On September 19th, 2019, the Environmental Protection Agency (EPA) and the National Highway Traffic Safety (NHTSA) finalized a portion of the Safer, Affordable, Fuel-Efficient (SAFE) Vehicles Rule, which they had proposed in 2018 to roll back corporate annual fuel economy (CAFE) standards issued during the Obama administration. Styled as the “One National Program Rule,” this portion of the SAFE Vehicles Rule is meant to do one thing only—prevent California from issuing its own CAFE standards to limit greenhouse gas (GHG) emissions from passenger vehicles and promoting zero emissions vehicles (ZEV). As described by the agencies issuing it, the final rule enables “the federal government to provide nationwide uniform fuel economy and greenhouse gas emission standards for automobiles and light duty trucks.”
CAFE standards were first required by the Energy Policy and Conservation Act of 1975, as a response to the 1973 oil crisis. For thirty years, they were issued by the Department of Transportation (of which NHTSA is a part), and meant to improve the fuel economy of automobiles and light trucks. In 2009, the Obama Administration brought the EPA into the process, instructing the environmental agency to issue federal standards for automotive GHG emissions using its Clean Air Act (CAA) authority. EPA and NHTSA complied by setting a standard of 37 miles per gallon (mpg) (equal to about 29.6 mpg in EPA label values) for model year 2016. In 2012, after consulting major automakers and other stakeholders such as California, EPA and NHTSA set a standard of 54.5 mpg (or 43.2 mpg EPA) by the 2025 model year, estimating that this would save 6 billion metric tons of carbon pollution over the life of the program. (The goal was revised downward to 51.5mpg (or 40-42.1 mpg EPA) in 2016, when the EPA, NHTSA, and the California Air Resources Board released a technical paper that found that the 54 mpg was unrealistic.) All the major automakers were on board with the 2012 Obama standards, and since 2012, have invested billions of dollars in clean technology.
As part of an ongoing effort by the Trump Administration to roll back fuel economy standards, the Trump administration has proposed that it will to freeze CAFE standards at the 2020 standard of 37 mpg (or 29.6 mpg EPA) for model years 2021-2026 through the proposed SAFE rule. While the part of the SAFE rule that would effect this freeze CAFE has not yet been finalized, the One National Program Rule provides that no states may require a stricter CAFE standard than the federal standard—whatever it may be—for cars sold in their territory. The One National Program Rule also provides that no states may impose ZEV mandates.
The One National Program Rule targets California, which has used a 2013 waiver from federal emissions standards under the CAA to stick with the Obama CAFE standard of 51.5 mpg. (The CAA allows California to receive waivers from EPA to set its own, stricter, air pollution standards to address particularly difficult pollution problems in the state.) California has also signed a compacts with four major automakers—Honda, Volkswagen, BMW, and Ford—in which they agree to adhere to California’s 51.5 mpg standard. Further, over a dozen have signaled that they will follow California’s standards. Given California’s market power, if the state is allowed to set its own standards, it would, in effect, set the standard for the entire country.
The One National Program Rule withdraws the 2013 waiver EPA granted to California on the basis that California does not need its GHG or ZEV standards to meet any compelling or extraordinary conditions in the state, because the challenge of climate change that those standards address is “not particular or unique to California,” is “not caused by emissions or other factors particular or unique to California,” and “will not provide any remedy particular or unique to California.” The One National Program Rule preempts state or local tailpipe greenhouse gas emissions and zero-emission vehicle (ZEV) mandates—from California or elsewhere—affirming that the Energy Policy and Conservation Act (EPCA) provides “statutory authority to [the federal government to] set nationally applicable fuel economy standards.” The Trump administration says it is enacting this program so that automakers will not be in the position “of having to expend resources to comply not only with the Federal standards, but also meet separate state requirements.”
The Trump Administration has also declared that creating a single national rule with less stringent standards will make automobiles more affordable for American families. With more inexpensive cars on the market, it reasons, the American people will be able to replace their old cars with newer, safer, and more fuel-efficient vehicles. In a press release by NHTSA issued on September 19 during the “One National Program Rule” Press Conference, Secretary of Transportation Elaine Chao stated that the action will make “new cars more affordable” as well as “strengthen domestic manufacturing base by adding millions of new car sales, and supporting good-paying American jobs. And, most importantly, because newer cars are safer, the standards will save thousands of lives and prevent tens of thousands of serious injuries.”
Advocates of the new rule include Stephen Moore, an economist, and visiting fellow at the Heritage Foundation, a conservative think tank. Moore states raising CAFE standards from the current 35 mpg to the Obama rule’s 2025 goal of 54 mpg "would raise the cost of many new cars by almost $3,000. The overall hit to the economy from these rules is expected to reach a cool $500 billion over the next 50 years." The Competitive Enterprise Institute, a libertarian think tank that opposes what it calls “global warming alarmism,” issued a non-peer reviewed report cited in the One National Program Rule that found the current CAFE standards were killing people, based on the reasoning that auto companies have been building lighter cars to meet fuel efficiency regulations, which keeps cars on the road longer causing 1,000 lives to be lost each year. Although no oil companies have publicly come forward in support of the rule, a report by Energy Innovation, an energy and environmental policy firm, concludes that “the only winners [from rules rolling back CAFE standards] are the oil companies, who stand to sell more gasoline at the expense of American consumers, manufacturers, and the environment.”
The One National Program was immediately challenged in federal court. The day after it was issued, California’s Attorney General, Xavier Bercerra, with 23 states and the District of Columbia, Los Angeles, and New York City, sued the Trump Administration, arguing that the “preemption rule” is “unlawful, disregards the National Environmental Policy Act and is arbitrary and capricious, among other complaints.” A coalition of automakers, including GM, Toyota, Fiat Chrysler, Subaru and Nissan (but excluding the four majors that signed the compact to adhere to the California standards) have intervened on the side of the federal government.
Observers predict that the legal battle will go all the way to the Supreme Court, which means that the rule will be tied up in litigation for the next few years. If California and the other challengers succeed in obtaining a stay of the rule during litigation, it will not go into effect until well after the next Presidential election.