In a sharply worded letter (August 11, 2011) to White House Counsel Kathryn Ruemmler, House Oversight and Government Reform Committee Chairman Darrel Issa (R-Calif.) contends that “the new Corporate Average Fuel Economy (CAFE) and EPA vehicle greenhouse gas (GHG) standards announced by President Obama and select automobile manufacturers on July 29, 2011, were negotiated in secret, outside the scope of law, and could generate significant negative impacts for consumers.”
Issa is also concerned “that the government’s ownership interest in General Motors and Chrysler at the time these negotiations were conducted creates a troublesome conflict-of-interest.”
Accordingly, Issa is launching “an investigation into the activities of the Administration leading up to the agreement for new CAFE standards for model years (MY) 2017-2025.”
I won’t try to summarize Issa’s 8-page letter, which among other things developes a detailed case that the 54.5 mpg fuel-economy deal will adversely affect vehicle prices, consumer choice, vehicle safety, and, hence, automotive sales and auto industry jobs. This post will only discuss the legal issues that Issa spotlights. My concern here — as in numerous previous columns — is with bureaucratic ‘lawmaking’: the trashing of the separation of powers and democratic accountability in the illusory pursuit of climate stability and energy independence.
The first legal problem on which Issa focuses is the backroom, special-interest character of the fuel-economy deal itself. Citing Jeremy Anwyl, CEO of Edmunds.com, and Jack Nerad of Kelley Blue Book, Issa notes that although the Administration conferred with environmentalists, automakers, and union labor, there was no one at the table representing “the very consumers who will be asked to buy a new generation” of higher-priced vehicles. The 54.5 mpg standard was the product of an off-the-record political negotiation. From this point on, the rulemaking process will be a “mere formality” — a criticism also voiced by Amy Siden of the left-leaning, pro-regulatory Center for Progressive Reform.
The Administrative Procedure Act “does provide agencies with the option of conducting a negotiated rulemaking,” Issa observes, “however, such a process is subject to additional transparency requirements, such as those required under FACA [Federal Advisory Committee Act].” Team Obama did not avail itself of that option, which requires an agency head to: (i) determine that a negotiated rulemaking committee serves the public interest (5.U.S.C. § 563); (ii) publish in the Federal Register a notice listing the persons proposed to represent the affected interests, describing the agenda of the negotiation, and soliciting public comment on the foregoing (5.U.S.C. § 564); and (iii) keep minutes and records as required by FACA Sec. 10(b) and (c) (5.U.S.C. § 566). Needless to say, EPA and NHTSA, the lead agencies in the negotiation, took none of those steps.
Next we come to the elephant in the room. EPA and National Highway Traffic Safety Administration (NHTSA) are promulgating greenhouse gas (GHG)/fuel economy standards for model years (MYs) 2017-2025. This is “outside the scope” of NHTSA’s authority. The Energy Policy Conservation Act (EPCA) as amended [49 U.S.C. § 32902(b)(3)(B)] states that the Secretary of Transportation “shall . . . issue regulations under this title prescribing average fuel economy standards for at least 1, but not more than 5 model years.” The deal Team Obama brokered sets fuel economy standards over a nine-year period. There’s no fudging the discrepancy. No matter how hard or long the lawyers squint at the page, 5 does not mean 9.
In addition, 49 U.S.C. § 32902(f) obligates the Secretary to consider “economic practicability” when setting fuel economy standards. “At this time,” notes Issa, “it is impossible for NHTSA to adequately consider economic practicality for fuel standards in MYs 2022-25, primarily because car manufacturers themselves do not have product plans for that year, and market conditions are unknown 14 years into the future.”
Well, then, is it in the scope of EPA’s authority to promulgate GHG standards for MYs 2017-2025? Issa’s letter doesn’t address this question. The 5-4 Massachusetts v. EPA Supreme Court majority would likely say yes. My answer is no. GHG standards are essentially de-facto fuel economy standards, because 94.9% of GHG emissions from motor vehicles is carbon dioxide (CO2) from the combustion of motor fuel (EPA/NHTSA Tailpipe Rule, p. 25424), and “there is a single pool of technologies for addressing these twin problems [climate change, oil dependence], i.e., those that reduce fuel consumption and thereby reduce CO2 emissions as well” (p. 25327). The Clean Air Act provides no statutory authority to any agency to establish fuel economy standards. EPCA vests that authority solely in the Secretary of Transportation (i.e. NHTSA).
Finally, Issa asks for information about the California Air Resource Board’s (CARB’s) role in the negotiations. Some background here may be helpful.
In 2009, EPA worked hand-in-glove with CARB to break the auto industry’s will to resist the imposition of new federal GHG/fuel economy standards. EPA agreed to reconsider CARB’s request for a Clean Air Act waiver to establish its own GHG standards program. A baker’s dozen other states were poised to follow suit if California got the okay. As noted above, GHG standards chiefly function as fuel-economy standards. The waiver thus threatened to create a “patchwork” of state-by-state fuel-economy regimes, balkanizing the U.S. auto market. As originally designed, the CARB program would have ruined what remained of the financially distressed auto industry.
So in backroom negotiations honchoed by White House environment czar Carol Browner, auto companies agreed to support EPA and NHTSA’s “national” GHG/fuel economy program as the lesser regulatory evil, with CARB and the other ‘California’ states agreeing to consider compliance with the EPA/NHTSA program as compliance with their own.
In his letter to the White House counsel, Issa challenges the legality of state-level fuel economy standards:
Do you believe that when Congress enacted Section 209 of the Clean Air Act [the provision under which EPA granted CARB a waiver], Congress intended California regulators to establish fuel economy standards for the national fleet, despite the express language contained in EPCA [49. U.S.C. 32919(a)], which declares that states “may not adopt or enforce a law or regulation related to fuel economy”?
Federal law explicitly preempts States from “adopt[ing] or enforce[ing] a law or regulation related to fuel economy standards . . .Since CARB is currently enforcing its own fuel economy/greenhouse gas (GHG) regulation (CA LEV [Low Emission Vehicle program]), please state your reason(s) why 49 U.S.C. 32919(a) is not being enforced?
Issa also inquires whether in 2011, Team Obama again used the threat of a CARB-spawned fuel-economy patchwork as political leverage:
California needs a Clean Air Act preemption waiver to enforce its fuel economy/GHG vehicle program for MY 2017-2025. Since CARB has predicated not enforcing its “patchwork” fuel economy regulation upon EPA’s future decision to grant a CAA waiver, has the Administration already privately committed to grant California such a waiver even before California has submitted a waiver request? Please explain the precise nature of any agreement beween the Administration and the State of California and/or CARB as it relates to the development and or administration of CAFE and EPA light-duty vehicle greenhouse gas standards for MYs 2017-2025.
Finally, Issa asks whether, besides possible regulatory intimidation by CARB, the Administration deployed selective financial inducements to line up auto industry support for the 54.5 mpg standard — in effect, making auto companies an offer they could not refuse:
Did the Administration commit to provide any auto manufacturer with federal assistance, either in the form of grants or loans, in consideration for their cooperation on the development of the CAFE and EPA light duty vehicle greenhouse gas standards for MYs 2017-2025?
In November 2009 and again in March 2010, Issa asked similar questions about the May 2009 Browner-led, backroom, “put nothing in writing, ever” fuel-economy/GHG negotiations. Back then, Issa was committee ranking member. Today, he’s the chairman. Does that cut any ice with an administration steeped in Chicago-style politics?
This much seems likely. Issa’s investigation will build support for legislation, like the appropriations language sponsored by Rep. Steve Austria (R-Ohio), to deny EPA funds to develop GHG emission standards for MYs 2017-2025, or to consider granting CARB a waiver to do likewise.
The investigation might also lay the groundwork for litigation to challenge the 54.5 mpg standard. After all, when the authorizing statute says “not more than 5 model years,” how can NHTSA lawfully issue fuel-economy standards for nine years?