Former EPA official says EPA bluffed automakers at fuel efficiency talks

Source: By David Shepardson, Detroit News Washington Bureau • Posted: Saturday, March 28, 2015

Transportation Secretary LaHood And EPA Head Jackson Make Fuel Economy Announcement

Margo Oge, who headed the EPA’s Office of Transportation and Air Quality during fuel economy talks with automakers, discloses new details in her new book: “Driving the Future: Combating Climate Change with Cleaner, Smarter Cars” published this month by Arcade Publishing.

In 2011,the EPA initially asked automakers for 5 percent increases in fuel efficiency for light trucks starting in 2017 but Oge says the agency wasn’t serious about it.

“Our proposal is a straw man. Not only are we sure the car companies won’t accept it, but we never had any intention of pushing for 5 percent for light trucks outright,” Oge said, saying EPA’s own technology team didn’t think that was realistic. “The Ann Arbor tech team doesn’t think it’s realistic that Chevy could improve the fuel economy on, say, a Silverado pickup by 5 percent year on year starting in 2017.”

Oge argues that it made sense to ask for more than the EPA really wanted because “we are expecting pushback from the companies no matter what we bring to the table. The proposal isn’t outrageous and it gives us a bit of wiggle room.”

The initial 5 percent proposal would have hiked fleetwide efficiency to 56.2 mpg by 2025. EPA and the National Highway Traffic Safety Administration ultimately reached a deal with automakers to improve the efficiency of light trucks by 3.5 percent annually between 2017-21, while cars must improve by 5 percent annually over the same period, resulting in a fleetwide average of 54.5 mpg by 2025.

The administration brought in former auto czar Ron Bloom to help reach a deal in July 2011.

Ford Motor Co.’s then environmental chief Sue Cischke in July 2011 told the officials that 5 percent was not realistic. “You don’t know what you’re talking about,” Cischke told them. “We showed you everything we had. You have totally overestimated what we can do with trucks.”

Oge acknowledges that the key was to get the Detroit Three to sign on. If they did “it will be hard for many of the foreign manufacturers to say no,” she wrote.

Foreign automakers were angry at the breaks for trucks over cars, accusing EPA of being biased toward U.S. companies. “At one point Toyota’s representatives threaten to stop production of trucks in America,” Oge wrote.

Toyota spokesman Ed Lewis called the comment “illogical. Toyota’s truck plant in San Antonio, which represents an investment of $2.4 billion and nearly 2,500 jobs, began operations in 2003. Our Texas plant continues to be one of our most productive assembly operations and the only plant that builds Toyota trucks in the United States.”

NHTSA and EPA declined to immediately comment on Oge’s book.

By late July 2011, 13 major automakers, including Detroit’s Big Three, signed off on a proposal to nearly double fuel standards to 54.5 mpg by 2025. The 2017-25 rules will cost the industry $157.3 billion, the Obama administration estimates, but will save consumers $1.7 trillion at the pump — including the 2012-16 rules. Those 2012-16 rules will cost automakers another $52 billion.

Oge — who joined the EPA in 1980 and joined the office that oversees transportation emissions in 1994 — also discloses the EPA and NHTSA repeatedly clashed during contentious talks to dramatically hike fuel efficiency standards. She recounts the remarkable transformation — from before 2007, when Congress had blocked any increases in passenger car fuel efficiency — to the dramatic increases agreed to by the auto industry.

She said NHTSA and EPA had clashed for years on the rules. Oge said then-NHTSA Deputy Administrator Ron Medford “and everybody else at his agency — stopped responding to my emails one day during the Bush years.”

Under the Obama administration, the EPA was granted authority to set greenhouse gas emissions standards in tandem with NHTSA’s fuel economy mandates.

In 2009 NHTSA said estimated the cost of hiking fuel economy standards by 40 percent to 35.5 mpg by 2016 would be close $4,000 per vehicle, while EPA insisted it was only about $1,000 per vehicle. “Even in an environmentally friendly administration, the gut instinct of many people is that EPA wants to put the car companies out of business — or at least we don’t care if they succeed,” Oge wrote.

EPA and NHTSA remained apart on costs, prompting a meeting with White House chief of staff Rahm Emanuel in May 2009 that included Transportation Secretary Ray LaHood and EPA Administrator Lisa Jackson. “There are histories between all of you,” Emanuel tells them. “But I want you to know that you have to get it done. … If we have to keep you locked in a room, so be it.”

After EPA and NHTSA agreed by April to a 40 percent hike in fuel standards to 35.5 mpg, they invited GM’s then top environmental official, Beth Lowery, to the White House to discuss the plan on April 21. GM ultimately agreed to support the deal after it won credits for building vehicles that can run on mostly ethanol.

EPA sought to take advantage in the talks of GM’s desperate financial shape. Officials were well aware that “Beth’s employer is on federal life support. But the final shape of any agreement is uncertain. If we don’t get commitments from the automakers, some auto companies may file lawsuits in hopes of delaying the rule. But in this conference room, the power dynamics are clear. We have the better hand; we just need to play it correctly.”

EPA and NHTSA met with some foreign automakers to talk about the plan on May 14 — after the president’s announcement of the agreement had already been scheduled for May 19. In the final days, Ford’s Cischke threatened to pull out without some credits.

Oge argues that as part of the EPA-NHTSA “midterm review” by 2018 of the feasibility of the 2021-25 requirements, that the agency should issue a draft regulatory framework for 2026-35 standards. She says after 2025 that EPA and NHTSA should continue to hike efficiency requirements by 5 percent a year. By 2050 the internal combustion engine “needs to be largely replaced” by zero emission vehicles, Oge argues, to meet aggressive greenhouse gas emission reduction targets.

She also says fuel efficiency standards should be expanded. “After dealing with cars and trucks, EPA should next move to aircraft,” she says, followed by trains and boat engines.