Illegal Car Standards Rollback Built on Faulty Reasoning

Cars braking in traffic
Credit: Shutterstock/Richard Semik

The Trump administration is attempting to roll back commonsense clean car and fuel economy standards with arguments held together with little more than twine and masking tape. They have no chance against the storm of public comments breaking their faulty analysis and erroneous, illegal arguments.

The joint proposal from the National Highway Traffic Safety Administration (NHTSA) and Environmental Protection Agency would halt progress on fuel efficiency and clean car technologies in 2020. That means vehicles’ average fuel economy would stop at about 37 miles per gallon instead of continuing to increase to 51 miles per gallon in 2025.

At the highest level, NRDC’s comments, which will be submitted tomorrow, respond to the fact that federal law requires that 1) NHTSA set fuel economy levels at their “maximum feasible” levels and 2) EPA set emissions standards that will protect public health and welfare. Neither agency has met those requirements, making their proposed changes illegal.

The agencies also flout the law in attempting to preempt California and other states from adopting stronger emissions standards as they have lawfully done for decades.

The agencies’ proposal is based on a combination of falsehoods and errors. For example:

Analytical flaws overstate the costs of meeting the existing standards in order to make them seem infeasible. NHTSA—the agency that led the rollback proposal analysis—seeks to reverse the robust technical analysis done jointly by EPA, NHTSA and California in 2016 and which found plenty of cost-effective technology exists to meet (and even exceed) the 2025 standards. This time, NHTSA artificially raises costs dramatically by relying on a compliance model that makes irrational decisions about how manufacturers would comply and relies on inflated costs of individual fuel-saving, emission-reducing technologies.

The agencies wrongly assume that meeting the existing standards will drive up prices and reduce sales. In fact, inflation-adjusted average new vehicle prices have been basically flat since the early 2000s, including when vehicle efficiency was improving. Under the existing standards, car buyers will save thousands of dollars more in fuel than they pay for cleaner, more efficient technologies. In fact, each owner will save on average $6,000 under the existing standards compared to vehicles on the road today.

Agencies ignore their own findings that the proposal will lead to job losses. When President Trump went to Detroit in March 2017 to announce that he would roll back the standards, he claimed it would boost jobs. The opposite is true. The agencies’ must consider the “economic practicability” of the proposal and found that the automotive sector would lose 60,000 jobs in 2030 compared to the existing standards due to reduced technology and related manufacturing investment. In fact, the rollback's employment losses are likely to be much bigger when considering the lost consumer fuel savings that would have been spent to boost GDP and local economies. In fact, macroeconomic analysis of the existing standards finds that more than 100,000 jobs will be created by 2025 and more than 250,000 by 2035. Additionally, under weaker standards, U.S. workers could see investments shift to other countries where standards are higher. 

Erroneous assumptions are the basis of bogus safety claims. In the proposal, the agencies deploy a new and untested model for how changes in the price of new vehicles will affect existing cars. The result is nonsense that doesn’t accord with either reality as we all know it or economics. The agencies' new modeling is based on the basic concept that an increase in the price of new vehicle will lead to an increase in the demand for existing vehicles, which causes existing vehicle prices to increase. This part makes sense. But the agencies get it all wrong in the next step when they predict that these price increases will cause the total fleet to balloon. In fact, economists and the rest of us understand that if both new and existing vehicles become more expensive, then overall fleet size should decrease. People who didn’t want to buy a used car at today’s prices will not go out and buy one because they become more expensive. This is Economics 101. To make matters worse, the agencies assume that the same population of drivers will have the time and desire to drive each of the cars in their expanding fleet as much as they used to drive their one car, causing more than a 2.5 trillion increase in vehicle-miles traveled (VMT). And NHTSA then uses this imaginary VMT increase to assert that the current standards will cause an increase in fatalities and emissions. This is ridiculous as VMT is based on demand for driving and mobility, not on the number of cars that exist.

Agencies ironically justify the rollback with an assumption of runaway global warming. In their Draft Environmental Impact Statement, the agencies predict that the Earth will warm by 4 degrees Centigrade, or 7.2 degrees Fahrenheit, by 2100. This one regulation won’t single-handedly save the planet, so, they argue it’s OK to give up. This is not only defeatist, it’s unlawful. Halting progress would lead to an additional 872 million metric tons of carbon dioxide in the atmosphere, which would endanger public health and welfare. Faced with this danger, the agencies should be increasing the standards.

In addition to the direct climate impacts, the agencies ignore the fact that a warming climate will lead to more bad air days of intense smog and particulate pollution that leads to dangerous lung and heart illnesses.

Agencies illegally propose to eliminate state vehicle pollution standards. Federal law has expressly allowed California and other states to adopt vehicle pollution standards independent of fuel economy standards. NHTSA now claims that California’s standards are preempted by the Energy Policy Conservation Act. But courts have previously rejected this claim. We are confident they will do so again.

Furthermore, EPA cannot legally revoke California’s existing waiver of preemption from federal emissions standards (or the right of other states to adopt California’s rules). Not only would revoking the 2013 waiver be unprecedented but California continues to suffer from severe air pollution and increasingly serious effects of climate change, as highlighted by UC-Berkeley's Environmental Law Clinic. These include more dangerously hot days, intensifying rainstorms, diminishing water supply, dwindling crops, and heightened disease risks. 

Agencies irrationally undervalue the need to conserve energy. The central tenet of the Energy Policy and Conservation Act, which directed NHTSA to set fuel economy standards, is the need to reduce U.S. energy consumption. The agencies erroneously argue that the ability of the U.S. to domestically produce most of its oil for gasoline and diesel ends this requirement. But fracking doesn’t exempt the Trump administration from following the law. And, in reality, American drivers are affected by the global price of oil, which U.S. production cannot control. This has been demonstrated even in the period since the proposal was released, in which time gas prices have spiked--and President Trump blamed foreign countries for that spike.

In short, the Trump administration’s cynical and unjustified attempt to halt progress on vehicle emissions and mileage standards is both unhelpful and unlawful. By the administration’s own calculations, it will mean fewer jobs, more pollution and higher costs for drivers at the pump. Given the evidence added to the record up through the comment period, there is only one reasonable action for the administration to take: Withdraw this ridiculous proposal.