Analysis-Trump EPA ends emissions limits for US automakers; state rules, lawsuits could follow

By Valerie Volcovici

WASHINGTON, Feb 13 (Reuters) – President Donald Trump’s repeal of the foundation for federal climate regulation will immediately free automakers from costly tailpipe emissions standards, but the move could spark lawsuits and force businesses to navigate an uncertain future of multiple state and regional rules.

Trump’s Environmental Protection Agency on Thursday finalized its repeal of the “endangerment finding” for vehicles, a 2009 determination that greenhouse gas emissions endanger human health. The finding gave the agency authority to regulate emissions from vehicles, as well as other sectors that burn or produce fossil fuels.

Trump said the country’s “biggest deregulatory action” in history would save companies over $1 trillion in compliance costs. Environmental groups denounced the move, which was cheered by some industry groups but greeted with caution by others.

Ten lawyers and analysts interviewed by Reuters said companies face a bumpy ride, citing imminent court challenges and the possibility that a patchwork of state and regional emissions rules will replace one federal rule.

“This federal withdrawal will cause an unprecedented disruption to 15 years of regulatory progress, threatening public health, local communities, industries, natural resources, and public investments,” said Rob Bonta, attorney general for the state of California, which is weighing a lawsuit.

Matthew Leopold, an environmental attorney at Holland & Knight who had served as EPA general counsel during Trump’s first administration, said company strategies for adjusting to the repeal will depend on how quickly legal challenges reach and are resolved by the U.S. Supreme Court.

He said utilities and other big emitters will seek a clearer understanding of the implications.

“While this initial rulemaking is focused on motor vehicle regulation, it will have ripple effects on other EPA programs as well. It’s the foundation of all EPA greenhouse gas regulation in all sectors,” said Leopold. 

The EPA has relied on the endangerment finding to regulate power plants, vehicle manufacturers and oil and gas operations. Transport and power make up about half of U.S. greenhouse gas emissions. 

Trump has called climate change a “con job” and withdrawn the U.S., the world’s biggest historic emitter, from international efforts to combat it.

CAUTIOUS REACTION

Trump’s first administration did not seek to revisit the endangerment finding, as industry groups opposed the move and then-EPA Acting General Counsel David Fotouhi said the disruption was too risky.

The EPA was bolder this time after Supreme Court cases such as Loper Bright Enterprises v. Raimondo found Congress, not administrative agencies, should make that determination, the agency said in a press release on Thursday.

The EPA decision drew praise from some industry groups representing smaller oil and gas operators – the Independent Petroleum Association of America and the Marcellus Shale Association. The trade group for companies that supply equipment for internal combustion engine vehicles called the Specialty Equipment Market Association, or SEMA, said it will “directly impact the range of new vehicle choices that exist in the coming years.” 

Environmental groups blasted the move and noted that some major industry groups did not appear to be on board either.

David Doniger, senior attorney for the Natural Resources Defense Council, pointed to public comments from Ford and Honda last fall. Both automakers supported keeping the finding in place to ensure a stable regulatory environment.

“They’re worried about the political pendulum swinging back in a few years,” Doniger said. 

Honda did not respond to a request for comment on the EPA’s decision. Ford praised the administration for addressing the “imbalance between current emissions standards and customer choice” but said it has advocated a single national emission standard instead of separate state standards.

The Alliance for Automotive Innovation did not endorse the Trump endangerment repeal on Thursday but said “automotive emissions regulations finalized in the previous administration are extremely challenging for automakers to achieve given the current marketplace demand for EVs.”

The American Petroleum Institute said it had not advocated for a repeal of the endangerment finding but supported the administration’s action to end electric vehicle mandates for autos.

API Senior Vice President of Policy and Regulatory Affairs Dustin Meyer said in a statement that the trade group supports federal regulation of emissions – including methane from oil and gas operations.

“Our focus now is working on durable policies that reduce emissions while meeting growing energy demand,” he said. 

The Chamber of Commerce said on Thursday it will take a few days to analyze the rule and its impact. 

“While we did not call for the EPA to revisit and rescind the agency’s 2009 Endangerment Finding, we are carefully reviewing the specifics of this final rule and will engage with our members to assess its implications and impacts over the long term,” said Marty Durbin, president of the Global Energy Institute at the Chamber.

The Edison Electric Institute, representing big U.S. investor-owned utilities, said “We are reviewing this new action and will continue to work with the Administration to strengthen grid reliability and lower energy costs for all customers.”  

In public comments last year, EEI said repealing the endangerment finding could open the door to a regional patchwork of regulation and legal action.

Ann Carlson, environmental law professor at the University of California law school, agreed with that assessment, saying that federal authority to regulate greenhouse gases would no longer preempt state actions.

“If greenhouse gases aren’t subject to the Clean Air Act, there’s an argument that states could then regulate them independently,” she said.

(Reporting by Valerie Volcovici; additional reporting by David Shepardson; Editing by David Gregorio)