UPDATE 1-Trump administration close to finalizing fuel efficiency rules rewrite -sources

(Adds background, details on rules)

WASHINGTON, March 25 (Reuters) - The White House is close to finalizing a landmark rewrite of U.S. fuel efficiency standards through the 2026 model year, boosting annual requirements but at a considerably lower rate than under Obama-era standards, three people briefed on the matter said on Wednesday.

The Trump administration plans to unveil the final rules by Tuesday ahead of an April 1 deadline to revise the 2022 model year, the sources said.

In August 2018, the Trump administration proposed freezing fuel economy standards at 2020 levels through 2026 reversing Obama-era standards that called for about a 5% annual increase during the period.

A draft final proposal circulated by the administration this year proposed increase requirements by about 1.5% per year and the final rule is expected to be similar, the sources said.

The requirements, being written by two federal agencies, are aimed at reducing greenhouse gases and improving the fuel efficiency of U.S. vehicles.

The Environmental Protection Agency referred questions Wednesday to the White House Office of Management and Budget (OMB) because it is “still under interagency review.” OMB declined to comment. The National Highway Traffic Safety Administration did not immediately respond to a request for comment.

California and 22 other U.S. states have vowed to challenge the final rule and previously sued to challenge the Trump administration’s decision to revoke California’s authority to set stiff vehicle tailpipe emissions rules and require a rising number of zero emission vehicles.

Senator Tom Carper, the top Democrat on the Environment and Public Works Committee, said earlier this year the draft proposal would result in a 40.5 mpg average for the combined fleet by 2030 — significantly less than the Obama rules.

The Obama standards, adopted in 2012, sought to raise fuel efficiency standards to an estimated 46.7 mpg by 2026, which officials had said would save motorists $1.7 trillion in fuel costs and eliminate 2 billion metric tons of carbon dioxide over the life of the vehicles but cost the auto industry about $200 billion over 13 years.

The draft final rule projects that the standards will lead to the use of between 78 billion and 84 billion more gallons of gasoline and the emission of 867 million to 923 million additional metric tons of CO2, Carper said. (Reporting by David Shepardson Editing by Chris Reese and Grant McCool)