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EPA issues stiffer rules on vehicle fuel ratings

Next year, automakers will face stricter rules for conducting a crucial test or face an audit by the Environmental Protection Agency and potential penalties. The rules for the test had not been updated in more than 10 years.
Next year, automakers will face stricter rules for conducting a crucial test or face an audit by the Environmental Protection Agency and potential penalties. The rules for the test had not been updated in more than 10 years. Bloomberg

After two years of imposing increasingly stiff penalties on automakers that overstate their fuel economy ratings, federal regulators on Monday said they would tighten guidelines used in determining the mileage advertised to consumers.

Next year, automakers will face stricter rules for conducting a crucial test or face an audit by the Environmental Protection Agency and potential penalties. The rules for the test had not been updated in more than 10 years.

“We think this guidance will result in more accurate fuel economy numbers that consumers can trust,” said Byron Bunker, director of compliance for the EPA’s Office of Transportation and Air Quality.

The fuel economy numbers have been the source of frustration for car owners who say that their actual mileage does not match the figures advertised.

“You’ve had disappointment from consumers who expect the mileage to be what is on the window sticker and who find things are off by not just a little, but by a lot,” said Karl Brauer, an analyst with Kelley Blue Book. “There isn’t much patience for it by consumers, and it’s why we see the government taking a tougher stance.”

For automakers, the tightening of the rules could lead to lower fuel economy ratings if they have not previously fully complied with the test. Automakers are under enormous pressure to improve their corporate fuel economy to a federally mandated 54.5 mpg by 2025, up from the approximately 25 mpg that vehicles average today.

The agency has been increasingly aggressive in its oversight of automakers over mileage figures, conducting dozens of audits since Hyundai and Kia issues came to light.

Last fall, the agency fined Hyundai and Kia a combined penalty worth $300 million after an investigation revealed that the Korean automakers had inappropriately conducted the test, resulting in vehicles with inflated mileage results. It was the largest-ever penalty for a violation of the Clean Air Act.

Ford and Mercedes-Benz also had instances of problems with the test that led them to subsequently have to reduce the posted mileage on several vehicles.

Under current rules, automakers conduct the mileage testing themselves, and the EPA provides oversight through audits that include the agency’s own testing of selected vehicles.

Bunker said most automakers were already providing accurate numbers. The new limits will give companies that are not “greater insight into how we arrive at our audit numbers” and let the agency “better monitor manufacturer compliance.”

The test under scrutiny measures a car as it slows to a stop from about 70 mph. The EPA laid out the new standards for how the tests must be conducted in a 10-page document sent to car companies on Monday. For instance, a test vehicle must be warmed up first for 30 minutes at 50 mph to stabilize the tires, and test vehicles should not be new, but rather have about 4,000 miles on them to better simulate real-world conditions.

“Before, you had guidance that didn’t fully capture things automakers could do to futz with their numbers,” said Brauer, the analyst with Kelley Blue Book. “This action fills in those gaps.”

The EPA guidelines will not have the force of a formal rule and so in theory are voluntary. But the agency said the federal rule-making process, which can take years of drafts and comment periods, was too slow.

“While initially we believed that a rule-making would be necessary, after thorough review, we believe that a combination of targeted and random audits, guidance compliance and oversight strategies can have the same impact as making a change to the regulations,” said Bunker, the EPA official. “In fact, these strategies would allow us to implement change quicker than a rule-making and would provide both EPA and manufacturers the benefit of more flexibility to address any potential changes in technology, testing or other unforeseen conditions.”

The new rules apply to model year 2017 vehicles, which will go on sale next year.

The new guidelines on the key test still leave other parts of the EPA’s fuel economy rules in place. But the agency also said it planned to tackle another fuel-economy-related problem using a similar fast-track approach, the disparities among the growing number of hybrid and electric vehicles on the market.

In 2013, Ford reduced the combined fuel economy rating of its C-Max hybrid sport utility vehicle to 43 mpg from 47 mpg after a rash of consumer complaints. The company offered payments of $550 to any C-Max buyer.

Ford, it turned out, was technically within the letter of the law, as current rules allow for automakers to take the mileage rating of one car and apply it to another if both vehicles are about the same size, with the same engine and transmission. Ford had used the 47 mpg rating of its Fusion hybrid and assigned it to the C-Max.

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