Did Scott Prewit just resurrect gas guzzlers? Today on Parts Pervilion, we break down what the latest EPA decision will mean when the rubber really hits the road. Hello, and welcome to Parts Pervilion. I'm your host David Schultz, and we are here for a very special edition of Parts Pavilion with our climate reporter Abby Smith here at Bloomberg Environment. There was some breaking news just a few hours ago.
Scott Prewit and the EPA have made a big decision on fuel efficiency for cars and trucks, and Abby is here just to break it all down and explain what it means. It's pretty complicated. Hopefully it will not be so complicated after Abby explains it. But Abby just made a face, so I'm wondering if that's if that's going to have him. Abby, thank you for joining us, Good luck, Thanks for having me. So, okay, let's start at the beginning.
What you know, can I can't just buy any kind of car that I want or I guess to put in another way, the auto manufacturers can't just make a car that gets like two miles per gallon because there are these regulations. Can you explain what the regulations are what power the EPA has to regulate automobiles. Sure, EPA regulates cars greenhouse gas emissions, but when you're looking at the fuel economy program, it's actually three agencies that do
the regulating. It's EPA which regulates cars greenhouse gas missions, It's the National Highway Traffic Safety Administration part of the Transportation Department that regulates fuel efficiency. And then also California is in the mix because it has a special power under the Clean Air Act basically set its own state level standards that could be different. California is very special.
California is very special. That's true. So right now, the Obama administration back in twenty ten and twenty twelve made an agreement with automakers, EPA, NITZA, and California to set one national program, one national standard, so the standards are the same for automakers across the country. And that's just to make it easier, so you know, the car makers wouldn't have to make, you know, special cars for California and different cars for other states. That would be a
huge mass. So they all just decided, let's just set one fuel economy standard for all cars. That's right, Yeah, so if you're an automaker, you can make one model of your car. You don't have to make a separate model for California and a separate model for the rest of the country. It makes it much easier for you to comply. It's the less of a regulatory headache for you. So that was what was going on. We should actually
take one quick step back. I mean, this may seem obvious, but what are the environmental benefits to having these standards? I mean, is this you know, how significant are the greenhouse gas pollutions pollution that comes from the cars. Well, actually, just this past year, transportation emissions actually surpassed the power sector as the most emitting sector of the economy. So when you're looking at transportation of greenhouse gas, missions from
cars and trucks are pretty significant. So if we reduce those, it's a pretty substantial benefit for the climate. So, Okay, during the Obama administration, everyone agrees we have one standard California EPA, NITSA. Everyone's in the same page. But then what happened. So what happened November twenty sixteen, the Trump President Trump is elected, and basically what happened is when the Obama administration set the standards back in twenty twelve.
Part of the agreement was that they would do kind of a check in halfway through, so they would do what's called a midterm review. And the Obama administration had started that process and was going through that, and the process was slated to end April first of twenty eighteen,
and long after he left office. Yes, but what happened was right before the Obama administration left office, in January of twenty seventeen, EPA came out with the determination saying, we think the standards at their current levels we set them at are achievable and feasible, and so we're going to keep the standards the same. And that was that, And I imagine the automakers weren't too heavy about that.
They thought those standards were way too high. They wanted to be able to make cars that were slightly less fuel efficient, right sure, But the I mean they also were very angry about the process because they were promised to review that would end in April of twenty eighteen, and they say, well, the Obama administration short circuited that process, and really we needed that time to do the analysis and really take a look at the standards make sure
that they're achievable. So it was also very much a process thing too, So it was more it was a fairness issue for them from their perspective. Yes, definitely. So right before, you know, I guess days before Obama leaves office, he says standards are good, they don't need to be changed. Then Trump comes into office. I get the sense that the Trump administration has a different point of view on that. Yes,
that's correct. So back last year in March, actually President Trump, along with EPA Administrator Scott Pruitt and Transportation Secretary Elaine Chow, had an event in Detroit and Trump announced that they would be reopening the mid term review, that they would be doing the process like was originally promised, and that they would come to their conclusion and make that in
April of this year. But at that time they didn't say whether they were going to change the standard or they were going to you know, lower it or even raise it. I guess that was theoretically possible. They just said, we're going to take another look at this. The decision that the Obama administration made right before they left office, that's not actually final, even though they said it was final. Back then right, but one would assume that they are not.
They're obviously not going to make the same conclusion as the Obama administration and automakers were asking them to take another look at the standards because they they were saying, these are too stringent, We're not able to meet these, we need to take another look at these. And so the Trump administration from the start was really listening to the automaker's arguments here, and it was widely expected that
they would come to the conclusion that the standards weren't appropriate. So, okay, that was in March, and then now we have almost I guess actually almost exactly a year later, and they've reopened this and what did they decide, I guess just less than twelve hours ago. Well, they came out with a conclusion saying, look, we don't think these standards are achievable, we don't think they're appropriate, and we need to revise them.
So the determination really just simply was that they said standards aren't appropriate, we need to take another look at these. And now they're going to start a joint rulemaking process with NITZA, the Transportation Department, to set those fuel economy standards. So we don't really know what level they're thinking about setting the standards at. We just know that they're going
to be taking another look at them. And is it I guess, as you mentioned, it's safe to say that they're going to be you know, good, They're going to go down. That the automakers are going to have a lower target to reach. We don't know how much lower, but it's not going to be higher. Yes, that seems
to be the case. When you read through the finding that the administrator put forth, you know, there's a lot of talk about how the standards may not be achievable, that some of the projections and assumptions that the Obama administration are used about technology and fuel prices and consumers acceptance of fuel efficient technologies were really too optimistic and therefore so would be more challenging for automakers to meet
the standards. So the EPA and the NITZE, and I guess the federal government real large is going to be taking the look at these maybe revising them downward. There's one problem though, and as we mentioned before, it's California, because they have their own authority to regulate cars as they see fit, and as we know, California has some very different points of view than the Trump administration. The governor there, Jerry Brown, a Democrat, is one of the
most prominent opponents to the Trump agenda. Are we going to see a situation where we have types of cars for forty nine states and then a separate type of car for California, where you know, automakers are gonna have to make different cars for different states. Is that that's the one thing they were trying to avoid. Is that
what's gonna happen? Well, it's unclear at this point. And the interesting thing too with California is that California has the authority to set its own standards, but a dozen other states, including New York, Pennsylvania, Massachusetts, and others, have signed onto those standards too, So it wouldn't be forty nine to one. It would be you know, a couple dozen,
and it'd be even more messier, that's right. And together those thirteen states, California and the twelve that follow their standards, they equal, you know, over a third of the US auto market. So you're looking at, you know, an automaker would have to make a car to meet those state standards for a third of the market, and then make another model for two thirds of the market, which just is kind of a logistical headache for automakers, and that's
something they really want to avoid. So the yeah, this is this is exactly what they wanted to avoid when they got together back in twenty ten, twenty twelve, and they tried to sort of get everyone on the same page. So I guess the it seems like there are only two possible outcomes. So there's probably a lot of possible outcomes, but there's two main ones. California, you know, they decide to just make separate cars and deal with that, or the EPA says, hey, California, you know this power you
had to regulate your own cars. You don't have that anymore. Is is that on the table? I would say it is on the table. So EPA yesterday in their announcement they said the California still has this authority and they didn't really say anything about the waiver authority, which is what it's called, but they did say they're still re examining it. So it does seem like it's still on
the table. And the administrator, Scott Prutt, has made comments in the past, you know, signaling that he's not comfortable with the fact that California has this power. You know, he says federalism doesn't mean one state should dictate the standards for the rest of the country. So he's really uneasy with the California's authority here. But I think at this point what the automakers want is they don't want to split. They don't want, you know, California and the
federal government to be fighting. They want everyone to come to the table, and they want to keep the one national program that they agree to back in twenty ten. So it's going to be an interesting road going forward. It's getting road. Yeah. Yeah. Also, I guess to have another automotive pun. I guess there. It seems like California and the EPA are on a collision course. Yeah, I would say so, And I like your puns, I would
say they are. I think it's going to be interesting to see whether they're able to all come to the table and negotiate. That's clearly what automakers want, clearly what some of the other groups who are involved in this want.
But you know, others, other people tell me it's unclear why California would come to the table, and you know what they could get out of this really, Yeah, Like, why what leverage does the EPA have at this point because the political you know, wins in California are all pushing the leaders of the state to not come to
the table, to not negotiate with the Trump administration. That's right, I mean, really, the leverage that the Trump administration might have if they were to try to go after California's authority. What a mess. So we're talking about, you know, the kind of really messy politics and regulatory scheme and litigation here. But let's wrap this up and kind of talk about what this means for people like you and me. You know, I'm going to the dealership, I'm going to buy a car.
Does that mean I can't get like a Prius now or you know, will they cost more or will there will just be that other cars are cheaper? Like, what's this going to mean for the cars on the road in the future. Well, I think the interesting thing is when you look at what automakers are doing with technology, their plans may not change a whole lot. You know, Ford and General Motors including other automakers, have made big
announcements recently about how they're moving toward electric vehicles. They're really pushing autonomous technologies. So I think that you might not see a lot of change as a consumer when you're going in to buy a car. There might be changes on the margins, but you really make these technology investments years in advance. So automakers are moving toward these more fuel efficient technologies in part because consumers do want them, you know, And there is a question of whether how
that impacts the price to the consumer. But at the end of the day, automakers are going to be moving toward more advanced vehicle technologies irrespective of what happens to the standards. I think, all right, Well, that was Abby Smith, Bloomberg Environment's Climate reporter. For more of her on climate, visit bnanews dot BNA dot com. Today's episode was produced by Jessica Coombs and Rachel Daegel, with help from Arissa Horn and Chuck McCutcheon. Music tracks for parss Pavilion is
a message by Jazzarre. It was used in under a Creative Commas license. For more information, you can go to Better with Music dot com.