Senate bill aims to align NHTSA, EPA emissions programs

WASHINGTON -- A half dozen senators on Thursday sponsored legislation to address technical discrepancies between separate federal programs that automakers say make it difficult to comply with carbon and fuel efficiency mandates.

The bill, authored by Sen. Roy Blunt, R-Mo., would bring consistency to the practice of transferring fleetwide credits earned under National Highway Traffic Safety Administration and EPA emissions programs.

Automakers complain that regulatory misalignment puts manufacturers in jeopardy of being fined by NHTSA for not achieving Corporate Average Fuel Economy standards even though they comply with EPA's emissions requirements.

The Obama administration and the auto industry agreed in 2010 to stepped increases in fleetwide fuel economy standards, with a goal of 54.5 mpg by 2025. NHTSA is responsible for that program, while the EPA manages a parallel program aimed at reducing greenhouse gas emissions for light vehicles.

The standards were finalized in 2012 under separate laws, but policymakers originally intended to achieve a joint rule for both the emissions and fuel economy programs that would allow automakers to comply through a single unified fleet.

The bill corrects statutory differences between the programs related to the expiration date, amount and type of credits manufacturers can earn in one model year and apply to another. It also puts pressure on regulators to harmonize other mechanics of their programs.

"Automakers commend the sponsors of this bi-partisan legislation for seeking to better align government programs to avoid unnecessary costs that ultimately are paid by consumers. We urge Congress to pass this legislation as soon as possible to help keep automobiles affordable to the widest range of customers," the Alliance of Automobile Manufacturers said in a statement.

The fix

The Fuel Economy Harmonization Act allows automakers to utilize CAFE credits earned over a longer period (up to 11 years), as they do under the EPA program. NHTSA currently has a statutory limit of five years during which earned credits can be carried forward, while EPA has no such restriction. Under the EPA program, automakers can "bank" credits in early years, when requirements are less stringent, and apply them when fuel economy standards become more rigorous.

After 2025, the treatment of credits would revert to five years.

The bill also removes caps on the amount of fuel mileage credits automakers can transfer between car and light-truck fleets. NHTSA limits the movement of credits to no more than 2 mpg, regardless of how many credits the manufacturer may have earned for exceeding fuel mileage standards. When the current limit was set by law in 2007, the overall fleet average was expected to be about 35 mpg by 2020. However, by 2025 the target fleet average is expected to be over 50 mpg.

The legislation will gradually increase the credit transfer cap from 2 mpg in model year 2017 to 6 mpg in model year 2022.

The EPA program provides automakers even more flexibility because there is no transfer cap.

Off-cycle credits

The third area addressed by the Fuel Economy Harmonization Act involves off-cycle credits.

Off-cycle technologies -- such as stop-start capabilities when the engine isn't needed or grille shutters that close at highway speed -- achieve fuel economy improvements and carbon dioxide reductions that aren't captured under EPA test procedures in a lab. The EPA recognizes the benefits of these technologies and has provided credits since model year 2012 to automakers that implement them.

For the 2014 model year and later, the EPA provided a preapproved list of technologies and credit values. The EPA also allows automakers to petition for credits for items that are not on the list, but for which benefits can be documented. NHTSA has a similar program starting in 2017 but has not allowed automakers to earn credits for earlier improvements.

The legislation would allow automakers to earn "off-cycle" credits in the NHTSA program from 2012 to 2017 to match the EPA program.

"I continue to support one strong national standard that promotes innovation, increases fuel economy, reduces carbon emissions, and ensures more choices for consumers," co-sponsor U.S. Sen. Debbie Stabenow, D-Mich., said in a statement. "Fuel economy standards have helped reduce our dependence on foreign oil and create new jobs for Michigan workers. Our bill makes simple changes so our manufacturers, suppliers, and workers can continue to make the best products in the world."

The Motor Equipment Manufacturers Association also issued a statement applauding the Senate proposal for providing regulatory certainty that enables long-term compliance planning and technology investment.

Other inefficiencies

Meanwhile, automakers are waiting for the agencies to address several other inefficiencies in their emissions programs.

The AAM and the Association of Global Automakers, representing international brands in the U.S., petitioned the EPA and NHTSA last summer to iron out inconsistent assumptions and procedures in their respective environmental programs. The requested changes don't weaken the standards, but would provide automakers more compliance certainty and reduce costs, they said.

NHTSA should also account for air conditioning efficiencies in earlier models when calculating a manufacturer's fleetwide fuel economy, consistent with the approach for the next phase of the programs, the industry groups said. The disparity means automakers do not get credit for exceeding fuel mileage standards due to more efficient air conditioning systems the way they do under EPA practices.

Also sought are NHTSA accounting changes to the way fuel economy credits are adjusted based on fuel savings and miles traveled.

The legislation does not affect the Trump administration's midterm evaluation of fuel economy standards, first set by the Obama administration.