EPA watchdog kicks off probe after agency slashed fuel efficiency regs

The Environmental Protection Agency’s (EPA) internal watchdog will probe “potential irregularities” in how the agency crafted a rule that drastically rolls back the mileage standards automakers must meet.

The evaluation of the rule comes after a former EPA employee complained career staff were sidelined when the rule was drafted. A review of documents by The Hill found the final rule ignored concerns flagged by the White House.

The notice from the EPA’s Office of Inspector General in part credits Sen. Tom Carper (D-Del.) for spurring the probe and says the watchdog will determine whether the rule was “consistent with requirements, including those pertaining to transparency, record-keeping, and docketing, and followed the EPA’s process for developing final regulatory actions.”

The March rule was issued by both the EPA and the National Highway Traffic Safety Administration (NHTSA), replacing a landmark climate measure under the Obama administration with mileage standards below what automakers have said is possible for them to achieve.

The rule, called the Safer Affordable Fuel-Efficient (SAFE) Vehicles Rule, cuts the year-over-year improvements expected from the auto industry from 55 miles per gallon by 2025 under the Obama administration to 40 mpg by 2026.

Career staff at EPA said they were shut out from crafting the rule.

“NHTSA would say nothing about what they were assuming. They wouldn’t give us a copy of their models, they wouldn’t share their assumptions, they wouldn’t share their projections of how much the standards were going to cost,” Jeff Alson, a former senior policy adviser to EPA’s Office of Transportation and Air Quality, told The Hill last year. 

He accused EPA Administrator Andrew Wheeler of lying to Congress about EPA staffers’ involvement in developing the standards. 

After the rule was finalized, internal documents obtained by Carper detailed how EPA staff objected to claims that the new rule would reduce climate change impacts, while other files showed the White House Office of Management and Budget (OMB) said the rule lacked legal justification.

The rule states “this action will result in reductions in climate change-related impacts and most air pollutants compared to the absence of regulation.”

But EPA staff disagreed with that assessment.

“This is not correct,” they wrote when weighing in on the rule NHTSA compiled after the interagency collaboration. “‘The absence of regulation’ … would be the existing EPA standards which are more stringent than those finalized in this action.”

Other rulemaking documents show the EPA was warned of possible legal action before finalizing the rule.

“The legal justification is lacking,” OMB wrote when sending the rule back to EPA after its review, adding that it “reads very cursory.”

“It does not do enough to explain why 1.5 is the right stringency level as a matter of fact or why it is proper as a matter of law,” OMB wrote, referring to the rule asking for 1.5 percent year-over-year improvements in fuel efficiency from automakers, versus the 5 percent required under the Obama administration.

“The documents obtained by my office – which have now also been formally requested by the EPA Inspector General – demonstrate significant irregularities and illegalities throughout the Trump Administration’s preparation and finalization of its SAFE Vehicles rule, which was fraught with fatal flaws from the start,” Carper said in a statement to The Hill.

“I’m pleased that the EPA Inspector General is opening an investigation into this rule, which was the product of the most procedurally problematic process my office has ever reviewed. If the EPA IG follows the facts, I have no doubt they will find that the Trump Administration failed to follow the law.”

Experts have said the SAFE Vehicles Rule is also vulnerable in court because its cost-benefit analysis shows Americans would lose money under the weakened standards.

The analysis found consumers would take a $13 billion hit over the next decade, in part due to spending more on gas because of lower fuel economy standards. It also estimates that increased pollution under the accompanying emissions regulations would cost taxpayers $22 billion over the next decade. 

The Energy Policy and Conservation Act also requires the NHTSA and EPA to set the maximum standard that’s feasible for automakers while being economically practicable to consumers.

“You’ve got four automakers who have already publicly stated they can do significantly more and data shows industry can improve the efficiency of vehicles at 2 percent per year, so the reality of the marketplace and what automakers have already said show this isn’t the maximum feasible,” David Friedman with Consumer Reports said shortly after the rule was released.

Four automakers signed a deal with California to meet more ambitious mileage standards shortly after the Trump administration pulled the state’s waiver that allowed it to set more stringent emissions regulations.