Background Briefing by a Senior Administration Official on White House Announcement on Auto Emissions and Efficiency Standards

Via Conference Call

7:18 P.M. EDT

MR. LaBOLT: Hi, this is Ben LaBolt of the White House press office. Thanks for joining this evening's background briefing on tomorrow's announcement on fuel efficiency (inaudible) emission standards for autos. This call is not for broadcast and can be sourced only to a senior administration official; also embargoed until 9:00 p.m. this evening.

I'd like to turn the call over to your senior administration official.

SENIOR ADMINISTRATION OFFICIAL: Thank you. Tomorrow the administration is proposing tough new fuel economy standards and the first ever greenhouse gas pollution standards for cars. The program will begin in model year 2012. By 2016 the fleet average will be 35.5 miles per gallon, that is four years earlier than the CAFE law requires. The CAFE law required a 35 miles per gallon in model year 2016.

This is an average 5 percent year in increased fuel efficiency. In model year '09, the current model year, the average fuel efficiency is 25 miles per gallon. More efficient cars mean savings to consumers at the pump. The projected oil savings of this program over the life of this program is 1.8 billion barrels of oil. The program is also projected to achieve reductions of 900 million metric tons of greenhouse gas emissions under the life of the program. That is equivalent to taking 177 million cars off the road or shutting down 194 coal plants.

This proposed national policy weaves together the legal authority and the Environmental Protection Agency pursuant to the Supreme Court decision in Mass versus EPA, DOT's new CAFE law, while respecting California's authorities under the Clean Air Act.

(Inaudible) of the agencies and the White House worked closely with California and all of the car companies in developing this historic proposal. It's important to note that all companies will be required to make more efficient and cleaner cars. We do that by setting – by proposing individual standards for each class size of vehicle and then a fleet average for each company. This has the effect of preserving consumer choice -- you can continue to buy whatever size car you like, all cars get cleaner.

There has been some questions about the California waiver. EPA has not made a final decision on the reconsideration of the California; that is still under consideration. If EPA does grant the waiver, California has agreed that they will defer to the proposed national standard that we are announcing tomorrow.

With that, happy to take any questions.

Q: Good evening. Two quick questions. Number one, how does the measurement system differ from the current standards, or footprint-based system of CAFE? And secondly, would California be able to set a tougher standard under the outline that you've envisioned here, than the federal standards would be under this plan?

SENIOR ADMINISTRATION OFFICIAL: Right. So the attributes are the foot-based standard that was embodied in the CAFE law, it's being used for the greenhouse gases, too. It would use the same methodology, the same sort of mechanism in this proposal.

California is agreeing through model year 2016 -- which is what this proposed program, national policy encompasses -- that they will defer to the national policy, not set a separate standard.

Q: What is the administration assuming will be the price of gasoline in 2016? (Inaudible) and those who say that the recent slowdown (inaudible) as gas prices have fluctuated (inaudible).

SENIOR ADMINISTRATION OFFICIAL: The models that were used by EPA and DOT assume a price -- a price per gallon from AEO, the Energy Information Agency -- no, AEO. And that, remember they use in model year 2016 $3.50 a gallon, so that was the number used by the agency.

Q: Three dollars and 50 or 15?

SENIOR ADMINISTRATION OFFICIAL: Fifty, 5-0.

Q: Okay. And then on the second question?

SENIOR ADMINISTRATION OFFICIAL: I'm sorry, what was the second question?

Q: The second question was how do you respond to those who say that the slowdown in sales (inaudible) compact cars (inaudible) large SUVs (inaudible).

SENIOR ADMINISTRATION OFFICIAL: I think what's very attractive about this proposed national policy is that consumers can maintain their choice, but they will be more fuel efficient cars just because every single category of cars has to become more efficient.

As you well know, Steve, under the old CAFE program it was a fleet average and so you could offset your less fuel efficient cars by making more fuel efficient cars. What this says is it requires in each class size of vehicle that there are improvements made.

Q: Thanks for taking the time. Just a couple of quick questions. What's the estimated cost to the auto industry of the proposed regulation? And what are the fleet light averages for both light duty trucks and passenger cars in 2016?

SENIOR ADMINISTRATION OFFICIAL: The average cost per vehicle is -- of the national policies is $600 above the CAFE cost. So CAFE was estimated in 2016 to have an average vehicle cost of about $700, and this national policy has an incremental cost of $600.

There are immediate savings, obviously, to the consumer because of the fuel savings -- the cars that are fuel efficient and so for people who buy their cars on time, you know, over a 60-month loan, which is about 70 percent of the American people, on a month-to-basis it may end up being a wash in terms of the slight increase in the price of the car, but that is offset by the lower gasoline used.

You asked for the specifics on cars and trucks. In 2016 it's 39 miles per gallon for cars and 30 miles per gallon for trucks. Today it is 27.5 miles per gallon for cars and 23.1 miles per gallon for trucks.

Q: And then just lastly, don't you think that the regulation will sort of dramatically change, sort of, the makeup of vehicles -- won't we move toward more smaller vehichles with, you know, more efficient engines, smaller engines? Don't you see the fleet having a dramatically different look by 2016?

SENIOR ADMINISTRATION OFFICIAL: We don't. We think that companies can preserve the options that consumers have. I think in terms of the efficiencies of the engines, in terms of the air conditioning systems, making those more efficient, yes, you will see some changes. But there is some available technology, some off-the-shelf technology that will allow them to make some progress without dramatically changing the mix of the fleet.

Q: Can you please just sort of help me, walk me through here what this means for California. What exactly are they giving up by signing on to this?

SENIOR ADMINISTRATION OFFICIAL: Well, there's one program and so California doesn't have to develop their own compliance and enforcement program; that will be handled through the national program. The number that California had sought or is seeking in the waiver for 2016 is 35.5 miles per gallon, and so that is what this is proposing to do. The ramp up to the 35.5 miles per gallon is a slightly different path than what California had proposed, but in terms of greenhouse gas emissions, because it was a national program -- which California would not have been – the total amount of greenhouse gas reductions is greater than what a California program would have gotten, even with the 14 states who they said they would join the California program.

Q: Specifically what's different about the ramp up?

SENIOR ADMINISTRATION OFFICIAL: It (inaudible) a little bit more slowly in the initial years and then it -- I think it catches up -- does it catch up in 2015?

SENIOR ADMINISTRATION OFFICIAL: Yes.

SENIOR ADMINISTRATION OFFICIAL: It catches up in model year 2015. So it starts out a little bit more gradual, and then was important to give the car companies some ability to making investments in the adjustment. That was one of the things that was important to the car company. And so we would get to the same environment place in terms of fuel efficiency. And as I said, we get to an even better place in terms of greenhouse gas reductions because, again, it's the entire country, not just California and the states that had said they would join with California.

Q: And just one last quick thing. What happens to this proposal if the California waiver is denied by the EPA?

SENIOR ADMINISTRATION OFFICIAL: What will happen tomorrow is EPA and the DOT will issue a notice of intent to propose these standards, so that will become publicly available. But car companies in California have also submitted a letter saying that if the proposal goes forward as they have been told, then they are prepared to move forward to do whatever they need to do. In the case of California, defer (inaudible) or compliance with their waiver if it were granted.

We're not -- it's up to EPA to decide what they need to do. This proposal goes forward regardless.

Q: Thank you. A few things, if I may. I want to follow up on a question that was mentioned, brought up just a few moments ago, and that is the issue of motivation. The automakers have long complained, and many people support this position, that unless the government actually takes a more direct role in motivating consumers -- or penalizing, if you prefer -- through higher gas taxes or such -- that basically it is simply offloading responsibility for driving consumers to better fuel economy, and I wonder how you would react to that, because there doesn't seem to be anything here that essentially says the government will really help push consumers to shift to a higher (inaudible), you've just got to hope the fuel prices will help do it for you.

SENIOR ADMINISTRATION OFFICIAL: No, we're not hoping that fuel prices do it. What the government is doing is proposing the toughest ever fuel efficiency and the first ever greenhouse gas emissions standards. I mean, it is -- these are historic levels and historic increases in fuel efficiency. And, you know, we worked closely with the companies to understand what they needed to be able to meet these kind of tough standards. What they said is they needed the certainty and predictability, they needed the government to say we want you and we will require you to be in a particular place by 2016. And we're doing that in a way that preserves consumer choice.

And so I think we've ended up in sort of the best of all words, with the environmental gains that California thought was important, that the administration thought were important, and at the same time giving the companies the certainty that they need so they will make the investments -- you know, when this proposal is finalized they'll be required to make the investments to meet these standards.

Q: I hear what you're saying and I understand that and I think you do address a number of the issues. But there is that one issue which time and again the industry continues to talk about, and a lot of critics of the CAFE standard -- including people who are on both sides of the issue, those who would like better fuel economy and those who either oppose -- you know, don't believe in greenhouse warming, global warming. There seems to be a general consensus that this is a process that says: Automakers, go make fuel efficient cars, but unlike the rest of the world -- particularly Europe or Japan -- the government is not going to do anything proactively to try to encourage consumers to make the switch to more fuel efficient cars. You're saying “go build it,” but you're not doing anything that I can see that says “we're going to help motivate the consumers, we're just going to try to give them a little bit better mileage if they still stick with their big trucks.”

SENIOR ADMINISTRATION OFFICIAL: Well, first of all, it's not “a little bit better.” I mean, going from fuel efficiency of 25.1 miles per gallon today to 35.5 in 2016 is not, you know, insignificant. It is on average a 5 percent increase per year starting in 2012 with the program.

And secondly, you know, we are doing something, which is the government is saying to consumers: You're going to get and you're going to be buying more fuel efficient cars. And I think that is very, very significant.

Q: Thank you.

SENIOR ADMINISTRATION OFFICIAL: First, I'd like to officially ask that this not be (inaudible) -- that is fairly well known already (inaudible).

MR. LaBOLT: As I said at the beginning of the call, this is a background briefing, sourced to a senior administration official.

Q: (Inaudible) what did you say the California standard would be if it were imposed (inaudible) point five is the federal standard?

SENIOR ADMINISTRATION OFFICIAL: Correct, that's what California's waiver -- that was the standard in the California waiver. California was looking for a greenhouse gas standard, but when you (inaudible) the things back and forth it's effectively 35.5 miles per gallon in 2016.

Q: The same mileage equivalent at the same time, but the curve is different, is what you're saying.

SENIOR ADMINISTRATION OFFICIAL: It is slightly adjusted in the early years to provide the car companies with some opportunity to make the investments that they needed to meet the 35.5 miles per gallon.

Q: And again, to be clear, do I understand this right, that this is a proposal and it needs to go through the normal rulemaking process and therefore (inaudible) a lot of the parties that have agreed in principle to compromise have second thoughts about this?

SENIOR ADMINISTRATION OFFICIAL: It does go through the normal rulemaking process. There are some differences here. It is a joint rulemaking -- (inaudible) and DOT -- many of you know I served in the government in another administration and it eight years we never did a joint rulemaking. I think that is fairly significant because, again, we're weaving together the EPA and the DOT authorities. Also there are intervening pieces to this, as people are aware. There are pending lawsuits. There's -- you know, California.

And so all of the parties to the discussions that we've been having with EPA, DOT, the companies in California, have everyone moving forward together in terms of making this proposal. And so, you know, there is notice and comment, but I think that there is a commitment from -- I think it is significant that there is a commitment from the companies and California to support a proposal.

Q: I was wondering if you could clarify -- you could spell out the individual car and truck standards for each year in 2012 and 2016. Also I'd like to know if this (inaudible) agreement between the car companies and the administration and California grew out of talks at the Aspen Institute that occurred earlier this year.

SENIOR ADMINISTRATION OFFICIAL: Let me answer your second question first. Obviously administration officials were aware of those conversations.

I didn't -- I don't think any current administration official actually participated in the Aspen Institute. But it was certainly something we were familiar with and I think it helped to give us sort of a framework to think about how we would proceed. I think, you know, what intervened since Aspen is obviously the change in leadership in the federal government and this real willingness on the part of EPA and DOT to work together, to harmonize with the program so that you could get both the fuel efficiency standards and the first-ever greenhouse gas pollution.

The actual -- the numbers -- there are individual numbers for each class size for each company, and then there is a fleet number for each company. So I would -- that will all be displayed in the rulemaking.

Q: Is there an individual car and truck goal for 2016?

SENIOR ADMINISTRATION OFFICIAL: Yes. For 2016 it's 39 miles per gallon for cars, and it is 30 miles per gallon for trucks. That's how you get the fleet average of 35.5, the proposed fleet average.

Q: That's in 2016 and that would be the program after which California could impose its own rules?

SENIOR ADMINISTRATION OFFICIAL: The only way California can impose its own rules is through the waiver process. The waiver that's pending at EPA goes through model year 2016, so if California wanted to file another waiver that would obviously be up to them.

One thing I think I should make clear to people, the reason this national policy goes through model year 2016, is DOT is only allowed under the CAFE to work forward five years, right. So from today -- this proposal starts in 2012 through 2016, that's the five-year window, the (inaudible) model year from there.

MR. LaBOLT: Thanks, everyone, for joining the call. Again, this is sourced to a senior administration official and it's embargoed until 9:00 p.m.

END 7:38 P.M. EDT