Although the notice has yet to hit the Federal Register and become official, EPA Administrator Scott Pruitt released the text of the Notice that would reevaluate 40 CFR Part 86, which is the Mid-term Evaluation of Greenhouse Gas Emissions Standards for Model Year 2022-2025 Light-duty Vehicles. The summary to the notice elaborates that the Administrator has reconsidered the previous final determination, and decided that the current standards are based on outdated information and are therefore possibly too stringent, thus requiring revision. The notice withdraws the previous Final Determination issued on January 12, 2017 and will initiate comment rulemaking along with the National Highway Traffic Safety Administration at some future date.
According to the Supplementary information provided, a “significant record . . . has been developed since the January 2017 Determination. Many of the key assumptions EPA relied upon in its January 2017 Determinations, including gas prices and the consumer acceptance of advanced technology vehicles, were optimistic or have significantly changed and thus no longer represent realistic assumptions.” Additionally, the Administrator found that the greenhouse gas (GHG) emissions standards that were set are not feasible or practicable for the auto industry, and raise the risk of concerns related to safety and increased costs on consumers. This reconsideration was announced in a March 22, 2017 notice in the Federal Register, therefore allowing about a year for the final determination to be made.
Section III of the Notice lays out the Administrator’s assessment of the factors that were relevant to his decision. Factor 1 is the availability and effectiveness of technology and the appropriate lead time for introduction of technology. This is coupled with Factor 3, the feasibility and practicability of standards. Under these factors, the Administrator determined that it is uncertain that the technology would be available to meet the standards within the timetable that was originally set. He bases this determination on the changes in the trends of electrification since January 2017; the reliance on future technology advances; and the acceptance rate of the technology by consumers. According to the figures supplied, electric light-vehicle sales have decreased in total and as a percentage of all light-vehicle sales since a peak in 2013. The information also says that there is “flagging consumer demand for fuel-efficient vehicles.” The notice cites Global Automakers, the Alliance of Automobile Manufacturers (Alliance), and individual automakers (Toyota, Fiat Chrysler, Mercedes Benz, and Mitsubishi are among those quoted in the entire document) as providing information on the technologies that the EPA had projected could be used to meet the goals. According to the Alliance, advanced internal combustion engine technology alone is not sufficient to meet the standards; a greater electrification would be required than was originally projected by the EPA. The Alliance additionally provided information that only electric vehicles (strong hybrids, plug-in hybrids, or electric vehicles) currently meet the 2025 goals and that these have a minimal market share of the light-vehicle market. Many auto manufacturers asked that the EPA exclude technologies that are protected through intellectual property rights from their modeling and estimations, which again was claimed would change the previous determinations. Automakers apparently argued that customers were not purchasing electric vehicles at a rate that would be sufficient for them to come into compliance with the new standards. Furthermore, there was an argument that the lower gasoline prices make the standards more difficult to achieve. The argument seemed to be that consumers are concerned about fuel economy in relation to what they pay at the pump, so when gas prices are lower, the concerns about fuel economy and efficiency are not as great as when gas prices are higher and gas prices were higher when the rules were originally being contemplated going back to 2012.
Factor 2 was the cost on the producers or purchasers of new motor vehicles or new motor vehicle engines. According to the notice, the cost of meeting the standards can be significant; however, no actual figure was quoted to show how significant this would be. The Alliance and Global Automakers claim that the EPA underestimated the cost, but again no figures were provided. This factor claims that the EPA failed to appropriately consider the cost of these standards that would be passed on to low-income consumers in particular.
Factor 4 is the impact of the standards on reduction of emissions, oil conservation, energy security, and fuel savings by consumers. Arguably, this is one of the more important factors for the EPA since it does have to deal with its main charge, which is the protection of the environment. However, the focus of this was on the consumer adoption of new lower emitting cars, cost of fuel, and rebound effects. This did not seem to take into account the dependence of the country on oil or the fact that the change in GHG emissions would stabilize or improve the environment. The focus was on the slow adoption of lower emitting cars by consumers, which was argued would reduce the effectiveness of the program. It fails to consider that lower emissions standards for all light-vehicles would mean that adoption of any one type of car is irrelevant since all should be meeting the standards. The change in fuel prices and thus consumer demand for fuel efficiency was discussed again. The rebound effect is the increase in driving owing to a lower cost of driving from greater fuel efficiency.
Factor 5 is the impact of standards on the automobile industry. It is interesting that this is a separate factor given that the impact on the auto industry has been discussed in seemingly every other factor as well. However, in this factor, the possibility of decreased sales due to increased costs per vehicle are discussed, which is in turn used to claim that this would force the industry to employ fewer people. Factor 6 is the impacts of the standards on automobile safety, but this is not discussed much.
Factor 7 is the impact of GHG emission standards on the Corporate Average Fuel Economy standards and a national harmonized program. Here, the need for a national program was heavily emphasized. The differences between California’s emissions standards and the possible new federal standards is seen as a problem for the industry. Factor 8 is a hodgepodge of the impact of the standards on other relevant factors, which merely discusses the need for regulatory certainty. One could argue that there was certainty before the EPA decided to reconsider a final determination.
The very interesting thing about this report is that it has pages and pages of explanations and some data on why the rules need to be changed. It is clearly a case of justification for a decision based on only some of the opinions out there. Although there are a few sentences or paragraphs expressing countervailing views, these are given very little attention and seem to be summarily dismissed. The troubling part is the fact that grandiose statements are made about costs and efficiency, but there is very little hard numerical data provided to substantiate those claims. For an agency that wants to make science “transparent” by providing access to all scientific data upon which decisions are made, this is an interesting start to that idea.