Carper Urges Chao, Wheeler to Abandon Plan to Dismantle Clean Car Standards

WASHINGTON, D.C. – Today, Senator Tom Carper (D-Del.), top Democrat on the Environment and Public Works Committee, sent a letter to Department of Transportation (DOT) Secretary Elaine Chao and Environmental Protection Agency (EPA) Acting Administrator Andrew Wheeler urging both to reverse course on a Trump administration proposal that recklessly undermines effective, Obama-era fuel economy and greenhouse gas emissions standards.

Carper also highlights a non-exhaustive list of 10 major deficiencies in the proposal, including the inaccurate assertion that the ‘maximum feasible’ fuel economy and tailpipe standards can legally be frozen for the better part of a decade; flaws in the legal reasoning used to argue that California’s authority to set its own clean car standards should be removed; disregard of technology cost and fuel-efficiency data; and non-credible predictions of the consumer and driving behavior used to underpin the proposal’s safety findings.

Carper writes, “…Your proposal, if finalized, would harm U.S. national and economic security. It would also undermine efforts to combat global warming pollution, create regulatory and manufacturing uncertainty for the automobile industry and unnecessary litigation, and increase the amount of gasoline consumers would have to buy… I urge you to abandon your current approach and do all that you can to support efforts to identify and finalize a ‘win-win,’ consensus approach.”

Carper warns of litigation if the proposal’s flaws are not remedied, adding that “…A likely outcome of that litigation is that courts will overturn NHTSA’s proposed model year 2021-26 fuel economy standards, leaving no fuel economy standards whatsoever in place starting in model year 2022, and will additionally overturn EPA’s proposed modifications to its existing model year 2021-26 tailpipe standards, leaving the current, more stringent EPA tailpipe standards in place.”

In May 2018, Senator Carper called on Secretary Chao and then-EPA Administrator Scott Pruitt to reverse course on a draft proposal obtained by Carper’s office that would weaken fuel economy and greenhouse gas emissions standards far beyond what even the U.S. auto industry had requested. When the extreme proposal was submitted to the White House a few months later in August, Carper decried the plan, highlighting the ways in which rolling back smart, effective clean car standards would hurt American business and the planet.

A copy of the letter can be found HERE, and the full text of the letter and its attachments is below:

October 16, 2018

The Honorable Elaine L. Chao                                   The Honorable Andrew Wheeler

Secretary                                                                     Acting Administrator

U.S. Department of Transportation                             Environmental Protection Agency

1200 New Jersey Ave. SE                                          1301 Constitution Ave. NW

Washington, DC 20530                                              Washington, DC 20460

Dear Secretary Chao and Acting Administrator Wheeler:

I write to strongly urge you to reverse course on your August, 2018 proposal to dramatically weaken future vehicle fuel economy and greenhouse gas tailpipe standards. The proposal, which is currently out for public comment, also seeks to remove California’s authority to set and enforce its own greenhouse gas tailpipe standards (as well as the authority of the 12 additional states, including Delaware, which have adopted them). The proposal wrongly asserts that California’s authority is preempted by law. 

As I noted in my May, 2018 correspondence^[1] regarding an earlier version of the draft rule that my office received, your proposal, if finalized, would harm U.S. national and economic security.  It would also undermine efforts to combat global warming pollution, create regulatory and manufacturing uncertainty for the automobile industry and unnecessary litigation, and increase the amount of gasoline consumers would have to buy.  

In past months, I have urged you both repeatedly to work to negotiate a ‘win-win’ solution on federal fuel economy and greenhouse gas tailpipe standards that can be supported by both the automobile industry and the State of California.  President Trump^[2], the automobile industry^[3] and the State of California^[4] have also indicated that they support such an approach. 

Regrettably, your proposed vehicle standards do not seem to reflect the almost universally-shared view that a consensus approach is within reach and should be pursued.   Moreover, the pending proposal is rife with seemingly unlawful assertions and erroneous assumptions.  Specifically, the proposal makes the inaccurate assertion that the ‘maximum feasible’ fuel economy and tailpipe standards can legally be frozen for the better part of a decade, bases its safety analysis on a model that in no way reflects real-world driving or consumer behavior, artificially inflates the costs and minimizes the benefits of fuel-efficient technologies that are currently being used by automobile manufacturers, and fails to follow statutorily mandated requirements and procedures. 

In fact, in comments submitted to the Department of Transportation and the White House Office of Management and Budget (OMB), EPA observed^[5] that “EPA analysis to date shows significant and fundamental flaws in CAFE model… These flaws make the CAFE model unusable in current form for policy analysis and for assessing the appropriate level of the CAFE or GHG standards.” 

I have attached a non-exhaustive list of some of the most significant deficiencies in your Agencies’ proposal.  As you work to evaluate public comments, I want to underscore the consequences that could result if these deficiencies are not addressed in a final rule – which include precisely the sort of litigation and regulatory uncertainty the automobile industry wishes to avoid.  Moreover, a likely outcome of that litigation is that courts will overturn NHTSA’s proposed model year 2021-26 fuel economy standards, leaving no fuel economy standards whatsoever in place starting in model year 2022, and will additionally overturn EPA’s proposed modifications to its existing model year 2021-26 tailpipe standards, leaving the current, more stringent EPA tailpipe standards in place.  This appears to be the opposite of the outcome this Administration has said it wants.

I have spent considerable time over the past year talking frequently and extensively with automobile manufacturers, suppliers, officials representing the State of California, and other stakeholders.  I remain convinced that an agreement is well within reach that would provide near-term flexibility and predictability for the auto industry, more rigorous standards going forward, and continued compliance flexibilities and incentives to develop electric and other advanced technology automobiles, all while avoiding years of unnecessary litigation with California and others.  I urge you to abandon your current approach and do all that you can to support efforts to identify and finalize a ‘win-win’, consensus approach.

Thank you very much for your attention to this important matter. If you have any questions or concerns, please contact me directly or have your staff contact Michal Freedhoff of the Environment and Public Works Committee staff, at 202-224-8832.

Attachment 1

A non-exhaustive list of significant deficiencies in the proposed rules that, if finalized, could leave the rules vulnerable to legal challenge.

3. Relies on modeling of driver habits that contains documented errors and yields conclusions which defy common sense, distorts projections of regulatory impact, and lacks credibility. NHTSA is required by law to consider economic practicability when it is setting fuel economy standards.^[10]  As part of this analysis, NHTSA developed a new and not-yet-peer-reviewed module for predicting consumer behavior.  The module essentially assumes stronger fuel economy standards depress new car sales and keep more old cars on the road.  Despite repeated corrections by EPA that are recorded in the docket, the NHTSA module projects that each new vehicle sale that is deferred results in many more old cars staying on the road, driving billions more miles than the new vehicles themselves otherwise would have – a pattern that defies common sense.  Because additional vehicle miles traveled (VMT) correlate to both emissions increases and roadway fatalities, these implausible modeling results distort the regulatory impact analysis and render its results virtually meaningless as a basis for the statutorily required economic analysis. Indeed, the NPRM concludes that leaving the more stringent standards in place would lead to 12,700 additional deaths by MY 2029,^[11]  6,180 of them attributable to this new module.   However, materials in the rulemaking docket^[12] indicate that EPA believes this NHTSA module is fundamentally flawed, cannot be relied upon to justify the proposed rollback, and that EPA repeatedly brought these deficiencies to NHTSA’s attention. Specifically:

• According to EPA’s analysis, NHTSA’s module predicts that if the current standards are left unchanged, there will be a 15-20% increase in registered vehicles because so many old cars will stay on the road – a conclusion that cannot be explained by any real-world policy or projection.
• According to EPA’s analysis, NHTSA’s module predicts that the current, more fuel-efficient, standards would result in 8,000 new vehicles that consumers would not purchase each year (because they would be too costly), and also result in an additional 512,000 used vehicles remaining on the road each year, a phenomenon that appears to be a fictitious creation of the module that has no real-world explanation.
• According to EPA’s analysis, NHTSA’s module predicts an unexplained 10-15% increase in vehicle miles traveled (VMT) if the standards remain unchanged. Specifically, the module predicts people will drive an extra almost 700 billion miles in model years 1977-2029 vehicles, with no real-world explanation for why that would be^[13].
• The exaggerated estimates of vehicle miles traveled are magnified by a factor called the ‘rebound effect,’ to which NHTSA attributes 6,340 of the 12,700 additional deaths that would result if the current standards are left unchanged.  This factor assumes that because fuel-efficient cars are cheaper to use, people will drive more. The NPRM assigns a value of 20 percent to the ‘rebound effect’ (meaning 20 percent more driving by consumers in more fuel-efficient vehicles) – twice the value that both EPA and NHTSA have determined to be appropriate since 2010, and absent any justification for departing from its past practice.^[14]  EPA also found flaws in the application of the rebound factor, noting^[15] that NHTSA’s model wrongly predicts less driving associated with more stringent standards when the rebound effect was set to 20 percent than when it was kept to 0 percent, which is the opposite of what would be expected in the real world. This once again undermines the credibility of NHTSA’s modeling results as a basis for legally justifying a regulatory decision. 

4. Ignores industry data on automobile safety: Safety analysis has always been an important component of the balance that NHTSA seeks to achieve when setting fuel economy standards.  Of the 12,700 additional deaths the NPRM states will occur if the currents standards are left unchanged,^[16] 160 of them are attributed to ‘mass changes’.  This means that as vehicles are light-weighted to comply with more stringent standards, NHTSA believes that more people will die as a result of traffic accidents that occur in these lighter vehicles.  Although the proposal notes that reducing the mass of light trucks generally improves the fleet’s overall safety, it does not note that a recent study disproves^[17] the argument that fuel economy standards result in more traffic fatalities in the first place. The proposal additionally fails to incorporate other industry^[18] analysis^[19] that shows that most of the mass reductions the industry is undertaking to improve fuel economy is being planned to occur in light trucks (which therefore, even by NHTSA’s own flawed argument, should be projected to result in an overall reduction in traffic fatalities). 

5. The NPRM ignores premature deaths due to increased air pollution that are presented within their own environmental study: Even NHTSA’s contorted modeling shows that freezing fuel economy standards would increase air pollution, since vehicles that use more gasoline also emit more toxic air pollutants.  Table 4.2.3.1 of the Draft Environmental Impact Statement^[20] on the proposed rule shows that there will be as many as 299 premature deaths associated with freezing the standards from MYs 2020-26 by 2050. These additional deaths relative to the current standards are not factored into the total fatalities contained in Table 11-27 of the NPRM, and do not appear to be included in the analysis used to justify freezing the standards.

6. Uses inaccurate and/or disputed cost, technology and compliance data that undermine the statutorily mandated analysis of ‘technological feasibility’:  Another factor that NHTSA is required to consider when setting standards under the law is “technological feasibility.”^[21] Two years ago, NHTSA claimed there would be nearly $100 billon of net societal benefits^[22] associated with maintaining the current standards, while now it claims that keeping these rules will lead to about $200 billion of net societal costs^[23]. In its extensive comments^[24] to NHTSA and OMB prior to the release of the proposed rule, EPA repeatedly highlighted examples of problematic cost, technology and compliance assumptions made by NHTSA, most, if not all of which, do not seem to have been remedied in the proposed rule.  All of these assumptions result in an over-estimation of the current, more fuel-efficient standards’ costs, and an under-estimation of their benefits.  If these assumptions are not remedied in the final rule, litigation could be filed on the grounds that each or all of them are arbitrary and capricious.  Some examples of these flaws include:

• EPA observed that NHTSA over-estimated the costs of some fuel-efficient technologies compared to their current, real-world costs and use. For example, EPA noted that NHTSA assigned a cost of Dynamic Cylinder Deactivation that “is 2-4 times higher than industry quoted costs for the version of the technology which is going into production in MY2019,” observing that the high costs lead to a prediction that this technology will not be implemented at all under its ‘preferred alternative,’ even though GM is offering the technology in the MY 2019 Silverado which will be available for sale in late 2018. EPA believes that existing plans to use this technology will likely result in its inclusion in “well past 4.4%” of the new vehicles sold in the MY2019-2022 timeframe.  In another example, EPA notes that NHTSA assumes that the cost of batteries for hybrid and plug-in vehicles is in most cases 20-40% more expensive than would be expected using Department of Energy projections. 
• EPA told NHTSA and the White House Office of Management and Budget that the NHTSA model uses the most expensive technology packages available to meet the standards, which overestimates the most cost-effective ways to do so by $1-2,000 per vehicle.  For example, NHTSA’s assumptions about which types of hybrid technology to include in its model results in “strong hybrid packages that are significantly higher costs [sic] and less effective than the vast majority of real-world implementations.”
• EPA identified NHTSA’s omission of the benefits of some fuel-efficient technologies entirely, along with errors in the values NHTSA assigned to others.  For example, ‘start/stop’ technology, which causes engines to automatically shut off while vehicles are stopped in traffic (and thus use no fuel), was estimated by NHTSA to have a negative effect on fuel-efficiency in some scenarios, which is simply not plausible.   In another instance, EPA observed that the most advanced eight-speed transmission technologies are assigned unrealistically low fuel-efficiency effectiveness values for some vehicle types.  EPA also noted that the more expensive version of an engine technology (TURBO2), which would be expected to be more fuel-efficient, was instead assigned a negative fuel-efficiency value for some types of vehicles in NHTSA’s model.  Additionally, an existing engine technology called cooled exhaust gas recirculation (CEGR1), which has been demonstrated in the market to significantly reduce carbon dioxide emissions, was assigned a fuel-efficiency effectiveness of at or near zero for nearly all of the options modeled by NHTSA.
• EPA also called out NHTSA’s decisions to omit the existence of technologies that provide a significant improvement to fuel economy that are currently deployed in the marketplace, such as the Atkinson engine.  EPA observed that with “Mazda applying the technology to the majority of their current vehicles, and Toyota announcing its plan for at least 60 percent application (by volume) by 2021,” it was unrealistic that the NHTSA model does not even project the inclusion of this technology in future compliance modeling scenarios of the companies that use the technology today.
• EPA also noted that NHTSA did not appear to recognize that the Clean Air Act allows trading of compliance credits between a company’s car and truck fleets, which most companies currently and regularly engage in.  This failure had the effect of driving compliance costs up since it assumes that a company would need to purchase credits from other companies rather than transfer credits from (for example) its over-compliant car fleet to its under-compliant truck fleet.  According to EPA, the model also “inappropriately applies the credit cap (10g/mi) separately to each manufacturer’s car and truck fleets” rather than the combined fleet as allowed for in the regulations.

7. Relying on preemption analysis that has been rejected by courts: The NPRM states that “States may not adopt or enforce tailpipe greenhouse gas emissions standards when such standards relate to fuel economy standards and are therefore preempted under EPCA [Energy Policy and Conservation Act], regardless of whether EPA granted any waivers under the Clean Air Act (CAA).” It additionally concludes that “the California ZEV [zero-emissions vehicle] mandate is expressly and impliedly preempted by EPCA.”  These assertions are starkly contradicted by the body of case law interpreting the interplay between EPCA, CAA^[25], State waivers under the CAA, and the legislative history of both acts. That history affirms that EPCA’s preemption provisions simply do not apply to pollution standards applicable to new motor vehicles, including greenhouse gas pollution standards, set by EPA or by California acting pursuant to a Clean Air Act waiver.  The document also does not cite the clear Congressional intent on this point expressed by three of the principal^[26] authors^[27] of the fuel economy provisions of EPCA during their December, 2007 consideration on the House and Senate Floors that also refute the preemption proposal’s premise.

8. Unprecedented attempt to revoke California’s waiver to set standards:  The NPRM also proposes to revoke the waiver California received under section 209 of the Clean Air Act to enforce its own light duty vehicle and zero-emissions vehicle standards, although EPA has never before revoked any of the more than 100 such waivers that have been granted.^[28] The NPRM invokes all three statutory criteria that could be used to deny a waiver, namely that “EPA finds that California’s determination that its standards are, in the aggregate, at least as protective of public health and welfare as applicable Federal standards, is arbitrary and capricious; that California does not need its own standards to meet compelling or extraordinary conditions; or that such California standards and accompanying enforcement procedures are not consistent with Section 202(a) of the CAA.” Since the NPRM proposes to freeze federal standards between MYs 2020-26, it is difficult to understand how a determination that California’s stronger standards would be more protective of public health and welfare could be arbitrary and capricious.  No scientific or other evidence was provided to refute EPA’s 2009 approval^[29] of California’s waiver application, which acknowledged the “adverse impact that climate change may have on local ozone conditions” as well as “the evidence submitted concerning the observed and projected impacts of global climate change in California and other states” when it determined that the conditions the California standards were intended to meet constituted compelling and extraordinary conditions. Finally, as noted in the above section, several court decisions have informed the question of whether fuel economy standards, EPA tailpipe standards and California’s separate standards can co-exist free of conflict, as they have since 2009.

9. EPA did not draft its own proposed rule, which may be unlawful: Numerous reports have indicated that EPA provided almost no input into this proposal, which was written largely by NHTSA.  One recently retired EPA official stated that “EPA staff had basically nothing to do with that entire document and analysis,^[30]” and another current EPA official asked^[31] that EPA’s logo be removed from the document to reflect that fact.  Not only is this a dramatic departure from past inter-agency processes, it is also likely illegal, as courts^[32] have^[33] repeatedly^[34] ruled that agencies can use external input and advice when writing regulations under their own statutory authorities, but must write the regulations themselves. 

10. NHTSA failed to include a reasonable range of regulatory alternatives as mandated by the National Environmental Policy Act: The range of alternative standards that were analyzed in NHTSA’s Draft Environmental Impact Statement depart from past practice, because they do not appear to include a reasonable range of alternative rulemaking options. In fact, none of the alternatives analyzed are more stringent than the current (augural) standards. This also poses a legal vulnerability.  In 1981, the Council on Environmental Quality published in a memorandum to agencies that addressed how alternatives should be selected,^[35] saying that the range examined should include “the full spectrum of alternatives”. It uses as an example a proposal to designate wilderness areas within a National Forest from 0 to 100 percent of the forest and states that “An appropriate series of alternatives might include dedicating 1, 10, 30, 50, 70, 90 or 100 percent.” The document goes on to explain that reasonable alternatives include those that are practical or feasible from the technical and economic standpoint and using common sense, rather than simply desirable from the standpoint of the applicant. Several^[36] court^[37] decisions^[38] have opined on this ‘reasonableness’ test and required a broader range of alternatives to be required for consideration by agencies that were found to have unlawfully constrained them.

Attachment 2 – Historic Tailpipe Performance of Cars and Trucks (not including advanced technology vehicle, air conditioning off-cycle or other compliance flexibilities)

           Source: EPA’s Fuel Trends, Table 9.1

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