July 29, 2011

White House Flouts Agency Heads, Rolls Out Backroom Deal on Fuel Economy Standard

This post was written by Member Scholar Amy Sinden and Policy Analyst Lena Pons.

This morning President Obama will make an announcement about upcoming fuel economy and greenhouse gas emission standards for passenger cars and light trucks for model years 2017-2025. The announcement will reference the Administration’s plan to propose a standard to reach 54.5 miles per gallon by 2025. These standards will set the pace at which automakers improve the fuel economy of cars for many years to come, and help to determine how quickly advanced technologies – plug-in hybrids, electric vehicles, and fuel cell vehicles – will be available in showrooms.

But the planned announcement is troubling because the number the President will roll out was the result of raw political wrangling, not the rational policymaking process that the Administration purports to pride itself on. The White House has been haggling with the automakers for the last month, and 54.5 is the magic number that has emerged from that negotiation.

This is not how the process is supposed to work. Under the laws passed by Congress, the agencies are supposed to go through a rational scientific process in order to set the standard at the “maximum feasible” level. Once the agencies – in this case the National Highway Traffic Safety Administration (NHTSA) and EPA – have gone through that process and come up with a tentative number, then they are supposed to go through the notice and comment rulemaking process. That means they publish their proposed rule along with a detailed explanation of their proposal and supporting information. Then everyone, including the automakers, is invited to comment on the proposal and attempt to persuade the agencies of how the initial proposal should be modified. The comments of all interested parties are public, and everyone is theoretically included in the process. This process is not new or unfamiliar. It is one of the fundamental tenets of Administrative Law.

But the Administration has put the cart before the horse. The agencies have been working to craft the proposed 2017-2025 standards for over a year, tackling the challenging task of developing a scientific basis for determining what level of fuel efficiency will be the maximum that is technologically and economically feasible a decade-plus out into the future. This process is scheduled to result in the publication of a proposed rule and the initiation of the notice-and-comment rulemaking process in September.  But the White House short-circuited that process. 

It all started late June, when automakers leaked to the press that the Obama Administration expected to propose standards that would reach 56.2 miles per gallon in 2025. Automakers immediately went on the offensive, running radio ads and issuing press releases with stories about the doom and gloom that would result from the Administration’s proposal. 

In response, the White House offered to negotiate the standards to find a level of stringency the industry could stomach. The problem with this approach is that rather than going through the notice-and-comment rulemaking process, the industry drew a line in the sand. 

If the level of improvement is set based on a political deal, then the agencies will be left to come up with a justification after the fact. But President Obama nominated, and the Senate confirmed, the heads of these agencies to carry out a mission to protect the American people from air pollution and to buffer them from volatile gas prices. The rulemaking process should be driven by law. And the law says that the agencies should select a level of stringency that is the maximum feasible, economically practicable level that both reduces the air pollution that endangers public health and welfare and supports the need of the nation to conserve energy.

The fuel economy and greenhouse gas standards for cars and light trucks are important. They may be the single most significant step President Obama takes in his first four years toward controlling greenhouse gas emissions and protecting us from the worst consequences of climate change. The 2017-2025 standards are being set well in advance to give the auto industry time to meet goals that will transform the industry. The concessions the auto industry reportedly secured in the deal with the White House – a carve-out for pickup trucks, and a review of the technology and economics assumptions in 2018 – are exactly the kind of issues the automakers should suggest to the agencies as part of the comment process. These are decisions for the experts running the agencies, not political compromises doled out by the White House.

Amy Sinden, CPR Member Scholar; Professor of Law, Temple University Beasley School of Law. Bio.

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