The Hidden Cost of Fuel Economy Regulations: Constitutional Vitiation

The Environmental Protection Agency and the National Highway Transportation Safety Authority project that their proposed Model Year (MY) 2017 and later light-duty vehicle greenhouse gas (GHG) emissions and fuel economy standards will engender net benefits ranging from $262 billion (assuming a 7% discount rate) to $358 billion (assuming a 3% discount rate). These projections are based on assumptions regarding vehicle cost, fuel prices, and consumer acceptance that may or may not be borne out by events. Skepticism is justified. If the proposed standards are as beneficial to consumers and automakers as the agencies contend, why wouldn‘t consumers demand and profit-seeking manufacturers produce vehicles built to the same or similar standards without regulatory compulsion? Fuel economy regulation assumes that auto buyers do not want to avoid pain at the pump and automakers do not want to get rich. Experts will likely debate for years the net benefits of the rule as data become available regarding vehicle costs and sales and auto industry profits and employment. In a comment letter on the regulation I sent yesterday to the agencies, I examine a cost most experts have not addressed: the damage the Obama Administration‘s fuel economy agenda does to our constitutional system of separated powers and democratic accountability. Read the letter here.