How Many Agencies Does It Take to Regulate Fuel Economy?

by Marlo Lewis on March 30, 2011

in Blog, Features

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How many agencies does it take to regulate fuel economy?

Only one — the National Highway Traffic Safety Administration (NHTSA) — if we follow the law (1975 Energy Policy and Conservation Act, 2007 Energy Independence and Security Act); three — NHTSA + EPA + the California Air Resources Board — if law is trumped by the backroom, “put nothing in writing,” Presidential Records Act-defying deal negotiated by former Obama Environment Czar Carol Browner.

Tomorrow, the Senate is expected to vote on S. 493, the McConnell amendment, which is identical to S. 482, the Inhofe-Upton Energy Tax Prevention Act. S. 493 would overturn all of EPA’s greenhouse gas (GHG) regulations except for the GHG/fuel economy standards EPA and NHTSA jointly issued for new motor vehicles covering model years 2012-2016, and the GHG/fuel economy standards the agencies have proposed for medium- and heavy-duty trucks covering model years 2014-2018. The legislation would leave intact NHTSA’s separate statutory authority to regulate fuel economy standards for automobiles after model year 2016 and trucks after model year 2018.

Bear in mind that GHG emission standards and fuel economy standards are largely duplicative. As EPA acknowledges, 94-95% of all GHG emissions from motor vehicles are carbon dioxide (CO2) from the combustion of motor fuels. And as EPA and NHTSA acknowledge, “there is a single pool of technologies for addressing these twin problems [climate change, oil dependence], i.e., those that reduce fuel consumption and thereby reduce CO2 emissions as well” (Joint GHG/Fuel Economy Rule, p. 25327).

The National Auto Dealers Association (NADA), whose members know a thing or two about what it takes to meet the needs of the car-buying public, sent a letter to the Senate today urging a “Yes” vote on S. 493. NADA stresses three points. S. 493 would:

  • End, after 2016, the current triple regulation of fuel economy by three different agencies (NHTSA, EPA, and California) under three different rules.
  • Restore a true single national fuel economy standard under the CAFE program, with rules set by Congress, not unelected officials. Ensure jobs, consumer choice, and highway safety are considered according to federal law when setting a fuel economy standard.
  • Save taxpayers millions of dollars by ending EPA’s duplicative fuel economy regime after 2016.

Let’s examine the first two points in a bit more detail. The NADA letter says:

The McConnell amendment would restore the statutory clarity that was lost in 2009 when EPA allowed states to begin regulating fuel economy by granting California a waiver from preemption under the Clean Air Act for its fuel economy/greenhouse gas rules, and when EPA elected to also regulate fuel economy as part of its voluntary response to the remand in Massachusetts v. EPA by the U.S. Supreme Court. The McConnell amendment would reestablish the historical system of a single national fuel economy standard, once the triple regulation of fuel economy embodied in the National Program has run its course after model year 2016.

What NADA calls the “historical system” is also the statutory system. The Clean Air Act provides no authority to any agency to regulate fuel economy. A completely separate statute, the 1975 Energy Policy and Conservation Act (EPCA), authorizes EPA to monitor compliance with federal fuel economy standards (49 U.S.C. 329). The same statute authorizes the Department of Transportation, not EPA, to prescribe fuel economy standards.

The NADA letter also handily shoots down the falsehood that S. 493 would “massively increase America’s oil dependence”:

The [NHTSA-administered] CAFE [corporate average fuel economy] program alone provides virtually all of the fuel economy increases/GHG reductions in the current National Program, since raising the fuel economy of a vehicle automatically reduces its GHG emissions. EPA’s rule provides only minor incremental GHG reductions by also regulating vehicle air conditioners. To our knowledge, EPA has never offered any evidence demonstrating that giving credits to automakers for installing improved air conditioners after 2017 would save, as EPA claims, “hundreds of millions of barrels of oil.” To the contrary, under EPA’s MY 2012-2016 rule, air conditioning credits are extended to automakers primarily for switching to coolants that are less greenhouse gas intensive, which has a negligible impact on oil savings.

Opponents assert that S. 493 would harm the auto industry. That defies common sense. Opponents “fail to explain how being regulated by three different fuel economy programs with three different sets of rules administered by three different agencies pursuant to three different laws is more beneficial than a single national fuel economy standard.”

My organization, the Competitive Enterprise Institute (CEI), has long argued that fuel-economy regulation per se is bad policy because it restricts consumer choice, increases vehicle cost, and, most importantly, literally kills people.

Fuel economy standards inevitably induce automakers to decrease average vehicle size and weight. Lighter cars have less mass to absorb collision forces. Smaller cars provide less space between the occupant and the point of impact. The National Academy of Sciences found that in 1993 (a typical year), CAFE-induced downsizing contributed to an additional 1,300-2,600 fatalities and 13,00-26,000 serious injuries.

As long as we’re stuck with fuel economy regulation, however, the agency setting the standards should be the one required by law to consider all adverse unintended consequences. That agency is NHTSA, not EPA:

When setting a fuel economy standard, NHTSA considers job loss, consumer choice, consumer acceptability, and highway safety. Congress mandated that NHTSA consider these important factors to ensure that fuel economy increases do not needlessly put people out of work or limit sales of certain types of vehicles. This balancing of protections for workers, consumers, and highway safety is not replicated in the Clean Air Act, as that statute was not designed to regulate fuel economy. Passage of the McConnell amendment would ensure that jobs and highway safety are given the consideration Congress mandated.

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