The Trump administration dramatically weakened Obama-era fuel economy standards Tuesday in a move it says is its largest deregulatory initiative to date and that environmentalists and Democratic lawmakers say undercuts the most significant climate policy in the United States.
The Department of Transportation and the Environmental Protection Agency’s new rule will require automakers to improve passenger cars’ fuel efficiency by 1.5% each year through 2026, sharply lower than the nearly 5% year-over-year increase the Obama-era standards required. The 1.5% annual increase, though, is larger than the complete freeze of the program the Trump administration proposed in 2018.
EPA Administrator Andrew Wheeler, in prepared remarks Tuesday, said the agencies felt, based on public comments, slightly raising the stringency was “an important change to make.”
Environmentalists, though, say a 1.5% year-over-year standard doesn’t pass the laugh test. That’s “already less than what the industry has averaged over the last 10 years,” Dave Cooke, senior vehicles analyst with the Union of Concerned Scientists, told reporters recently.
Several environmental groups and at least one state, California, have signaled they will sue to defend the Obama-era limits.
Critics also say the rollback will hurt the economy, which is already suffering in the midst of the coronavirus pandemic.
“It is absolutely stunning that the administration would finalize a plan that will cost drivers more money at the pump for years to come,” David Friedman, vice president of advocacy for Consumer Reports, told reporters.
“Fuel economy savings creates a great domino effect,” allowing consumers to pump more money into the economy, added Friedman, who helped lead the National Highway Traffic Safety Administration during the Obama years.
The auto industry has offered tentative support for the Trump administration’s new rule, although the main industry trade group says it is still reviewing the document.
“It is important to note that this final rule establishes near-term compliance obligations, understanding that the auto industry and our nation face economic challenges due to the COVID-19 public health emergency,” said John Bozzella, head of the Alliance for Automobile Innovation, in a statement. The group represents major auto companies that manufacture 99% of light-duty vehicles sold in the U.S.
Bozzella also said, though, that automakers are looking beyond 2026 for longer-term policies that would support a transition to lower-carbon transportation, as automakers are preparing to introduce many more electric models in the coming years.
Some free-market groups argue the agencies should have gone even further. The Competitive Enterprise Institute, for example, said the administration should have maintained the freeze initially proposed or eliminated the fuel economy program entirely.
Martin Rodriguez, a policy analyst with Americans for Prosperity, said the agencies should build on their final rule “by making comprehensive changes to their regulatory processes to better evaluate the associated costs and benefits of rulemaking.”
Trump administration officials say their final rule will save $200 billion in total costs, half of that being avoided regulatory costs. The new rule would also lead to 3,300 fewer traffic fatalities, according to a news release.
But that’s far less than the more than 12,000 avoided fatalities the Trump administration said a freeze of the standards would cause, analysis that itself came under heavy scrutiny even from some in the auto industry.
And critics say that even in the final rule, the Trump administration can’t get its math to work. California Attorney General Xavier Becerra told reporters Tuesday he and his team are prepared to “debunk” claims from Wheeler and other Trump officials that the rule saves lives, reduces pollution, and benefits the economy. “In each case, he’s wrong,” Becerra said of Wheeler.
In fact, the agencies’ own analysis shows multiple scenarios in which the net benefits of its new standards are negative. For example, the cost-benefit analysis that supports the final rule said a 1.5% annual increase in fuel efficiency could cost the public as much as $22 billion through 2029.
It’s clear from the agencies’ own analysis that more stringent fuel economy targets yield more benefits to society, said Elaine Meckenstock, deputy attorney general for California.
The Trump administration “is only able to get to net benefits here by tweaking the math, largely in unsupported ways and all in one direction,” Meckenstock told reporters. She noted the agencies’ analysis of a 1.5% standard only achieves net benefits — around $16 billion — in a scenario where a 7% discount rate is used, and that rate “undervalues the future benefits.”
Automakers, who initially asked the Trump administration to redo the standards, had publicly balked at the White House’s plans to freeze the standards, in part because the proposal sparked a bitter fight with California that they feared would lead to a protracted legal battle and market uncertainty.
That fight has happened anyway. In September, the Trump administration finalized the first piece of its fuel economy rollback, stripping California of its special ability under the Clean Air Act to set tailpipe greenhouse gas targets stronger than federal levels.
California and nearly two dozen other states sued in November to protect the state’s authority. A handful of automakers, including General Motors, Fiat Chrysler, and Toyota, have intervened to back the Trump administration in that lawsuit.
Several other automakers, though, bucked the White House to form a pact with California in July 2019. Those automakers — Ford, BMW, Volkswagen, and Honda — agreed with the state to follow fuel economy standards stricter than what the Trump administration is finalizing, though not quite as strong as the Obama-era standards.
That deal could ultimately complicate the Trump administration’s ability to defend its rollback against inevitable legal challenges, critics say.
NHTSA must set standards at the “maximum feasible” level by law, Friedman said. “If you’ve got several automakers already saying they can do a lot more, that pretty much tosses out the window any claims that” the administration’s rule is “maximum feasible.”
