Last week, industry groups representing twelve major producers of cars and light trucks and global automakers submitted letters to the Environmental Protection Agency (EPA) asking to revisit a determination on the finality of vehicle emissions standards for 2022-25. Both proponents and skeptics of the standards may see this as a harbinger of a regulatory sea-change, and not a good one from a progressive point of view, but that is not what the largely process-oriented letters actually request.
While it is likely that the companies are indeed making their ask in the hope of some regulatory relief, that is not the same as asking to gut the program. Environmental advocates and deregulation enthusiasts alike should mind the nuance in between; black-and-white characterizations of the industry position could become self-fulfilling and prompt a drastic outcome that’s in nobody’s best interest. Importantly, the “Big Three” CEOs themselves reportedly informed the President that “not a single car manufacturer head wants to eliminate the fuel economy standards.” And given companies’ historical commitment, the investments they have already made, and the role that fuel-saving technologies have played in the revival of the U.S. auto industry, there is good reason for them to want to keep them.
By way of context, in 2009 and again in 2012, the EPA, the U.S. Department of Transportation’s National Highway Traffic Safety Administration (NHTSA), and the State of California collaborated with auto manufacturers and the environmental community to put in place coordinated standards called the One National Program. The new program streamlined implementation of several statutes, including the Corporate Average Fuel Economy (CAFE) program (initially established under the Energy Policy and Conservation Act of 1975), and it regulated air pollutants from motor vehicles under the Clean Air Act, as well as California state law.
The rules establish an annual process for calculating each company’s unique performance targets, based on actual fleet plans and reflective of consumer demand. The 2012 rule also built in a “midterm review” of the later-year standards as a midstream checkpoint, to be completed no later than 2018. Companies objected, in the final months of the Obama Administration and again last week, to the EPA’s acceleration of that review, which concluded with a “final determination” in January that emissions standards would remain unchanged, as finalized in 2012.
But the reason this may not be as big a deal as it may seem is that there are mechanisms in place, regardless, for ongoing evaluation leading up to 2022. NHTSA is statutorily required to conduct a new rulemaking for those years, and EPA itself left the door open for continued dialogue, stating in the determination that “neither precludes nor prejudices the possibility” of future rulemaking that would provide more incentives for clean technologies.
Whether or not EPA chooses to grant the current request, federal and state agencies, companies, the environmental community, and others should continue to evaluate and share new information as it becomes available and remain mindful that the companies need the predictability that a stable long-term program structure provides. By design, accommodating companies’ multi-year planning cycles is a virtue of the One National Program. And indeed, agency analysis shows that “production life” of a vehicle model tends to range from roughly four to 10 years, depending on the type, and that redesign decisions are often made years in advance. Just look at examples like Ford’s multi-year efforts to retool the popular F-150 pickup truck with plans to roll out a hybrid model by 2020, or Chevrolet’s work to unveil and expand its new all-electric “Bolt” line estimated to travel 238 miles on a charge.
With the One National Program in place, auto companies continue to achieve record efficiency, providing consumers with cleaner and more cost-effective options. And these ongoing improvements have been part of a critical chapter for the industry, as it has recovered from crisis amidst the Great Recession. The industry has now seen six consecutive years of record sales; creation of nearly 700,000 new jobs between when Chrysler and GM emerged from bankruptcy in mid-2009 and early 2017; and innovation across the sector in areas ranging from efficiency technology to automation, with fuel-saving technology playing an important role in the industry’s revival. Keeping this program on strong footing is worth the ongoing effort and meticulous analysis it demands.