Trump Regulators and California on Collision Course on Rolling Back Fuel Efficiency Standards

By Jerri-Lynn Scofield, who has worked as a securities lawyer and a derivatives trader. She now spends much of her time in Asia and is currently working on a book about textile artisans.

The National Highway Traffic Safety Administration (NHTSA) yesterday sent a proposal to the Office of Management and Budget (OMB) yesterday to roll back fuel efficiency standards due to come into effect after 2021.

As reported by the :

The OMB did not release the contents of the document but is expected to publish it by the end of June, prompting a 60-day public-comment period.

The draft of the overhauled standard, as reported last month, would eliminate automakers’ obligation to boost fuel efficiency after 2021 and would set up a clash with California by challenging its ability to set its own stricter standards, a power granted to the state by the [1970 Clean Air Act]. Mary D. Nichols, head of the California Air Resources Board, met in Washington with officials from the Transportation Department and the Environmental Protection Agency [EPA] in an effort to alter the Trump administration’s position.

The EPA and Transportation issued a news release afterward calling the conversations “productive” and saying that they were “fully supportive of an open dialogue that proceeds in an expedited manner.”

The Trump administration has fixated on rolling back the its precedecessor’s legacy– and no more so than in the area of climate change.  As in so many areas– e.g. Obamacare, Iran nuclear deal, there is far less to these signature climate change policies, than was touted (see this previous Real News Network interview cross post, Road to Trump’s Climate Change Hell Paved by Obama and Clinton and Obama Again Sounds Climate Change Alarm But Continues To Support Fossil Fuel Industry). But  no one would deny the Trump climate change policy is a disaster– taken by itself, or even in comparison to previous inadequate policies (as discussed further here: in a nutshell, “the Trump administration is ground zero for a certain brand of climate denialism and is especially close to the fossil fuels industry.”

Pending State Lawsuit to Scupper Trump Attempts to Roll Back Future Fuel Efficiency Standards

California on May 1 filed a lawsuit in the U.S. Court of Appeals for the District of Columbia seeking to thwart the latest Trump regulatory efforts to scupper the new fuel efficiency standards. As an aside, I’ll point out that as with so many measures– it would be far more difficult for Trump officials to roll back these earlier initiatives if they had not been phased in so slowly and if companies had already made necessary adjustments and investments to comply with new rules.

reported California was joined by sixteen other states, New York, Illinois, Oregon, Washington, Massachusetts, Iowa, Virginia, Minnesota, New Jersey, Pennsylvania, Delaware, Connecticut, Rhode Island, Vermont, Maine and Maryland:

Last month made between 2022 and 2025 “not appropriate.” The standards, approved by Congress in 2012, required automakers’ fleets to average 36 miles per gallon by 2025, or about 10 miles per gallon better than their current new models.

As litigation proceeds, however, the reports that the standards conflict could hurt automakers, who will likely be forced to bifurcate their product offerings, to comply on the one hand with the higher California standards (which twelve other states would also follow), compared to whatever revised standards the Trump administration ultimately enacts– if it succeeds in doing so and until the larger legal issues are resolved conclusively. The Forbes article reinforces this analysis, noting, “Stuck in the middle are industry executives who simply want one national standard for both fuel economy and emissions.”

According to the Grey Lady, these twelve states and California comprise about one-third of the US auto market:

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.

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.

The bottom line is that the Trump initiative to create weaker fuel efficiency standards would create a worst-case scenario for automakers, as the NYT explains:

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.

Unusually, when faced with the possibility of being forced to comply with two sets of standards and an effective split into two markets, at least some automakers themselves oppose the proposed Trump regulatory rollback:

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.”

Whether fruitful or not, unfortunately, I foresee a long, costly legal battle, with plenty of accompanying political activity, before this issue is resolved– in a way that may fracture the fuel efficiency standards used into two parts, over the opposition of automakers. And need I mention, the federal government will continue to ignore climate change, leaving it to states and private actors to act otherwise.

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28 comments

  1. Jim Haygood

    ‘standards approved by Congress in 2012 require automakers’ fleets to average 36 miles per gallon by 2025, or about 10 miles per gallon better than their current new models’

    Boomer technophobe Eric Peters explains how CAFE standards are changing vehicles … like it or not:

    Downsizing engines is one way for car companies to reduce fuel consumption. Enter the 2019 Chevy Silverado 1500 – the leading edge of this strange, increasingly desperate dynamic.

    It will be the first full-size truck to come standard with a four-cylinder engine – comparable in size (2.7 liters) to engines that power mid-sized cars that weigh 1,000- pounds less and which aren’t tasked with towing thousands of pounds.

    The little engine replaces the 4.3 liter V6 that is the current Silverado’s standard engine. The 2.7 liter engine is turbocharged, intercooled and double overhead cammed, with twice as many valves in its head. It makes 310 hp vs. 285 hp for the force-retired V6, but it takes 22 pounds of boost (and premium unleaded) to do it. That is a lot of pressure on an engine. Maybe it will hold up. Maybe not.

    A replacement turbo will cost you $800-$1,500 in parts and labor. How much gas did you save, again?

    Turbocharging, hybrids — various engineering tricks can turn a tiny motor into a monster when needed. But they all add initial cost, increase part count, add maintenance cost, and reduce reliability. A small engine obliged to operate at high speed and high combustion pressure will not last as long as a big engine that loafs by comparison.

    They’ll have to pry my low-tech, vintage vehicles out of my cold dead heads. We are the don’t-wanters.

    1. Carolinian

      We’ll bring a crowbar.

      It would be interesting to know how many people who drive these huge pickups that barely fit between lane markers actually need such a vehicle. We know that Detroit needs them for the high profit margin. It’s not just Musk who is into “upselling.’

      There was a discussion here awhile back about compact pickups that once were popular and are still popular if you can find a used one. However auto makers and their almost Freudian advertising departments have done everything in their power to discourage such un-manly rides in a category where size does matter.

      And BTW it’s not just about AGW. These 18 mpg guzzlers increase our pollution and ozone problems not to mention the sheer road hoggery of it all.

      1. rd

        Many of them are needed to defend the occupants against other people driving similar big vehicles driven by people texting on their cell phones.

        BTW – I have a hybrid sedan. 13 gallons gives me almost 700 miles range during decent weather. I get less than that in winter with winter tires and snow, but still averages over 30 mpg in mixed city/highway driving in those conditions. Usually a quiet ride as well.

        Electric motors provide a lot of torque, so should be good in pick-ups and SUVs that are towing or hauling heavy loads with much better mileage than current gas motors.

      2. FluffytheObeseCat

        “it’s not just about AGW. These 18 mpg guzzlers increase our pollution and ozone problems not to mention the sheer road hoggery of it all.”

        Particulate and NOx air pollution are significant problems in California. And most urban centers in the rest of the west, almost all of which are in valleys that experience multi-day inversions every winter. The cities of the desert southwest have mostly piggy-backed on California in this matter. They either follow their lead, albeit with weaker local smog regulations, or pretend to be ‘mandate free’ cowboy types, but benefit from a healthy percentage of CA-compliant cars on their roads.

        Tail pipe pollution causes a measurable amount of death and illness every year in this country. It’s not the CO2 that is injuring people directly, but strict CAFE standards – geared towards increasing MPG – also reduce particulate and NOx pollution for each miles traveled.

        Part of the reason righties always rage on about CO2 and “climate extremists” when discussing fuel and tailpipe emissions controls is that they have no good arguments about the deaths and injury that are known to be caused by the rest of the crap spewed out by ICE engines.

    2. L

      To a certain extent this path has already been taken though not for “efficiency”. The original H1 Hummer was a carbon copy of the military vehicle minus the electronics. By the time the H3 rolled off the line it was a box on top of an existing SUV frame that had sacrificed most of the actual carrying capacity, towing capacity, lift, power, and indeed anything else that makes a vehicle like that either sporty or have any meaningful utility.

      In that case it was about cutting costs to manufacture and making them more road-legal (narrower body) and had nothing to improve the customer experience or cut customer costs.

    3. drumlin woodchuckles

      I read the Eric Peters article linked-to in the comment above, and I don’t see what indicates that Mr. Peters is a technophobe. What am I missing in this article that would show me that Mr. Peters does not like technology?

  2. L

    This is an informative article as always but I want to note one absence as emphasized by this point:

    As litigation proceeds, however, the NYT reports that the standards conflict could hurt automakers, who will likely be forced to bifurcate their product offerings, to comply on the one hand with the higher California standards (which twelve other states would also follow), compared to whatever revised standards the Trump administration ultimately enacts– if it succeeds in doing so and until the larger legal issues are resolved conclusively.

    As big as California and the other states are they are also only a small proportion of the car buying world. For car companies like Ford to go all in on backing these lower standards means that they are also resigning themselves to either selling only to the US market or maintaining a separate set of production and engineering for US and non-US lines. While that makes some sense in the short term given the high margins on trucks and SUVs it is yet another example of short term thinking destroying otherwise productive companies. Ford is a particularly ironic example since their last few years were among their best ever precisely because of non-US sales of cars. Gassy SUVs do not sell well in Asia or Europe.

    Admittedly this is a bit of a pet peeve of mine. When I travel out of the US and talk to people who buy US products, particularly cars, their rationale is always the exact opposite of the claims made in the US. On my last trip I heard glowing stories of the safety features in Ford’s smaller cars which make them popular in Asia precisely because the local cars have such low standards that noone trusts them while Ford (wisely) builds all cars to the same high US standards and thus profits.

    I have come to expect such behavior from executives and Wall Street but I am surprised that the articles did not note the international costs of having lower standards. Even if the execs don’t care about the environment they should care about the bottom line.

  3. heresy101

    Change in the automotive world with EVs is happening so fast that this debate/battle with the EPA is almost meaningless even if the Trump gets his way. There will be a few old geezers driving “low-tech, vintage vehicles” but most new vehicles will be hybrid or full electric and meet or beat Obama’s lame standards!

    The CA CPUC has mandated that utilities provide $738M for fast chargers and chargers at multi-family homes.

    BMW will be offering wireless electric charging on it’s 530e models this summer.

    The car companies are being driven by the Chinese market where “Marchionne (Fiat/Chrysler) also revealed that all new engine families for the 2019 Ram will offer hybrid powertrains, including a mild hybrid standard on every version powered by the V-6 engine and optional on V-8s. The mild-hybrid system will include FCA’s first use in North America of a 48-volt electrical system.” “By 2022, Fiat Chrysler will offer three new all-electric Jeeps and six plug-in hybrids.”

    Range of EVs is going up and prices down.

    The future forecasts:
    “The International Energy Agency, an advisory council to energy-consuming countries, released a new report forecasting that by 2030, the world will have 125 million electric cars on the road. That would amount to 10 to 12 percent of the world’s cars running on electricity in a little over a decade.”

    “Electric car sales are poised to increase tenfold by 2025 and reach 55 percent of car sales worldwide by 2040, according to the latest report on electric cars from Bloomberg New Energy Finance.Sales of pure electric cars are set to grow from a record of 1.1 million worldwide in 2017 to 11 million in 2025 and 30 million in 2030, according to the study. Those sales will bite into sales of gasoline cars in the mid-2020s, Bloomberg says. By 2040, 55 percent of new-car sales worldwide will be electric and 33 percent of the cars on the road will be powered by batteries.”

    CAFE fuel standards are so 20th Century!!!!

  4. MikeW_CA

    Actually, they wouldn’t “be forced to bifurcate their product offerings”, they could simply choose to comply with the higher California standards.

    1. TimH

      The problem actually is that the bifurcation won’t work for long anyway, because the imports will meet CA across the board, in every state.

      1. drumlin woodchuckles

        Would the Japanese and Korean transplant car plants in the US also meet the California standards uniformly across the US if the California and Trumpamerica standards bifurcated?

    2. The Rev Kev

      If the car manufacturers did an end run and made cars that all met the higher California standards, would that make them more competitive against imported cars at all? If it went the other way, would that mean that you would have cars manufactured that could only be sold in the US because of the lower standards? As far as I can see, if you have two standards in one country, then you don’t really have a standard at all.

    3. animalogic

      Yes, I thought that…but then I wondered whether consumers, given a choice between the efficient Californian standard & the old “grunt” engines wouldn’t go for old fashioned “grunt” ?
      The market knows best !
      (But, as an encouragement to buy at the higher standard, how about (the sheer HORROR) a substantial fuel tax ?( Oh, to dream….)

  5. albert

    According to nada.org, the ‘California + 16’ accounted for 43% of US new car registrations in 2016. It’s a significant part of the market.

    @TimH,
    Good point. So will Trump slap tariffs on those imports?

    . .. . .. — ….

  6. drumlin woodchuckles

    Trump does not care about the carmakers except symbolically. What Trump cares about are the merchants of coal, gas and oil. So if the carmaker executives all unanimously begged and pleaded for the Trashy Trump Administration to leave the Obama standards in place nationwide, Prez Trashy would still seek to roll them back . . . in order to get more anti-efficient cars burning more oil to get more money going to the oil bussiness.

    How do “Inland Empire” and “Farm Country” Californians feel about the Trump fuel-efficiency rollback quest? My automatic assumption is that those particular Californians would all support Trump on this issue. Would I be wrong?

    1. drumlin woodchuckles

      . . . ( oh, and . . . . oilfield Californians too. I should think that the oilfield Californians would all support the Trumpian anti-efficiency standards. Would I be wrong?)

    2. jrs

      since a good part of the Inland Empire seems to be commuting to L.A. proper judging from traffic, I’m not sure they really want to spend their entire paychecks on gas for the commute, it really argues against huge vehicles.

      1. drumlin woodchuckles

        Ahh . . . so the Inland Empire is really the vast exurban Bedroom Community zone out beyond Los Angeles? I have learned something through the clever expedient of saying something wrong enough to get corrected.

        So . . . if the Imperial Inlanders have to commute in their millions to jobs or other things in/around Los Angeles proper . . . . then they will feel and accept the brute force cost-of-gas incentive to try making their transport more fuel efficient. One wonders if commuter railroads could snake from Los Angeles out into the Inland Empire zone like ragged spokes of a wheel in such a way that a huge percent of the Imperial Inlanders could take such commuter trains reliably into LA and then back out again, at whatever times they need to or please to. One wonders if the money being spent on that High Speed Railroad from somewhere to somewhere else might be better spent on a bunch of commuter spokes all leading to and from the hub of Los Angeles. And if any money is left over, do something like that for San Diego and its own little Inland Exurb. That would pre-empt and prevent the burning of more gas than a bunch of “more efficient” cars would do. The most non-emitting car is the car that isn’t driven at all. Which is surely more moderate than saying ” The only good car is a dead car”.

      2. JBird

        What about people working in the Bay Area and commuting to Sacramento? Talk about a commute! I use to whine about some two hours long round trip, but we’re talking three hours, or more, one way.

        The traffic was worse during the Dot.Com boom of around 2000 as that boom was more inclusive than this “strong” economy. The more boomish this time around is said to be, the less I see of it.

        1. drumlin woodchuckles

          Do the Greater Bay Area people have effective deep, broad and far-reaching mass transit? I’ve heard of “BART” but how good is it? Good enough? For enough Greater Bay Areans?

          If not, do the Greater Bayans have enough organizable power to force the issue and force the mass transit they would want into being?

          1. JBird

            We have mass transit, it’s a patchwork system that often has too few hours and too few runs. On weekends and holidays we’re talking once a hour, or less, in areas. Still it’s there and useable and one does have the ability to get around the Bay Area. The big problem for someone like me is that we don’t have enough BART lines, or cars, and some areas are completely uncovered. If I wanted to commute to San Francisco it bus only and then I have to connect to another system. The Golden Gate Transit and San Francisco Muni are good at lining up connections with the Muni usually having a fair number of buses through the years. But if I want to go south or across the Bay without BART…you can do it. Fortunately, it’s been so long since I enjoyed mass transit south of the city that I cannot give good information. But really it would be fantastic to have a BART line up into the North Bay and then have that connected to a more extensive East and South Bay BART system. That good old NIMBYism back in the 70s killed that and left this truncated system.

            And that’s a big reason that we don’t have a good system covering the San Francisco Bay Area instead of a patchwork of decent, bad, and nonexistent transit, and enough housing as well, NIMBYism which blocks almost all attempts to even fix either, and just forget about improving or expanding. We don’t want to pay taxes to help the proles find it easier to get around or stay off the street. The same fools also complain about traffic and the homeless.

            Connections anyone?

            1. drumlin woodchuckles

              I wonder if so many people have been so abused in the past by forced building of things which benefited only the builders and backers and detrimented everyone else that a sullen first resort to NIMBYism is the only self-defense people feel they have against pro-upper-class construction aggression. I don’t know that, I merely wonder.

              Some of the line-additions you describe sound like they would not happen within Silicon Frisco itself but in more far-flung areas. In which case, would Pelosi’s Base attempt to obstruct them even though no NIMBY would be involved . . . because Pelosi’s Base want to keep the lowly proles out of their beautiful Silicon Frisco?

              We recently here in Southeast Michigan had a ballot initiative to Yes-Or-No support a unified mass-transit system for the 4 SE Michigan counties of Oakland, McComb, Washtenaw and Wayne. The counties of Washtenaw and Wayne voted for it, Oakland very slightly against, and McComb very heavily against. So the added 4-County totals came out against.

              The Backers and Seekers of 4-County mass transit are figuring out how to get a 4-County-Askit on a future ballot. I myself would suggest giving up on Oakland and McComb and getting a 2-County Askit ( Washtenaw and Wayne) on the ballot in those two counties. If those 2 counties alone voted net-yes for a 2-county system, then we could begin raising money to build it with. If it really did lead to economic development and social betterment as the proponents hope, then decent growth and opportunity and social goodness could flow from Detroit to the West and from the West back to Detroit. If it turned out to redirect growth and survival away from Oakland amd McComb enough to where Oakland and McComb began to suffer and wither on the vine for dwindling bussiness and opportunities, it would serve Oakland and McComb well and truly right for voting to keep “those people from Detroit” out of their two beautiful counties. If it played out that way and the McCombers and Oaklanders became so desperate that they begged to join, we could then invite them to build their own connectors to our own system at their own expense and with zero help from us.

  7. Synoia

    If you tried to drive or park an F150 or F250 in London, you’d have an interesting problem. The Petrol is twice the price of US petrol, and there used to be extra road tax on vehicles with a engine over 2 liters.

    Is there a market for the “full size” pickups outside the US? In Europe vans are the trade vehicles, because they keep contents dry, and are lockable.

  8. Ook

    In 2018, with the TCJA law, 168(k)(6)(A) would allow a 100% write-off of an SUV/Truck purchased new or used (and used for “business”). The government continues its active role in practically paying people to buy these things.

  9. Barry

    Taleb’s examination of intolerant minorities seems relevant here.

    Complying with CA standards is likely more economical than trying to develop different car lines for different states.

    1. drumlin woodchuckles

      If what Mr. Taleb says is correct over and over again in the real world, then it may offer some hope for a Real Democrat takeover of the Democratic Party. All the Real Democrat voters and supporters have to do is rigidly intolerate and reject the Fake Democrat nominee over and over and over again. . . . in every single election. If none of the Real-Democrat-voting citizens ever vote for a Fake Democrat nominee, but some of the Fake-Democrat-voting citizens will vote for a Real Democrat nominee, the Real Democrat supporters may begin to recruit enough Fake Democrat supporters into voting for Real Democrat nominees that Real Democrats will start winning more elections through recruitment of less-than-fully-committed Fake Democrat supporters. The Fake Democrat leaders and operatives may be attrited and starved out of power within the Democratic Party.

  10. JBird

    As a Californian, let me say that the state had anti-smog laws including special gasoline and engines not for any global warming, but for the difficulty of breathing in the 60s, 70s, and even 80s along the coastal areas, the Bay Area included. Even the natives’ camp fires were problems in Los Angeles when the Spanish arrived as all the smoke became the smog trapped against the hills and the inversion overhead.

    So now it all about climate change, but really breathing is under rated by many.

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