On November 30, 2016, EPA issued a Proposed Determination as part of its Midterm Evaluation of greenhouse gas (GHG) emission standards for model year 2022-2025 light-duty vehicles.  EPA has concluded, in this proposed adjudicatory determination, that these GHG standards, established in 2012, remain appropriate under the Clean Air Act (CAA).  EPA is required by regulation (40 CFR 86.1818-12(h)) to consider factors such as the availability and effectiveness of technology, appropriate lead time for technology, costs to manufacturers and consumers, and the feasibility and practicality of the standards in making this determination.  As this is an adjudicatory decision by EPA, it should not impacted by the Congressional Review Act (CRA), which establishes expedited procedures for overturning federal agency rules, and which is expected to be used by the incoming Trump administration to overturn contentious EPA regulations.

What is a Midterm Evaluation?

The requirement for a Midterm Evaluation was added during the 2012 rulemaking for GHG and corporate average fuel economy (CAFE) standards for model year 2017-2025 light-duty vehicles.  There are three steps in the Midterm Evaluation:

1. Issue a Draft Technical Assessment Report (TAR).  EPA issued the Draft TAR in July 2016, jointly with the NHTSA and the California Air Resources Board (CARB). The Draft TAR  examines issues related to the model year 2022-2025  GHG emission standards, such as the market penetration of fuel-efficient technologies, consumer acceptance of these technologies, and fuel prices and trends in vehicle fleets.
2. Issue a Proposed Determination.  EPA issued the Proposed Determination and a Technical Support Document (TSD) on November 30, 2016. To reach this determination, EPA considered public comments on the Draft TAR, updated some of its analyses, and concluded that the model year 2022-2025 GHG standards are still appropriate under CAA section 202(a)(1) in light of the record and latest available data and information.
3. Issue a Final Determination.  EPA has until April 1, 2018 to issue the Final Determination, but is expected, and has the discretion, to do so much sooner, before president-elect Trump takes office on January 20.

What are the implications?

Through its Proposed Determination, EPA has concluded that the model year 2022-2025 GHG standards should remain as promulgated, despite automotive industry evidence demonstrating the need for less stringent standards.  Industry claims that technology cannot develop as quickly, and at as low of cost to manufacturers and consumers, as estimated by EPA.  Further, EPA does not appear to have appropriately considered the impact of low gas prices.  Low gas prices have driven down consumer demand for more costly hybrids and electric vehicles.  This is problematic as EPA’s report states that a vehicle mix, which includes hybrids and electric vehicles, is necessary to meet 2022-2025 standards.

This Proposed Determination was originally anticipated to be released in 2017, along with a proposed rule on joint fuel economy standards from the National Highway Traffic Safety Administration (NHTSA).  While EPA’s action appears disjointed, the TAR will can provide NHTSA with the technical basis for its proposed rule.

Industry has been lobbying for amendments to make these GHG standards less stringent prior to the election, and will continue to lobby the Trump administration.  Even if a Final Determination is not issued before president-elect Trump takes office, the conclusions in EPA’s TAC and TSD – that technology is developing adequately to enable manufacturers to meet the standards – likely would require a new, extensive technical analysis and potentially a new rulemaking to overturn.  The longer timeframe EPA may need to change course could be problematic for industry, as development of new model years occurs well in advance.

Interested parties may submit comments to EPA until December 30, 2016.

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