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 November 08, 2018
Auto firms find Trump plan to ease fuel rules too much of a good thing

 It's no shocker that environmental and consumer advocates are furious about the Trump administration proposal to throttle sweeping Obama era rules intended to dramatically reduce auto tailpipe emissions and boost fuel economy.

But pushback also is coming from less likely sources: auto manufacturers and their suppliers, and even a major oil company.

That opposition has emerged even though auto industry leaders, soon after Donald Trump became president, urged his administration to relax the historic Obama fuel efficiency and greenhouse gas agreement announced seven years ago. When the rollback proposal from the Trump administration arrived in August, it called for freezing fuel-efficiency requirements after 2020 --- instead of living up to the agreement to make them more stringent every year through 2025.

For many automakers and suppliers -- including those that have been investing heavily in fuel economy and emissions improvements -- the bottom line is that they got offered more regulatory relief than they actually wanted. They also recoiled at the administration's contention that more fuel-efficient vehicles would be less safe, and rejected its call to revoke California's special authority to write its own tough emissions rules.

Jack Gillis, executive director of the Consumer Federation of America, likened the auto industry's bewilderment to that of a dog that chases a bus and somehow manages to catch up to it. "Now what is he going to do?," Gillis said.

Automakers have come to "the belated realization ... that if Detroit rests and slows down its efforts to improve fuel efficiency, they will not only be globally noncompetitive but they may find themselves in the same position as they did during the last financial and gas price crisis, where they were sitting on lots and lots and lots of unsold vehicles," Gillis said.

While the oil industry largely has steered clear of the fray, Shell Oil submitted a letter during the formal 60-day comment period, saying that it doesn't support the rollback either. The oil giant called on the government to combat global warming by curbing carbon dioxide emissions. Shell noted that an analysis from two agencies that issued the proposal -- the Environmental Protection Agency and the National Highway Traffic Safety Administration -- acknowledged that the rollback would do the opposite.

Still, the criticism from environmentalists and consumer groups was especially sharp. The Consumer Federation of America, leading a coalition of 33 advocacy groups, estimated that the public over five years would lose $150 billion in savings at the gas pump and in economic growth if the proposed Trump rollbacks take effect.

Daniel Becker, director of the Safe Climate Campaign, a Washington-based environmental advocacy group, said the existing Obama rules marked "the biggest single step any nation has ever taken to combat global warming .... and now it's very much in doubt."

According to the Union of Concerned Scientists, the proposed fuel-efficiency freeze beginning in 2021 would hold requirements for the average new car at 28 to 29 miles per gallon, rather than raising the level to 36 mpg by 2025. The result, the group estimates, is that 2021-2025 model year cars over time would emit more than 900 million metric tons of extra global warming gases. That's the equivalent of what 226 coal-fired power plants produce in a year.

Within the auto industry, Honda was among the strongest critics. In formal comments -- among the flood of 12,620 comments submitted to the government by the Oct. 26 deadline --- Honda said the administration's plan "would make the U.S. an outlier with much of the rest of the world" and undercut global competitiveness. Instead, Honda urged officials to maintain annual fuel-efficiency improvements of 5 percent, staying roughly in line with the improvement envisioned in the existing rules from the Obama era.

Honda's push was part of a pattern of companies seeking changes that play to their competitive strengths and self-interest. For example, General Motors -- which, unlike Honda, sells lots of gas-guzzling pickup trucks -- was less forceful in advocating improved fuel economy, though it still rejected the proposed Trump freeze. GM said it would "prefer" standards that "continue improving the fuel economy of gasoline powered vehicles at historic rates," which it described as being about 1 percent a year since 1980.

At the same time, GM -- which boasts that it offered "the first mainstream, long-range [electric vehicle] on the market," the Chevrolet Bolt EV --- also called for a national zero emissions vehicle program to spur sales of electric cars. The company said it was "troubled" that the Trump plan seeks to phase out some measures to promote electric vehicles after the 2021 model year.

The auto industry -- including its two main lobbying groups, the Alliance of Automobile Manufacturers and the Association of Global Automakers -- also criticized other parts of the Trump administration proposal. That included the push to revoke the provision under the Clean Air Act that enables California to set tougher fuel economy standards than the federal government's and permits other states to adopt California's rules.

Today, California emissions rules are followed by 12 other states and cover more than one-third of the U.S. population. Given that automakers don't want to bear the cost of meeting separate federal and California standards, the companies for years have operated largely as though the California rules were the law of the land, and the state and federal government have coordinated their regulatory efforts. The auto industry groups called for the federal government and California to maintain that partnership to avoid what the Global Automakers called "costly and uncertain litigation."

In fact, California and 16 other states filed a suit in May against the federal EPA to prevent it from weakening auto emissions rules.

The California Air Resources Board followed up two weeks ago by submitting a blistering 415 page-document opposing the Trump proposal, calling the analysis behind the proposed rollback "inconsistent with empirical information, established economic theory, and logic." It was joined by 19 other states, and several big cities, in calling the rollback plan "arbitrary and capricious and unlawful in multiple respects."

Another point of controversy is a mathematical tool known as the scrappage model that plays a key role in the administration's assertion that its rollback would improve safety. The argument: Relaxed fuel economy standards will hold down the price of new cars and thus spur sales of autos with the latest safety features, resulting in older, less safe vehicles being retired more quickly. Emphasizing the supposed safety benefits, the administration named its proposal SAFE, or "The Safer Affordable Fuel-Efficient Vehicles Rule."

Honda, citing the Trump administration's scrappage calculations, said it found "the use of this previously untested model to be premature and ill-advised."

The Association of Global Automakers, for its part, said its own technical modeling found that the Trump administration's findings "are not consistent with reality." Even if tougher mileage rules raise prices, the association said, consumers might continue to buy new cars with the latest safety features but try to save money by getting cheaper models with fewer accessories.

There is no deadline for the Trump administration to finalize its plan, but it is expected to arrive by around the end of March, which means it could take effect in time for the 2020 model year. The two federal agencies working on the proposal, the EPA and NHTSA, said they were reviewing all comments before writing a final rule but declined to comment further.

"That doesn't mean that the administration will respond thoughtfully," said Gillis of the Consumer Federation, "but I think they are going to have to do some serious analysis of not only what the consumer groups are telling the government, and the environmental organizations, but also the car companies."