The Trump administration plans a sweeping reassessment of stringent fuel economy standards set in place by the Environmental Protection Agency during the Obama presidency.
President Donald Trump announced the move to re-open the mid-term review of the regulations Wednesday at Willow Run Airport in Ypsilanti, Mich.
The action was requested by the auto industry, which had warned about the technological challenges and expense of meeting regulations intended to push a test measure for the fuel economy of new cars to 54.5 mpg by 2025. The policy was a climate change initiative designed to reduce production of carbon dioxide, a greenhouse gas.
Environmental groups objected to the move by President Donald Trump and EPA administrator Scott Pruitt, saying better fuel economy was technically feasible, would slash pollution and would save consumers billions of dollars at the pump.
Here’s what you need to know about the EPA’s change in direction.
What is the regulation?
Known as the Corporate Average Fuel Economy, or CAFE, and greenhouse gas emissions standards, the rules were adopted in 2009 by the Obama administration and set a target of 54.5 mpg in average fuel economy for vehicles sold in the United States by 2025. But the target number is actually a measure used for testing vehicles and is based on the mix of vehicles expected to be sold in 2025. On the preference of U.S. consumers for trucks and SUVs, the formula would translate into a real world driving average of about 36 mpg.
The average fuel economy, or window-sticker rating of new vehicles sold in the U.S. in February was 25.1 mpg—unchanged from the value for January, but down 0.4 mpg from the peak of 25.5 mpg reached in August 2014, according to the University of Michigan Transportation Research Institute.
What did the Trump administration do?
The EPA set the 2022-2025 standards in place in January, at the very end of the Obama administration, but Pruitt will reopen a review of the regulations, allowing for the auto industry and others to submit new comments that would support relaxing the standards. This could pave the way to formal changes in the regulations.
What does this mean for the EPA’s so-called Phase 2 greenhouse gas emission rules for heavy-duty trucks issued last year?
In August, the EPA issued a 1,690-page document, known as Phase 2 standards, because they were the second step by the Obama administration to reduce greenhouse gas emissions from commercial trucks, buses and cargo vans, in three phases by 2027. The regulation is intended to slash CO2 emissions by approximately 1.1 billion metric tons over the lifetime of the vehicles sold under the program, or about a 25 percent reduction compared to the current rules.
The trucking industry has not asked the Trump administration to reverse those rules, according to Sean McNally, spokesman for the American Trucking Associations.
What does it mean for the Trump Administration’s view on other truck environmental regulation?
A large segment of the industry is lobbying the EPA to maintain the Diesel Emissions Reduction Act, or DERA, which provides subsidies to replace or retrofit older diesel powered vehicles with new, more effective emission control technologies and equipment. They fear the program will be scuttled with reductions in the EPA's budget.
The petitioners include Cummins Inc., Navistar, Daimler Trucks, Volvo Group North America and the Truck & Engine Manufacturers Association. They said DERA is a cost-effective federal clean air program that has provided $12.6 billion in health benefits from an investment of $700 million in the past 10 years.
What are automakers saying about the EPA’s walk back from Obama Administration fuel economy standards?
“We applaud the Administration’s decision to reinstate the data-driven review of the 2022-2025 standards. By restarting this review, analysis rather than politics will produce a final decision consistent with the process we all agreed to under ‘One National Program’ for GHG and fuel economy standards,” said Mitch Bainwol, chief executive of the Auto Alliance, which represents 12 major automakers, including General Motors, Ford and Toyota.
Bainwol said the industry will work with the EPA, the National Highway Traffic Safety Administration and the California Air Resources Board “in carefully determining how we can improve mileage and reduce carbon emissions while preserving vehicle safety, auto jobs and affordable new cars and trucks.”
Some senior automaker executives said the technology would be available to meet the fuel economy standards but that they were worried about the expense.
“The question is how fast and how affordable will it be for customers?” Alan Batey, president of General Motors North American operations, told Trucks.com earlier this year. “The last thing we want to do is have a regulatory environment that forces very expensive equipment on customers. That potentially means that less people can afford to buy. Vehicles will stay on the road longer and that has a very negative effect on what we are trying to achieve [because older vehicles produce more greenhouse gases than newer ones.]”
“We do believe in global warming,” he said. “We do believe that we have a huge responsibility and we want to step up to it. “
What are environmentalists saying?
They universally say the roll back is a bad move. The American Council for an Energy-Efficient Economy said that if kept in place the current standards would:
- Reduce fuel consumption by more than 2 million barrels of oil per day by 2025– the equivalent of taking almost a fifth of the vehicles off of U.S. roads.
- Eliminate 6 billion tons of greenhouse gas emissions over the lifetimes of vehicles of model years 2012-2025.
- Save consumers more over $1 trillion at the gas pump, which the groups said amounts to more than three times the added cost of the more efficient vehicles.
“There’s no good reason to re-opening these common-sense standards. They’re saving consumers money and reducing pollution,” said Luke Tonachel, an analyst with the National Resources Defense Council.
Will California still have the ability to set its own fuel economy and emissions standards?
The Clean Air Act of 1970 granted California the ability to issue its own vehicle emissions standards as long as it is as stringent as the federal standards and granted a waiver by the EPA. To earn the waiver, California has to demonstrate that it has “compelling and extraordinary conditions” that can only be mitigated by its own regulations.
California’s environmental rules – crafted by its Air Resources Board – can be nearly as influential as EPA policy. The Clean Air Act allows other states to enact the same environmental regulations for vehicles and certain types of equipment if California already has a waiver for those rules. Nine states and the District of Columbia, for example, have adopted its zero-emissions vehicle mandate, which uses a complex environmental credit system that will require automakers to sell about 2 million electric cars and trucks by 2025.
Environmental groups say they believe there is enough legal precedent to make it difficult for the Trump administration to challenge California’s environmental regulation. But a trucking industry lawsuit expected to be heard the U.S. 9th Circuit Court of Appeals this year, challenges the EPA’s granting of waivers that give California the ability to write environmental regulations that preempt federal rules.
What happens next?
The EPA will reconsider the determination it made in January, and revisit greenhouse gas emissions standards set for light-duty vehicles during the span of 2022-2025.
The EPA will work in coordination with NHTSA and release a final determination on the 2022-2025 standards no later than April 1, 2018.
“We’re going to work on the CAFE standards so you can make cars in America again,” Trump said. “We’re gonna help the companies and they’re gonna help you.”
Trump said that the leaders of the Detroit Three automakers explained to him the importance of the previously scheduled mid-term review.
“Just days before my inauguration the previous administration cut short the promised mid-term review in an eleventh-hour executive action,” Trump said. “Today I am announcing that we are going to cancel that executive action. We are going to restore the originally scheduled mid-term review and we are going to ensure that any regulations we have protect and defend your jobs, your factories. We’re going to be fair.”
Editor’s note: Trucks.com staff writer Ryan ZumMallen contributed to this report.