EPA Races to Finalize Fuel Economy Standards

The race is on to finalize the 2022-2025 fuel economy standards, which was expected to happen next year, but has clearly been sped up before President-Elect Trump takes office in January. I actually thought I would have some time this month to review some docket submissions to see if there would be anything of interest for readers…

In an unusual move, EPA Administrator Gina McCarthy announced this week a proposed determination that the standards as originally proposed in 2012 and following the mid-term review process earlier this year should remain in place as is. The determination is open for public comment until December 30, and the final decision will be made after that. The deadline for making a final determination is April 2017.

Among other justifications, the Agency found that:

• Auto manufacturers can meet the MY 2022-2025 standards at slightly lower per-vehicle costs than predicted in the mid-term review report, and lower costs than predicted in the 2012 rulemaking that established the standards.
• The current standards will save consumers money and provide benefits to the health and welfare of Americans.
• Automakers have a wide range of technology pathways available to meet the standards. Standards are achievable with very low penetration of strong hybrids, electric vehicles and plug-in hybrid electric vehicles, shown in the figure below.

• Automakers have outperformed the standards for the first four years of the program (MY2012-2015) and manufacturers are adopting fuel efficient technologies at unprecedented rates, all while vehicle sales have increased for 6 consecutive years. There are over 100 car, SUV, and pickup versions on the market today that already meet 2020 or later standards, EPA notes.

EPA’s draft technical assessment report (TAR) on the fuel economy standards noted that between MY2015 and MY2030, manufacturers as a group will be required to increase required vehicle fuel economy levels by more than 50% for passenger cars and 40% for light trucks – a hefty challenge. To provide a sense of where automakers currently stand, I include the figure below from the TAR.

The figure shows “the required and achieved CAFE levels for the MY2025 fleet simulated from the MY2010 analysis fleet in the 2012 FRM and the MY2025 fleet simulated from the MY2015 fleet in the current analysis. Total industry average CAFE level and standard are lower using the MY2015 fleet in the current analysis than they were using the MY2010 fleet in the FRM, largely attributable to the shifts in sales between light trucks and passenger cars, described earlier in this chapter. Both simulations show manufacturers achieving CAFE levels close to the requirements, albeit generally closer for the passenger cars than the light trucks.”

You can see the significant improvements in fuel economy between these two model years. Some manufacturers are better off than others for total CAFE: BMW, Daimler, Fiat, GM, Mitsubishi, Toyota and Volkswagen.

What’s the real effect here?  Can’t President-Elect Trump just cancel these regulations anyway? Maybe, but it’s not easy. A Wall Street Journal article from earlier this year highlighted the difficulties:

“But repealing federal regulations is far easier promised than done. Few finalized regulations have ever been successfully undone by a succeeding administration, Republican or Democratic. And the few that did fall were far less politically charged than the Obama administration regulations under fire today, so while they had less fierce opposition, they also had less impassioned support.

 

Repealing Obama-era rules would require writing—and legally justifying—new regulations, a process that could take nearly two years and might not withstand legal scrutiny, given the body of legal and scientific work that typically goes into writing a rule in the first place, experts say. Other efforts to nullify rules, such as congressional or court action, face limitations of their own.”

It’s a good strategy: finalize the fuel economy standards before the Administration handover, make it very difficult to challenge and get the auto industry wondering if they should take a chance on years more uncertainty instead of just agreeing to move forward with the regulations as they are.

(See also relevant posts: Nov. 14, 2016; Nov. 9, 2016; Nov. 7, 2016; July 27, 2016, July 1, 2016.)