Greenhouse gas regulatory rollback: What it means for car shoppers

The White House recently rescinded a 2009 finding that greenhouse gases pose a danger to human health.

The Environmental Protection Agency called the move “the single largest deregulatory action in U.S. history,” asserting it repeals many regulations on the automotive industry.

In a statement, the agency said the decision removes “all subsequent federal GHG (greenhouse gas) emission standards for all vehicles and engines of model years 2012 to 2027 and beyond.”

The move, however, may not bring drastic change to the cars you see for sale.

Let’s explore what the decision means, and why its impact may be limited.

Credit: Special

Credit: Special

Why does the endangerment finding matter?

Congress writes laws, but federal agencies like the EPA write the regulations that explain how the federal government interprets and enforces those laws.

Those agencies are staffed by lawyers, scientists and other professionals who take the broad guidance of federal law and make it specific. Congress, for instance, empowers the government to pass rules that will protect health. Congress does not define whether carbon dioxide and methane are dangerous, in what quantities or how industries should restrict them. Federal agencies do that.

The automotive industry was heavily regulated before 2009. But the endangerment finding is the foundation for many regulations issued since then.

In a landmark 2007 ruling, Massachusetts v. EPA, the Supreme Court found the agency has the authority to regulate greenhouse gases. But the court required the agency to prove greenhouse gases posed a threat in order to issue any rules.

The endangerment finding served as that proof. Without it, those rules may be void.

Challenges to come

Several entities have announced plans to challenge the EPA’s move in court.

The state of California plans a challenge. It often attracts other states to join similar lawsuits.

Several environmental groups are also challenging the move. Lawsuits could keep the matter tied up for years.

Why will the auto industry’s response likely be limited?

The move may have little practical effect on the cars you see on dealer lots in the near future for two reasons.

The first is that designing new cars from scratch often takes five years or more. Designing new engines is similarly slow.

Automakers must design, test and validate parts and then entire cars, negotiate new contracts with suppliers, negotiate with unions over jobs and work conditions, retool factories and more before a new design is ready to build.

Those time scales mean automakers rarely react aggressively to swings in U.S. policy.

The Trump administration leaves office in less than three years. The new cars that reach showrooms over the rest of President Donald Trump’s term will largely have been designed before his second inauguration. The cars automakers are designing today will be sold under the next president, who might rewrite the greenhouse gas rules.

Automakers have to plan for future presidencies. Simply put, the automotive industry does not move at the speed of politics.

The second issue is that automakers sell most cars in multiple countries. They must build those to the highest standard they’ll encounter. A country tightening its rules could impact designs. A country loosening its rules may not.

Americans buy more large trucks and SUVs than people in other countries. Automakers could more easily design those for only the U.S. market.

But sales of both large trucks and SUVs are growing in other markets. An automaker designing them only to American standards would give up important growth opportunities.

Popular smaller models, like the compact SUVs Americans can’t get enough of, are often largely the same in the U.S., Japan and Europe.

What changes could car companies make in response?

Car design is too slow a process for politics to impact it quickly. But automakers can make some quick decisions centered around things they already build.

For instance, under the prior administration, Stellantis (parent company of Chrysler, Dodge, Jeep, Ram and other brands) had planned to end production of its famous Hemi V8 engines. The company began phasing the engines out of most models last year.

Then, the Trump administration announced it would stop enforcing fuel economy rules. So, Stellantis elected not to end production of the engine and put it back into many cars for the 2026 model year.

That required no new designs.

Similarly, AMG, the high-performance division of Mercedes-Benz, has begun replacing 4-cylinder engines in some models with more powerful 6-cylinder engines. That did not require much design work or retooling.

Automakers could well adjust the mix of models and engines they currently build because of the EPA’s move. But they are unlikely to radically change future designs unless they grow certain the decision will last longer than one presidency.

Sean Tucker is a managing editor for Kelley Blue Book. He’s based in Washington, D.C., where he has covered the auto and energy industries for a quarter-century.