Donald Trump revokes EV policies with speed - and uncertain legal standing

Yahoo

01-06-2025

President Donald Trump is slated to sign a bill blocking California's emissions regulations as the administration and Republicans in Congress move rapidly to unwind policies that support the electric vehicle transition.
The rollback of Biden-era EV policies is the latest move by the government to unravel federal support for the vehicles, some of which are on shaky legal ground, according to a government watchdog.
Only five months into a second presidential term, Trump and his allies are poised to strip California of its waivers and have already withheld congressionally allocated funds for a national charging network, two actions that may break the law. Congress is also slated to eliminate the $7,500 individual EV tax credit, impose a new fee for EV owners and end incentives for battery manufacturing.
Industry groups and manufacturers have cheered some administration moves, saying they reduce pressure on the industry and prioritize consumer choice. Still, analysts told Automotive News that Trump's decision does not predict the future.
'These things go in cycles,' said Chris Pierce, a senior analyst at Needham and Co. 'What happens if the Democrats win the midterm elections and all of a sudden it's 2027 and Rivian has the R2 out there and GM and Ford have pulled back on EVs?'
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The federal government for decades has granted California waivers to write its own stricter vehicle emissions. That authority, meant to protect residents from air pollution, was originally offered by the 1967 Air Quality Act and later enshrined in the Clean Air Act of 1970.
The Biden administration granted California waivers that allowed for stringent requirements starting with the 2026 model year. Many stakeholders said the requirements were unrealistic.
'There was every expectation that regardless of which political party was in the White House, this was going to have to change,' said Stephanie Brinley, an associate director of research and analysis at S&P Global Mobility.
However, Congress used a contested method, the Congressional Review Act, to revoke the California waivers. That mechanism is meant to disapprove agency rules. For example, in 2017, Congress passed a Congressional Review Act joint resolution to disapprove a rule enacted by the Consumer Finance Protection Bureau that would have limited clauses preventing people from suing their banks.
In March, the Government Accountability Office affirmed a decision that said the California waivers are not 'rules' subject to Congressional disapproval. The California waivers are instead akin to adjudicatory orders because they are 'a case-specific, individual determination,' rather than 'a broad application of general principles.'
The Senate parliamentarian, a nonpartisan chamber adviser, concurred with the GAO in April.
California officials have said the state plans to sue.
If the use of the Congressional Review Act for this purpose stands, it will open up agency notices, orders, declarations, licensing and statutory interpretations to congressional review, said John Miller, managing director at TD Cowen.
The act allows resolutions to avoid the filibuster.
'We're in this place now where the White House can deem anything a rule, and have that agency submit it to Congress and the Senate can move under fast-track procedures,' Miller said.
The National Electric Vehicle Infrastructure Formula Program authorized funding to states to deploy a charging network through the Infrastructure Investment and Jobs Act under the Biden administration.
Congress appropriated $5 billion to the Department of Transportation's Federal Highway Administration over five years. States submit plans, enter into project agreements with the Federal Highway Administration and the Department of Transportation records a funding obligation.
In February, the highway administration said it would review the implementation of the program, rescind previous guidance and suspend approvals for states. It said no new funds would be issued, but existing obligations would be reimbursed. As of Feb. 6, the department had obligated about $527 million of the remaining $3.3 billion.
The GAO issued a decision May 22 that said 'DOT violated the recording statute' because it 'treated signed project agreements as the point of obligation' rather than the time that the Infrastructure Investment and Jobs Act made appropriations.
The GAO said the department must release funds appropriated by Congress, which has the power of the purse, according to the Constitution. Or, it must 'propose funds for rescission or otherwise propose legislation to make changes to the law for consideration by Congress,' the GAO said.
House Republicans passed a budget bill May 22 that reduces federal incentives for battery manufacturing and other clean energy projects.
The bill, if approved by the Senate, would cut Section 30D, which provides the $7,500 individual EV tax credit. The bill includes an exception for manufacturers who have not sold 200,000 qualifying vehicles.
The bill would also phase out Section 45X, which supports battery manufacturing, by 2028 and it adds restrictions on components associated with certain countries.
The bill also institutes a new tax of $250 for EV owners and $100 for hybrid owners. The tax is designed to contribute to the Highway Trust Fund, which supports transportation infrastructure such as highways. Drivers of combustion-engine vehicles pay into the fund via taxes on gasoline.
For all the shifts at the federal level, analysts say the impact will be mixed. Changes may slow the EV transition, but it is still happening.
EV registrations grew 16 percent to 307,696 vehicles in the first quarter, according to S&P Global Mobility. Share rose to 7.7 percent from 6.9 percent a year earlier.
'EV demand was strong in the first quarter because there was a pull forward, because people were worried about the tax credit going away,' Pierce said. 'We'll see what happens, but there's going to be a subset of people that are going to want EVs.'
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