CAFE Standards In The Age of Trump: It’s A Stall Y’all!*
Candidate Trump had promised the auto industry and his supporters that he would get Detroit working again by deregulating the industry. On the Ides of March 2017, The Donald started to make good on that promise. In an executive order, The Donald directed EPA and the Department of Transportation/National Highway Transportation and Safety Agency to re-open the Midterm Evaluation (MTE) completed just prior to President Obama’s leaving office.
The MTE led to EPA’s finalizing the 2022–2025 CAFE for cars and light trucks at 54.5/mpg**. The Alliance of Automakers had written both Trump and EPA Administrator Pruitt, early in 2017, asking them to reopen what they thought to be a flawed rulemaking process. It was, in their opinion, a rush to judgement and violative of their 2009 agreement with Obama
CAFE standards were introduced to the nation in 1975 as part of the Energy Policy and Conservation Act (EPCA). Motivating the new standards was the 1973 oil embargo. Congress and President Ford sought to lower reliance on foreign oil to decrease the impact of any future embargos. The environment received little more than a nod from lawmakers at the time.
Auto/light truck fuel efficiencies stayed much the same as they were initially, until the Energy Independence and Security Act of 2007 (EISA) was signed into law by President Bush. Interest in vehicle fuel efficiencies was aroused, yet again, as a matter of supply security.
Oil consumption was on the rise, in large part due to the relative stagnation in CAFE standards, the doubling of annual vehicle miles traveled in the previous 25 years, and a sizable increase in the market share of less efficient SUVs and light trucks.
EISA raised the combined average of SUVs, cars and light trucks to 35/mpg by 2020. Between 2020 and 2030 expectations for further increases were phrased as the maximum possible rather than a number.
President Obama, in 2009, saw in the regulations an important opportunity to limit harmful GHG emissions. Later in his administration he would see these emissions as part of the calculus used to determine the nation’s Nationally Determined Contribution’s (NDC) pledge made as a signatory of the Paris Climate Accord.
The transportation sector is second only to electric generation as a major emitter of green-house gases.
In 2009, an historic agreement between the Federal Government, state regulators, and the auto industry established a national program to implement these first meaningful fuel efficiency improvements in over 30 years and the first-ever global warming pollution standards for light-duty vehicles.
The agreement came about because of the unfortunate position the auto industry found itself in during the Great Recession. There would never be a better time for Mr. Obama to get the auto industry to agree than when it was coupled to its rescue.
He wanted the average fleet-wide fuel efficiency to reach 54.5 miles per gallon by 2025. They needed a bailout.
The deal struck with the manufacturers was contingent on the completion of a mid-term evaluation. The government had until April 2018 to do what was needed to finalize the number.
Bailout today versus efficiency standards a decade down the road couldn’t have presented much of a dilemma for the companies. A lot could happen in ten years.
The required review was completed just days before Obama left office. Signing the standards into existence was one of his last presidential acts.
These standards are often referred to as Phase 2. Phase 1 covered the years 2012 to 2016. By law standards can be set for periods of no more than 5 years.
The White House press office announcement read:
When leaders from around the U.S. auto industry met with the President during one of his first days in office, they discussed specific actions that he could take to eliminate government barriers to job creation and their industry…they sent him a letter unanimously requesting the President “reinstate the data-driven midterm review of fuel economy GHG rules through model year 2025 without prejudging the outcome and to harmonize federal requirements.
Trump ordered the re-review of the Phase 2 standard believing he had the authority to do so. Whether he did or not is a question that may ultimately have to be answered by the courts.
No internal White House or agency papers have been released that explain the basis upon which President Trump claimed the authority to re-open the MTE. The reasoning behind Trump’s use of an executive order to consider the standard a second time is a matter of speculation based on a best educated guess.
After the November election Obama was understandably worried about Trump’s announced intention to de-regulate the environment and moved up the date of the final MTE, hoping to bring the standard in just under the wire. As previously mentioned, the government had until April 2018 to finalize the rule/standard, although there was no prohibition to finalizing the numbers earlier.
On November 30, 2016, EPA posted a proposed determination under the MTE stating that the Model Year 2022–2025 standards remained appropriate and that a rulemaking to change them was not warranted. The announcement started a public comment period running through December 30, 2016.
On January 12, 2017, a final determination to retain the Model Year (MY)2022–2025 standards as promulgated in 2012 was made and published.
Trump’s issuance of the executive order re-opening the MTE was either a wanton disregard of the facts in this case or counsel’s mistaken belief that the standards only came into being on January 12, 2017.
If White House counsel was of the opinion the rule was just coming into being in January, then the interpretation is at odds with EPA’s own announcement (EPA-420-R-17–001):
In this final order, the Administrator is making a final…adjudicatory determination that, based on her evaluation of extensive technical information available to her and significant input from the industry and other stakeholders, and in light of the factors listed in the 2012 final rule establishing the MY2017–2025 standards, the MY2022–2025 standards remain appropriate under section 202 (a) (1) of the Clean Air Act.
This action leaves those standards entirely as they now exist, unaltered. The regulatory status quo is unchanged. This final order constitutes a final agency action. See 76 FR 48763 (Aug. 9, 2011) (emphasis mine)
The EPA administrator had based her finding — that the standards were appropriate and reasonable — on two factors.
1. The Technical Support Document, released previously as the Draft Technical
Assessment Report by the three organizations tasked with responsibility: EPA; DOT; and the California Air Resources Board (CARB). As well, input from the auto industry and 100,000 other stakeholders.
2. There was sufficient time for the industry to comply with the standards.
There is another factor that lends support to the belief the January 12, 2017 publication of the determination was not in fact the first time the rule had been promulgated. The rule could have been rescinded by Congress had the 12th been the date of promulgation.
The Congressional Review Act (CRA) allows the Congress to disapprove any issue regulation within 60 working days, i.e. days actually in session, of their final publication. The Republican majorities in the House and Senate had little problem rescinding 13 other Obama-era regulations, why then wouldn’t CAFE have been on their list?
Having been published within days of Trump’s inauguration, there should have been no problem throwing the auto efficiency standards on to the pile with the others. It is fair to suggest the reason is neither the Senate nor House Parliamentarians would have approved its complying with the 60 working days requirement having been promulgated years earlier.
What’s next depends upon what the Trump administration decides to do at the conclusion of the re-opened Midterm Evaluation. There are two possibilities but only one likely scenario.
It is possible the Trump administration will accept the findings of the Obama administration and leave the 54.5/mpg standard in place. Possible that is in an alternate universe when donkeys howl at the moon.
The likely decision will be to roll the standard back. Where to is the question. The safest haven would be to continue the 2017 (35.1/mpg combined) levels or a bit higher, as the car companies are nearly there now. Continuing the 35.1/mpg would technically satisfy the 2007 Energy Independence and Security Act (EISA) 2020 requirement of at least 35/mpg.
The administration cannot legally refuse to regulate. The EISA requires federal action. Congress could amend the 2007 Act, but It would take a bipartisan effort. To change EISA, a super majority of 60 votes in the Senate is required — eight more than the Republicans have.
Carmakers are not opposing CAFE in general. The Detroit News summed up the industry position neatly in the title to a story back in April: Auto Industry: Trump will mend, not end, mpg mandate.
Given continued federal regulation the companies would like to see the One National Program (ONP) put in place. The ONP was to harmonize the rules of EPA, DOT/NHTSA, California Air Resources Board, the Department of Energy and other federal program/offices.
California is in the mix of CAFE — setters because it has a waiver from EPA that allows it to establish a more strident state standard than the feds. The waiver was granted as part of the 1970 Clean Air Act (CAA).
California is the only state allowed the waiver. However, other states are free to follow it. Fifteen states currently opt for the tougher rules, including Georgia, Pennsylvania, North Carolina, and the entire New York metro area…cover[ing] 135 million people, more than 40 percent of the U.S. population.
According to John Bozzella, president of the Global Automakers:
… one clear set of running rules and have the time to get the job done. Right now,we don’t have that. We have three sets of rules, run by two federal agencies and the State of California. It’s a crazy patchwork.
ONP was promised as part of the deal struck by President Obama. The companies feel it wasn’t implemented — at least not to their satisfaction. Their desire to have one unified structure to cope with is understandable. From a management perspective, it is desirable — no matter the targeted mpg.
EPA and complicit federal compatriot agencies will be sued under any circumstance. California and its state followers, as well as major environmental organizations, are committed philosophically, politically and likely personally to defend the environment — from both harmful emissions and Trump.
New York State’s attorney general, speaking for 12 other states and the District of Columbia, has already announced the collective intention of challenging in court any decision weakening the 54.5-mile requirement. Among the other states in the group are Pennsylvania, Connecticut, Massachusetts, Iowa, Washington State, Oregon and Rhode Island.
Rolling back the regulation will not only unleash legal actions, it will unshackle CARB from the federal ONP group. CARB is already eyeing a measured march to the exits.
It is one thing for the Board to participate with EPA and DOT/NHTSA as part of the deal of the Obama administration with the car companies. It is quite another to be a willing participant under the Trump regime.
With waiver in hand, it is highly probable California would strike out on its own to maintain more stringent regulations. The state could exit before any final decision on CAFE is made by the administration. Once it is convinced the 54.5/mpg target is being abandoned, it will know all it needs to, to retire from the federal field.
How long the waiver will remain in hand is another matter. Questioned by California Congressman Ken Calvert (R-Corona) in June, Pruitt stated clearly California’s waiver was not at that time under review. It was the same question he hedged an answer to during his confirmation hearings.
Not at this time is hardly a reassuring commitment. The power California — along with its state and D.C. allies — exert over national environmental policies is substantial. Should California and friends set a stricter standard than the Trump administration, the car companies are going to be hard pressed not too build to it. Economies of producing separate models to meet different standards would be problematic.
There is also the matter of emission standards in foreign markets to consider. The U.S., under the Trumpian regime, may not give a fig for the environment; there are, however, 194 other nations still at the Paris table who do care. Many of those nations have or will have a regulatory structure in place governing vehicular emissions higher than the U.S. re-set standard.
Would Trump sit still for such an erosion of his power and influence? It would be a close call. Certainly, the Hothouse Gang, e.g. Pruitt, Sessions, Bannon and Miller, would see preempting the right of unruly states to protect the environment against the White House’s wishes as a legitimate exercise of presidential authority.
Clean car rules in California, as unpopular as they are with oil companies and auto manufacturers, offer what may be the clearest opportunity for federal preemption.
It is consistent with Trump’s rollback promises and carries a low threat level with core supporters and the more conservative members of Congress.
To change the current arrangement requires amending various laws like the Clean Air Act and EISA. It would be a fight, but it is possible given the current composition of Congress.
According to the Congressional Research Service:
It is unclear whether the Trump Administration will be able to modify or eliminate the standards, or if so, how quickly. The standards were promulgated in 2012 and were not modified by the MTE [Midterm Evaluation], so the deadlines for judicial review and for the fast-track review authority in the Congressional Review Act would appear to have lapsed. (emphasis mine)
The rule could be changed through a new rulemaking, a process that normally would take a year or more and would itself be subject to judicial and congressional review upon completion.
The way to avoid questions of legality and to delay finalizing the 2022–2025 standard is to continue the MTE until at least April 2018 — per the original Obama agreement — and to propose at the end of the Midterm a new lower standard. To stall the process all the administration needs to do from there is to follow the rules governing the rulemaking process.
A new 2025 standard at the 2017 level would be easy enough for the administration to justify superficially “on the evidence.” There are the beginnings of an effort by Administrator Pruitt to repopulate EPA’s outside science committees with advisors from industry and academia whose opinions are more closely aligned with his and the president’s.
By August, 38 of 49 Board of Scientific Counselors (BOSC) seats will be empty and available to rent. There are indications that similar changes will be made to the larger Science Advisory Board and other of EPA’s advisory committees.
Both SAB and BOSC help to ensure that EPA research and regulations are grounded in credible scientific evidence. Both are involved in assessing and recommending research involving clean air and sustainability at both the national and local levels.
Pruitt -appointed-panels will undoubtedly have the opportunity to comment on CAFE. They would be expected to validate any proposed mileage standard as the maximum feasible for each fleet and model year, as prescribed by the Act.
The Board could begin laying the foundation to stall the standard out around the 35/mpg level by indicating more stringent standards would be problematic technically and add many more thousands of dollars to the price of a new car or truck.
There is adequate time between 2018 and 2022 to consider the issues. The 54.5/mpg standard isn’t to be applied until 2022. The law requires public-ation of the rule at least 18 months prior to the Model Year (MY) it is to take effect. After the MTE and the publication of the new standard, the clock would then reset.
As CRS had suggested, to change the rule would require a new rulemaking a process that would take a year or more. Additional time could be gained through the collaboration of the administration and the Republican congress.
Be On The Look Out
The Congressional Review Act permits Congress to disapprove of a rule within 60 days of its being finalized. It takes a simple majority to pass a disapproval resolution.
The Act was little used during the Obama administration because a president can veto a joint disapproval resolution. Republican efforts to weaken national environmental regulations would go nowhere as long as Obama was president.
Now that The Donald occupies the White House, presidential signatures are much easier to come by:
Congress took just 100 days to wipe out 14 important protections that took federal agencies the equivalent of more than 30 years of resource-intensive analysis, public comment, and painstaking review to create.
Among the rejects was the Stream Protection Rule. Environment remains a go-to target for the administration. In this case it’s use against the CAFE standard proposed by the Trump administration itself will be considered a win by both Congress and the White House.
Disapproval of the new standard puts into play another CRA provision. The Act prohibits an agency from reissuing substantially the same rule unless authorized by Congress in legislation.
There is an exception to the provision that would apply to CAFE:
If a statute or court establishes a deadline for promulgating a rule, the CRA joint resolution of disapproval does not prohibit an agency from issuing future rules as required by the deadline. Instead, the deadline to do so is extended by one year from the date of the joint resolution of disapproval.
EISA specifically requires promulgation of the 2022–2025 rule. Although a federal court would likely agree that EPA has the obligation and order EPA to proceed with the rule, the case would take time to decide.
To the denier community, justice delayed is almost as good as outright victory. Although the above outlined series of events will avoid certain problems, at least temporarily, and stall the rulemaking process, it won’t keep California/CARB in line nor other states from challenging the EPA in court.
Federal courts will have the Massachusetts v EPA case to rely on. The case established EPA’s obligation to regulate GHG emissions from automobiles and itself led the way to the Clean Power Plan. A loss in court is unlikely to fluster Trumptefarians as being right is not as important as being a drag on efforts to defend the environment and protect the health and welfare of citizens.
What’s next for CAFE is much like the future of all federal climate-centered policies and programs in the age of Trump — litigation and a lot of it.
*My apologies to Southern grammarians. I realize the correct plural of y’all is all y’all, for literary reasons I have dropped the all.
**Note that a 54.5/mpg CAFE rating translates to a 38–41/mpg in real life. The lower number is the one you’d see on the window sticker of a car on a dealer’s lot.