Competitive Enterprise Institute | 1899 L ST NW Floor 12, Washington, DC 20036 | Phone: 202-331-1010 | Fax: 202-331-0640
President Barack Obama recently announced his first concrete environmental policy, and it was a doozy. Obama ordered the U.S. Environmental Protection Agency (EPA) to reconsider whether California has the right to set fuel efficiency standards for the entire nation.
Don't you think national fuel efficiency standards would be the responsibility of Congress? After all, there is a robust interstate trade in automobiles and in 2007 Congress revised EPA’s Corporate Average Fuel Economy (CAFÉ) standards to require cars and trucks sold in America to become 40 percent more fuel efficient by 2020.
These 2020 standards are extremely ambitious. For the next decade, they will force automakers to increase fleet-wide fuel efficiency at two-and-a-half-times the historical rate.
Still, they aren’t ambitious enough for California legislators, who passed a law requiring that cars and trucks sold in the Golden State have to be about 30 percent more fuel efficient by 2016.
Before California can enforce its tougher tailpipe emissions regulation, however, it needs a waiver from the EPA. No dice, said the Bush administration's EPA, which rejected the waiver primarily on the grounds that California’s 2016 fuel efficiency target would inevitably have to apply to the nation as a whole.
Auto manufacturers have little incentive to break up production to meet a patchwork of state regulations. Such a decision would have let auto-rich California set the standard for every other state from Hawaii to Maine. The EPA decided that this was crazy. Quite rightly, it determined that only Congress should establish national standards.
In late January, Obama ordered the EPA to reconsider its refusal to give California a waiver. Environmentalists are thrilled, but the rest of us should worry. The Obama initiative could bury Detroit’s ailing automakers and choke development across America.
Detroit has the most to lose. Increases in fuel economy don’t come easy. According to a government study, it will cost auto manufacturers $50 billion over five years to reconfigure production to meet the standards. According the auto industry’s own research, it will cost $100 billion over 10 years.
That’s right, California’s accelerated regulatory burden would force domestic automakers to find scores of billions of dollars of investment at the very time that a global economic crisis has tightened credit. That’s awful news for an industry that needs successive rounds of taxpayer bailouts just to avoid bankruptcy.
A doomed Detroit is bad enough, but the news gets worse. Much worse. If the Obama EPA grants the California waiver, it could trigger a regulatory nightmare that would stifle wealth creation across the United States.
If the EPA allows California to regulate greenhouse gases from automobiles, it will tacitly acknowledge that greenhouse gases are “pollutants” -- and under the Clean Air Act anything considered a pollutant is automatically subject to regulation. Environmental groups will be sure to have their lawyers sue the EPA to make this explicit.
Once greenhouse gases are classified as a “pollutant,” big construction projects (power plants, high schools, apartment buildings, hospitals) will be delayed and perhaps halted while federal regulators try to decide whether they comply with the Clean Air Act. New construction jobs? Forget about it.
Before the EPA takes this drastic step, shouldn’t our nation’s representatives in Congress debate and vote on whether to substitute this California regulation for federal law? Environmentalists don’t think so.
Rather than have Congress deliberate, the environmental groups want the courts to decide. The Environmental Defense Fund (EDF) and other well-funded, litigation-happy green groups think the California waiver is a dream come true.
EDF executive director David Yarnold gushed: “I was deeply honored to be among those who attended the White House ceremony and witness history in the making. And, I couldn't help but think that this is what change looks like.”
It's certainly not what job creation looks like. By using a regulatory waiver and other bureaucratic procedures that are comprehensible to no one but high-priced lawyers, the Green Glitterati will hold the entire economy hostage.
Obama promises to create millions of “green jobs” and argues that we can fight climate change without hurting economic growth. But his first environmental policy puts the lie to that notion, squarely.
William Yeatman is an energy policy analyst at the Competitive Enterprise Institute. Jeremy Lott is an editor at Capital Research Center.