(Bloomberg) -- U.S. regulators are poised to propose a freeze on fuel-efficiency standards at 2020 levels, according to two people familiar with the plan, which would erode an ambitious Obama-era initiative to curb planet-warming greenhouse gases.
A draft of the proposed rulemaking outlines eight scenarios for replacing the Obama administration requirements that aimed to slash carbon dioxide emissions from cars and light trucks, said two people, who asked to speak anonymously because the deliberations are private.
In addition, the administration is considering whether to eliminate California’s unique authority to set its own auto efficiency standards that exceed those of the federal government, though a decision has not yet been made, the people said.
The Environmental Protection Agency and the National Highway Traffic Safety Administration, which are developing a proposal for the White House, will offer a range of options to change the Obama standards, the people say. But the agencies will recommend one that would freeze the target for 2020 through 2026, one of the people said.
The EPA disputed that the agencies were proposing a freeze, citing ongoing discussions.
“The agency is continuing to work with NHTSA to develop a joint proposed rule and is looking forward to the interagency process,” Liz Bowman, an EPA spokeswoman, said in an email.
The NHTSA said in a statement that "the department is committed to a public, robust, and transparent review process."
"Given that the work is ongoing, at this time there is nothing to announce until a proposal is actually release," the safety administration said.
Miles Per Gallon
Adopting the proposal would reduce federal vehicle efficiency standards for cars and light trucks from levels enacted in 2012 by the Obama administration. Those aimed to bolster fuel economy to a fleet average of about 39 miles per gallon in 2020 and more than 50 miles per gallon by 2025.
Earlier this month, the Trump administration said the Obama standards were too stringent and needed to be revised. Regulators at the Transportation Department and EPA have been huddling for weeks on the proposal, trading drafts of language before submitting it to the White House Office of Information and Regulatory Affairs for review. It could be submitted within days, the people said.
The preferred option was earlier reported by the Los Angeles Times.
Repealing California’s authority would lead to a major political and legal fight with the nation’s most populous state, which has vowed to defend its standards against a Trump-led rollback. The state has its own car and truck efficiency standards that are aligned with federal rules in place through 2025, an arrangement reached during the Obama administration and with the support of nearly all major automakers.
"We’ll closely monitor any developments and I’m ready to take any and all action necessary to defend our progress,” California Attorney General Xavier Becerra said in a statement.
California’s Unique Authority
A Clean Air Act waiver has given California unique authority to set its own clean-air rules since 1970. A dozen other states follow California’s emissions rules and together account for around a third of American auto sales.
On Thursday, EPA Administrator Scott Pruitt told a House committee the agency has no plans "at present" to revoke California’s authority.
“We are not aware of any official proposal," said Stanley Young, a spokesman for the California Air Resources Board. Such a move would "severely disrupt the U.S. auto industry, compromising its ability to succeed in a highly competitive global market that increasingly values innovative and efficient technologies.”
The draft proposal lays the legal justification to revoke California’s auto-rule authority, according to one person who has viewed a version of the draft that was last updated in mid-April. The document expresses the Trump administration’s view that California lacks the legal authority to set its own standards, the person said.
The EPA, the NHTSA and the White House didn’t immediately respond to a request for on this aspect of the proposal comment.
"Rather than pursuing a reasonable compromise, the Trump Administration is crafting a proposal that is dramatically weaker than any automobile manufacturer has requested," Senator Tom Carper of Delaware, the top Democrat on the Senate Environment and Public Works Committee, said in a statement.
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