EPA reportedly will block increase in fuel efficiency standards for autos, revoke California's authority over tailpipe emissions

Key Points
  • The Trump administration is expected to block an increase in fuel efficiency standards for cars, Bloomberg News reported.
  • The administration also intends to strip California of the authority to set its own emissions rules.
  • The issue is likely to get tied up in a court battle.
Exhaust flows out of the tailpipe of a vehicle.
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The Trump administration will reportedly announce major changes to the nation's fuel efficiency standards for automobiles this week, setting up a battle with California and the jurisdictions that align their rules with the Golden State.

The Environmental Protection Agency will cancel plans to raise fuel efficiency requirements, known as CAFE standards, to about 50 miles per gallon by 2025, Bloomberg News reported, citing three people familiar with the plan. The administration will instead leave the average fuel efficiency requirement at 35 mpg for the fleet of cars and trucks manufactured by automakers.

The EPA and National Highway Traffic Safety Administration will also move to strip California of the authority to set tougher standards, which is enshrined in a waiver granted under the Clean Air Act, according to Bloomberg. That would also undercut California's plans to require carmakers to sell a higher number of electric vehicles.

White House officials confirmed to CNBC that the administration intends to release its CAFE standards proposal later this week.

That plan is widely anticipated to become mired in litigation, an outcome two White House officials acknowledged to CNBC.

California, along with 16 other states and Washington, D.C., sued the EPA in May over the Trump administration's intention to weaken fuel efficiency standards for automobiles. The state filed suit one month after the EPA said it would overturn the Obama administration's requirements to boost fuel efficiency and cut greenhouse gas emissions from passenger cars.

“To the Trump Administration: make no mistake about it — we are ready to use every legal tool at our disposal to protect the current vehicle emission standards. The stakes are high for our families’ health, the environment, and our economic prosperity,” California Attorney General Xavier Becerra said in a statement.

The impending battle has raised concerns among automakers that they will have to engineer cars for two sets of standards. In the past, California has coordinated its fuel efficiency rules in cooperation with the federal government, essentially helping to lift the national benchmark.

Former EPA Administrator Scott Pruitt teased the showdown with California in April, saying, "Cooperative federalism doesn't mean that one state can dictate standards for the rest of the country."

More than a dozen states and the District of Columbia have adopted California's tougher standards.

The announcement later this week will set in motion the process of overturning the Obama-era plan.

— CNBC's Kayla Tausche and Jeff Daniels contributed reporting to this story.