Midterm Evaluation of Light-Duty Vehicle Greenhouse Gas Emissions Standards


>>WELL, GOOD MORNING, EVERYONE. I’M PETER WELCH, I’M THE PRESIDENT OF THE NATIONAL
AUTOMOBILE DEALERS ASSOCIATION, WE’RE A NATIONAL TRADE ASSOCIATION THAT REPRESENTS AMERICA’S
NEARLY 19,000 FRANCHISE NEW CAR AND TRUCK DEALERS. I’M PLEASED TODAY TO INTRODUCE THE ADMINISTRATOR
OF THE ENVIRONMENTAL PROTECTION AGENCY, SCOTT PRUITT, WHO WAS CONFIRMED JUST LAST YEAR AS
THE 14TH ADMINISTRATOR OF THE EPA AND SINCE THEN HE HAS BEEN VERY BUSY. HE’S SPEARHEADED OVER TWO DOZEN SIGNIFICANT
REGULATORY REFORMS WORTH OVER A BILLION DOLLARS IN SAVINGS, HIS FIRST YEAR HERE AT EPA AND
ALL TOLD, ISSUED MORE DEREGULATORY ACTIONS THAN ANY OTHER FEDERAL AGENCY UNDER THE TRUMP
ADMINISTRATION. I WANT TO THANK THE ADMINISTRATOR FOR HIS
LEADERSHIP AND COMMITMENT IN WORKING TOWARDS GREEN HOUSE GAS STANDARDS THAT HELP US BUILD
UPON THE TREMENDOUS PROGRESS THAT OUR INDUSTRY, THE AUTOMOTIVE INDUSTRY, HAS MADE IN FUEL
ECONOMY, AND IMPROVEMENTS IN EMISSION REDUCTIONS WHILE ENSURING THAT NEW MOTOR VEHICLES REMAIN
WITHIN THE ECONOMIC REACH OF OUR CUSTOMER BASE. AUTO DEALERS FULLY SUPPORT CONTINUOUS IMPROVEMENTS
IN FUEL ECONOMY AND WE FULLY SUPPORT FUEL ECONOMY STANDARDS THAT ENCOURAGE FLEET TURNOVER
BECAUSE THAT’S REALLY THE NAME OF THE GAME. GETTING NEW AND MODERN CARS ON THE ROAD. BUT THE KEY TO THE EQUATION ISN’T JUST THE
HIGHEST POSSIBLE STANDARD, IT’S THE HIGHEST STANDARD WE CAN ACHIEVE WHILE KEEPING VEHICLES
AFFORDABLE. BECAUSE IF OUR CUSTOMERS CAN’T BUY THEM WE
DON’T GET THE ADVANTAGE OF IT. CUSTOMER RESEARCH SHOWS THAT MONTHLY
PAYMENT IS THE TOP CONCERN FOR OUR CUSTOMERS. WE LOSE AFFORDABILITY, WE LOSE SALES. IT’S REALLY AS SIMPLE AS THAT. AND IF WE LOSE SALES WE WILL KEEP PEOPLE IN
OLDER CARS THAT ARE LESS SAFE, THAT ARE LESS FUEL EFFICIENCY,–FUEL EFFICIENT. AND THEN WE REALLY HAVEN’T ADVANCED OUR MUTUAL
GOAL TO MAXIMIZE THE NUMBER OF NEW FUEL EFFICIENT CARS ON THE ROAD. SO THIS IS WHY A DATA-DRIVEN PROCESS FOR DETERMINING
THE APPROPRIATE STANDARDS IS SO VITAL TO THE PROCESS. ONE THAT TAKES INTO ACCOUNT THE MYRIAD OF
FACTORS THAT DETERMINE WHICH AMERICANS ARE LIKELY TO BUY WHICH VEHICLES AND AT WHAT PRICE. ADMINISTRATOR PRUITT? [APPLAUSE] WELL PETER, THANK YOU VERY MUCH
AND IT’S GOOD TO SEE YOU HERE TODAY. WHAT AN EXCITING DAY, WE ALWAYS LIKE TO HAVE
GUESTS HERE AT THE EPA AND I LOVE THESE SIGNS, PARTICULARLY THE SIGNS THAT SAY JOBS. THAT LOOKS REALLY REALLY GOOD. I SEE ALL KINDS OF, THE SIGNS UP HERE AS WELL,
SO IT’S GOOD TO SEE THIS DEMONSTRATED TODAY. WE’RE HERE TO TALK ABOUT JOBS. OBVIOUSLY, BUT I WANT TO TALK FIRST ABOUT
WHAT’S HAPPENING ACROSS THE COUNTRY WITH RESPECT TO OUR AGENDA HERE AT THE EPA. YOU KNOW IT’S A TIME OF HOPE AND OPTIMISM. THIS IS A SPECIAL TIME OF THE YEAR AS YOU
KNOW, I’VE TALKED ABOUT THIS QUITE A BIT — OPENING DAY WAS LAST WEEK AND SO AS WE START THE NEW
BASEBALL SEASON, ALL TEAMS ACROSS BASEBALL ARE VERY OPTIMISTIC ABOUT WINNING THE WORLD
SERIES AND AS I KID MY FRIENDS FROM CHICAGO, AFTER ALL IF THE CUB CANS WIN, ANYBODY CAN,
AND SO THAT HOPE AND OPTIMISM THAT HAS DRIVEN BASEBALL THIS TIME OF YEAR, IT’S DRIVING THE
ECONOMY ACROSS THE COUNTRY AS WELL AND LARGELY BECAUSE OF THE DECISIONS THAT WE’RE MAKING
IN THE EXECUTIVE BRANCH TO GET BACK TO COMMON SENSE REGULATIONS AND CERTAINTY WITH RESPECT
TO HOW WE DO BUSINESS. AS YOU KNOW, ONE OF THE FIRST THINGS THAT
PRESIDENT TRUMP DID AS HE CAME INTO OFFICE WAS INVITE THE AUTO ALLIANCE, MANUFACTURERS,
AUTO DEALERS TO THE WHITE HOUSE TO TALK ABOUT THE IMPORTANCE OF AUTO MANUFACTURING AND THAT
SECTOR OF OUR ECONOMY. AND HE FOLLOWED THAT UP SHORTLY BY GOING TO
DETROIT. WHEN I JOINED HIM THERE AND HE MADE A COMMITMENT
TO THE PEOPLE IN DETROIT AND HE MADE A COMMITMENT TO THE PEOPLE OF THIS COUNTRY THAT WE WERE
GOING TO RETURN TO DUE ORDER AND DUE PROCESS AND MAKING THE DECISION ABOUT THE MIDTERM
EVALUATION BECAUSE AS YOU KNOW THE PAST ADMINISTRATION, TOLD THE AMERICAN PEOPLE AS THE STANDARDS
WERE ADOPTED THERE WOULD BE A MIDTERM EVALUATION IN APRIL OF 2018. THE PAST ADMINISTRATION ACCELERATED THAT BY
16 MONTHS, MADE THE DECISION IN DECEMBER, ANNOUNCED IT IN JANUARY, GAVE THE TEST BEFORE
THE TEST WAS SUPPOSED TO BE GIVEN AND SO THE PRESIDENT WENT TO DETROIT MICHIGAN AND SAID
WHAT? WE’RE GOING TO RESTORE A COMMITMENT TO THAT
PROCESS AND THUS BEGAN THE JOURNEY FROM MARCH OF LAST YEAR TO APRIL OF THIS YEAR TO EVALUATE
THE MERIT, THE STANDARDS THAT WERE SET, WERE THEY APPROPRIATE? AS YOU KNOW I’M HERE TO ANNOUNCE THAT THOSE
STANDARDS THAT WERE SET THAT WE ARE OBLIGATED TO EVALUATE, WE ARE DETERMINING, I AM DETERMINING
THAT THOSE STANDARDS ARE INAPPROPRIATE AND SHOULD BE REVISED. [APPLAUSE ] THIS WILL BEGIN A PROCESS THAT WILL DETERMINE WHAT THOSE STANDARDS SHOULD BE. IT IS NOT CONCLUSORY IN THAT REGARD. BUT WHAT IS CONCLUSORY IS THAT WHAT TOOK PLACE
BEFORE AND AS WE LOOK AT VARIOUS ISSUES ON HOW WE SHOULD SET THESE STANDARDS, THEY NEED
TO BE UPDATED AND EVALUATED AND THE STANDARDS NEED TO BE REVISED ACCORDINGLY. AS AN EXAMPLE WHEN YOU THINK ABOUT YOU KNOW
WHERE WE ARE IN THIS COUNTRY TODAY, AND HOW FUEL IS BEING USED, AND HOW CARS ARE BEING
USED AND I THINK AS PETER INDICATED, I THINK THE FOCUS ON THE PAST HAS BEEN ON MAKING MANUFACTURERS
IN DETROIT, MAKING MANUFACTURERS IN VARIOUS PARTS OF THE COUNTRY MAKE CARS THAT PEOPLE
AREN’T GOING TO BUY. AND IF OUR FOCUS SHOULD BE ON MAKING CARS
THAT PEOPLE PURCHASE ACTUALLY MORE EFFICIENT. TO HAVE ARBITRARY PERCENTAGES OF OUR FLEET,
MADE UP OF VEHICLES THAT AREN’T GOING TO BE PURCHASED, THAT DEFEATS THE VERY PURPOSE OF
WHAT THE CAFE STANDARDS ARE SUPPOSED TO ADDRESS. WE SHOULD BE FOCUSED UPON MAKING THOSE CARS
MORE EFFICIENT BECAUSE IF NOT, THEN AN INDIVIDUAL WILL STAY IN OLDER VEHICLES AS PETER INDICATED. AND EMISSIONS WILL GO UP. SO WE WILL GET THIS RIGHT GOING FORWARD THIS
YEAR BUT IT IS VERY RIGHT FOR US TO BE HERE TO RECOGNIZE THAT WHAT WAS DONE IN 2011-12
AS WE EVALUATE IT NOW IS NOT APPROPRIATE GOING FORWARD AND WE’RE GOING TO GET IT RIGHT AS
WE ADDRESS IT THIS YEAR. SO THIS IS ANOTHER STEP, THIS IS ANOTHER STEP
IN THE PRESIDENT’S REGULATORY AGENDA, DEREGULATORY AGENDA. REGULATORY CERTAINTY, AS PETER INDICATED,
A BILLION DOLLARS IN SAVINGS WITH RESPECT TO OVER 22 SIGNIFICANT REGULATORY ACTIONS
THAT WE’VE BEEN INVOLVED IN HERE AT THE AGENCY. THIS PRESIDENT HAS SHOWN TREMENDOUS COURAGE
TO SAY TO THE AMERICAN PEOPLE THAT AMERICA’S GOING TO BE PUT FIRST. AND I THINK THIS MIDTERM EVALUATION, THE AUTO
SECTOR, THE IMPORTANCE OF AUTO MANUFACTURING IN THIS COUNTRY, THE PRESIDENT AGAIN IS SAYING,
AMERICA IS GOING TO BE PUT FIRST AND WE HAVE NOTHING TO BE APOLOGETIC ABOUT, WITH RESPECT
TO THE PROGRESS WE’VE MADE IN REDUCING EMISSIONS AS A COUNTRY, WE’VE LED THE WORLD WITH RESPECT
TO REDUCTION OF GHG, MOBILE SOURCES AND OTHERWISE, THROUGH TECHNOLOGY AND INNOVATION AND THE
AUTO SECTOR FROM MY PERSPECTIVE HAS BEEN THE LEADER IN ACHIEVING THAT THROUGH BETTER DESIGN
AND THROUGH BETTER TECHNOLOGY AND THAT’S EXCITING AND WE SHOULD CELEBRATE THAT AS A COUNTRY. SO AS WE GO FORWARD, THE REST OF THE YEAR,
I JUST WANT TO SAY FIRST AND FOREMOST TO YOU IN THE AUTO SECTOR, THANK YOU FOR YOUR LEADERSHIP. THANK YOU FOR THE DIFFERENCE YOU’VE MADE ON
BEHALF OF THE ENVIRONMENT. THANK YOU FOR YOUR CONTINUED COMMITMENT TO
THESE PRINCIPLES, AND WE HERE AT THE AGENCY RECOGNIZE THAT, WE HERE AT THE AGENCY RECOGNIZE
THAT ARE GOING TO CONSIDER THAT AND MAKE SURE THAT CONSUMERS ACROSS THIS COUNTRY ARE NOT
PUT IN THE POSITION WHERE THEY’RE HAVING TO BUY MORE EXPENSIVE CARS OR CARS THAT DON’T
REALLY TRULY WANT TO BE PURCHASED CREATING WORSE OUTCOMES FOR THE ENVIRONMENT. SO AGAIN, WELCOME TODAY AND THANK YOU FOR
YOUR ATTENDANCE TODAY AND I THINK THAT WE’RE GOING TO HAVE A COUPLE OF MORE FOLKS COME
UP AND TALK ABOUT THE MIDTERM EVALUATION AND I THINK MAYBE, PERHAPS, YES? COME ON UP AND WELCOME. THANK YOU SO MUCH.>>[ APPLAUSE ]
>>ADMINISTRATOR PRUITT, WE’RE PLEASED TO BE HERE TODAY. MY NAME IS JOHN BOZELLA, I’M THE PRESIDENT
AND CEO OF GLOBAL AUTOMAKERS. ON BEHALF OF OUR MEMBER COMPANIES, I WANT
TO EXPRESS MY APPRECIATION FOR THE THOROUGH, EMPIRICAL ANALYSIS OF THE 2022-25 GREENHOUSE
GAS STANDARDS FOR CARS AND LIGHT TRUCKS. IN 2011, WHEN AUTOMAKERS AND AUTO REGULATORS
IN WASHINGTON AND CALIFORNIA AGREED TO SIGNIFICANTLY REDUCE GREENHOUSE GAS EMISSIONS AND IMPROVE
FUEL ECONOMY MORE THAN A DECADE INTO THE FUTURE, WE ALL AGREED TO REVIEW THE BASIS FOR THAT
DECISION, THE STATE OF THE TECHNOLOGY, THE PRICE OF GASOLINE, CONSUMER PREFERENCES, TO
ENSURE THAT WE ARE ON THE RIGHT COURSE. GLOBAL AUTOMAKERS AND ITS MEMBER COMPANIES
BELIEVED THEN AND WE BELIEVE NOW THAT WE NEED TO CONTINUE TO REDUCE EMISSIONS AND IMPROVE
FUEL ECONOMY. STRONG AND ACHIEVABLE STANDARDS ARE IMPORTANT
FOR THE ENVIRONMENT, FOR THE INDUSTRY, AND FOR CONSUMERS. TODAY THE EPA HAS DECIDED A COURSE CORRECTION
IS REQUIRED. OUR REVIEW OF THE RECORD TO DATE SUPPORTS
THIS CONCLUSION. HOWEVER, A COURSE CORRECTION DOES NOT REQUIRE
THAT WE ABANDON OUR COMMITMENT TO ONGOING EMISSIONS REDUCTIONS, NOR SHOULD IT. TODAY’S ANNOUNCEMENT IS THE FIRST STEP IN
A LONGER RULE MAKING PROCESS. WE BELIEVE THE BEST WAY TO ACHIEVE OUR COLLECTIVE
GOALS IS UNDER A SINGLE NATIONAL PROGRAM THAT PROVIDES AN AGGRESSIVE BUT ACHIEVABLE PATHWAY,
A VARIETY OF COMPLIANCE TOOLS AND FACTORS IN THE ROLE OF CUSTOMERS. THE WORLD MARKET IS SHIFTING TO LOW CARBON
TRANSPORTATION AND THE UNITED STATES NEEDS TO REMAIN COMPETITIVE. THE AUTO INDUSTRY CAN BEST ACHIEVE ITS GOALS
WHERE THERE IS REGULATORY CERTAINTY, CONSISTENCY AND ROOM TO INNOVATE. MANUFACTURES NEED TO SELL VEHICLES THAT CUSTOMERS
NEED AND WANT TODAY, TO FUND THE TECHNOLOGICAL SHIFTS IN ELECTRIFICATION AND AUTOMATION EXPECTED
IN THE FUTURE. ALL STAKEHOLDERS, FEDERAL, STATE, INDUSTRY
AND OTHERS, NEED TO BE WORKING TOGETHER NOW, FOLLOWING THE FINAL DETERMINATION TO DEVELOP
A NATIONAL PROGRAM THAT KEEPS US MOVING FORWARD FOR THE YEARS 2022-2025 AND BEYOND. THANK YOU VERY MUCH. [ APPLAUSE ]
>>THANK YOU, JOHN. I’M MITCH BAINWOL WITH THE AUTO ALLIANCE,
I’M REMINDED WHENEVER I GO LAST IN THE SEQUENCE OF WHAT FORMER SENATOR JOHN WARNER SAID WHEN
HE MARRIED ELIZABETH TAYLOR, BECOMING HER SIXTH HUSBAND, HE SAID I KNOW WHAT TO DO BUT
I’M NOT SURE HOW TO MAKE IT INTERESTING, SO I KNOW WHAT TO DO AND I WILL TRY TO MAKE THIS
INTERESTING. THANK YOU ADMINISTRATOR PRUITT, I REALLY APPRECIATE IT. IT’S GOOD TO BE HERE WITH YOU AND YOUR TEAM. I’M ALSO DELIGHTED TO BE WITH THE DEALERS,
PETER, THANK YOU FOR BEING HERE, THESE STANDARDS ARE NOT ABOUT ABSTRACT THEORY OR HOPEFUL FORECASTS,
THEY’RE ABOUT WHAT PEOPLE WANT TO BUY IN THE DEALERSHIPS THAT PETER REPRESENTS. THE EPA AND NHTSA PROGRAMS MEASURE AUTOMAKERS
BY WHAT PEOPLE BUY AT THOSE DEALERSHIPS. THE CARS IN THE SHOW ROOMS OF AMERICA
TELL THE STORY OF AN INDUSTRY COMMITTED TO ENERGY EFFICIENCY, INVESTING BILLIONS OF DOLLARS
TO MAKE GAS ENGINES MORE SOPHISTICATED AND EFFICIENT AND TO DEVELOP HIGH MPG ALTERNATIVE
POWER TRAINS. JUST OVER A YEAR AGO, AS THE ADMINISTRATOR
NOTED, THE ENTIRE INDUSTRY REQUESTED THE NEW ADMINISTRATION TO REBOOT THE MTE AND UNDERTAKE
A DATA DRIVEN REVIEW TO DETERMINE IF THE GHG TARGETS NEEDED ADJUSTMENT AND TO HARMONIZE
AT LEAST THE FEDERAL PROGRAMS, RETURNING TO INDIVIDUAL TIMING AND HONORS THE 2011 AGREEMENT,
THE PRESIDENT AGREED AND ALONG WITH SECRETARY CHOW, YOUR ANNOUNCEMENT TODAY MARKS THE BEGINNING
OF AN EFFORT TO MAXIMIZE GHG SAVINGS, FACILITATE COORDINATION BETWEEN EPA AND NHTSA, AND HOPEFULLY
CALIFORNIA, AND ALIGN THE PROGRAM WITH MARKETPLACE REALITIES. FACTS MATTER AND THEY SUPPORT YOUR DETERMINATION
TODAY. WHAT ARE THOSE FACTS? GAS PRICES, PROJECTED TO BE $3.65 CENTS IN
2018. THEY’RE ABOUT A DOLLAR SHORT OF THAT NOW. VERY CHEAP. SALE OF ALTERNATIVE POWER TRAINS, STUCK AT
ABOUT 3% OF THE MARKET. COMPLIANCE, WE’RE IN FULL COMPLIANCE IN 2015. WE’RE NOW IN UNDERCOMPLIANCE EVEN AS FUEL
EFFICIENCY RISES. UNIT SALES RISING THROUGH 2016 AND BEGINNING
TO SOFTEN. THERE’S A LOT OF TALK ABOUT ROLL BACK IN THE
PRESS COVERAGE AND THAT DESCRIPTION IS WRONG, I JUST WANT TO POINT OUT HERE’S WHERE WE ARE
RIGHT THERE. ANYTHING SHORT OF THE HORIZONTAL LINE IS A
ROLL BACK. THE SECOND YOU GO UP, AND WE’RE ALL FOR INCREASING
STANDARDS, YOU’RE NOT IN ROLL BACK TERRITORY. AUTOMAKERS TO BE PRECISE, SUPPORT TARGETS
RISING YEAR OVER YEAR. NO ONE, NO ONE IS ADVOCATING A FREEZE OR ROLL
BACK FROM TODAY’S NUMBERS. WE ARE COMMITTED TO PROGRESS AND SUPPORT STANDARDS
THAT RISE OVER TIME. ADJUSTMENTS ARE ALSO NECESSARY TO REFLECT
CHANGES IN FLEET MIX, THESE CHANGES AUTOMATICALLY MOVE THE HEADLINE NUMBER, YOU CAN SEE IN THAT
CHART, THE NUMBERS STARTED AT 545, WHEN EPA IN JANUARY, EARLY JANUARY OF ’17, ADJUSTED,
THE NUMBER MOVED TO 514, JUST BASED ON FLEET EXCHANGES AND THAT IF YOU WERE TO RECALCULATE
BASED ON FLEET MIX, HAS ALREADY GOT YOU UNDER 50 SO THERE’S NOTHING ETCHED IN STONE HERE. I WOULD LIKE TO OFFER THESE ADDITIONAL POINTS. FIRST, THE NATURE OF MOBILITY IS FUNDAMENTALLY
CHANGING, BOTH IN POWER TRAINS AND MODELS OF MOBILITY. NOW IS A GREAT OPPORTUNITY TO MODERNIZE AND
UPDATE THESE PROGRAMS. SECOND, WHILE WORKING OUT AN AGREEMENT WITH
CALIFORNIA ISN’T EASY GIVEN DIFFERENT PERSPECTIVES, HARMONIZATION OFFERS REAL VALUE TO OUR INDUSTRY
AND TO THE AMERICAN CONSUMER BECAUSE REGULATORY COHERENCE, INCOHERENCE JEOPARDIZES AFFORDABILITY,
SO THANK YOU FOR YOUR TEAM’S EFFORTS TO MEET WITH CALIFORNIA, WE HOPE IT SUCCEEDS. THIRD, YOUR POINT ABOUT THE POWER FLEET TURNOVER
IS COMPELLING. WE ALL NEED TO REMEMBER THAT A VEHICLE IMPROVING
FROM 10-20 MPG, SAVES ABOUT 10 TIMES THE FUEL THAT A VEHICLE GOING FROM 40-50 MPG DOES. GIVEN THAT THE AVERAGE AGE OF CARS IS NEARLY
12 YEARS OLD, THE BEST THING WE CAN DO FOR FAMILIES AND FOR SOCIETY, IS TO TURN OVER
THIS FLEET AS RAPIDLY AS POSSIBLE. SMART REGULATION DOES THAT. FOURTH, IN TERMS OF FUEL EFFICIENCY AND ASSOCIATED
CARBON SAVINGS, THE GAP THAT WE’RE TALKING ABOUT IS REALLY FRACTIONAL. A 1% GROWTH RATE OVER TODAY’S LEVEL YIELDS
97% OF NHTSA’S FUEL SAVINGS, 97% WITH JUST A 1% INCREASE AND THAT’S OVER THE 2012-2025
PERIOD. A 3% GROWTH RATE YIELDS 99% OF THE ORIGINAL
ESTIMATES. SO WE’RE TALKING ABOUT FRACTIONS HERE. FINALLY, AND MY LAST POINT, WHETHER YOU’RE
STANDING HERE IN DC OR ANYWHERE ACROSS THIS COUNTRY INCLUDING CALIFORNIA, OUR GOALS ARE
FUNDAMENTALLY THE SAME. WE WANT TO FIND A WAY TO MAXIMIZE FUEL EFFICIENCY,
MAXIMIZE CARBON REDUCTION, EMPLOYMENT, AFFORDABILITY AND SAFETY. THESE ARE ALL ESSENTIAL SOCIAL OBJECTIVES. WE CAN’T COMPROMISE ONE FOR THE OTHERS. SO THANK YOU FOR YOUR LEADERSHIP SIR. WE DEEPLY APPRECIATE THE ADMINISTRATION’S
WORK TO FIND A WAY TO BALANCE FUEL EFFICIENCY AND AFFORDABILITY. THANK YOU. [APPLAUSE] [PEOPLE TALKING]
>>I THINK WE’RE GOING TO GET A PICTURE NOW. [PHOTOGRAPHER GIVING INSTRUCTIONS] [APPLAUSE]

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