The White House Office of Management and Budget, which reviews all executive branch rules before they are finalized, began scrutinizing the joint fuel economy/GHG measure on Tuesday, according to new information posted on OMB's web site.

OMB said it expects the rule to be finalized by the end of March, which is consistent with the timetable that top Obama administration officials have articulated in recent months.

"This rulemaking would significantly reduce GHG emission from model year 2012 through 2016 light-duty vehicles," OMB said on its web posting, adding that the measure would also respond to the "critical need to address global climate change and reduce oil consumption."

The proposed rule, which as jointly written by the US Department of Transportation and the Environmental Protection Agency, stems from an agreement that President Barack Obama brokered with the automobile industry last May, ending years of litigation over state-led efforts to curb motor vehicle GHG emissions. The rule would raise Corporate Average Fuel Economy standards to 35.5 miles per gallon by 2016, about 40% better than the current 25-mpg average, and four years ahead of a timetable mandated by a major 2007 energy bill.

The measure would also adopt a regulatory scheme crafted by the state of California to reduce GHG emissions from new cars and trucks by about 30%, or to 250 grams of CO2 per mile, beginning in 2016. That provision, if finalized, would mark EPA's first use of the Clean Air Act to regulate GHG emissions from any source.

OMB, in its web posting, said the rule is needed because "GHG emissions from light-duty vehicles are responsible for almost 60% of all US transportation-related GHGs, and increase the risk of unacceptable climate-change impacts."

EPA has estimated that the rule would reduce GHG emission by some 900 million metric tons, and save 1.8 billion barrels of oil between 2012 and 2016.

OMB classifies the rule as "economically significant," meaning it will have an annual economic impact of $100 million or more.

When EPA and DOT proposed the rule last year, the agencies estimated it would increase the sticker price of the average new motor vehicle by $1,300 in the year 2016. But the agencies said most motorists would more than offset those costs through the savings they would realize by driving more fuel-efficient vehicles.

The auto industry's primary Washington-based trade group, the Alliance of Automobile Manufacturers, has supported the rule since the White House announced it last spring. But several industry groups, including the National Automobile Dealers Association and the US Chamber of Commerce, have filed a federal lawsuit in an attempt to block EPA and DOT from regulating motor vehicle GHG emissions. That suit is pending in the US Court of Appeals for the District of Columbia Circuit.

The joint CAFE/GHG rule that OMB began reviewing this week is important for reasons that go far beyond the transportation sector, as EPA has said that that measure, once finalized, will "trigger" carbon-control regulations for other sectors of the economy. For example, after EPA rolls out the motor vehicle rule, the agency is expected to promulgate a rule to regulate GHG emissions from coal-fired power plants, oil refineries and other large stationary sources.

Some members of Congress are trying to block EPA on that front, or at least delay any such action for upwards of two years in order to give their branch of government more time to pass comprehensive climate-change legislation.

--Brian Hansen, brian_hansen@platts.com