Fuel Companies and 15 States Sue EPA Over Emission Standards

Meanwhile, Ford separates ICE vehicles and EVs into two divisions within the auto company.

March 02, 2022

Electric fuel nozzle and gas nozzle

ALEXANDRIA, Va.—The gasoline industry and alternative fuel producers are joining forces to challenge the Environmental Protection Agency’s (EPA) new fuel efficiency standards for passenger cars and light-duty trucks. The groups say the standards favor the sale of electric vehicles (EVs) and hinders the market for liquid fuels, whether made of petroleum or plants.

Bloomberg reports that Diamond Green Diesel LLC, a joint venture between Valero Energy Corp. and Darling Ingredients Inc., and soybean groups are asking a federal appeals court to review the EPA’s standards.

“Through the final rule, EPA seeks to unilaterally alter the transportation mix in the United States, without congressional authorization and without adequately considering the vast greenhouse gas reduction benefits provided by renewable fuels,” the groups said in a filing.

Additionally, Texas Attorney General Ken Paxton and 14 other states also are suing the EPA, saying in a news release that the federal regulations “will create a deliberate disadvantage to Texas and all states who are involved in the production of oil and gas.”

A separate petition for review was jointly filed by the Competitive Enterprise Institute (CEI) and a group of oil producers known as the Domestic Energy Producers Alliance, which is led by Harold Hamm, founder of Continental Resources Inc.

“EPA is trying to transform the motor vehicle market from gas-powered to electric vehicles by making gas-powered cars more expensive,” CEI attorney Devin Watkins said in a statement, arguing the rule exceeds the agency’s authority.

Under the new standards, auto manufacturers must meet a fleetwide average of 55 miles a gallon for cars and light trucks by model year 2026, up from the 43-miles-per-gallon standard set by the Trump Administration for that year. Vehicles that are model years 2023 to 2026 must reduce their greenhouse gas emissions between 5% and 10% each year.

According to the EPA, the tougher rules will save U.S. drivers between $210 billion and $420 billion in fuel costs through 2050. However, the new rules limit automakers’ flexibility in how they account for their fleets’ emissions. So, although the rules may reduce pollution more quickly, they also make it harder for auto manufacturers to comply, reports the Wall Street Journal.

Ford Splits EVs and ICEs

Meanwhile, Ford announced that it will separate its gas-powered and electric vehicles into two separate divisions within the automaker.

Ford Blue will build out company’s portfolio of internal combustion engine (ICE) vehicles, and Ford Model e will encompass Ford’s electric vehicles. Ford also introduced a third division, Ford Pro, which will serve commercial and government customers.

“The formation of two distinct, but strategically interdependent, auto businesses—Ford Blue and Ford Model e—together with the new Ford Pro business, will help unleash the full potential of the Ford+ plan, driving growth and value creation and positioning Ford to outperform both legacy automakers and new EV competitors,” said Ford in a statement.

All three businesses are expected to have distinct P&Ls by 2023.

Ford said that Model e and Ford Blue will operate as “distinct businesses but share relevant technology and best practices to leverage scale and drive operating improvements.”