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Hope for Reforming Obama-Era Fuel Economy Mandates at EPA

The Environmental Protection Agency is approaching the April 1st deadline to complete its Midterm Evaluation of the Obama administration’s fuel economy and motor vehicle greenhouse gas emission standards for model years 2022-2025. EPA is widely expected to scale back the standards for those years, and possibly for model year 2021 as well. Automakers have long complained that the standards are too stringent and will price millions of Americans out of the market for new cars.

The California Air Resources Board (CARB) now warns that if the Trump administration repudiates the Obama administration standards, California and its 13 allied states will impose their own standards on new motor vehicles sold within their borders. Although automakers want relief from the Obama administration standards, they also fear the prospect of a market-balkanizing “patchwork” of multiple fuel economy regimes if California “de-couples” from the so-called harmonized National Vehicle Program jointly administrated by EPA, CARB, and the National Highway Traffic Safety Administration (NHTSA).

The fact that bureaucrats in Sacramento can threaten to wreck the auto industry any time they don’t get to impose their policy preferences on the nation’s auto buyers reveals that the National Vehicle Program is a sham. Indeed, the fictional character of the “harmonized” program was clear when the Obama EPA completed its Midterm Evaluation 14 months ahead of schedule, in January 2017, in order to confront the incoming Trump administration with a fait accompli. The Obama EPA’s “early action” compelled NHTSA to choose between two unacceptable options: (1) produce an independent evaluation of the model years 2022-2025 standards that may conflict with EPA’s determination, or (2) endorse EPA’s determination without regard to information supporting different standards.

The Trump EPA’s forthcoming Midterm Evaluation will restore proper coordination between EPA and NHTSA in federal fuel economy regulation. However, a more fundamental fix is required for the underlying malady—automakers are subject to three sets of fuel economy standards by three agencies operating under three statutes. The solution is to return to the statutory scheme Congress enacted. Congress provided no authority for EPA to regulate fuel economy and specifically preempted states, such as California, from adopting laws or regulations “related to” fuel economy.

Consequently, CEI Center for Energy and Environment director Myron Ebell argues that EPA should never have granted California a waiver from federal preemption to adopt its own de facto fuel economy standards in 2009. Ebell hopes EPA Administrator Scott Pruitt will use the mid-term review as an opportunity to follow the clear intent of Congress by not renewing or extending the waiver.

CEI has long argued that the Corporate Average Fuel Economy (CAFE) program is lethal. CAFE’s fuel efficiency mandates force vehicles to be downsized, making them less crashworthy. A number of independent studies have shown that this downsizing contributed to thousands of traffic deaths per year. In 1992, in the case of Competitive Enterprise Institute & Consumer Alert v. NHTSA, a federal appeals court ruled that the agency had deliberately “obscured the safety problem” through a combination of “fudged analysis,” “statistical legerdemain,” and “bureaucratic mumbo jumbo.” In the court’s view, it was clear that “the 27.5 mpg standard kills people.”

CEI General Counsel Sam Kazman, who handled CEI’s court challenge and has long been involved in the issue, said the following about the EPA’s forthcoming announcement: 

CAFE’s lethal effects on vehicle crashworthiness were documented by analysts and a federal appeals court years ago. Despite this, CAFE has remained in force, getting even more stringent and more deadly over the years. We hope that the Trump Administration will finally take account of those effects and start to liberalize this program.

CEI Senior Fellow Marlo Lewis has studied energy and environmental policy for more than 20 years, including the science used to determine and evaluate greenhouse gas emissions standards. He said the EPA should revoke the waiver authorizing California to regulate fuel economy:

The federal Energy Policy and Conservation Act specifically prohibits states from adopting or enforcing fuel economy laws or regulations. After EPA rescinds Sacramento's power to coerce and threaten automakers, President Trump should ask Congress to abolish the federal fuel economy program.

Fuel economy mandates restrict consumer choice, add thousands of dollars to the cost of new vehicles, and limit vehicle safety. Contrary to the program's original rationale, the world is not running out of oil. And even if you worry about global warming, fuel efficiency standards are a stupendously inefficient climate change mitigation strategy. Congress should end the reign of bureaucrats and put consumers back in charge of telling automakers what kinds of cars and trucks to produce.

Read Sam Kazman’s testimony on how CAFE standards threaten vehicle safety here.

Read more from Sam Kazman and Marlo Lewis on why the administration should reconsider these standards in their regulatory comments here.