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EPA Preemptive Strike on Car Mileage Seen Forcing Trump’s Hand

  • Ford decries ‘lame-duck’ administration’s stepped-up timing
  • Action sets up potential conflict with Trump administration

The U.S. Environmental Protection Agency moved to cement existing fuel-economy and emissions targets before President-elect Donald Trump takes office with a proposal that automakers blasted as "eleventh-hour politics."

The auto industry is “well positioned” to meet the 2022-2025 standards, the EPA said in signaling its intention to keep those requirements intact months earlier than expected. The agency’s action still must be finalized after a 30-day comment period that would close before Trump’s inauguration, but it could be undone by the new administration. 

The move won an immediate rebuke from American automakers including General Motors Co., which was helped back from bankruptcy through the U.S. government’s multibillion-dollar Automotive Industry Financing Program during the 2009 financial crisis. 

"It is deeply disappointing that eleventh-hour politics in a lame-duck administration has short-circuited a data-driven process for developing regulation," said Ziad Ojakli, group vice president of government and community relations at Ford Motor Co., which didn’t go into bankruptcy during the crisis. “Ford and the industry stand ready to work with the next administration and Congress to find a way forward.”

‘Extraordinary, Premature’

The Alliance of Automobile Manufacturers, the industry’s main trade group, denounced the EPA’s action as an “extraordinary and premature rush to judgment.”

But Obama administration officials and environmentalists took a starkly different view, insisting there’s no reason to slow down because automakers have the technology to meet the targets now.

“It’s clear from the extensive technical record that this program will remain affordable and effective,” EPA Administrator Gina McCarthy said in a statement. “This proposed decision reconfirms our confidence in the auto industry’s capacity to drive innovation and strengthen the American economy while saving drivers money at the pump and safeguarding our health, climate and environment.”

Optimistic View

McCarthy’s comment echoes a technical assessment report issued in July by the EPA, the National Highway Traffic Safety Administration and the California Air Resources Board. The agencies expressed an optimistic view about the industry’s ability to comply with Obama’s targets, which would boost average fuel economy in the U.S. to 50.8 miles per gallon by 2025, from 35.3 currently.

It is not clear how the Trump administration will address the issue. Trump has promised to rescind “job-killing” regulations, and Republican leaders in the House have warned agencies they will take a critical view of any regulations issued in the waning days of the Obama administration. The incoming administration and Congress have wide latitude to repeal or force changes in newly finalized rules and executive actions.

Trump’s transition team didn’t immediately respond to e-mail requests for comment on the EPA proposal.

Read more: GM is ready to lose $9,000 a pop on electric cars

The EPA’s earlier technical assessment laid the foundation for keeping or tightening the standards and could make it tougher for the Trump administration to justify moving lower.

“The Trump administration may now have to explain to environmentalists why -- in light of today’s proposed determination -- the ‘feasible’ original standards should be loosened,” g1ClearView Energy Partners LLC told clients in a research note.

Senator John Thune, a Republican from South Dakota who heads the Commerce, Science and Transportation Committee, vowed scrutiny of "how this bears on the economy and the price for automobiles."

"I know that fuel-economy standards have a lot of support from people who are trying to lesson our dependence on fossil fuels and it has environmental benefits," Thune said. "We have to take that all into consideration. But I think we have to look at what that does to the price, the cost for the average family in this country for automobiles."

The Alliance of Automobile Manufacturers said in a statement that the EPA action “circumvents the serious analysis necessary" to ensure that the fuel economy and greenhouse gas standards "appropriately balance fuel efficiency, carbon reduction, affordability and employment."

Job Threatening?

The alliance said the agency is failing to strike a proper balance between fuel efficiency and jobs. If the rules drive the price of cars too high, they could threaten 1 million manufacturing jobs in the U.S., the group said, citing a study by the Center for Automotive Research in Ann Arbor, Michigan.

Under a previous EPA timeline, the proposed determination was slated for the middle of next year. Now, McCarthy may finalize Wednesday’s preliminary determination before Trump takes office, Janet McCabe, the EPA’s acting assistant administrator, told reporters on a conference call.

General Motors said in a statement that it was "disappointed that EPA changed the process and decided to advance the timetable" for completing its review of the fuel economy requirements. "This unexpected action appears to dismiss the many comments and questions raised by automakers regarding the draft technical assessment report issued by EPA earlier this year."

"The EPA has abandoned its own timeline in an effort to ram through another unrealistic and costly mandate," said Daniel Simmons, vice president of the American Energy Alliance, a free-market, fossil-fuel advocacy group. "It’s clear the EPA wants to make it difficult for the Trump administration to get fuel economy standards in line with the needs and expectations of American families."

Research Focus

McCabe said EPA administrator McCarthy hadn’t considered the incoming Trump administration’s intent or its legal options before Wednesday’s announcement, focusing instead on the extensive research the EPA has already conducted on the Obama targets.

Automakers will have to spend $875 per vehicle to comply with the Obama’s fuel economy targets for 2025, McCabe said. That’s down from the EPA’s 2011 estimate of $1,100. If those costs are passed on to consumers, they’ll be more than offset by fuel savings, she said.

The companies are ahead of schedule in installing fuel-saving technologies like smaller, turbocharged engines, and electronic controls that shut off engines and quickly restart them at traffic lights, McCabe said.

Fiat Chrysler Automobiles NV, which faces the biggest projected costs to meet the 2025 rules, said Wednesday that its plug-in hybrid Chrysler Pacifica minivan did better on EPA tests of efficiency and range than the company had projected.

“The reason the EPA is not touching this is because automakers have done too good a job showing that they can meet the standards,” Mike Ramsey, an analyst for researcher Gartner Inc., said in an interview. "They haven’t shown really good evidence that they can’t meet the standards.”

Avoiding Uncertainty

Dan Becker, director of the Safe Climate Campaign, said that by keeping the existing numbers in place, EPA is giving much-needed certainty to the auto industry -- and ensuring the federal targets continue to mirror standards in California and Canada. If the Trump administration moved to lower the standards, that could cause more disruption for automakers that compete globally, Becker said.

“What’s not to like about a plan agreed to by the automakers that cuts oil use, saves consumers money at the pump and reduces pollution?” Becker said by phone. “I would think the next administration wouldn’t want to increase our oil addiction and cost consumers more at the pump by weakening these standards.”

— With assistance by Laura Litvan, Jamie Butters, and Keith Naughton

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