EPA and NHTSA Rule on Vehicle Emissions and Efficiency

April 21, 2020 by Maxwell Unterhalter

By Simon Moskovitz

The Environmental Protection Agency (EPA) and National Highway Traffic Safety Administration (NHTSA) recently released the final SAFE Vehicles Rule. The rule sets forth requirements for emissions and efficiency in vehicles for model years 2021-2026 and revokes the Clean Air Act waiver to California.

On March 30, the Environmental Protection Agency (EPA) and National Highway Traffic Safety Administration (NHTSA) released a final rule, the SAFE Vehicles Rule,[1] amending the carbon dioxide tailpipe emissions and mileage requirements for some automotive vehicles, and revoking the Clean Air Act California Waiver.[2] The new rule amends carbon dioxide standards to allow for a 1.5% increase per year in automobile carbon dioxide stringency until 2026, as opposed to the previously promulgated 5% per year standard from 2012. While a reduction from the previous administration’s efficiency goals, the final SAFE Vehicles Rule represents an increase from the 0% freeze on all stringency standards in the notice of proposed rulemaking issued in 2018.[3]

Tailpipe emissions and mileage per gallon, though interrelated, are regulated by the EPA and NHTSA separately and under different statutory regimes. While colored by political considerations, the two agencies’ overlapping mandates have made work on the issues a cross-agency concern. As the Supreme Court stated in Massachusetts v. EPA, “there is no reason to think the two agencies cannot both administer their obligations and yet avoid inconsistency.”[4]

The rationale for the final SAFE Vehicles Rule is multifold. The agencies have stated that this rule will ease burdens on auto manufacturers while still maintaining tough environmental standards, making cars safer, and increasing vehicle affordability. However, members of the Senate Committee on Environment and Public Works have expressed concern over the legality of the rule and skepticism of its rationale.[5] The some members believe the stringency levels violate the Energy Policy and Conservation Act, requiring corporate average fuel economy (CAFE) standards be set at the “maximum feasible level” per year.[6] Similarly, they point out that the new rule will lead to an increase of one billion additional metric tons of carbon dioxide into the atmosphere and 80 billion additional gallons of gas.[7]

The committee’s concern is strongly supported by an EPA, DOT, and NHTSA report released in the final weeks of the Obama administration. The report studied CAFE fuel efficiency standards and found that the 2012 standards were projected to reduce greenhouse gas emissions by 540 million metric tons, save drivers $100B in fuel, and eliminate consumption of 1.2 billion barrels of oil. The report further found that the standards would not have any adverse impact on automobile safety. Once the Trump Administration took office, the EPA immediately sought to reconsider the report.[8]

Historically, the auto industry has resisted some federally imposed standards, whether seat belts or fuel efficiency, often arguing that they increase costs to consumers. Critics of the final SAFE Vehicles rule concede that the less stringent regulations will decrease the price of vehicles at the point of sale, but that the less efficient vehicles will ultimately have higher lifetime costs for consumers, as they spend more on fuel. Pointedly, critics of the new final SAFE Vehicles Rule note that, because of the United States’ role as one of the largest car markets and manufacturers in an evolving marketplace,[9] failure to lead fuel efficiency and emissions innovations would open the door for competing manufacturers to pioneer new technologies.[10]

The SAFE Vehicles Rule also notably revokes the California waiver granted in section 209(b) of the Clean Air Act. Section 209 is a preemption provision that contains language prohibiting states from creating their own auto-emission standards. However, section 209(b) contains a waiver for California specifically, allowing the state to create standards more stringent than those at the federal level. This waiver has been unique to California since the Clean Air Act was passed in the 1970’s and has been granted more than fifty times since and denied once in 2008[11] (the denial was litigated but never decided because the Obama Administration re-granted the waiver once in office). [12]

Though the promulgation of the SAFE Vehicles Rule is only one of the most recent major regulatory changes made by the current Administration, its effects will be debated for years to come. Critics have been vocal about the timing of this rulemaking and revocation of the section 209(b) California Waiver during the COVID-19 pandemic. [13] While the rule represents a major shift in policy, how the inevitable lawsuits from states and environmental groups play out over the coming years is yet to be seen.[14]

[1] The Safer Affordable Fuel-Efficient (SAFE) Vehicles Rule for Model Years 2021-2026

Passenger Cars and Light Trucks.

[2] The Safer Affordable Fuel-Efficient (SAFE) Vehicles Rule for Model Years 2021-2026 Passenger Cars and Light Trucks, Docket ID Nos. EPA-HQ-OAR-2018-0283, NHTSA-2018-0067 (Mar. 30, 2020) (final rule accessed at https://www.epa.gov/regulations-emissions-vehicles-and-engines/safer-affordable-fuel-efficient-safe-vehicles-final-rule#rule-summary on April 20,2020, not yet published in the Federal Register, to be codified at 49 CFR pts. 523, 531, 533, 536, and 537, and 40 CFR pts. 85 and 86) https://www.epa.gov/sites/production/files/2020-03/documents/final-fr-safe-preamble-033020.pdf.

[3] The Safer Affordable Fuel-Efficient (SAFE) Vehicles Rule for Model Years 2021-2026, Passenger Cars and Light Trucks, 83 Fed. Reg. 42,986 (proposed August 24, 2018) https://www.govinfo.gov/content/pkg/FR-2018-08-24/pdf/2018-16820.pdf.

[4] 549 U.S. 497 (2007).

[5] Letter from Thomas R. Carper, Ranking Member Senate committee on Environment and Public Works, to Paul Ray, Administrator, Office of Information and Regulatory Affairs (OIRA), White House Office of Management and Budget (Jan. 22, 2020) (Available at https://www.epw.senate.gov/public/_cache/files/3/4/34e638bd-4a14-48f4-ba1d-61e994af2a24/A2FAE05638EA9108C39076471C21BA17.01-22-20tctopaulraycars.pdf).

[6] Id. Meghan Claiborne, The SAFE Vehicles Rule: How the Trump Administration’s Course Change on Vehicle Emissions Reflects a Larger Policy Shift Away from Environmentally Friendly Regulations, 6 Emory Corp. Governance & Accountability Rev. 9 (2019), https://law.emory.edu/ecgar/content/volume-6/issue-1/essays/SAFE-vehicles-rule-trump-course-policy-shift-regulations.html.

[7] Id.

[8] Id.

[9] I. Wagner, Largest automobile markets – new car registrations December 2019 YTD, Statista (Mar. 17, 2020) https://www.statista.com/statistics/269872/largest-automobile-markets-worldwide-based-on-new-car-registrations/.

[10] FCA Releases 2019 Sustainability Report Highlighting Environmental, Social and Economic Initiatives, AutoMobilSport.com (Apr. 17, 2020) http://www.automobilsport.com/fca-sustainability-report-environmental-social-economic-initiatives—206142.html; Krishtina D’Silva, How Automotive Industry is Performing Across the World? Urban Transport News (Mar. 24, 2020).  https://www.urbantransportnews.com/how-automotive-industry-is-performing-across-the-world/

[11] Denise A. Grab, Jayni Hein, Jack Lienke, Richard L. Revesz, No Turning Back, An Analysis of EPA’s Authority to Withdraw California’s Preemption Waiver Under Section 209 of the Clean Air Act, Institute for Policy Integrity (Oct. 2018).

[12] Michael S. McDonough, Mark E. Elliott, Stephanie Amaru, EPA-California Legal Showdown Looms Over Authority to Regulate Carbon, Pillsbury Winthrop Shaw Pittman LLP (Sep. 2019) https://www.pillsburylaw.com/en/news-and-insights/epa-california-legal-showdown-looms-over-authority-to-regulate-carbon.html.

[13] Jennifer Hijazi, Several States, Environmental Groups Vow to Sue Over Car Pollution Rollback, Scientific American, E&E News (Apr. 1, 2020) https://www.scientificamerican.com/article/several-states-environmental-groups-vow-to-sue-over-car-pollution-rollback/.

[14] Id.