WASHINGTON (Reuters) - The Trump administration plans to announce on Tuesday it is finalizing its effort to roll back Obama era vehicle emissions rules and will mandate average annual increases in fuel efficiency standards of 1.5% through 2026, three people briefed on the matter said.

FILE PHOTO: Morning traffic drives on the 405 freeway in Los Angeles, California, U.S., November 12, 2019. REUTERS/Lucy Nicholson

In August 2018, the Trump administration proposed freezing fuel economy standards at 2020 levels through 2026, reversing Obama-era standards that called for about 5% annual increases.

The new rules, which must be finalized by April 1 in order to revise the 2022 model year requirements, is a jump over the initial proposal but will still result in significantly lower overall fleet fuel efficiency, environmentalists said.

Environmental Protection Agency chief Andrew Wheeler said on Twitter on Monday that the final rule will raise U.S. fleet fuel economy, reduce air pollution and “make new vehicles more affordable.”

California and 22 other U.S. states plan to challenge the rewrite. They previously challenged the Trump administration’s decision to revoke California’s authority to set stiff vehicle tailpipe emissions rules.

Court battles will leave automakers in limbo. The fate of vehicle emissions standards may rest on who wins the Nov. 3 presidential election. Democratic candidate Joe Biden vows to toughen fuel economy standards to ensure “100% of new sales for light- and medium-duty vehicles will be electrified.”

U.S. Senator Tom Carper, the top Democrat on the Environment and Public Works Committee, said, “This legally flawed rule means more uncertainty and more litigation. This rule will not provide regulatory relief to automakers, it will do just the opposite.”

The Obama standards, adopted in 2012, sought to raise fuel efficiency standards to an estimated 46.7 mpg by 2026, which officials had said would save motorists $1.7 trillion in fuel costs and eliminate 2 billion metric tons of carbon dioxide over the life of the vehicles but cost the auto industry about $200 billion over 13 years.

Carper said earlier this year the draft proposal would result in a 40.5 mpg average for the combined fleet by 2030.

A draft final proposal circulated by the administration this year proposed to increase requirements by about 1.5% per year. It is not clear what additional compliance flexibilities the administration will include.

John Bozzella, who heads an automotive trade representing nearly all major automakers including General Motors Co GM.N, Volkswagen AG VOWG_p.DE and Toyota Motor Corp 7203.T, said automakers would review the final rule when published.

“A lot of the planning for these model years has already been done,” Bozzella said, adding policymakers should now look at longer-term requirements beyond 2026.

Ken Kimmell, president of the Union of Concerned Scientists, called the expected final regulation “a massive transfer of tens of billions of dollars from drivers to oil companies, as consumers will spend more on gasoline due to less efficient cars.”