Fuel mileage standards may be rolled back

President Trump promises to protect manufacturing jobs

3/16/2017

BY TYREL LINKHORN
BLADE BUSINESS WRITER

President Donald Trump gestures as he speaks at the American Center for Mobility in Ypsilanti, Mich., on Wednesday.

ASSOCIATED PRESS

YPSILANTI, Mich. — The Trump Administration will review a set of EPA rules that govern future vehicle fuel economy standards, a move that has been sought by most major automakers but seen as worrisome by environmentalists and many consumer groups.

President Donald Trump made the announcement Wednesday at the American Center for Mobility, a up-and-coming testing facility for self-driving and connected cars at located on the grounds of a World War II bomber factory in Ypsilanti, Mich.

“The assault on the American automotive industry, believe me, is over,” Mr. Trump said. “We’re setting up a task force in every federal agency to identify and remove any regulation that undermines American auto production and any other kind of production.”

The current Corporate Average Fuel Economy standards were put in place by the U.S. Environmental Protection Agency and the National Highway Traffic Safety Administration in 2012 as part of an effort to cut greenhouse gas emissions, lower drivers’ fuel costs, and reduce the country’s dependence on imported oil. The guidelines, which went into effect with the 2017 model year, require that automakers must have an average fleet economy of 54.5 miles per gallon by the 2025.

The figure is lofty but it’s also somewhat misleading, as the real world fuel economy target will be closer to 40 miles per gallon, given how the calculations are done. And not every vehicle will be required to meet even that — pickup trucks, for example, will have lower targets than will small cars.

Prior to making his comments, Mr. Trump and several administration officials met with Michigan Gov. Rick Snyder, top U.S. auto executives, and leaders with the United Auto Workers. Several hundred UAW employees were bused to the event from plants in Michigan and Ohio, including about 60 employees of the Fiat Chrysler Automobiles’ Toledo Assembly Complex.

Mr. Trump’s move reopens a review of the CAFE standards that was initially set to be completed in 2018, but was rushed through in the last days of the Obama Administration in an effort to lock in the regulations before Mr. Trump took office.

“If the standards threatened auto jobs, then common sense changes could have and should have been made. Just days before my inauguration the previous administration cut short the promised midterm review in an eleventh-hour executive action,” Mr. Trump said. “Today I am announcing we are going to cancel that executive action.”

The decision will have no immediate effect on fuel economy standards, but the targets could be lowered following the review.

For the automotive industry, the decision to revisit the planned review was welcomed.

Speaking to reporters after Mr. Trump’s speech, Sergio Marchionne, the chief executive officer of Fiat Chrysler Automobiles, said he felt the Obama Administration’s decision to lock in the 2025 guidelines early this year went against the the intention of the rules when they were put in place.

“I was there,” Mr. Marchionne said. “We all agreed that 2017 and 2018 were going to be used to carry out a thorough midterm review with the full participation of the auto industry.”

Automakers have expressed concern about hitting that target, particularly as Americans are shunning cars for larger crossovers, sport utility vehicles, and trucks. In a Feb. 21 letter sent to EPA director Scott Pruitt, the Auto Alliance, an industry association representing a dozen automakers, including General Motors, Ford Motor, and Fiat Chrysler, said the 2025 standard could cost 1.1 million jobs.

Mr. Marchionne, who was among a group of industry and union leaders who met with the President prior to his speech, said the industry could meet the targets, but he questioned at what cost.

“Ultimately all these things can be achieved at a price, that’s not the issue,” Mr. Marchionne said. “At the end of the day, the question is can a consumer afford to pay for all the technology in the car.”

Research from Michael Sivak, director of the Sustainable Worldwide Transportation Research Institute at the University of Michigan, found the average EPA-rated fuel economy of new vehicles sold in the United States last month was 25.1 miles per gallon.

Mr. Sivak noted that’s 5 mpg higher than what the study reported in October, 2007 — the first month for the ongoing project — but down 0.4 mpg from the peak reached in August 2014.

While reopening a review of the CAFE standards was the major policy point of the event, Mr. Trump’s speech was reminiscent of the freewheeling style of his campaign.

For example, he abruptly jumped at one point from talking about the fuel standards to unfair trade.

“For decades I’ve raised the alarm over unfair foreign trade practices that have robbed communities of their wealth and robbed our people of their ability to provide for their families,” he said. “They’ve stolen our jobs, they’ve stolen our companies, and our politicians sat back and watched, hopeless. Not anymore.”

While the President didn’t offer specific initiatives or polices, he talked at length about the need — and his expected success — of bringing more automotive jobs to Michigan and the United States. He highlighted recent hiring announcements from Ford and Fiat Chrysler as proof of that, though company executives have said those decisions were not tied to his presidency.

He did not talk much about the venue, American Center for Mobility, or the industry’s push for more autonomous and connected vehicles.

Still, Mr. Snyder said it was an important visit to the state.

“It was great to have the president here, and to have a great discussion, and show him about the American Center for Mobility,” the Michigan governor said. “I appreciate his comments about helping the auto industry and hopefully it means more job for Michigan and the country.”

Mr. Trump teased what he said was a major announcement for the automotive industry coming next week, though it wasn’t clear if he was referencing an announcement from his administration or the industry itself.

News of the reopening the fuel economy standards drew quick blowback from environmental and consumer groups.

In a statement released before the president had even spoken, Rhea Suh, president of the Natural Resources Defense Council said the change made no sense.

“Mileage standards save consumers money at the gas pump, make Americans less dependent on oil, reduce carbon pollution and advance innovation,” she said. “The current standards helped the auto companies move from bankruptcy to profitability, and there is no reason they cannot be met. This is just another part of President Trump’s retreat from action on climate change.”

Consumer Federation of America also released a statement saying U.S. car buyers won’t benefit from any changes to the standards.

“Tragically,” the group said. “the biggest beneficiaries of rolling back fuel efficiency standards will be the foreign oil companies, just as we are reducing our dependency on foreign oil.”

Contact Tyrel Linkhorn at tlinkhorn@theblade.com or 419-724-6134.