Trump’s Path to Weaker Fuel Efficiency Rules May Lead to a Dead End

Source: By Coral Davenport, New York Times • Posted: Monday, February 17, 2020

WASHINGTON — Last April, the head of the Environmental Protection Agency, Andrew Wheeler, proclaimed at an auto show here that he would soon roll back President Barack Obama’s stringent fuel efficiency standards.

That, the administration contends, would unleash the muscle of the American auto industry. It would also virtually wipe away the government’s biggest effort to combat climate change.

Nearly a year later, the rollback is nowhere near complete and may not be ready until this summer — if ever. In January, administration staff members appointed by President Trump sent a draft of the scaled-back fuel economy standards to the White House, but six people familiar with the documents described them as “Swiss cheese,” sprinkled with glaring numerical and spelling errors (such as “Massachusettes”), with 111 sections marked “text forthcoming.”

The cost-benefit analysis showed that consumers would lose more money than they would gain. And, because the new auto pollution rule lacks the detailed technical analyses required by law, the regulations would be unlikely to withstand court challenges.

“They look like they’re headed to a legal train wreck here,” said Richard Lazarus, a professor of environmental law at Harvard University.

Michael Abboud, a spokesman for the E.P.A., said the length of time the rule was taking reflected the care the administration was using. “The Trump administration has reviewed hundreds of thousands of comments, met with numerous stakeholders, and provided ample amount of time for all involved to voice their opinion on this serious matter,” he said.

The delay has angered Mr. Trump, who is eager to campaign on the rollback as a signature economic achievement — one that he personally promised to autoworkers in the critical battleground state of Michigan, which he won in 2016 by 10,704 votes.

By lifting the Obama administration’s requirements that carmakers build and sell millions of hybrid and electric vehicles, Mr. Trump hoped to claim credit for lowering the cost of sport-utility vehicles, pickup trucks and large sedans while boosting economic growth.

But the problem is mathematics. Instead of boosting the economy, the analyses show that the rule’s economic costs would outweigh its benefits, according to the people who have viewed the documents. For months, Trump administration aides crunching the numbers of the new rule have come up with the same unwelcome result: while lower sticker prices on less fuel-efficient cars would save consumers money upfront, fuel costs over time would overwhelm the initial savings.

And, by allowing more pollution into the air, the rule would measurably contribute to more premature deaths from lung and respiratory illnesses, piling on more societal and economic costs. Massaging the numbers or the models used to produce them would only open the rule to legal attack when it is inevitably challenged in court.

“They are trying to make the data dance the way this administration wants it to dance,” said John M. DeCicco, an expert on transportation technology and emissions policy at the University of Michigan. But, he added, “the data and the models don’t lie.”

Since his first days in office, Mr. Trump has reveled in rolling back regulations on industry; to date, his administration has erased or weakened about 100 environmental protections on climate change, clean air, clean water, and endangered species.

But the largest federal climate change regulation remains in place — Mr. Obama’s 2012 fuel economy rules to cut vehicle tailpipe emissions. The standards, which require automakers to sell vehicles that average about 54 miles per gallon by 2025, are among the most ambitious fuel economy standards in the world.

Once fully implemented, they would reduce U.S. carbon dioxide emissions by about six billion tons over the lifetime of the vehicles affected by the regulations. That would be about the same amount of carbon dioxide the United States emits in a year. Oil consumption would be reduced by about 12 billion barrels over the same period.

To meet the standards, automakers will have to invest heavily in building and marketing highly fuel-efficient hybrid and electric cars.

From the beginning of his administration, Mr. Trump saw the fuel economy rules as an opportunity. In March 2017, he told autoworkers in Ypsilanti, Mich., “The assault on the American auto industry is over.”

Under his new rule, automakers would have to build cars that achieve a fleetwide average of about 40 miles a gallon by 2026. To meet Mr. Obama’s 54-miles-per-gallon standard, automakers have been forced to increase the fuel economy of their fleets by about 5 percent a year. Under the Trump standard, that would drop to about 1.5 percent a year, lower than the 2-percent annual increase that auto companies roughly achieve absent any regulation, according to industry experts.

A draft of the rule sent to the White House in January, which was obtained by Senator Thomas R. Carper, a Delaware Democrat, concluded that the Trump fuel economy target would lower the prices of new cars and light trucks by about $1,000. But it would increase the amount consumers would pay for gasoline by about $1,400, according to a letter sent to the White House by Senator Carper, the ranking Democrat on the Senate Environment Committee.

A senior administration official, speaking on condition of anonymity because the rule is not yet complete, described that analysis as “insufficient” and “incomplete.”

But outside experts say they agree that the rule will cost consumers money. An analysis by the Consumer Reports concluded that, overall, increasing fuel economy rates 1.5 percent annually compared to 5 percent annually would cost American consumers a total of $300 billion in net losses, chiefly as a result of higher gasoline expenditures. An analysis by the nonpartisan research firm Rhodium Group concluded that a rule that would increase efficiency by 1.5 percent a year would raise oil consumption by 1.8 billion barrels by 2035 relative to Obama-era standards, and cost drivers an additional $231 billion through 2035.

“No matter how you look at these numbers, this still costs consumers money,” said Shannon Baker-Branstetter, a policy analyst with Consumers Reports.

Beyond the politics of those numbers is the legal problem.

“If the costs to the economy exceed the benefits, and there are no environmental benefits, the courts would classically look at this as an arbitrary and capricious policy,” said Mr. Lazarus, who specializes in environmental law at Harvard. “That makes it very vulnerable to being overturned.”

More basic issues holding up the regulations point to another problem: the skeleton crew of inexperienced political appointees who are heading the drafting process may not be up to a job that would usually be handled by career federal workers with decades of expertise.

The draft rule lacks two technical documents that experts say would be essential to defending it in court. By law, any major new policy affecting the environment requires an environmental-impact statement, but no such document has been completed or sent to the White House, according to people who have viewed the draft.

Those people say the draft rule also lacks what is known as a regulatory impact analysis, which is supposed to describe at length the legal, scientific, health and economic impacts of a major new rule.

It typically takes many months to complete — the analysis accompanying the original Obama rule ran to 1,217 pages and included supporting analyses by the National Academies of Science. But as of last month, that document was in bare-bones draft form at best, according to a person familiar with the matter.

“That’s the single most important document for the legal status of the rule,” said Jeff Alson, an engineer who spent more than 20 years at the E.P.A. working on vehicle emissions programs before retiring in 2018. “That’s where all the key numbers are explained and generated and supported.”

As Mr. Trump’s appointees began the work of loosening the Obama rules, he said he and his team of vehicle emissions experts were excluded from the process.

“I can tell you with certainty and personal experience that E.P.A. career staff were completely locked out doing any technical work on these documents,” Mr. Alson said.

In fact, people familiar with the writing of the rules said the regulatory impact analysis had been sent to the Transportation Department, where a small group with limited experience in mathematical modeling of vehicle emissions was still working to complete it.

Although Mr. Trump is said to be irritated by the delay, he is reluctant to rebuke the secretary of transportation, Elaine Chao, because her husband, Mitch McConnell, the Senate majority leader, was instrumental in ensuring the president’s impeachment acquittal, according to two people familiar with the matter.

The pressure is rising. The federal government has until March 30 to publish the fuel economy standard for vehicles that will be built and sold in 2022. If the deadline is missed, either the Obama standards remain in place another year, or the Trump administration must press to extend the deadline, squeezing the automakers’ production schedule as they await a final word.

“The auto suppliers — aluminum and steel manufacturers, the guys who make transmissions — they’re all waiting for a clear signal from the government on what the automakers are going to do,” said Chris Miller, executive director of the Advanced Engines Systems Institute, which represents manufacturers of vehicle emissions equipment.

“If there isn’t soon a clear fuel economy standard for model year 2022, we won’t know if we’ll be able to sell in the U.S. market,” Mr. Miller said. “Our companies and suppliers have already started shifting to focus on the European and Asian markets.”