I keep coming back to this topic because fuel economy zealots are trashing our constitutional system of separated powers and democratic accountability. Only Congress can make them stop. Leading the counter-offensive is House Oversight and Government Reform Committee Chairman Darrell Issa (R-Calif.), who has been watch-dogging the Obama administration’s fuel economy agenda since 2009.

The Energy Policy Conservation Act (EPCA) delegates the responsibility to prescribe fuel economy standards solely to the National Highway Traffic Safety Administration (NHTSA); the Clean Air Act (CAA) provides EPA no authority to regulate fuel economy; and EPCA specifically preempts state laws or regulations  “related to” fuel economy. Yet ever since May 2009, when Obama environment czar Carol Browner brokered the so-called Historic Agreement between EPA, auto makers, and the California Air Resources Board (CARB), EPA and CARB have effectively determined the stringency of the fuel economy standards NHTSA prescribes.

How so? EPA and CARB impose greenhouse gas emission standards on auto makers. Carbon dioxide (CO2) constitutes almost 95% of motor vehicle greenhouse gas emissions, and there being no commercial technologies to capture or filter out CO2 emissions, the only way to reduce CO2 emissions per mile is to reduce fuel consumption per mile — that is, increase fuel economy (EPA/NHTSA Tailpipe Rule, pp. 25424, 25327).

So under the Obama administration, instead of one agency regulating fuel economy through one set of rules pursuant to one statute, as Congress intended, three agencies regulate fuel economy through three sets of rules pursuant to three statutes (EPCA, CAA, and California Assembly Bill 1493). EPA is implicitly regulating fuel economy outside the scope of its statutory authority and CARB is implicitly regulating fuel economy in defiance EPCA’s express preemption.

As my colleague David Bier noted earlier this week, Browner negotiated the Historic Agreement in “put nothing in writing, ever” closed-door meetings that flouted Presidential Records Act and Federal Advisory Committee Act transparency provisions. And as I explain in a recent column, auto makers agreed to the ‘triplification’ of fuel economy regulation to escape an even worse regulatory fate – a market-balkanizing fuel-economy patchwork that EPA teed up when, defying EPCA, it authorized California and other states to adopt greenhouse gas emission standards, which are highly “related to” fuel economy.

The Alliance of Automobile Manufacturers once argued forthrightly that EPCA preempts California’s greenhouse gas emission standards. But that was before the Historic Agreement — and before the auto industry bailout and GM and Chrysler evolved into “Government Motors.”

If Congress ever overturns or merely limits EPA and CARB’s power grabs, it will largely be due to Chairman Issa’s unrelenting investigation of the administration’s fuel economy policies and related actions. On Monday, Issa sent a strongly-worded oversight letter to CARB Chairman Mary Nichols.

Issa’s letter faults Nichols for refusing to turn over documents relating to CARB’s role in negotiating model year (MY) 2012-2016 fuel economy standards, for “intentionally misleading” the Committee by erroneously suggesting there is a ”single national program” rather than at least two different standards (NHTSA’s and EPA/CARB’s), and for disingenuously denying CARB’s involvement in negotiating fuel economy standards despite the Committee’s possession of evidence that Nichols or her staff met with NHTSA officials on 116 separate occasions.

Issa’s letter also effectively rebuts Nichols’s assertion that CARB’s greenhouse gas emission standards are not “related to” fuel economy and, thus, are not preempted by EPCA. In her response to an earlier letter from Issa, Nichols asserted that regulation of fuel economy and greenhouse gases are “separate and independent” from each other, that the phrase “related to” in the EPCA preemption should be construed narrowly to prohibit states from adopting fuel economy standards, that a broader reading that would prohibit CARB from regulating greenhouse gases is a “legalistic contortion that defies common sense,” and that two district court decisions have “definitively rejected” such notions. Issa responds as follows (footnotes omitted):

I would respectfully suggest that CARB’s view of its regulatory authority of greenhouse gases not only overstates its legal certainty in this area and conflicts with the facts at issue here, but is itself a “legalistic contortion that defies common sense.” As you know, CARB has required automobile manufacturers to drop all litigation challenging CARB’s actions on the basis of the EPCA preemption indefinitely as a condition for CARB’s agreement to adhere to EPA’s greenhouse emission standards [thereby averting the market-balkanizing patchwork]. By insisting on this condition, CARB has deprived automobile manufacturers of the full protection of law. Insofar as CARB’s legal authority rests on two non-precedential decisions and CARB has obstructed further development of the law, CARB should not in good faith boldly proclaim the definitiveness of its legal authority.

Moreover, the facts here suggest that the overlap between greenhouse gas regulations and fuel economy regulations is so great that they are nearly indistinguishable. As you are aware, 95 percent of the reductions in greenhouse gases obtained through EPA’s greenhouse gas standards, which CARB has accepted as an adequate substitute for its own standard, are obtained through reductions in carbon dioxide. Fuel economy and carbon dioxide emissions are so closely related that tests for fuel economy are performed by measuring carbon dioxide emissions. Accordingly, the same control technology used to increase fuel economy is used to decrease 95 percent of all greenhouse gas emissions from vehicles. Nitrous oxide and methane emissions comprise less than one percent of total greenhouse gas emissions, and hydroflourocarbons, a refrigerant used in air conditioners, makes up the remainder of emissions. In fact, the relationship between greenhouse gas emissions and fuel economy is so close that in California’s commitment letter for MY 2012-2016, California agreed to allow manufacturers “to use data generated by [corporate average fuel economy] test procedures . . . to demonstrate compliance.” In light of these facts, your response that the regulation of fuel economy and greenhouse gases are not related lacks completeness and candor. These facts suggest that CARB — whether intentionally or not — is indeed regulating fuel economy.

In addition to these facts, in your own response to the Committee, you boast about the fuel savings that would result from CARB’s regulatory activities, stating: “Under this program, the U.S. will reduce its consumption of oil by 12 billion barrels . . .” The reduction in fuel consumption is not an accidental or indirect benefit of CARB’s regulatory activities. It is the expected outcome that results from increased fuel economy standards. Accordingly, it is abundantly clear that CARB’s regulation of greenhouse gases is “related to” the regulation of fuel economy within the meaning of EPCA. CARB cannot escape this conclusion simply by calling its fuel economy regulations by another name.

And if that is not enough to persuade you, dear reader, take a gander at CARB official Michael Kenny’s deposition in Central Valley Chrysler-Plymouth v. CARB, one of the two cases Mary Nichols cited as having “definitively rejected” the proposition that greenhouse gas emission standards are “related to” fuel economy standards:

Federal agencies are not supposed to be overtly partisan. They are also not supposed to legislate. EPA Administrator Lisa Jackson and Department of Transportation Secretary Ray LaHood apparently didn’t get the memo. Or maybe they just don’t give a darn.

In a press release announcing their plan to raise fuel economy standards to 54.5 miles per gallon by 2025, the agency heads boast: “Today’s announcement is the latest in a series of executive actions the Obama Administration is taking to strengthen the economy and move the country forward because we can’t wait for Congressional Republicans to act” [emphasis added]. Jackson and LaHood even title their press release, “We Can’t Wait.”

‘What do we want? Energy independence! When do we want it? Now!’ Even if that means trashing the separation of powers, the essential constitutional foundation for accountable government.

Team Obama has turned the nation’s fuel economy law, the Energy Policy Conservation Act (EPCA), into a non-controlling legal authority.

EPCA specifically limits the setting of fuel economy standards to “not more than 5 model years.” EPA and DOT plan to establish fuel economy standards for model years (MYs) 2017-2025 — a nine-year period. No matter how long government lawyers squint at the page, five does not mean nine.

To get around the five-year EPCA limitation, the administration invokes EPA’s alleged authority to regulate greenhouse gases through the Clean Air Act (CAA). Yet EPCA delegates to DOT sole responsibility for prescribing fuel economy standards, and the CAA provides no authority for fuel economy regulation.

Contradictorily, EPA and DOT officials deny that greenhouse gas emission standards are even “related to” fuel economy standards. This easily refuted falsehood allows the administration to pretend that EPA did not defy EPCA when it authorized California and other states to regulate motor vehicle greenhouse gas emissions.

The administration’s proposed MY 2017-2025 fuel economy standards, like the current MY 2012-2016 standards, are explicitly designed to “harmonize” with the California Air Resources Board’s greenhouse gas emission standards. But greenhouse gas emission standards implicitly regulate fuel economy, and EPCA prohibits states from adopting laws or regulations “related to” fuel economy.

By threatening to allow states to create a “patchwork” of conflicting fuel economy requirements, EPA frightened auto makers into supporting the agency’s greenhouse gas emission standards as the lesser regulatory evil. EPA then parlayed its new role as de-facto fuel economy regulator into a mandate to regulate greenhouse gases from from stationary sources.

To pull off these power grabs, Obama officials negotiated with auto makers, California, environmental groups, and union labor behind closed doors, in defiance of federal accountability statutes.

The agencies’ press release should be re-written as follows:

We can’t wait for Congressional Republicans to amend EPCA. We want more power over the auto industry and consumer choice. So we’re going to amend EPCA by administrative action. To thwart congressional oversight, we’re also going negotiate these deals, er, “Historic Agreements,” in the Chicago style – mum’s da woid. And if you auto guys don’t come along quietly, we’re gonna let the California Air Resources Board muss ya up.

Earlier this week, House Oversight and Government Reform Committee Chairman Darrell Issa (R-Calif.) sent letters to three Obama administration officials regarding the veracity of their testimonies at an October 12 subcommittee hearing on the administration’s fuel economy policies.*

Issa’s letters — to National Highway Traffic Safety Administration (NHTSA) Administrator David Strickland, EPA Assistant Administrator for Air and Radiation Gina McCarthy, and EPA Director of Transportation and Air Quality Margo Oge – are identical in content.

The gist of the letters is that each administration witness denied under oath that EPA and California’s greenhouse gas emission standards are “related to” fuel economy standards, whereas in fact, according to Issa, ”regulating greenhouse gases and regulating fuel economy is a distinction without a difference.”

This matters for three inter-related reasons: (1) EPA is currently regulating fuel economy by setting motor vehicle greenhouse gas emission standards even though the Clean Air Act provides no authority for fuel economy regulation; (2) EPA in June 2009 granted California a waiver to establish motor vehicle greenhouse gas emission standards despite the Energy Policy Conservation Act’s (EPCA’s) express prohibition (U.S.C. 49 § 32919) of state laws or regulations “related to” fuel economy; and (3) the California waiver, by threatening to create a market-balkanizing “regulatory patchwork,” enabled the Obama administration to extort the auto industry’s support for EPA’s new career as greenhouse gas/fuel economy regulator in return for California and other states’ agreement to deem compliance with EPA’s greenhouse gas/fuel economy standards as compliance with their own.

As I will demonstrate below, greenhouse gas emission standards are highly “related to” fuel economy standards, and the administration witnesses cannot possibly be ignorant of the relationship. Do their denials of plain fact rise to the level of perjury?

In his letters to the Obama officials, Issa excerpts pertinent exchanges between them and Members of the Subcommittee:

Chairman Jordan: I guess maybe here’s the question — I’m not a legal scholar on this — but it seems that when you read the statute [EPCA], it talks about a regulation related to fuel economy standards, and greenhouse gases are certainly related to fuel economy standards, is that right?

Administrator McCarthy: They are closely aligned but they are different, Mr. Chairman.

*  *  *

Vice Chair Buerkle: I just have a quick question for the three of you. It’s a yes or no question, if you wouldn’t mind. Are the greenhouse gas rules — either EPA’s or the California rules — are they they related to fuel economy? Mr. Strickland, yes or no?

Administrator Strickland: No, they regulate greenhouse gas emissions.

Administrator McCarthy: They regulate greenhouse gas emissions.

Ms. Oge: They regulate greenhouse gas emissions.

Vice Chair Buerkle: So they’re not related to fuel economy, under oath.

Administrator Strickland: No. They’re greenhouse gas emission regulations.

Administrator McCarthy: We do not regulate fuel economy standards.

Vice Chair Buerkle: And all three of you agree with that?

Ms. Oge: Yes.

Administrator Strickland: Yes.

When asked if EPA and California’s standards are “related to” fuel economy standards, the administration witnesses offer a tautology: Greenhouse gas emission standards regulate greenhouse gas emissions. It is as if John Smith were asked whether he is related to Joe Smith and replied, “I am not my brother, I am me.”

Motor vehicle greenhouse gas emission standards implicitly – and inescapably – regulate fuel economy. EPA and NHTSA confirm this – albeit not in so many words – in their joint May 2010 greenhouse gas/fuel economy Tailpipe Rule.

As the agencies acknowledge (Tailpipe Rule, pp. 25424, 25327), no commercially proven technologies exist to filter out or capture carbon dioxide (CO2) emissions from fossil fuel-powered vehicles. Consequently, the only way to decrease grams of CO2 per mile is to decrease fuel consumption per mile, i.e., increase fuel economy. Carbon dioxide constitutes 94.9% of vehicular greenhouse gas emissions, and “there is a single pool of technologies . . . that reduce fuel consumption and thereby reduce CO2 emissions as well.”

That EPA and CARB are regulating fuel economy is also evident from the administration’s current plan to increase average fuel economy to 54.5 miles per gallon by 2025. The plan derives from EPA, NHTSA, and the California Air Resources Board’s (CARB’s) Interim Joint Technical Assessment Report, which proposed a range of fuel economy targets from 47 mpg to 62 mpg. The mpg targets are determined by – are simple reciprocals of – CO2 reduction scenarios:

Four scenarios of future stringency are analyzed for model years 2020 and 2025, starting with a 250 grams/mile estimated fleet-wide level in MY 2016 and lowering CO2 scenario targets at the rate of 3% per year, 4% per year, 5% per year, and 6% per year [p. viii].

The 54.5 mpg target represents a negotiated compromise between the 4% per year (51 mpg) and 5% per year (56 mpg) CO2 reduction scenarios (p. ix).

That the California greenhouse gas motor vehicle emissions law, AB 1493, is highly “related to” fuel economy is obvious from CARB’s 2004 Staff Report presenting the agency’s “initial statement of reasons” for its regulatory program.  The Staff Report’s recommended options for reducing greenhouse gas emissions (Table 5.2-3) are identical in substance, and often in detail, to fuel saving options presented in the National Research Council’s (NRC’s) 2002 fuel economy report (Tables 3-1, 3-2). A few options in the CARB list are not included in the NRC list. In each case, however, the CARB option is a fuel-saving technology, not an emission-control technology.

In addition, the text of AB 1493 clearly implies that CARB is to regulate fuel economy. AB 1493 requires CARB to achieve “maximum feasible” greenhouse gas reductions that are also “cost-effective,” defined as “Economical to an owner or operator of a vehicle, taking into account the full life-cycle costs of the vehicle.”  CARB rightly interprets this to mean that the reduction in “operating expenses” over the average life of the vehicle (assumed to be 16 years) must exceed the “expected increases in vehicle cost [purchase price] resulting from the technology improvements needed to meet the standards in the proposed regulation” (Staff Report, p. 148). Virtually all of the “operating expenses” to be reduced are expenditures for fuel. The CARB program cannot be “cost-effective” unless CARB regulates fuel economy.

Strickland, McCarthy, and Oge could not acknowledge what they must know to be true because otherwise they would have to admit:

1. EPA is regulating fuel economy, which is outside the scope of its delegated authority; and
2. CARB is regulating fuel economy, which is prohibited by EPCA.

Since EPA contends that its greenhouse gas/fuel economy motor vehicle standards compel the agency to regulate greenhouse gas emissions from large stationary sources, the administration witnesses also could not acknowledge the obvious without admitting that EPA’s entire greenhouse gas regulatory agenda rests on shaky legal grounds.

* I testified at the Subcommittee’s October 12 hearing on the first, private-sector witness panel, which also included Jeremy Anwyl (Edmunds.Com), Roland Hwang (Natural Resources Defense Council), and Scott Grenerth (Independent Trucker). The three Obama officials testified on the second, public-sector witness panel.