WASHINGTON – Top Trump administration officials are engaged in a heated debate over how to undo federal fuel-efficiency targets for cars and light trucks, as manufacturers voice concern that a major rollback of an Obama-era rule could go too far and fracture the nation's auto market.
The internal negotiations over relaxing carbon-emission limits for cars and SUVs slated to be sold in model years 2022-2025 underscore the challenge officials face in trying to fulfill President Donald Trump's 2017 promise to ease the regulatory burden on Detroit.
Some of the same companies that had pressed for action now worry that they will be forced to comply with two standards: the stricter specifications that California imposes on its massive auto market and a separate requirement for the rest of the country.
Within the next few days, several administration officials say, the Environmental Protection Agency will announce that it has concluded automakers cannot meet the fuel-efficiency guidelines set by the previous administration. Under those guidelines, cars and light trucks would have to average more than 50 miles per gallon (mpg) overall by 2025.
But the more difficult issue is what the replacement will be – a point of intense wrangling among EPA, the National Highway Traffic Safety Administration and the White House. The talks have been complicated by the fact that California sets the pace for nearly 35 percent of the nation's auto market, with tailpipe requirements followed by a dozen states and the District.
California has threatened to press ahead on its own if the administration weakens the federal targets significantly, prompting some automakers to lobby for the current standards to mainly be kept. The current federal requirement for the 2018 model year is 38.3 mpg. By 2025, it would rise to roughly 51 mpg.
On Tuesday, Ford Executive Chairman Bill Ford and Chief Executive Jim Hackett wrote a Medium post calling for "one set of standards nationally, along with additional flexibility" that would allow Ford to sell lower-emissions vehicles that U.S. consumers could afford.
"We support increasing clean-car standards through 2025 and are not asking for a rollback," they wrote.
Company officials plan to meet with EPA Administrator Scott Pruitt by early next week to discuss the potential new standards. General Motors Chief Executive Mary Barra met with Pruitt and Transportation Secretary Elaine Chao earlier this month.
Margo Oge, a former senior EPA official who helped to negotiate the Obama administration's guidelines with California and the auto industry, said that multiple companies have privately shared the concerns that Ford just raised publicly. Rather than change the 2025 thresholds, the automakers want more options for meeting them given the significant sums manufacturers have already invested.
"I don't think they were expecting that the Trump administration would roll back the standards" to the degree that now seems likely, Oge said. "Sometimes you dance with the devil, then you don't really like the dance."
Officials at the Alliance of Automobile Manufacturers, whose members produce 70 percent of the cars and light trucks sold in the United States, say low gasoline prices in recent years have created a disconnect between what sort of vehicles federal policymakers expect to be sold and what Americans are actually buying. Alliance spokeswoman Gloria Berquist noted that the government had previously predicted future sales would be two-thirds cars and one-third light trucks, while the current ratio is the reverse.
"We're caught between these standards and the marketplace, and they're not aligning," Berquist said.
Within the administration, NHTSA Deputy Director Heidi King has repeatedly pressed for a significant reduction in future mileage levels. The agency has offered a range of numbers in negotiations, according to individuals who spoke on the condition of anonymity because no final decision has been reached, with the lowest proposal being 34.5 mpg by 2025.
On Wednesday, the agency unveiled a proposed rule that would freeze the civil penalties automakers must pay if their fleets fail to meet federal fuel-efficiency requirements. The fine had been slated to rise from $5.50 to $14 for every tenth of a mile per gallon by which companies missed the standards for model year 2019 vehicles.
NHTSA spokeswoman Karen Aldana said officials are still working on a fuel-efficiency-standards package, which she said she cannot discuss until it is "final and publicly released."
Bill Wehrum, assistant administrator for EPA's Office of Air and Radiation, and White House energy and environment adviser Michael Catanzaro have continued to talk with California officials about the prospect of a compromise – but have yet to show them any specific proposal or the supporting data and analysis, according to the California Air Resources Board. Wehrum met with CARB Chair Mary Nichols on Tuesday.
"We have not seen the document in question, and California had no input into its content," board spokesman Stanley Young said in an email. "We feel strongly that weakening the program will waste fuel, increase emissions and cost consumers more money. It's not in the interest of the public or the industry."
California Democratic Attorney General Xavier Becerra said the state has no intention of backing down on its plans to increase fuel-efficiency goals over time: "We're prepared to take whatever action, legal or otherwise, that we must to protect our economy, our environment and the public health of people of California."
Beyond the health and climate-related benefits of more stringent emissions standards, he noted, many businesses in California and elsewhere already have made major investments in preparing to build vehicles that meet the guidelines set under the Obama administration.
"What we do, we do because we think it's the right thing," Becerra said. "We're not interested in participating in a race to the bottom."
Pruitt has taken a harder line against California's autonomy in recent months. Asked by Sen. Kamala Harris, D-Calif., in a hearing in January whether he would promise to continue to grant the state's waiver under the federal Clean Air Act, which allows it to put stricter standards in place, Pruitt declined, vowing only to "review" the issue.
In the weeks since, he has said in media interviews that California should not be able to dictate standards for the rest of the nation and that the state is "not the arbiter of these issues."