Policy Brief:

TheSaferAffordableFuel-Ef2icient(SAFE)VehiclesRule

RevokingCalifornia’sWaiverandImpactsonElectricVehicle(EV)Deployment

September 2018

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Policy Brief: TheSaferAffordableFuel-Ef2icient(SAFE)VehiclesRule

Introduction InAugust,theU.S.EnvironmentalProtectionAgency(EPA)andtheU.S.DepartmentofTransportation’sNationalHighwayTrafEicSafetyAdministration(NHTSA)unveiledjointproposedrule-makingtorevisetailpipeemissionstandardsandaveragefueleconomystandardsforcarsandlight-dutytrucksmanufacturedformodelyears2021-2026.ThisannouncementcreatedaconfrontationwithCaliforniaandraisedquestionsaboutwhetherEPAhastheauthoritytorevokeCalifornia’swaiver–whichtheydidintheproposedrule–underthecircumstances,andwhetheritsbettertoforgeacompromisebothgovernmentscanlivewith.

Backin2012,EPAandtheNHTSAEinalizedstandardsrequiringautomobilemanufacturerstoaverage54.5milespergallon-equivalentacrossnewvehicleEleetsby2025.Thisstandardisroughlyequivalentto36milespergalloninreal-worlddriving.Followingitsreviewofthesestandards,EPAhaddeterminedtheyareunwarrantedandinconjunctionwithNHTSA,proposedtolowerthemconsistentwith2020levelsandlocktheminplaceuntil2026givenconcernsbyautomobilemanufacturersthatthestandardswereinfeasible,evenwithrosyassumptionsabout

hybrid,plug-inelectric,andfuelcellvehiclemarketpenetration.

EPA,asdiscussedmorefullybelow,facedasigniEicantoppositionfromCalifornia,whichhistoricallyenjoyedtheauthoritytosetitsownfuelefEiciencystandardsforvehicles,andfromenvironmentalgroupsEiercelyopposedtoanymovebytheTrumpAdministrationtomodifyObama-eraregulations.CaliforniaandotherstatesmadeitwellknowntheyplannedtosuetoblockEPAandNHTSA’sruleintheinstanceofEinalized.

EPA Review is Legally Required Despitecertainpresscoverage,thiswasnotasimplecaseofregulatoryrollback.AspartofthestandardsEinalizedin2012,EPAwasrequiredtoconducta“mid-term”reviewofthestandardsformodelyears2022-2025giventhatthosestandardsweresetmorethanadecadeinadvance.

Backthen,automakerswereconcernedoverthelackofreliableprojectionsforthecostandtheavailabilityoftechnologiesneededtomeetthesestandards.TheAllianceofAutomobileManufacturershadsaidnoconventionalvehicletodaycanmeetthestandardsaswritten.Some

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hybrids,plug-inelectric,andfuelcellvehiclescan,buttheycomprisefewerthan3.5percentofnewvehicles.

Inotherwords:thisreviewwaslong-plannedandwaslegallyrequired,andmanybelievedtheObamaAdministrationrushedtocompleteitsversionofthereviewinitsEinaldayswithoutcoordinatingproperlyacrossagenciesandconsideringthevoluminoustechnicalrecordithadcompiled.

Indeed,priortothe2016presidentialelection,inJuly,EPA,NHTSA,andtheCaliforniaAirResourcesBoard(CARB)jointlypreparedadrafttechnicalassessmentexaminingthefeasibilityofthestandards.Theassessmentfoundautomakerscouldmeetthestandardsatareasonablecost(automakersgenerallydisagreedandhavesinceobjected).

EPAthenindicateditwouldcompleteitsmid-termreviewandissueitsdeterminationonwhetherthestandardsshouldbemodiEiedbythemiddleof2017–aprocessthatwouldinvolveNHTSAandCARB.

ButonNovember30,2016,afewweeksafterDonaldTrumpwaselectedpresident,EPAchangedcourseand,unilaterally,releasedadraftdeterminationsayingthestandardsfor2022-2025shouldremainastheyare.TheagencyspedthroughanabbreviatedperiodforpubliccommentandthenEinalized

itsdetermination,unchangedfromitsproposal,onJanuary13,2017.

Notably,NHTSAandCARBdidnottakepartinthisreview.InMarch2017,theTrumpAdministrationperformedthelegallyrequiredreview,whichultimatelyledtotheSAFEVehiclesRuleproposal,includingrevocationofCalifornia’swaiver. Impacts on EV Deployment LegalprognosticatorsareallovertheboardonhowEPA/NHTSA’sproposaltorevokeCalifornia’swaiverwillplayoutinthecourts.However,assumingtherulestood,therewerewidelydivergentviewsonhowthatwouldimpactEVdeploymentintheUnitedStates.Asalegalmatter,itwouldblocksomeofCalifornia’smoststringentvehicleemissionsgoals,butasapracticalmatter,somesayyoucan’tputthetoothpastebackinthetube,sotospeak.

TheSAFEVehiclesRulewouldineffectpre-emptCalifornia’sZeroEmissionsVehicle(ZEV)mandate.ThismandateiscreditedwithmuchoftheEVgrowthinCaliforniaandotherstateswho’vechosentoadopttheCaliforniastandard.MorespeciEically,theZEVprogramrequiresautomakerstosellelectriccarsandtrucks inCaliforniaandnineotherstates(Connecticut,Maine,Maryland,Massachusetts,NewJersey,NewYork,Oregon,RhodeIsland,andVermont).

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Theexactnumberofvehiclesislinkedtotheautomaker’soverallsaleswithinthestate.

Theprogram’sinitialobjectivewastoensurethatautomakersresearch,develop,andmarketEVs,whichgeneratefeweremissionsthanvehiclespoweredwithinternalcombustionengines.Bydirectlyrequiringthatautomakersinvestincleantechnology,theZEVprogramwasconsideredadrivingforcebehindanexpandingmarketwithacurrentofferofover30zeroemissionmodelsavailabletotheU.S.public.

Programcomplianceishighlytechnical,buttheprogramisoneoftheprimaryreasonsCaliforniaissettoexceeditsgoalof1.5millionEVsontheroadby2025andisconsideredwithinstrikingdistanceofthestate’smoreambitiousgoalof5millionEVsontheroadby2030.Iftheprogramwerepre-emptedalongwithsimilarprogramsinnineotherstates,itseasytoseewhyEVadvocateswereconcernedabouthowtheSAFEVehiclesRulewouldstiEleEVdeploymentprogress.

Ontheotherhand,freemarketproponentshavepointedoutthatifEVsareabetteroption,theywon’trequireamandatetoimprovetheirpopularity.And,theTrumpAdministrationhaspointedoutthatanentirecountryofdriversshouldn’tbeforcedtosubsidizeaspeciEicstate’spolicypreference.Aswithallthings,thefulltruthisprobablysomewhereinbetween.

But,manyEVadvocatesandtechnicalanalystshavebeguntobelievethatEVswillcatchanddeploymorequicklyregardlessofmandates.

Forexample,anICFreportreleasedin2018arguedthatotherpolicyleversandinternationaltrendsmaymakeCAFEstandardsamootpoint.Thereportexplicitlystates,“The[EPA’s]about-faceisnotlikelytohaveanappreciableimpactonthelong-termtransformationthatisalreadyunderway.”ICFtechnicaldirectorPhilSheehywentasfarassaying,“ThecatisoutofthebagonelectriEication.There’sjustnotalotthatyoucandotoundowhat’salreadybeendonethere.”

Tobesure,automakershavebeeninvestingheavilyinEVbatteryR&DandutilitiesareworkingwithEVserviceproviderstoexpandEVcharginginfrastructureavailability.

The Alliance for Innovation and Infrastructure (Aii) consists of two non-profit organizations, The National Infrastructure Safety Foundation (NISF) a 501(c)(4), and the Public Institute for Facility Safety (PIFS) a 501(c)(3). The Foundation and the Institute focus on non-partisan policy issues and are governed by separate volunteer boards working in conjunction with the Alliance’s own volunteer Advisory Council.

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