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:

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”?

And again:

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?

Yesterday, the House Appropriations Committee approved an amendment to the Fiscal Year 2012 Interior, Environment, and Related Agencies appropriations bill that would block EPA from using any funds to:

• Develop greenhouse gas (GHG) emission standards for new motor vehicles and vehicle engines manufactured after the 2016 model year; and
• Consider or grant a Clean Air Act waiver allowing the California Air Resources Board (CARB) to establish GHG emission standards for new motor vehicles and vehicle engines manufactured after the 2016 model year. 

Capital Alpha Partners, LLC, a firm providing political and policy risk analysis to institutional investors, rightly notes that the amendment, sponsored by Rep. Steve Austria (R-Ohio), could ”shift the debate over fuel economy standards and pressure the administration to soften its 56.2 mpg target floated two weeks ago.” In addition, the measure “would slice two of the three currently-involved agencies [EPA and CARB] out of the rule-making loop,” leaving fuel economy regulation to the National Highway Traffic Safety Administration (NHTSA), ”the one agency seen as ‘most reasonable’ by industry and other observers.” 

Capital Alpha reckons the measure “has a 25% chance of enactment into law this year.” If enacted as part of the one-year EPA funding bill, the measure would expire on September 30, 2012. “However,” says Capital Alpha, ”should it make it into law, opponents would be hard-pressed to strip it out in future years.” An exciting prospect for liberty-loving Americans!

As explained previously (here, here, and here), EPA is ’legislating’ climate policy under the guise of implementing the Clean Air Act (CAA), a statute enacted in 1970, years before global warming became an issue. Al Gore’s “planetary emergency” is bogus, but America’s constitutional crisis is real. Under the U.S. Constitution, only the people’s representatives get to make the big decisions concerning the content and direction of national policy. When agencies legislate, the separation of powers is breached, and the people have no one to hold accountable at the ballot box for the burdens government places upon them. 

EPA’s power grab is breathtaking. EPA is not only making climate policy through the regulatory backdoor, it has also hijacked federal fuel economy regulation by establishing GHG standards for new motor vehicles.

As explained here, here, and here, motor vehicle GHG standards are almost 95% fuel economy regulation (because 94-95% of all motor vehicle GHGs are carbon dioxide from the combustion of motor fuel, and because there is a single pool of technologies that reduces motor fuel consumption and thereby CO2 emissions as well). This means EPA can effectively tighten federal Corporate Average Fuel Economy (CAFE) standards just by tightening its GHG standards. Yet the CAA provides no authority to EPA (or any other agency) to regulate fuel economy. And although 1975 Energy Policy Conservation Act (EPCA) and 2007 Energy Independence and Security Act (2007) authorize EPA to test automakers’ compliance with CAFE standards, those statutes reserve the authority to prescribe CAFE standards to NHTSA.

The auto industry supported EPA’s GHG standards, but only to escape a worse regulatory fate. EPA threatened to inflict a patchwork quilt of GHG/fuel economy standards on the U.S. auto market by granting CARB’s request for a waiver to establish GHG emission standards for new cars sold in California. A baker’s dozen other states were poised to opt into the CARB GHG/fuel economy regime. “Are you gonna come along quietly, or do we have to let the California Air Resources Board muss ya up?” That was the gist of the deal EPA offered in 2009 to obtain auto industry support for a “national” GHG/fuel economy standards program.

To run this greenhouse protection racket, however, EPA had to flout EPCA Sec. 32919, which prohibits states from adopting laws or regulations “related to” fuel economy standards. To repeat, GHG motor vehicle standards are largely fuel economy standards by another name.

Rep. Austria’s amendment would put the kibosh on further mischief of this sort during FY 2012. And, as Capital Alpha opines, if the amendment is enacted into law, “opponents would be hard-pressed to strip it out in future years.”

This post updates my June 14 post on the mantra intoned by EPA, the California Air Resources Board (CARB), and the National Highway Traffic Safety Administration (NHTSA) that EPA/CARB’s greenhouse gas (GHG) motor vehicle emission standards are “harmonized and consistent” with NHTSA’s fuel economy standards.

EPA Associate Administrator David McIntosh recently sent written responses to questions from House Energy and Commerce Committee members following up on a May 5, 2011 hearing entitled “The American Energy Initiative.”

In a nutshell, EPA defines “harmonized and consistent” as “whatever we say it is.”

The 2007 Energy Independence and Security Act (EISA) extended the Corporate Average Fuel Economy (CAFE) credit granted to manfacturers of flexible-fueled vehicles (FFVs), phasing it out in 2020. 

In his question to EPA, Rep. John Shimkus (R-Ill.) notes that EISA extended the FFV credit “specifically because Congress wanted to encourage the production of vehicles that can run on E-85 [motor fuel blended with 85% ethanol].” He further notes that EPA’s GHG emission standards program allows FFV credits “only during the period from model years 2012 to 2015.” After model year 2015, “EPA will only allow FFV credits based on a manufacturer’s demonstration that the alternative fuel is actually being used in the vehicles.” Congress included no such limitation in EISA.

Shimkus asks:

How can this rule be characterized as “harmonized and consistent” if the way EPA treats FFV [credits] is markedly different than the way Congress mandated FFV credits be treated under CAFE?

EPA’s response:

EPA treats FFVs for model years 2012-2016 the same as under EPCA [Energy Policy Conservation Act of 1975, which EISA amended]. Starting with model year 2016, EPA believes the appropriate approach is to ensure that FFV emissions are based on demonstrated emissions performance, which will correlate to actual usage of alternative fuels. This approach was supported by several public comments.”

Starting in 2016, EPA will not give an automaker a CAFE credit for building FFV vehicles unless the automaker can demonstrate that its customers actually use alternative fuels — a requirement not only not included in EISA but inconsistent with it. Several people submitting comments on EPA’s GHG standards supported this approach. And that, apparently, is all the justification EPA needs to override the policy set forth in law.

As discussed in my previous post, EPA’s deviation from EISA partly explains how it is possible for EPA’s GHG standards to reduce fuel consumption more than NHTSA’s CAFE standards, even though EPA, CARB, and NHTSA all profess to believe that GHG standards are not sub-rosa fuel economy standards.

So…

In 2016-2020, NHTSA gives credits for building FFVs.

In 2016-2020, EPA doesn’t give credits for building FFVs.

EPA defines the above two policies as harmonized and consistent.

And 2 + 2 = 5. 

As also discussed in the previous post, since automakers cannot comply with EPA’s GHG standards and also offset their CAFE standards with FFV credits, the two sets of standards are “harmonized and consistent” only in the sense that EPA’s rules trump both NHTSA’s rules and the CAFE program Congress authorized in 2007.

But this is getting into the weeds. The big picture is this. Motor vehicle GHG standards are almost 95% fuel economy standards by another name (because 94.9% of all motor vehicle GHGs are carbon dioxide from the combustion of motor fuel). This means that EPA can effectively tighten NHTSA’s fuel economy standards just by tightening its GHG standards. Yet the Clean Air Act provides no authority to EPA (or any other agency) to regulate fuel economy. And although EPCA/EISA authorize EPA to test automakers’ compliance with CAFE standards, those statutes reserve the authority to prescribe CAFE standards to NHTSA.

Among other questions, Shimkus asked: “Could the logical reason for Congress’s silence on FFVs in section 202(a) [of the Clean Air Act] be that Congress never envisioned the Clean Air Act would be used to regulate fuel economy?”

A rather straightforward question, yes? Unsurprisingly, it’s the one question from Rep. Shimkus that EPA Associate Administrator McIntosh chose not to address.

The California Air Resources Board (CARB) boasts that its greenhouse gas (GHG) emission standards save more fuel than the National Highway Traffic Safety Administration’s (NHTSA) Corporate Average Fuel Economy (CAFE) standards – but denies that GHG standards are fuel economy standards. Huh?

Well, of course, CARB denies it, because the Energy Policy Conservation Act (EPCA) prohibits states from adopting laws or regulations “related to” fuel economy.

But CARB has to trumpet the fuel savings from its GHG standards to attack H.R. 910, the Energy Tax Prevention Act. H.R. 910, says CARB, would make America more dependent on foreign oil by prohibiting CARB and EPA from adopting tougher GHG standards.

H.R. 910 opponents talk as if policymaking were a game in which the regulatory option with the biggest fuel savings wins. By that criterion, why not just let EPA and CARB impose a de facto 100 mpg CAFE standard and declare America to be “energy independent”?

If Congress thinks NHTSA’s standards don’t go far enough, there is a simple fix. Pass a law! What H.R. 910 opponents want is for EPA and CARB to legislate in lieu of Congress. That is neither lawful nor constitutional.

EPA, NHTSA, and CARB claim that EPA’s GHG standards for model year (MY) 2012-2016 passenger cars and NHTSA’s CAFE standards for those same vehicles are “harmonized and consistent.” Yet they also contend that NHTSA’s standards de-coupled from EPA’s standards would result in 25% more oil consumption over the lifetimes of those vehicles. How is that possible?

That’s the question House Energy and Commerce Committee Chairman Fred Upton (R-Mich.) asked California Air Resource Board (CARB) Executive Director James Goldstene regarding the latter’s testimony at a hearing on H.R. 910, the Energy Tax Prevention Act. (The House passed H.R. 910 by 255-172. Although the bill failed in the Senate, where it fell 10 votes shy of the 60 needed to overcome a filibuster, sponsors say they’ll try to force additional votes in the future.)

H.R. 910 would stop EPA from ‘legislating’ climate policy under the guise of implementing the Clean Air Act (CAA), a statute enacted in 1970, years before global warming was a gleam in Al Gore’s eye. H.R. 910 would overturn all of EPA’s GHG rules except for the agency’s current GHG standards for MY 2012-2016 passenger cars and the agency’s proposed GHG standards for MY 2014-2018 heavy trucks. However, H.R. 910 would preclude EPA from setting new, tougher GHG motor vehicle standards in later years. Similarly, it would prohibit EPA from granting waivers to CARB to set tougher standards. But that means, opponents argue, that H.R. 910 would have the effect of making America more dependent on foreign oil.

Are the opponents correct? And even if so, is that a valid reason for allowing CARB to determine the stringency of national fuel economy regulation or for allowing EPA to dictate climate policy?

As noted, H.R. 910 would not repeal EPA’s MY 2012-2016 GHG emission standards (a.k.a. Tailpipe Rule) nor EPA’s proposed GHG standards for MY 2014-2018 medium- and heavy-duty trucks (a.k.a. Heavy Truck Rule). It’s not that the bill’s sponsors — Rep. Upton and Sen. James Inhofe (R-Okla.) — have any great fondness for those rules. Nor is it the case that Congress would have adopted those standards anyway via legislation. H.R. 910 would leave EPA’s current and proposed GHG motor vehicle standards in place because automakers and engine manufacturers have already made plans and investments to comply with them.

But that just means EPA is using the regulatory process to preempt congressional deliberation and narrow Congress’s policy options. Congress must act soon before stationary sources (power plants, steel mills, pulp and paper factories, refineries, cement production facilities) also spend big bucks complying with GHG-related “best available control technology” (BACT) standards and New Source Performance Standards (NSPS).

A common argument by opponents of H.R. 910 is that, even though it would leave intact NHTSA’s Energy Policy Conservation Act (EPCA) authority to establish Coporate Average Fuel Economy (CAFE) standards for new motor vehicles, NHTSA-only regulation would do less than joint EPA-NHTSA regulation to reduce U.S. oil consumption. Typically, opponents cite CARB’s estimate that stripping EPA’s portion out of the Tailpipe Rule would reduce fuel savings by 25% over the lifetimes of MY 2012-2016 vehicles.

CARB is by no means a disinterested bystander. EPA’s GHG standards are none other than the GHG standards CARB developed and EPA approved (in May 2009) via a waiver from federal preemption of state emission standards.

Here’s the puzzle for which Upton sought clarification. EPA, NHTSA, and CARB claim that EPA and NHTSA’s portions of the Tailpipe Rule are “harmonized and consistent.” Yet the agencies also contend that NHTSA’s portion of the Tailpipe Rule would reduce oil consumption by 58.6 billion barrels over the lifetimes of MY 2012-2016 vehicles whereas the complete rule including CARB/EPA’s GHG standards would reduce oil consumption by 77.7 billion barrels. How can this be?

In a letter dated March 11, 2011, but just now making the email rounds, CARB executive director Goldstene offers this explanation:

That the National Program [NHTSA + EPA] achieves greater emissions reductions and fuel savings than the CAFE standards alone is a result of the different underlying statutory authority that results in different program components. The four key differences are: 1) unlike the Energy Policy Conservation Act (EPCA), the CAA allows for the crediting of direct emission reductions and indirect fuel economy benefits from improved air conditioners, allowing for greater compliance flexibility and lower costs; 2) EPCA allows Flexible Fuel Vehicle (FFV) credits through model year 2019, whereas the EPA standard requires demonstration of actual use of a low carbon fuel after model year 2015; 3) EPCA allows for the payment of fines in lieu of compliance but the CAA does not; and 4) treatment of intra firm trading of compliance credits between cars and light trucks categories. 

Difference 1) doesn’t get us anywhere near the additional 19.1 billion gallons in projected fuel savings. According to the Tailpipe Rule, (i) carbon dioxide (CO2) emissions related to air conditioner-related loads on automobile engines account for only 3.9% of total passenger car GHG emissions (p. 25427), and (ii) various technologies could reduce air conditioner CO2 emissions by 10% to 30% (p. 24528). Even a 30% reduction of the 3.9% of motor vehicle emissions associated with air conditioner engine load would reduce oil consumption by only 1.1% — nowhere near the additional 25% fuel savings that supposedly depend on EPA’s GHG standards.

Differences 2) and 3) are likely the big factors. Per difference 2), automakers cannot comply with EPA’s GHG standards by manufacturing flexible-fueled vehicles. And per difference 3), automakers cannot pay fines in lieu of compliance with EPA’s GHG standards. 

Why do those differences have the effect of tighening fuel economy standards? Because EPA’s GHG emission standards are basically fuel economy regulation by another name! As EPA acknowledges, 94-95% of motor vehicle GHG emissions are carbon dioxide from motor fuel combustion. And as both EPA and NHTSA acknowledge, “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” (Tailpipe Rule, p. 25327). 

Because of differences 2) and 3), EPA will always be able to make NHTSA’s fuel economy standards more stringent than they would be if administered under the statutory scheme Congress created.

What this means, of course, is that the Tailpipe Rule is “harmonized and consistent” only in the sense that EPA and CARB are now calling the shots. The consistency and harmony is that of the first mate saying “aye aye, sir” to the captain. That should trouble a Congress jealous of its constitutional prerogatives, because Congress delegated the power to prescribe fuel economy standards to NHTSA, not EPA — and certainly not CARB.

EPA’s authority to set motor vehicle emission standards, and to grant CARB waivers to regulate motor vehicle emissions, comes from the CAA. The CAA confers no authority on any agency to regulate fuel economy. EPCA authorizes EPA to monitor automakers’ compliance with CAFE standards, but it delegates to NHTSA only the authority to prescribe CAFE standards.

Moreover, EPCA prohibits states from adopting laws or regulations that are even “related to” fuel economy standards. CARB’s GHG standards are massively “related to” fuel economy standards.

EPCA Sec. 32919 states:

a) General. – When an average fuel economy standard prescribed under this chapter is in effect, a State or a political subdivision of a State may not adopt or enforce a law or regulation related to fuel economy standards or average fuel economy standards for automobiles covered by an average fuel economy standard under this chapter.

In his letter to Upton, Goldstene tries to explain why EPCA does not preempt CARB’s GHG standards:

CARB has never claimed that there is no relation between the pollution [CO2] emitted by burning fossil fuels and the rate at which they are burned [gallons of fuel consumed per distance traveled, i.e. fuel economy].  CARB merely maintains the fact that pollution control and fuel economy are not identical — fuel economy and pollution control regulations have different policy objectives, utilize different incentive and flexibility features, and there are technologies that reduce pollution that are not counted under fuel economy measures, and some fuel economy improvements do not reduce emissions commensurately.

That doesn’t cut it. Let me count the ways.

1. A GHG standard does not have to be “identical” to a fuel economy standard to be “related to” it.
2. CARB is hardly one to maintain that fuel economy and GHG standards “have different policy objectives” when CARB’s big selling point for GHG regulation is that it saves more fuel than CAFE standards do! 
3. The fact that CARB/EPA’s GHG standards utilitize “different incentives and flexibility features” is irrelevant. Neither GHG regulation nor fuel economy regulation is defined by those features and incentives. The CAFE program, for example, would still be a fuel economy program even if it did not allow for payments of fines in lieu of compliance or award credits for flex-fuel vehicle sales. 
4. Just because some technologies — e.g., improved sealants for automobile air conditioning systems — “are not counted under fuel economy measures” does not mean that the Tailpipe Rule does not chiefly regulate fuel economy. Only 5.1% of motor vehicle GHG emissions are due to leakage of air conditioner refrigerants (Tailpipe Rule, p. 25424), which means CO2 from motor fuel combustion makes up 94.9% of all motor vehicle GHG emissions. To repeat, there is a “single pool of technologies . . . that reduce fuel consumption and thereby reduce CO2 emissions as well.” Almost 95% of EPA and CARB’s GHG reductions come from fuel economy enhancements.
5. Because 5.1% of motor vehicle GHGs are leaked air conditioner refrigerants, ”some fuel economy improvements do not reduce emissions commensurately.” But fuel economy improvements do reduce emissions commensurately for 94.9% of all motor vehicle GHG emissions.

H.R. 910 opponents talk as if policymaking were a game in which the regulatory option with the biggest fuel savings wins. By that criterion, why not just let EPA and CARB impose a de facto 100 mpg CAFE standard and declare America to be “energy independent”?

If Congress thinks NHTSA’s standards don’t go far enough, there is a simple fix. Pass a law! What H.R. 910 opponents want is for EPA and CARB to legislate in lieu of Congress. That is neither lawful nor constitutional.

What should drive fuel efficiency? Select the answer you think is correct: 

(a) Government;

(b) Markets; or

(c) Please pass the sweet and sour shrimp.

If you chose (a), then go straight to www.allsp.com (Season 10) and watch my favorite South Park episode, “Smug Alert.”

If you chose (c), then you’re on your way to a promising career as a diplomat.

Today, on National Journal’s energy blog, I explain why the correct answer is (b).

Today at Pajamas Media.Com, I discuss the latest stratagem of the greenhouse lobby to protect EPA’s purloined power to dictate national climate and energy policy: Sen. Max Baucus’s (D-Mont.) amendment to the small business reauthorization bill.
 
The Baucus amendment would essentially codify EPA’s Tailoring Rule, which exempts small greenhouse gas (GHG) emitters from Clean Air Act (CAA) permitting requirements.
 
That may seem innocent enough. However, if enacted, the Baucus amendment would also codify the ever-growing ensemble of EPA climate initiatives of which the Tailoring Rule is only a small piece.
 
EPA’s current and probable future climate regulations include GHG/fuel-economy standards for all categories of mobile sources (cars, trucks, marine vessels, aircraft, non-road vehicles and engines) and GHG/energy-efficiency standards for dozens of industrial source categories. 
 
Congress, however, never authorized EPA to determine fuel economy standards for motor vehicles, much less dictate national policy on climate change. The Baucus amendment would put Congress’s legislative stamp of approval on EPA’s end-run around the legislative process.
 
The amendment has almost no chance of passing in the GOP-led House of Representatives. However, it does not need to pass to perpetuate EPA’s shocking power grab. All it has to do is peel off enough votes in the Senate to prevent passage of the Inhofe-Upton Energy Tax Prevention Act. That bill, which is almost certain to pass in the House, would overturn most of EPA’s current GHG regulations and stop the agency permanently from promulgating climate change policies Congress never approved.
 
Whether the Baucus amendment is adopted or just blocks passage of Inhofe-Upton, the U.S. economy will be exposed to the risk that EPA will be litigated into establishing national ambient air quality standards (NAAQS) for GHGs, and to the risk that EPA will use BACT (“best available control technology”) determinations and NSPS (New Source Performance Standards) to restrict America’s access to affordable, carbon-based energy.
 
With the possible exception of Michigan Rep. John Dingell, who chaired the House-Senate conference committee on the CAA Amendments of 1990, nobody on Capitol Hill should know better than Sen. Baucus that Congress never authoried EPA to regulate GHGs for climate change purposes. During congressional debate on the CAA Amendments, Baucus tried and failed to persuade the Senate to adopt language requiring EPA to set CO2 emission standards for motor vehicles. He also tried and failed to persuade House-Senate conferees to adopt language establishing GHG emission reduction as a national goal and requiring EPA to regulate manufactured substances based on their “global warming potential.”
 
EPA today is exercising the very powers that Baucus tried and failed to persuade Congress to grant the agency in 1989. Hence the title of my column on the Senator’s amendment: “EPA’s Greenhouse Power Grab: Baucus’s Revenge, Democracy’s Peril.”
 
Sadly, more than a few Members of Congress today seem to believe that the greenhouse agenda is more important than any constitutional principle that might interfere with it. How Senators vote on the Baucus amendment will be a test of their respect for the Constitution.