Trump begins process to roll back fuel economy goals, automakers rejoice

In a meeting with automakers in Detroit on Wednesday, President Trump, along with Environmental Protection Agency (EPA) Administrator Scott Pruitt and Transportation Secretary Elaine Chao, announced that the EPA would reopen a review process involving fuel economy standards that must be met by automakers.

An Obama-appointed EPA announced in January that it would end the review process early and lock in fuel economy rules that required automakers to hit an overall efficiency rating above 50 miles per gallon by 2025. The rule-making process had been underway for years, and the fuel economy numbers had been negotiated with the auto industry in 2012. Still, the EPA wasn't set to review and finalize the 2025 numbers until 2018. When the agency ended the rule-making process in January, automakers complained that the EPA was trying to subvert their influence and prevent the incoming Trump administration from relaxing the proposed rules.

Today’s announcement doesn’t yet mean that automakers won’t have to hit new fuel economy standards, but it means that the EPA will re-open the review process and would likely adopt rules more favorable to automakers down the line. The review process is expected to take more than a year.

In a speech to autoworkers in Detroit this afternoon, Trump said that the 2018 review of the fuel economy standards should have stood. “If the standards threatened auto jobs, then common sense changes could’ve and should’ve been made,” he said, announcing that he would "restore the originally scheduled midterm review."

When the EPA finalized the rules in January, it had concluded that more aggressive fuel economy standards would save consumers hundreds or thousands of dollars a year over the life of the vehicle in fuel costs and reduce greenhouse gas emissions considerably. The EPA reported that meeting the goals would cost automakers $200 billion over 13 years but argued that recent technology advancements could help manufacturers meet the goals more cost-effectively than previous EPA estimates suggested.

The Auto Alliance, which represents BMW Group, Fiat Chrysler, Ford, GM, Volvo, Volkswagen, Toyota, and others, has been vocal about resisting the rules. In February, that group wrote to new EPA Administrator Scott Pruitt to argue that since the fuel economy rules never appeared in the Federal Register before the transfer of power, they weren’t technically finalized. The Auto Alliance also argued that there is precedent for the EPA to reconsider decisions made very recently by a previous administration.

In a statement today, the Auto Alliance wrote, “We applaud the Administration’s decision to reinstate the data-driven review of the 2022-2025 standards.”

“The Trump Administration has created an opportunity for decision-makers to reach a thoughtful and coordinated outcome predicated on the best and most current data,” the Alliance continued. “After all, these decisions impact the more than 7 million Americans dependent on autos for employment, as well as the driving public seeking affordable transportation.”

Environmental advocates, in turn, lambasted the decision. Carol Lee Rawn, transportation director at sustainability advocacy group Ceres, wrote that reopening the fuel efficiency standards to review would “harm auto parts suppliers, who employ two and a half times more Americans than auto companies, and who, relying on current standards, have invested heavily in fuel savings technologies.”

University of Tennessee engineering professor David Greene also wrote that if the standards are rolled back, low- and middle-income families would be hurt the most. “Families in the lowest income groups spend more on fuel every year than car payments, and for them, savings at the pump make a real difference.” Greene argues that low- and middle-income families tend to buy used cars, which will gradually get better fuel economy but may be insulated somewhat from costs passed on to the first owner from the automakers. “Improving fuel economy is not just good for our environment, it saves money," Greene wrote. "That’s why higher fuel economy standards have been overwhelmingly supported by Republicans, Democrats and Independents for decades,” Greene wrote.

For now, however, automakers still have to adhere to California Air Resources Board (CARB) emissions and fuel economy standards. California has long been the only state in the nation permitted to set stricter air-quality related rules than those promulgated by the EPA due to a waiver in the Clean Air Act. Interestingly, a White House official speaking to Axios confirmed that “the EPA isn't, for now, seeking to end the Clean Air Act waiver that gives California—and by extension over a dozen other states—leeway to maintain the tough Obama-era rules.”

That doesn’t mean it couldn’t happen soon, however. California has retained former US Attorney General Eric Holder to fight any potential encroachments on CARB’s authority to set air quality rules.