April 27, 2018 / 8:27 PM / in 3 months

UPDATE 2-U.S. likely to back freezing fuel economy standards from 2020-26 -sources

* Fuel efficiency standards frozen at 2020 levels through 2026 -gov’t draft proposal

* Proposal could spark fight with California over states’ role in setting vehicle emissions rules

* Automakers have sought changes to comply with rules but hope to avoid court fight

* EPA, Transportation still in talks over final proposal (Adds details, quote from senator, EPA administrator, President Donald Trump, letter, background)

By David Shepardson and Valerie Volcovici

WASHINGTON, April 27 (Reuters) - The Trump administration is likely to propose freezing fuel economy standards from 2020 through 2026, according to three people briefed on the matter, a move likely to spark a fight with California and other states backing tougher vehicle emissions rules.

The administration is circulating a draft proposal that would include freezing requirements after 2020 as the preferred alternative, but will include a series of other alternatives, the sources said. The formal proposal is expected to be unveiled in the coming weeks and has not been finalized. The Los Angeles Times first reported the plan earlier Friday.

The lengthy draft proposal, led by the National Highway Traffic Safety Administration (NHTSA), is also expected to assert that a 1975 federal law preempts states from imposing emissions rules, but the administration is not expected to immediately propose revoking California’s waiver under the Clean Air Act to set its own rules.

Automakers want changes to address lower gasoline prices and a shift in U.S. consumer preferences to larger, less fuel-efficient vehicles. They want revisions to the Obama standards to make it easier and less costly to meet targets, which vary depending on the size of vehicles and whether they are classified as cars or trucks.

The Obama administration’s rules, negotiated with automakers in 2011, were aimed at doubling average fleet-wide fuel efficiency to about 50 miles (80 km) per gallon by 2025.

The EPA did not comment on Friday but EPA said earlier this month it had determined the fuel rules through 2025 were not appropriate and would propose revisions. NHTSA said Friday it is working with EPA on the proposal. “The agencies intend to take comment on a broad range of options,” the agency said.

Senator Tom Carper, a Democrat, said “the Trump Administration is crafting a proposal that is dramatically weaker than any automobile manufacturer has requested and that also deliberately seeks to embark on a legal collision course with the State of California — a scenario that automakers, lawmakers and the state of California have all repeatedly urged the administration to avoid.”

President Donald Trump in March 2017 told autoworkers he would revisit the rules, which he suggested were harming auto jobs. “The assault on the American auto industry is over,” he said in Michigan.

Earlier this week, two auto trade groups met with White House officials, including Christopher Liddell, a White House deputy chief of staff, to discuss the issue, a Trump administration official confirmed.

The White House, California and Transportation Department have held talks for months in an effort to reach agreement on revisions.

Automakers, including General Motors Co chief executive Mary Barra and Toyota Motor Corp, have repeatedly urged the Trump administration to try to reach agreement with California to maintain a national program.

California Air Resources Board chief Mary Nichols told Reuters earlier this month the state was willing to make changes in the requirements to help automakers comply.

Stanley Young, a spokesman for Nichols, said: “If enacted, this would harm people’s health, boost greenhouse gas pollution and force drivers to pay more money at the pump for years.”

A group of 12 state attorneys general have threatened to sue if the Trump administration reverses the Obama-era rules.

On Friday, nearly two dozen Democratic U.S. senators wrote California and a dozen other states saying they would oppose any effort by the Trump administration to rescind California’s authority to set state vehicle emissions rules, according to a letter reviewed by Reuters.

The letter led by Senator Ed Markey and Carper and signed by Senators Charles Schumer, Elizabeth Warren, Kamala Harris and others said they “will oppose any unprecedented attack on the California waiver or on its standards.”

EPA Administrator Scott Pruitt on Thursday declined to answer if he would call for revoking California’s waiver, but vowed to work “to try to achieve commonality and an answer for both California and those states and our agencies.” (Reporting by David Shepardson; editing by Diane Craft)

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