Amid the Coronavirus Crisis in the U.S., the Trump Administration Moves Forward on Rolling Back Vehicle Fuel Economy Standards

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【Summary】While the United States along with the rest of the world battles the coronavirus pandemic, which has already resulted in over 3,000 deaths in the U.S. and the virtual shutdown of the economy, President Trump is moving forward with plans to roll back fuel economy standards for passenger vehicles.

Eric Walz    May 07, 2020 1:15 PM PT
Amid the Coronavirus Crisis in the U.S., the Trump Administration Moves Forward on Rolling Back Vehicle Fuel Economy Standards
Rush hour traffic backs up near San Francisco. (Photo: Getty Images)

While the United States along with the rest of the world battles the coronavirus pandemic, which has already resulted in over 3,000 deaths in the U.S. and the virtual shutdown of the economy, President Trump is moving forward with plans to roll back fuel economy standards for passenger vehicles.

The new regulations are known as the "Safer Affordable Fuel-Efficient (SAFE) Vehicles" rule and meant to dismantle the previous Obama era fuel economy rules for motor vehicles announced in July, 2011.

The Trump administration called the move its "largest single deregulatory action" and said it will save automakers upwards of $100 billion in compliance costs. The complete terms of the new plan were released today. 

The rollback of the federal fuel-efficiency standards today began back in April 2018, when the Trump administration first proposed weakening former President Obama's requirements adopted nearly a decade ago.

The new rules allow automakers to build less fuel efficient (and some say less competitive) cars, SUVs and pickup trucks at a time where global warming from greenhouse gases has alarmed climate scientists around the world. 

It would also conflict with the rest of the auto industry's global push toward electrification, which is being led by electric automaker Tesla.

The plan also includes the Trump administration's proposition to take away California's ability to set its own emissions regulations. This caveat was introduced by the administration in September, 2019 setting up a court battle with the state of California and the federal government. Thirteen other states have also adopted California's standards over the years, including Washington DC.

The new fuel economy rules undercut the previous Obama era plan that required automakers to improve average fuel efficiency of cars by 5% and SUVs and light trucks by 3.5% each year beginning in 2021. However, the new rules lower that to just 1.5% per year between model years 2021 and 2026, resulting in a fuel economy improvement by automakers of 7.5% by 2026. 

James Owens, acting head of the U.S. National Highway Traffic Safety Administration, supports the new plan and says it "strikes the right balance between environmental considerations, health and safety considerations and economic considerations."

The higher fuel economy standards were put in place by President Obama's administration as a way to improve public health by curbing the release of greenhouse gasses, combating climate change, lessening the reliance on foreign oil, while saving drivers money at the pump.

At the time, the U.S. was recovering from the recession of 2009, which included a $80.7 billion federal bailout of the U.S. auto industry.

On July 29, 2011, President Obama announced an agreement with thirteen automakers to increase fuel economy to 54.5 miles per gallon for cars and light-duty trucks by model year 2025. Passenger cars were required to achieve 5% annual improvements, while light trucks 3.5% annual improvements. 

The agreement was supported by automakers Ford, GM, Chrysler, BMW, Honda, Hyundai, Jaguar/Land Rover, Kia, Mazda, Mitsubishi, Nissan, Toyota and Volvo, as well as the United Auto Workers (UAW), and the State of California. 

To jumpstart the effort, the federal government even implemented the Consumer Assistance to Recycle and Save (CARS) program, more commonly known as "Cash for Clunkers," in the summer of 2009. 

The CARS program incentivized consumers by offering $3,500 or $4,500 to trade in an older SUV or other gas-guzzling vehicle for a more fuel efficient one. The program was also intended to help the economy recover from the 2008-2009 recession by boosting new car sales which offered better fuel economy.

When asked about the change to the fuel economy rules earlier today, EPA spokeswoman Corry Schiermeyer said in an email to the Washington Post that she could not comment on specifics because it was still under review. 

In a statement, Schiermeyer wrote, "This rule, when finalized, will benefit all Americans by improving the U.S. fleet's fuel economy, reducing air pollution, making new vehicles more affordable for all Americans and save lives."

However, Schiermeyer's statement mirrors that of the Trump administration, which claims without evidence that lessening fuel economy standards will somehow make cars more affordable. 

However, a former senior official with the EPA disagrees with that credence, saying that permitting less fuel efficient vehicles on the road will result in worsening air pollution, instead of reducing greenhouse gasses. The decision to move forward on the changes is also ill-timed, due to the coronavirus pandemic that has shut down the country.

"They're doing a rule to damage public health," said Chester France, a former senior official at the Environmental Protection Agency who helped oversee the Obama-era mileage standards and now works as a consultant for the Environmental Defense Fund. "In this crisis that we're having, it's unconscionable."

The Trump Administration's Unchecked Claims

The Trump administration has stuck with its position that the revised mileage standards will help consumers out by lowering the sticker price of new vehicles. 

The administration has also argued that requiring automakers to increase the fuel economy of their fleets to the Obama-era standards would encourage people to drive older, less safe cars and trucks, which is another unsubstantiated claim. 

Trump also suggested that lighter, more fuel efficient vehicles are less safe. However, vehicle safety does not generally correlate with fuel economy.

 There is little data to support that forcing automakers to build more fuel efficient vehicles will lead to cars costing more. In fact, the most popular gas-powered SUVs and pickup models cost significantly more than passenger cars already, while offering less than stellar fuel economy.

As far as price, Tesla's fully-electric mass-market Model 3 sedan starts at $39,900 in the U.S., which is less than many popular gasoline powered SUV and pickup models from U.S. automakers General Motors and Ford Motor Co. 

For example, a 2019 all-wheel-drive Chevy Blazer SUV has a MSRP of $39,480 on one Chicago area Chevy dealer's website. The combined fuel economy of the AWD Blazer is just 21 mph. The new Blazer is also built without American workers in Mexico, which saves GM significantly on overall assembly costs. But its sticker price does not really reflect that. 

For comparison, the fully-electric Tesla Model 3 made in California offers a combined fuel economy equivalent of 121 mpg for around the same price, according to the U.S. government website 

An Increase in Greenhouse Emissions

The Environmental Defense Fund's recent analysis indicates that the Trump administration's revised rules would release an additional 1.5 billion metric tons of greenhouse gas emissions into the air over five years. The additional greenhouse gas emissions are equivalent to the pollution released by 68 coal-fired plants operating during the same time period.

However, the government's own estimates say more Americans will die as a result of increased air pollution during that same period than if the existing fuel economy standards remained in place, according to two people briefed on the rule who spoke to the Washington Post on the condition of anonymity because it was not yet public. This is a baffling projection.

A Showdown in California

The Trump administration's move today follows its Sept 2019 attempt to revoke California's long-standing ability to set its own, more stringent tailpipe standards than the rest of the country, a move that resulted in other states following California's lead. 

California was allowed to set its own emission standards since 1967, a move backed by the state's governor at the time and former president Ronald Regan as a way to combat deadly smog created by automobile emissions in the Los Angeles Metro Area.

California is joined by nearly two dozen states that are suing the Trump administration for the right to set its own fuel efficiency standards. The suit is also backed by automakers Ford, Honda, Volkswagen and BMW, but not by U.S. automaker General Motors, Fiat Chrysler and Toyota.

In November 2019, California Governor Gavin Newsom publicly chastised the automakers that sided with the Trump administration. Newsom announced that the state capitol of Sacramento will halt all purchases of new vehicles from GM Toyota, Fiat Chrysler for stepping on its authority to regulate tailpipe emissions.

"Carmakers that have chosen to be on the wrong side of history will be on the losing end of California's buying power," Newsom said in a statement.

However, John Bozzella, president of auto industry group Alliance of Automotive Innovation, disagrees. Trump's plan still calls for a fuel economy increase each year of 1.5%. Although its lower than what was sought by the Obama administration, which would have resulted in an average fleet increase in fuel economy to 54.5 mpg by 2026, its still a small improvement and not a backwards move.

"The auto industry has consistently called for year-over-year fuel economy and [greenhouse gas] improvements," he said.

Bozzella added the standards developed a decade ago under the Obama administration made assumptions that "aren't supported by the data today." While fuel prices have remained low, buyers have still gravitated to larger SUVs and pickup trucks in favor of smaller, more efficient sedans.

"The standards that were originally developed are no longer appropriate in light of shifting market conditions and consumer preferences," he said.

The expected rollback of fuel economy standards this week reignited criticism from environmentalists, including the promise of legal action to challenge the new rules, even before it was made official this afternoon.

"In the middle of a national crisis, the Trump administration is moving forward with a legally flawed, environmentally damaging rollback that will unleash regulatory uncertainty and mire the automotive industry in more economic disarray," Sen. Thomas R. Carper (D-Del.), the top Democrat on the Senate Environment and Public Works Committee, said in a statement.

Still, the $100 billion that the Trump administration says automakers will save as a result of the new fuel economy changes may never materialize amid one of the worst economic downturns in U.S. history. 

The economic fallout will linger for far longer for the auto industry, with skyrocketing unemployment claims and the mounting economic losses experienced by small businesses across America that will certainly impact auto sales for the rest of the year.

It's likely that consumers will not be buying a new or used vehicle anytime soon, regardless of the new fuel economy rules.

resource from: Washington Post

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