “They jumped the gun,” Wheeler argued in his interview, contending that McCarthy’s decision was “a political attempt to try to move up the process and what we’re doing is taking the deliberative process of looking at the midyear review the way it was originally intended to be done.”
Automakers actively lobbied the Trump administration for a rollback. In the weeks after the new president took office, former Ford Motor Co. CEO Mark Fields warned him during a White House meeting that as many as 1 million jobs could be lost because higher vehicle prices would sharply reduce sales.
Proponents of tougher mileage standards quickly dismissed such arguments and today contend it is the Trump administration – which has taken a position rejecting the notion of global warming – that has politicized fuel economy.
“Our analysis clearly indicates that the car companies are fully capable of meeting the CAFE standards and they are able to do so with great savings for consumers,” echoed Jack Gillis, the Consumer Federation of America’s director of public affairs and author of the annual Car Book, said earlier this month.
(Click Here to see more about the auto industry backing away from CAFE cuts.)
The Alliance of Automobile Manufacturers, a trade group representing key carmakers, strongly praised the administration’s position. And a statement from General Motors said, “We look forward to reviewing the proposed standards once public and are committed to working with all parties to help achieve these goals.”
But, in recent months, a number of automakers have softened their tone, apparently responding to vocal criticism, as well as studies that indicate consumers still want the Obama-era rules to remain in effect. Ford, in particular, has tried to walk back from former CEO Fields’ comments last year, his successor Jim Hackett, along with Chairman Bill Ford, earlier this year writing a column declaring, “We support increasing clean car standards through 2025 and are not asking for a rollback.”
As things currently stand, any move the EPA might make could have reduced impact because of the waiver that California holds under the Clean Air Act. The state was given extensive authority to set its own air pollution rules under the Clean Air Act when it was enacted in 1970. Additional powers were added in 2009 to set guidelines for carbon dioxide emissions. CO2, blamed for global warming, is directly linked to fuel economy. The lower the mileage the more of the gas an engine produces.
California is the largest state market for new vehicles in the U.S., so automakers are loathe to ignore its mandates for fear of being unable to sell vehicles there. Its impact is further enhanced by the fact that 10 other states, including Massachusetts, New York and Oregon, as well as the District of Columbia, have adopted the California CO2 mandates. That includes specific targets for selling battery-electric and other zero-emissions vehicles.
The Trump administration has signaled it will try to eliminate California’s authority to set separate targets.
“From the automakers perspective, they’ll be happy not to deal with CARB,” (the California Air Resources Board that sets emissions targets, said Dave Sargent, the head of automotive research for J.D. Power and Associates. “What they want more than anything is one set of rules. Multiple sets of rules get expensive.”
GM echoed that in its statement which said, in part, “Our priorities for modernizing the standards include the need for one national set of requirements where California and the federal government come to a nationwide agreement.”
(To see more about former EPA Chief Scott Pruitt’s resignation, Click Here.)
California and 16 other states, along with the District of Columbia, decided not to wait to see what the EPA will propose for a revised CAFE target. They filed a lawsuit on May 2 challenging the planned rollback. Further legal action is expected to follow should the administration attempt to block the California CO2 waiver, as well.