EPA poised to announce rejection of Obama vehicle fuel efficiency rules

[March 30, 2018]  By David Shepardson

NEW YORK (Reuters) - The U.S. Environmental Protection Agency is expected to use a Virginia car dealership on Tuesday as the setting to tout its rejection of the Obama administration's landmark vehicle fuel efficiency rules, a move that could put automakers in the middle of a battle between the Trump administration and California.

EPA Administrator Scott Pruitt plans to sign a declaration by Sunday that the Obama administration’s vehicle efficiency rules for 2022 through 2025 are "not appropriate" and must be revised, Reuters reported last week.

Pruitt is expected to speak at an event at a Chevrolet dealership in suburban Washington and will joined by groups representing dealers and automakers, according to people familiar with the plans.

The state of California, which has the power to effectively create its own fuel economy standards, several allied states and environmental groups are gearing up for a legal and political fight over the rules, aimed at curbing greenhouse gas emissions from new cars and trucks.

California Air Resources Board chair Mary Nichols said in January the board does not believe the standards should be lowered. Pruitt was in California earlier this week, but did not meet with Nichols.

Two administration officials and several automakers told Reuters the timing of proposing specific revisions to existing fuel economy standards and emissions limits remains in flux. EPA officials suggested a detailed proposal could come in late May or June, while the Transportation Department is pushing for a speedier proposal, automakers and officials said.

The EPA declined Thursday to comment on Pruitt's plans. An EPA spokeswoman said last week "a final determination will be signed by April 1."

Automakers want rule changes to address lower gasoline prices and a shift in U.S. consumer preferences to larger, less fuel-efficient vehicles.

Auto industry executives have not publicly sought specific reductions in the requirements negotiated with the Obama administration in 2011. But they have urged Pruitt and U.S. President Donald Trump to revise the Obama standards to make it easier and less costly to meet complex targets, which vary depending on the size of vehicles and whether they are classified as cars or trucks.

Overall, the Obama rules called for roughly doubling by 2025 to about 50 miles (80 km) per gallon the average fuel efficiency of new vehicles sold in the United States. But the Obama rules included a review by April 2018 as to whether the final years were feasible or not.

EPA Administrator Scott Pruitt speaks during a meeting held by U.S. President Donald Trump on infrastructure at the White House in Washington, U.S., February 12, 2018. REUTERS/Kevin Lamarque

By declaring the Obama rules "not appropriate,” the Trump administration can reopen the process of setting vehicle targets agreed to by automakers in 2011.

Pruitt is expected to declare that the existing 2022-2025 model year rules on fuel economy must be revised but he is not expected to immediately propose new requirements, people familiar with the plans said. They asked not to be identified because they were not authorized to speak to the news media.

The so-called Corporate Average Fuel Economy rules sought to double the average fuel efficiency of automakers' fleets, or complete lineup of cars and light trucks, to about 50 miles (80 km) per gallon by 2025.

While automakers want relief from the Obama rules, they are pressing the administration to avoid a battle with California and maintain a single, nationwide set of fuel efficiency requirements.

In New York, Toyota North America <7203.T> Chief Executive Jim Lentz said at an Reuters event on Thursday that automakers would face higher costs if they had to manage fuel economy by each individual state.

Lentz said individual state emissions requirements could result in Toyota getting "towards the end of the year and I no longer can sell SUVs," depending on the state's fuel economy numbers. "It would be an absolute nightmare for us to figure out."

When fuel rules were written in 2011 amid high gas prices, fuel efficiency was the second highest attribute considered by Toyota buyers, Lentz said. Today it is 10th.

(Reporting by David Shepardson in New York. Additional reporting by Nick Carey in New York; Editing by Tom Brown)

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