E.P.A. Takes a Major Step to Roll Back Clean Car Rules

Source: By Coral Davenpor and Hiroko Tabuchi, New York Times • Posted: Friday, June 1, 2018

Scott Pruitt, the Environmental Protection Agency administrator, second from left, with auto executives and President Trump this month.Jonathan Ernst/Reuters

WASHINGTON — The Trump administration took a major step toward dramatically weakening an Obama-era rule designed to cut pollution from vehicle tailpipes, setting the stage for a legal clash with California that could potentially split the nation’s auto market in two.

The Environmental Protection Agency on Thursday submitted its proposal to roll back climate change rules that required automakers to nearly double the fuel economy of passenger vehicles to an average of more than 50 miles per gallon by 2025. The rules, which would have significantly lowered the nation’s greenhouse gas emissions, were opposed by automakers who said they were overly burdensome.

However, the proposed Trump rule could lead to unintended and unwanted consequences for those same car companies. The Obama-era regulations would have forced automakers to make and sell far more electric and hybrid vehicles, but the new proposal could end up leading to two separate sets of fuel economy regulations within the United States, creating what automakers say would be an even greater regulatory burden.

Jahan Wilcox, a spokesman for the E.P.A., confirmed on Thursday that the agency had sent its proposed regulatory rollback to the White House Office of Management and Budget for review. Typically that is the final step before a proposed rule is published in the Federal Register. The rules are then open for public comment before taking effect, during which the terms could still be modified.

While the administration had been expected to take the steps laid out on Thursday, the proposal is significant because it amounts to an official declaration of its intent.

Together with President Trump’s plans to undo a separate set of climate change regulations, on pollution from coal-fired power plants, “this represents the centerpiece of the administration’s gutting of the Obama-era domestic climate portfolio,” said Robert N. Stavins, a professor of environmental economics at Harvard University.

Dr. Stavins said that while the rollback could give automakers the looser regulations they had sought, it could well backfire by creating two different sets of regulations where there had been one. The uncertainty, he said, “ could haunt U.S. car producers at a time at which they are already worried about the effects on their production costs of Trump’s steel and aluminum tariffs,” Dr. Stavins wrote in an email.

One of the central and most controversial elements of the proposed rule would formally challenge California’s special status under the 1970 Clean Air Act to set its own vehicle pollution standards. California has said that it will continue to enforce the stricter, Obama-era pollution standards, a move that would create two separate auto markets in the United States — one with the tougher emissions requirements, and another with looser rules.

From left, Attorney General Xavier Becerra of California, Gov. Jerry Brown and Mary Nichols, head of the state’s clean air agency.Rich Pedroncelli/Associated Press

Twelve other states follow California’s lead, and together they make up roughly one-third of the nation’s auto market.

California’s lawmakers insist that, under the state’s special status, they and the 12 other states have the right to retain their own tighter rules even if the federal government lowers its fuel economy standards.

According to three people familiar with the proposal filed on Thursday, Mr. Trump’s proposed rule would not revoke California’s waiver outright. Instead, it will argue that California cannot use the waiver to require tougher fuel economy standards than those set by the federal government. The three requested anonymity because the E.P.A. had not authorized them to speak publicly on the matter.

Gov. Jerry Brown of California and the state’s attorney general, Xavier Becerra, have said that, should Mr. Trump challenge their state, they stand ready to fight back with a major lawsuit that would likely end up before the Supreme Court.

“We’ve ridden this bull for almost 50 years and we’re still on top,” Mr. Becerra said in an emailed statement. “We don’t intend 2018 to be any different because for California, taming greenhouse gas emissions isn’t a choice, it’s a necessity.”

Mr. Trump has vowed since the early days of his administration to roll back the vehicle pollution rule, which was one of President Barack Obama’s signature policies to address climate change. In the first weeks after Mr. Trump took office, he met with the chief executives of the United States’ major automakers, who asked him to lower the standards, saying that a million jobs were on the line. Mr. Trump then tasked Scott Pruitt, the head of the E.P.A., to craft a legal proposal to achieve that.

On May 23, Mr. Trump tweeted, “There will be big news coming soon for our great American Autoworkers. After many decades of losing your jobs to other countries, you have waited long enough!”

One person familiar with the plan, who spoke on condition of anonymity, said the White House intended to publish its new rule in the next two weeks. Once the proposed rule is published, the E.P.A. will open it up for public comments before publishing a final regulation later in the year.

The terms of the E.P.A.’s plan are similar to those in a draft that circulated last month, according to the three people familiar with the document. That draft laid out eight options for revising the Obama-era standards and identified a preferred option: freezing fuel economy standards at 2020 levels for both cars and light trucks. That approach would significantly increase the nation’s projected emissions of planet-warming carbon dioxide pollution from vehicle tailpipes.

For months, opponents of climate-change policy have pushed Mr. Trump to move forward with the legal challenge to California, arguing that the federal government should not allow states to set their own fuel economy standards.

“We strongly support undoing state pre-emption of standards and taking California out of the driver’s seat,” said Myron Ebell, who led Mr. Trump’s E.P.A. Trump transition team and works for the industry-funded Competitive Enterprise Institute, a conservative Washington organization.

But while automakers had pressed Mr. Trump to relax the Obama-era standards, some now fear that the president’s willingness to dramatically roll back the standards and to fight California in court could have unintended consequences that could end up harming, rather than helping, the industry.

Should California fight Mr. Trump’s plan in court and win, that could set the stage for a huge transformation of the nation’s auto market, ultimately creating one set of rules for cars sold in California and the 12 states that follow its strict fuel economy standards, and another set of rules for the rest of the country.

Automakers have long described that possibility as the worst-case outcome for them, forcing them to manufacture cars that meet two separate sets of standards. Opponents of the proposed Trump rule say they hope that possibility will persuade the administration to walk back the proposal before it is finalized.

In recent weeks, automakers and officials from California have held numerous meetings with Trump administration officials, both in Sacramento and in Washington, in an effort to broker a deal on a new proposal that would avoid the legal clash and the prospect of a split into two markets.

Automakers have also spoken publicly in support of sticking, in some form, to more stringent car standards. “We support increasing car standards through 2025, and are not asking for a rollback,” wrote Bill Ford, executive chairman at Ford Motor, in a blog post this year.

“It has been made very clear that excluding the state of California and freezing fuel economy standards for the better part of decade won’t prove fruitful,” said Senator Thomas Carper of Delaware, the ranking Democrat on the Senate Environment Committee. “President Trump should recognize the opportunity here and take yes for an answer, rather than try to push extreme and unwanted standards through.”

But people close to the Trump administration said that any future compromise was unlikely. “I can’t envision a scenario where President Trump and Jerry Brown would reach agreement over greenhouse gas emissions,” said Thomas J. Pyle, who advised Mr. Trump’s campaign and transition on energy policy, and heads the Institute for Energy Research, a group which advocates fossil fuel use.

Mr. Pyle said he was unworried that the ultimate outcome could be the imposition on American automakers of more regulations, not fewer. “If that’s the outcome, the automakers will figure out something to make it work,” he said.

Hiroko Tabuchi contributed from New York