EPA Is Said to Side With Carmaker Calls to Ease Fuel Rules

(Bloomberg) -- The U.S. Environmental Protection Agency has concluded that a landmark Obama-era effort to cut vehicle greenhouse-gas emissions is too aggressive and agrees with automakers that the standards should be revised, according to people familiar with the matter.

The agency has completed a draft decision outlining the rationale for easing fuel efficiency regulations for model-year 2022-2025 cars and light trucks, two people said. Bill Wehrum, chief of the agency’s Office of Air and Radiation, plans to meet with environmental regulators in California next week to discuss the draft determination ahead of an April 1 deadline to make it public, according to the people, who spoke on the condition of anonymity because the decision hasn’t been made public.

In an email, EPA spokeswoman Liz Bowman confirmed the agency has sent a draft of the decision on the standards to the White House’s Office of Management and Budget and that the final determination will be signed by April 1. Bowman didn’t describe the contents of the draft.

The California Air Resources Board is troubled by reports of the EPA’s decision, Stanley Young, a spokesman for the state regulator, said in a statement. The agency hasn’t seen the EPA’s draft decision and has had no input in drafting the decision, he said.

“California paved the way for a single national program and is fully committed to maintaining it,” Young said. “This rumored finding -- if official -- places that program in jeopardy. We feel strongly that weakening the program will waste fuel, increase emissions, and cost consumers more money.”

The EPA hasn’t determined what the new tailpipe-emission standards should be, the people said. However, the move is widely expected to result in weaker targets that will be easier for automakers to achieve as sales skew toward sport utility vehicles, pickups and other light trucks.

Earlier: EPA Chief Signals Showdown With California on Tailpipe Rules

Finalizing the decision next week will set in motion a longer-term process needed to re-write the tailpipe rules enacted by President Barack Obama’s administration. The rules were aimed at slashing carbon emissions from cars and light trucks by boosting fuel economy to a fleet average of more than 50 miles per gallon by 2025. The standard is equivalent to roughly 36 mpg in real-world driving.

The EPA’s so-called final determination marks the culmination of a yearlong re-evaluation of the Obama-era rules that was announced by President Donald Trump in March 2017. He touted the move in his State of the Union address in January, saying, “In Detroit, I halted government mandates that crippled America’s autoworkers -- so we can get the Motor City revving its engines once again.”

Reopening the review last year nullified an EPA decision during Obama’s last days in office to finalize the rules without changes after a lengthy analysis found automakers could meet the standards at a reasonable cost.

Why Trump Would Want to Slow Tough Fuel Standards: QuickTake Q&A

Automakers aggressively lobbied the Trump administration to reopen the review, saying it was ended prematurely without an adequate consideration of how gas prices, consumer preferences and other issues had changed the auto market since the rules were agreed upon in 2011.

In January, the EPA released a report showing 2016 model year cars and light trucks failed to achieve the EPA’s greenhouse gas standards for the first time despite a small gain in efficiency.

The EPA’s decision to change the standard also raises the specter of a legal battle with California regulators, who in 2011 agreed to align their own vehicle greenhouse-gas emissions standards with the federal rules. The deal, which had the support nearly every major carmaker, ensured consistent mileage and greenhouse-gas rules nationwide.

Officials from automaker trade associations said on Friday that they had not been notified of the EPA’s decision.

“Like everyone else, we’re going to watch with interest to see what the outcome is,” said Mitch Bainwol, president of the Alliance of Automobile Manufacturers, whose members include General Motors Co., Volkswagen AG and Toyota Motor Corp.

Bainwol said his group continues to support negotiations between the federal government and California that would allow them to continue aligning their greenhouse gas standards, even if that means -- as California has insisted -- that even higher goals be set for 2026 and beyond.

“Fuel efficiency doesn’t stop in 2025,” Bainwol said. “We see this as a journey that has no real ending.”

John Bozzella, president of the Association of Global Automakers, said his group also supports continued alignment between California and the federal government. The association is comprised mostly of companies headquartered outside the U.S., including Japan’s Toyota, Germany’s Robert Bosch GmbH and South Korea’s Hyundai Motor Co.

Trump officials have been in talks with California Air Resources Board officials about the future of the rules but there have been no signs of an agreement.

If a deal to maintain that consistency can’t be reached, automakers could face a regulatory patchwork with EPA tailpipe rules in most states and California-set efficiency rules in several others that have adopted California’s rules. Those states together account for about a third of the U.S. auto market.

Weakening the standards is “not in the interest of the public or the industry,” said Young, the California Air Resources Board spokesman. “We won’t take any action until we have the opportunity to see the document itself and any supporting data, evidence, or analysis that purports to justify what we think would be an unfounded conclusion.”

The Sierra Club criticized the EPA and Administrator Scott Pruitt, saying in an emailed statement that “it’s a surprise to no one” that the agency had sided with automakers.

“This is an Administrator and an administration that focuses solely on doing what’s best for corporate polluters, not the American people,” said Andrew Linhardt, deputy director for clean transportation at the environmental group.

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