U.S. to propose revoking California authority to set auto emissions rules: source

July 23, 2018, by David Shepardson

WASHINGTON (Reuters) – The Trump administration is expected as early as Thursday to propose revoking California’s power to set state vehicle emissions rules and mandate the purchase of electric vehicles, a government official briefed on the matter said.

The U.S. Transportation Department and Environmental Protection Agency are expected to unveil a proposed regulation that recommends freezing national emissions requirements at 2020 levels through 2026, the official said on condition of anonymity because it has not yet been made public.

The administration plans to propose a rule that would revoke a waiver California was granted by the EPA under the Clean Air Act to set state emissions rules and require zero emission vehicles. EPA and the Transportation Department will take comment and hold public hearings before finalizing a decision.

Regulators forecast freezing national emissions standards after 2020 would increase U.S. fuel consumption by about 500,000 barrels of oil per day, the source said. Government regulators also estimate the regulation, which they name the Safer and Affordable Fuel Efficient (SAFE) Vehicles rule, will cut traffic deaths and reduce the cost of new vehicles.

The proposal is sure to spark a massive fight with California and a dozen other states that have adopted California’s emissions rules, which would require average vehicle fuel efficiency to reach around 50 miles per gallon by 2025. Eliminating California’s electric vehicle mandate would hurt automakers like Tesla Inc (TSLA.O) and General Motors Co (GM.N) that are investing billions in EVs.

The Trump administration proposal will seek to reverse planned hikes in fuel efficiency standards adopted by the Obama administration. A freeze would reduce the average fleet fuel economy standard from a current projected level of 46.8 miles per gallon in 2026 to 37 miles per gallon, according to an earlier draft obtained by Democratic Senator Tom Carper.

The administration contends the new could lead to a total of 1 million additional new vehicle sales through 2029 versus if the Obama rules remained in place, the official said. Major automakers have repeatedly said they do not back freezing the requirements but have called for changes to take into account fuel prices and shifting consumer demand.

The proposal will also ask for comments on whether U.S. regulators should revoke or expand emissions credits for air conditioning improvements or offer new credits for autonomous vehicles.

The EPA and Transportation Department did not immediately provide comments on Monday.

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In May, California and a group of 16 other states challenged the Trump administration’s decision to reopen strict U.S. vehicle emissions rules for review. Reuters reported previously that the Transportation Department plans to assert in the proposal that California is also barred from setting emissions rules under a 1975 law.

The administration draft says the proposal would save up to 1,000 highway deaths annually by reducing the cost of new vehicles and prodding people to buy new safer cars sooner, the source said. California and environmentalists have previously criticized that analysis.

STAY OUT OF OUR WAY, CALIFORNIA OFFICIAL SAYS

California Attorney General Xavier Becerra said in a statement Monday that he is “ready to use every legal tool at our disposal to protect the current vehicle emission standards.”

The draft proposal forecasts the average cost of a new vehicle would fall by $1,850 by 2030 and would only have a “negligible impact” on the global climate of “3/1000th of one degree Celsius by 2100.”

The administration projects the new rule would reduce “societal costs” by about $500 billion over the life of the vehicles, but the administration’s overall forecast net benefits are unclear, once higher fuel consumption is taken into account.

The rules could thwart efforts to boost EVs in California.

In January, California Governor Jerry Brown set a new target of 5 million zero-emission vehicles in California by 2030, up from a prior goal of 1.5 million by 2025. Automakers have announced plans to spend tens of billions of dollars to add dozens of new EV models.

Representative Jimmy Gomez, a California Democrat, wrote on Twitter that the state’s “vehicle emissions standards are a big part of our environmental identity…. We actually care about our future. Stay out of CA’s way!”

Reporting by David Shepardson; editing by Chizu Nomiyama, Richard Chang and Cynthia Osterman