Automakers Press NHTSA To Not Go Beyond EPA Vehicle GHG Plan

Source: By Doug Obey, InsideEPA • Posted: Thursday, October 14, 2021

Automakers are pressing the National Highway Traffic Safety Administration (NHTSA) to ensure its updated light-duty vehicle fuel economy standards do not require improvements beyond EPA’s proposed greenhouse gas limits, even as environmental groups are urging both agencies to impose rules stricter than their preliminary plans.

The stances surfaced at an Oct. 13 public hearing on NHTSA’s fuel economy plan, offering a preview of upcoming formal comments to the agency.

The pitches underscore ongoing questions about how closely the agencies will mesh their two rulemakings, which are seen as only a first step toward Biden administration efforts to push for steep GHG reductions over roughly the next decade.

“Final NHTSA [corporate average fuel economy (CAFE)] and EPA greenhouse gas standards should be aligned in stringency such that the CAFE program does not drive additional improvements beyond those required under the greenhouse gas program, nor make EPA incentives for higher electric vehicle [EV] production moot,” argues Oct. 13 testimony from Michael Hartrick, senior energy and environment director of the Alliance for Automotive Innovation.

He also argued that NHTSA should pursue a “well balanced” program that does not impose too many fuel-saving requirements from internal combustion engine vehicles.

“[T]he level of internal combustion engine improvements driven by NHTSA CAFE standards should reflect the shift in policy and investment priorities to electric vehicles,” and NHTSA should “account for the differences” in treatment of EVs under the EPA and NHTSA programs.

The testimony responds to NHTSA’s Aug. 10 proposal that would boost average fuel economy improvement by 8 percent each year for model years 2024-2026.

The agency unveiled its plan just days after EPA on Aug. 5 floated proposed tighter vehicle GHG rules for MY23-26, with EPA claiming its proposal would generate a top-line improvement of just below 5 percent annually in vehicles over that timeframe.

The two plans are the latest iteration of the government’s efforts to coordinate the agencies’ vehicle standards, despite differing statutory requirements under the Clean Air Act and Energy Policy Conservation Act (EPCA). Questions also have been percolating about how closely the two agencies can coordinate their efforts over the longer term, with the Biden administration already pledging another round of rules by both agencies for post-MY26 requirements.

One immediate difference in the EPA and NHTSA authorities is less prescriptive lead-time requirements under the Clean Air Act that make it possible for EPA to propose stricter standards effective one model year earlier than NHTSA’s plan.

NHTSA under EPCA is also barred from considering “dedicated alternative vehicles,” such as battery EVs, when it determines “maximum feasible” fuel economy standards. NHTSA, however, does effectively encourage EVs through a petroleum “equivalency factor” for the vehicles. And it also must consider the effect of “other motor vehicle standards of the Government” on vehicle fuel economy when setting its own standards, opening the door to at least a partial accounting of EPA’s EV incentives or states’ zero-emission vehicle mandates.

‘More Challenging’ Role

In this vein, the Alliance argues that even though NHTSA is barred from explicitly considering EVs in its standard setting, “its program design should enable and encourage their adoption.”

The group also references and praises EPA’s proposed inclusion of credit multipliers for EVs — not included in NHTSA’s proposal but factored into EPA’s preferred option — and EPA’s regulatory assumption that EVs have zero upstream emissions.

“NHTSA’s role is more challenging,” and it is therefore “critical that NHTSA evaluate what changes in product investment strategies will mean for the overall capabilities of the fleet to continue improvements in internal combustion engines,” the automaker trade group says.

The testimony offers somewhat of a contrast with separate Oct. 13 remarks from Motor & Equipment Manufacturers Association (MEMA) representative Laurie Holmes, who appeared to embrace additional required improvement for internal combustion engine vehicles under the NHTSA rule. “While MEMA supports an increase in a wide range of electrification technologies, MEMA also strongly supports encouraging further advances in innovation to internal combustion engine technologies,” Holmes said.

Meanwhile, environmental and public health groups are underscoring calls for both agencies to strengthen their proposals, claiming automakers already have ample flexibility to comply with both plans.

Several such groups pressed NHTSA to move beyond its preferred option — dubbed alternative 2 — in favor of an alternative 3 that would require a 10 percent annual gain in fuel economy.

“Alternative 3 should be the minimum starting place for the final rule and for the next round of standards,” argued American Lung Association official Paul Billings at the public hearing.

In addition, Billings pressed NHTSA “not to lock in schemes or credits that would lead to fuel efficiency advancements on paper that don’t result in real-world efficiency gains.”

Natural Resources Defense Council vehicle expert Luke Tonachel similarly called for NHTSA to finalize a rule at least as stringent as alternative 3. He cited NHTSA’s own analysis as estimating greater benefits of the tougher approach, compared with the default option. They include up to $32 billion in additional net benefits through 2050; additional gasoline savings of 61 billion gallons by then; and 36 million metric tons of additional GHG cuts in 2040 alone.

NHTSA’s proposal says the agency “tentatively concludes” alternative 3 “may be too costly to be economically practicable” in the timeframe for its rulemaking, though NHTSA acknowledges it could result in greater fuel savings.

Additional commentary at the hearing included testimony from the conservative Competitive Enterprise Institute (CEI), which filed a court challenge over the Trump administration’s prior rollback of vehicle standards because it believes that rollback did not go far enough.

That suit — as well as litigation from multiple other groups that argued the Trump standards were too lax — have been paused as Biden officials reconsider the standards.

CEI representatives Sam Kazman and Devin Watkins at the hearing reprised the group’s arguments that NHTSA is overstating the danger of particulate matter pollution in its regulatory analysis of the fuel economy plan, and that it is giving inadequate attention to the safety implications of its rules.

Trump officials initially offered a primary justification for their policy by arguing the rollback would boost vehicle safety, though such claims sparked a barrage of criticism from outside experts. — Doug Obey (