Automakers seeking an easing of rules under Trump administration

Washington — Major automakers are seizing on the infancy of President-elect Donald Trump's administration to mount a push to ease regulatory headaches faced under President Obama, including potentially slowing the rise of fuel efficiency requirements.

In a letter to Trump's White House transition team Nov. 10, the Alliance of Automobile Manufacturers proposed that the new administration pause a key step in the ongoing midterm evaluation of the Obama administration's 2025 fuel economy and greenhouse rules until Trump's administration can “lead efforts” with regulators and automakers on “a pathway forward” for the final four years of the rules.

The Alliance called the rules, which become increasingly stringent starting in model year 2017, a “substantial challenge” for the industry. While the industry has expressed support for the broader efficiency and environmental goals of the program, automakers are concerned about the timing and costs of the rules, which will require billions of dollars in investment.

The proposal is among a series of policy and regulatory recommendations submitted to the Trump transition team aimed at streamlining the industry's regulatory obligations. Taken together, they signal that automakers view the early stages of Trump's administration as a key opportunity to secure regulatory reforms that they say create friction and drive up vehicle costs.

“We live at a moment where technology and change are swamping the regulatory capacity to manage our emerging reality. Reform is imperative,” Alliance CEO Mitch Bainwol said in the letter, obtained by Automotive News. Automotive News is a sister publication of Plastics News.

Trump himself has vowed a broad review of existing regulations that threaten jobs and a moratorium on all new regulations.

The Alliance called for a comprehensive review of all regulatory and policy actions by the Obama administration since Sept. 1. This would include the Transportation Department's guidelines for autonomous vehicle deployment.

It also proposed the creation of a new "presidential advisory committee" to coordinate the many federal agencies that oversee parts of the industry such as the EPA, National Highway Traffic Safety Administration, Federal Trade Commission, Federal Communications Commission, Consumer Financial Protection Bureau and others.

The Alliance said the committee could recommend a “new paradigm” for vehicle regulation.

“As car prices rise, it becomes vital to look at the full cost of regulatory initiatives,” Bainwol said in the letter. “Well-meaning regulatory action risks increasing compliance costs to the point that additional safety and fuel-efficiency technologies put new vehicles out of financial reach of the average new car purchaser.”

Much of the Alliance's letter focuses on changes to the so-called national program of joint greenhouse gas rules administered by the EPA and fuel efficiency standards overseen by NHTSA.

The coordinated regulations were put into effect by the Obama administration in the 2012 model year. The Alliance says discrepancies between the two programs have led to unneeded costs and make it possible for an automaker to comply with the EPA's CO2 limits but risk paying noncompliance fines under NHTSA's program.

“This regulatory friction is already occurring, driving up vehicle costs, and will become even more counterproductive as the regulatory requirements become more stringent in future model years,” Bainwol wrote. “Potentially billions of dollars in fines under the NHTSA CAFE program are anticipated.”

In the Trump letter, the Alliance called on the Trump administration to back agency and legislative changes to iron out those differences.

An EPA spokesman declined to comment.

The trade group also wants costs incurred from California's zero-emission vehicle sales mandates to be considered in the midterm evaluation of the national mpg program. They currently are not factored in.

The California requirement, which is followed by nine other states, requires that 15 percent of sales in California be zero-emission vehicles like battery-electrics or hydrogen fuel cell by 2025. California has supported the mandate with tax incentives and other programs but other states haven't followed suit, leading to “dramatically” different ZEV purchase rates outside of California, the Alliance said.

“The Administration should engage as appropriate to help address these ZEV issues — especially to help avoid the creation of a patchwork of requirements that will frustrate the overall intent of the ‘One National Program,'” Bainwol wrote.

Greenhouse gas and mpg targets through model year 2021 are already on the books. A required midterm evaluation is underway to determine whether proposed mpg and greenhouse gas standards through 2022 are appropriate, or if they should be changed.

The next step in the evaluation comes in 2017, likely midyear, when the next EPA administrator will propose whether the standards are appropriate or should be changed, which would kick off a rulemaking process. A final determination is due by April 2018.

The Alliance argues that that proposed determination shouldn't happen until Trump's administration has had a chance to review the regulations, and can lead talks between regulators and automakers about the final years of the program, which currently aim for a fleet average of more than 50 mpg.

A Technical Assessment Report issued by the EPA about the 2025 rules found that automakers were on track to comply and adopting technologies to boost efficiency and reduce greenhouse gas emissions faster than anticipated.

The Alliance believes that the report “over-projects” the benefits of certain technologies and fails to fully consider consumer acceptance and market factors.

“The combination of low gas prices and the existing fuel efficiency gains from the early years of the program is undercutting consumer willingness to buy the vehicles with more expensive alternative powertrains that are necessary for the sector to comply with the more stringent standards in out-years,” Bainwol wrote.

The 2025 fuel economy and greenhouse gas rules are a cornerstone of President Obama's effort to combat climate change. Trump meanwhile has said he believes climate change is a hoax and indicated he'd pare back EPA regulations aimed at reducing carbon emissions.

Any weakening of the 2025 standards will be met by stiff opposition from environmental groups, who've broadly championed the Obama administration policy.

“If the Trump Administration seeks to roll back fuel efficiency standards, which are highly popular with the American people and even have been supported by the auto industry, it will find us standing in the way,” Luke Tonachel, director of the Clean Vehicles and Fuels Project at the Natural Resources Defense Council, said in an e-mail.