EPA submits draft in step to roll back Obama fuel rules

WASHINGTON -- President Donald Trump's administration took a major step toward dramatically weakening a rule designed to cut pollution from vehicle tailpipes, setting the stage for a legal clash with California.

The Environmental Protection Agency on Thursday formally submitted its proposal to roll back rules implemented during President Barack Obama's tenure that required automakers to nearly double the fuel economy of passenger vehicles to an average of 54.5 mpg by 2025. The rules, which would have lowered significantly the nation's greenhouse-gas emissions, were opposed by automakers who said they were overly burdensome.

A spokesman for the EPA confirmed Thursday that the agency had completed its work on the proposed regulatory rollback and sent it to the White House Office of Management and Budget for review. Typically that is the final step before a proposed rule is published in the Federal Register. The rules are then open for public comment before taking effect, during which the terms could still be modified.

One of the central and most controversial elements of the proposed rule would formally challenge California's special status under the 1970 Clean Air Act to set its own vehicle pollution standards. California has said that it will continue to enforce the stricter, Obama-era pollution standards, a move that would create two separate auto markets in the United States -- one with the tougher emissions requirements, and another with looser rules.

Twelve other states follow California's lead, and together they make up roughly one-third of the nation's auto market.

California's lawmakers insist that, under the state's special status, they and the 12 other states have the right to retain their own tighter rules even if the federal government lowers its fuel-economy standards.

According to three people familiar with the proposal filed Thursday, the Trump administration's proposed rule would not revoke California's waiver outright. Instead, it will argue that California cannot use the waiver to require tougher fuel standards than those set by the federal government. The three requested anonymity because the EPA had not authorized them to speak publicly on the matter.

Gov. Jerry Brown of California and the state's attorney general, Javier Becerra, have said that, should Trump challenge their state, they stand ready to fight back with a major lawsuit that would quite likely end up before the U.S. Supreme Court.

Trump has vowed since the early days of his administration to roll back the vehicle pollution rule, which was one of Obama's signature policies to address climate change. Trump, who has framed the rollback as a way to help U.S. automakers, had given Scott Pruitt, the head of the EPA, the task of crafting a legal proposal to achieve that.

One person familiar with the plan, who spoke on condition of anonymity, said the White House intended to publish its new rule in the next two weeks. Once the proposed rule is published, the EPA will open it up for public comments before publishing a final regulation later in the year.

The terms of the EPA's plan are similar to those in a draft that circulated last month, according to the three people familiar with the document. That draft laid out eight options for revising the standards and identified a preferred option: freezing fuel-economy standards at 2020 levels for both cars and light trucks. That approach would significantly increase the nation's projected emissions of carbon dioxide pollution from vehicle tailpipes.

For months, opponents of climate-change policy have pushed Trump to move forward with the legal challenge to California, arguing that the federal government should not allow states to set their own fuel-economy standards.

"We strongly support undoing state pre-emption of standards and taking California out of the driver's seat," said Myron Ebell, who led Trump's EPA transition team and works for the industry-funded Competitive Enterprise Institute, a conservative Washington organization.

Automakers had pressed Trump to relax the Obama-era standards. However, some now fear that Trump's willingness to dramatically roll back the standards and to fight California in court could have unintended consequences that could end up harming, rather than helping, the industry.

Should California fight Trump's plan in court and win, that could set the stage for a huge transformation of the nation's auto market, ultimately creating one set of rules for cars sold in California and the 12 states that follow its strict fuel standards, and another set of rules for the rest of the country.

Automakers have long described that possibility as the worst-case outcome for them, forcing them to manufacture cars that meet two sets of standards. Opponents of the proposed Trump rule say they hope that possibility will persuade the administration to walk back the proposal before it is finalized.

"It has been made very clear that excluding the state of California and freezing fuel-economy standards for the better part of decade won't prove fruitful," said Sen. Thomas Carper of Delaware, the ranking Democrat on the Senate Environment Committee. "President Trump should recognize the opportunity here and take yes for an answer, rather than try to push extreme and unwanted standards through."

Business on 06/01/2018

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