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Monday, April 9, 2018VOLUME 14 ISSUE 15
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EPA to Ease Back Emissions Standards

Last Monday, U.S. Environmental Protection Agency (EPA) Administrator Scott Pruitt announced the completion of the Midterm Evaluation (MTE) process for the greenhouse gas (GHG) emissions standards for cars and light trucks for model years 2022-2025, and his final determination that, in light of recent data, the current standards are not appropriate and should be revised.

Administrator Pruitt also announced the start of a joint process with the National Highway Traffic Safety Administration (NHTSA) to develop a notice and comment rulemaking to set more appropriate GHG emissions standards and Corporate Average Fuel Economy (CAFE) standards. The rule that Obama’s administration adopted in 2012 would have required automakers to achieve an average fuel economy of 54.5 miles per gallon by 2025 for vehicles sold in the U.S. Pruitt did not specify what limits would be put in place. Current regulations require the fleet of new vehicles in real-world driving to get 36 miles per gallon by 2025. The U.S. fleet averaged 31.8 mpg for model year 2017, according to federal figures.

On July 29, 2011, President Obama announced an agreement with thirteen large automakers to increase fuel economy to 54.5 miles per gallon for cars and light-duty trucks by model year 2025. He was joined by Ford, GM, Chrysler, BMW, Honda, Hyundai, Jaguar/Land Rover, Kia, Mazda, Mitsubishi, Nissan, Toyota, and Volvo—which together account for over 90% of all vehicles sold in the United States—as well as the United Auto Workers (UAW), and the State of California, who were all participants in the deal. The agreement resulted in new CAFE regulations for model year 2017–2025 vehicles, which were finalized on August 28, 2012.

“The Obama Administration's determination was wrong,” said EPA Administrator Scott Pruitt. “Obama’s EPA cut the Midterm Evaluation process short with politically charged expediency, made assumptions about the standards that didn’t comport with reality, and set the standards too high.”

According to an article in the Washington Post, California officials wasted no time last Monday in excoriating the decision.

“This is a politically motivated effort to weaken clean vehicle standards with no documentation, evidence or law to back up that decision,” Mary Nichols, head of the California Air Resources Board, said in a statement. She argued that the move would “demolish” the nation’s shift toward cleaner cars and that “EPA’s action, if implemented, will worsen people’s health with degraded air quality and undermine regulatory certainty for automakers.”

Nichols also hinted at the potential legal fight to come.

“This decision takes the U.S. auto industry backward, and we will vigorously defend the existing clean vehicle standards and fight to preserve one national clean vehicle program,” she said, adding that the EPA’s decision “changes nothing in California and the 12 other states with clean-car rules that reduce emissions and improve gas mileage – those rules remain in place.”

“No one in America is eager to buy a car that gets worse gas mileage and spews more pollution from its tailpipe,” said Fred Krupp, president of the Environmental Defense Fund. “Designing and building cleaner, more cost-efficient cars is what helped automakers bounce back from the depths of the recession and will be key to America’s global competitiveness in the years ahead.”

Under the Clean Air Act (CAA), EPA sets national standards for vehicle tailpipe emissions of certain pollutants. Through a CAA waiver granted by EPA, California can impose stricter standards for vehicle emissions of certain pollutants than federal requirements. The California waiver is still being reexamined by EPA under Administrator Pruitt’s leadership. The government in California has vowed to stick to its own tough fuel economy mandates.

California has authority under the Clean Air Act to set its own emissions limits, and it has threatened to sue if its waiver is revoked and it is blocked from imposing stricter targets. Such a fight has broad implications, because 12 other states, representing more than a third of the country’s auto market, follow California’s EPA regulations will set off yet another legal standoff between the federal government and the state of California.

California, which is already engaged in more than 25 court battles with the Trump Administration over issues including immigration, the 2020 census, transgender military service, healthcare, and environmental concerns, will sue to maintain the fuel efficiency standards the state has created.

“Cooperative federalism doesn’t mean that one state can dictate standards for the rest of the country. EPA will set a national standard for greenhouse gas emissions that allows auto manufacturers to make cars that people both want and can afford — while still expanding environmental and safety benefits of newer cars. It is in America's best interest to have a national standard, and we look forward to partnering with all states, including California, as we work to finalize that standard,” said Administrator Pruitt.

These measures were created to reduce emissions that cause climate change, but car companies have protested them for years. While U.S. auto manufacturers may be in favor of this rollback, primarily due to the extra cost of compliance, many others are not.

“Rolling back fuel-efficiency and emissions targets would make zero sense economically for anyone but oil companies,” says David Richardson, the executive director of business development at Impax Asset Management. “In fact, it would set back American car companies and those working for them because the global automotive market is moving the opposite direction, away from gas guzzlers and toward cleaner, more efficient cars and associated technology.”

Industry sources said the change in U.S. policy will have no effect on foreign automakers, who still face continued tightening requirements in their countries and elsewhere. The Asian and European auto manufacturers have their own standards that they have to meet. This will result in continued fuel economy improvement by the U.S. automakers since more than half of their sales are now in foreign countries.

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