Trump Reopens Fuel Economy Standards Review

MARCH 16, 2017

President Trump announced yesterday that EPA and the Department of Transportation (DOT) will re-examine the federal fuel efficiency standards for cars and trucks that currently require automakers to achieve a companywide vehicle fuel economy average of 54.5 miles per gallon (mpg), or its equivalent, by 2025.

The auto industry agreed to this 2025 mpg target with the Obama administration in 2012, subject to thea midway review by the Federal Government no later than April 2018, whether the established 2022-2025 fuel economy standards remain appropriate. If EPA determined that the mileage targets were no longer appropriate through this review, then the Agency and DOT would propose new fuel economy standards.

Although EPA has until April 2018 to complete its review, the then-outgoing Obama administration surprised the auto companies this past January by finalizing the midway review and by determining that the fuel economy standards did not need to be changed. EPA did not have its review checked first by the Office of Management and Budget, and the Agency excluded DOT from the process. Automakers were upset because they have been telling the Federal Government that the 2022-2025 standards could not be met with current technology and the cost of the vehicles would be unacceptably high to consumers.

President Trump’s announcement does not have any immediate effect. It simply reopens the midway review that was completed in the waning days of the Obama administration. The president called it an “11th-hour executive action” that he is reversing “to ensure any regulations we have ... are going to be fair.” A final decision on whether to alter the fuel economy standards may not come until early next year.

“ILMA is encouraged that the Trump administration is committed to a ‘best available data’ review of the fuel economy standards,” said ILMA CEO Holly Alfano. “It is the right thing to do, because the mileage standards have a direct effect on the vehicle supply chain, including engine oil formulations and transmission fluids.”

“Take engine oils, for example,” Alfano added. “The process to get mileage improvements for the OEMs requires a very focused, expensive, data-driven and collaborative process including stakeholders from the auto companies and oil industry.”

ILMA’s CEO also warns that there may be a catch if EPA’s review concludes that the 54.5 mpg target should be lowered. “California has a waiver under the Clean Air Act that allows the State to set its own emissions standards,” she said. “When the fuel economy standards were last set in 2012, EPA, DOT and California agreed to set one target so the auto companies could build one car for emissions purposes.” If the Trump administration and California cannot agree on new mileage standards, then some states could opt out of the federal standards and choose to comply instead with the “California car.” “Such a crazy quilt could play havoc with innovations in the formulations for automotive lubricants,” Alfano noted.