The U.S. Transportation Department and Environmental Protection Agency are expected to unveil a proposed regulation that recommends freezing vehicle emissions requirements at 2020 levels through 2026, the official said on condition of anonymity because it has not yet been made public.
Regulators have forecast that the change would increase U.S. fuel consumption by about 500,000 barrels of oil per day, the source said.
The proposal is sure to spark a massive fight with California and a dozen other states that have adopted the rules. Eliminating the mandate could hurt automakers like Tesla Inc and General Motors Co that are investing billions in EVs.
The proposal will seek to reverse planned hikes in fuel efficiency standards adopted by the Obama administration. Freezing the standards would reduce the average fleet fuel economy standard from a current projected level of 46.8 miles per gallon in 2026 and reduce it to 37 miles per gallon, according to an earlier draft obtained by Democratic Senator Tom Carper.
The administration contends the new rules will cut the prices of new vehicles and could lead to a total of 1 million additional new vehicle sales through 2029 versus if the Obama rules remained in place, according to an official briefed on the draft plan. Major automakers have repeatedly said they do not back freezing the requirements but have called for changes to take into account fuel prices and shifting consumer demand.
The EPA and Transportation Department did not immediately provide comments on Monday.
In May, California and a group of 16 other states challenged the Trump administration's decision to reopen strict U.S. vehicle emissions rules for review.
The administration draft says the proposal would save up to 1,000 highway deaths annually by reducing the cost of new vehicles and prodding people to buy new safer cars faster, the source said. California and environmentalists have previously criticized that analysis.
The draft proposal also contends the freeze would reduce the average cost of a new vehicle by $1,850 by 2030 and would only have a "negligible impact" on the global climate of "3/1000th of one degree Celsius by 2100."
The administration also contends the new rule would reduce "societal costs" by about $500 billion over the life of the vehicles but the administration's overall forecast net benefits are unclear, once higher fuel consumption is taken into account.
Carper said a leaked earlier draft showed that under the proposal, U.S. vehicles would use 206 billion gallons of gasoline more than expected from 2020 to 2050 if the standards remained unchanged.
The rules could thwart efforts to boost EVs in California.
In January, California Governor Jerry Brown set a new target of 5 million zero-emission vehicles in California by 2030, up from a prior goal of 1.5 million by 2025. Automakers have announced plans to spend tens of billions of dollars to add dozens of new EV models.
Reporting by David Shepardson.