March 31, 2020
On March 31, 2020, the U.S. Environmental Protection Agency (EPA) and the National Highway Traffic Safety Administration (NHTSA) issued new standards for automobile fuel economy and greenhouse gas (GHG) emissions for model year (MY) 2021 through MY 2026 vehicles. The final rule, the Safer Affordable Fuel-Efficient (SAFE) Vehicles Rule for Model Years 2021-2026 Passenger Cars and Light Trucks, requires an annual 1.5% increase in the standards for passenger cars and light-duty trucks sold through MY 2026.
The regulatory landscape for fuel economy and tailpipe GHG emissions has experienced significant changes in recent years. In 1975, Congress passed the Energy Policy and Conservation Act (EPCA), which granted the Department of Transportation (DOT) the authority to regulate automobile fuel economy. DOT delegated this authority to NHTSA, which regulates fuel economy through the Corporate Average Fuel Economy (CAFE) program. Although state regulations of fuel economy are preempted by EPCA, California and several other states moved to regulate tailpipe GHG emissions in the early 2000s. The EPA was also poised to begin regulating tailpipe GHG emissions at the federal level after the Supreme Court’s 2007 decision in Massachusetts v. EPA.
Against this backdrop, the Obama Administration negotiated the “One National Program” agreement in 2009. Under the agreement, the EPA and NHTSA agreed to jointly issue fuel economy and GHG emissions regulations and California agreed to defer to the federal standards.
In 2012, the EPA and NHTSA issued joint regulations for vehicles sold in MYs 2017–2025, requiring a 5% annual increase in the stringency of the standards. But the agencies also committed to conduct “a comprehensive midterm evaluation and agency decision-making process for MYs 2022–2025 standards” by April 1, 2018. The final rule released today is the culmination of the Trump Administration’s midterm evaluation of the Obama Administration’s standards.
The EPA and NHTSA announced this planned regulation via a notice of proposed rulemaking (NPRM), published on August 24, 2018. That NPRM had two primary components. First, the NPRM proposed freezing the federal CAFE and GHG standards at their MY 2020 levels through MY 2026. Second, it proposed regulations that would make the federal government the sole regulator of fuel economy and tailpipe GHG emissions. The latter rulemaking, determining that state GHG and zero-emission vehicle standards are preempted by federal law and withdrawing California’s separate authority to establish such standards under the Clean Air Act, was issued in September 2019.
Part two of the joint rulemaking, released today, deals with the stringency of the fuel economy and tailpipe GHG emission standards and the applicable compliance mechanisms.
The New Standards
The final rulemaking includes several important developments of interest for the automotive industry, and departs in several ways from the action proposed in the August 2018 NPRM.
The rule will be published in the Federal Register in approximately one week and will become effective 60 days after its publication.
Litigation surrounding the final rule is a near certainty—indeed, California has already signaled its intent to challenge the rule in federal court.
 The Safer Affordable Fuel-Efficient (SAFE) Vehicles Rule Part One: One National Program, 84 Fed. Reg. 51,310 (Sept. 27, 2019). The ONP Rule is currently being challenged in the U.S. Court of Appeals for the D.C. Circuit, where Gibson Dunn represents a coalition of automotive manufacturers as Intervenors in support of the rule. See Union of Concerned Scientists v. NHTSA, No. 19-1230 (D.C. Cir.).
Gibson Dunn’s lawyers are available to assist in addressing any questions you may have regarding these developments. Please contact the Gibson Dunn lawyer with whom you usually work, any member of the firm’s Environmental Litigation and Mass Tort Group practice group, or the authors:
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