What the Reviewing of MPG Rules Could Mean

Revisiting the federal MPG standards does not necessarily mean there is a desire to rewrite them.

by Mark Phelan, Detroit Free Press / March 17, 2017

(TNS) -- Reopening the review of federal fuel efficiency standards isn’t about a return to the gas-guzzlers Detroit was once known for. It’s about honoring the deal the Obama administration made when the auto industry signed on to the most far-reaching and ambitious regulations in its history.

The Environmental Protection Agency invited the controversy that surrounded the review when it cut the process short earlier this year. The government committed to a midterm review in 2012 when it and automakers agreed to very challenging fuel-economy standards through 2025.

The EPA broke that deal when it ended the review days before the Obama administration ended. Donald Trump’s utterings on the very existence of the climate change the rules were created to address had been inconsistent. The EPA wanted to short-circuit the two-year review it had agreed to, but Trump’s announcement Wednesday at the American Center for Mobility in Michigan restarts the review, which was originally scheduled to run through April 1, 2018.

The EPA’s motivation was understandable but misguided. The agency knew a Republican could win the White House in 2016 when it agreed to review the standards. Nobody foresaw it being this Republican, but them’s the breaks: Automakers negotiated in good faith and got a promise to review the rules and consider new technologies and changing oil prices.

The standard should make window-sticker fuel-economy figures over 40 mpg common — the regulation says 54.5 mpg, but that’s based on a complicated formula very different from the mileage drivers get on the road. It’s a tough standard that will lead to lower fuel costs for drivers, more electric vehicles and environmental improvements. But the negotiators underestimated booming U.S. oil production and SUV sales when they agreed to the standards more than five years ago.

The auto industry liked the deal because it got a road map for new technologies and regulations through 2025 and unprecedented visibility for their long-term investment plans. The government was happy because the deal is meant to meaningfully reduce climate change and U.S. oil dependency.

It’s a good deal — and a good model for how industry and government can work together.

The claim the standard will eliminate more than a million jobs is a fake prediction, as the president might say. It’s the worst-case scenario in a 2016 study by the Center for Automotive Research. Among other things, that scenario assumes gasoline will cost $2.44 a gallon in 2025, less than it does today, and that meeting the regulations will add $6,000 to the cost of every vehicle.

The same study also has a best-case scenario that says the standards will create more than 140,000 jobs.

The standards allow U.S. automakers to make long-term investment plans and use the same technologies the rest of the world demands at home. Radically changing the standard would raise their development costs and make them less competitive.

Cheap gasoline and changing sales trends moved the goal posts but didn’t change the game.

A good-faith midterm review would have tweaked the rules; the newly reopened review will probably do that by reflecting the fact that electric vehicle sales are rising slowly and giving automakers more time to meet the standards.

Separate from the EPA review, automakers would love a single national standard for emissions and fuel economy. As it stands, California essentially gets to write its own rules, which are followed by other states with much of the U.S. population. It wouldn’t be a surprise if the Trump administration challenges that. It would be if they win.

©2017 Detroit Free Press Distributed by Tribune Content Agency, LLC.