Energy & Environment

Free the Carmakers

Cars at a Chevy dealership in National City, Calif., June 2017 (Mike Blake/Reuters)

The Trump administration has proposed two major changes to federal vehicle regulations. First, it seeks to abandon its predecessor’s 2012 plan to nearly double cars’ fuel economy by 2025, to an average of 54.5 miles per gallon; instead, the standard would stop rising after 2020, at 37 miles per gallon. And second, the administration wants to eliminate a waiver that gives California the right to create state-level emission rules that are stricter than federal law.

Obama’s fuel standards are a looming boondoggle and Trump is right to discard them. And California’s waiver, despite its pretensions to federalism, gives the state an unwarranted and outsized sway over federal policy: Unlike any other state, California can threaten to create a separate regulatory regime if federal policy doesn’t track its own prerogatives.

We wish Congress would step in, reform this dysfunctional system, and spell out exactly what the nation’s environmental standards should be, rather than leaving it to the executive branch. But given the laws we have, the Trump administration’s move is the right one.

The problems with the current fuel-economy standards are obvious enough. Because they require such a dramatic improvement in such a short time, they will prove difficult to meet and will drive up the price of cars. As Randal O’Toole of the Cato Institute has noted, “To meet the Obama standard, automakers would have to build electric vehicles, sell them at a loss, and then sell their other vehicles for higher prices to make up the difference.”

Beyond the strain this puts on Americans’ budgets, it pressures families to continue using older cars with less advanced safety features. And the new cars available are increasingly designed with only fuel economy, not safety or consumer demand, in mind.

The administration estimates that its proposed standards could spur a million vehicle sales, cut the average ownership costs of new vehicles by $2,340, save the economy $500 billion, and reduce fatal crashes by more than 10,000 (in part by making each mile driven more expensive through lower gas mileage). Such numbers must always be taken with a grain of salt — but then again, they hardly seem unthinkable given the implausible improvements in fuel economy now being demanded of the nation’s automakers. And they compare favorably with the estimated climate impact of three one-thousandths of a degree Celsius.

As for California’s waiver, it is a result of quirks of history that are not applicable to the present situation, including the fact that California created vehicle-emission standards before the federal government did, as well as the state’s once-notorious smog problem. The Clean Air Act generally preempts state regulation, but allows California to receive a waiver to create its own standards (which other states may then choose to join) — so long as an exemption is needed to address “compelling and extraordinary conditions.”

As the administration notes, California’s current greenhouse-gas regime does not address any conditions that are particular to California; global warming is a global problem. This entitles the executive branch to cut off the waiver, and while the state and its allies have vowed to sue to protect it, they are on weak legal ground. The administration is also looking to challenge California’s standards under a different statute, the Environmental Policy and Conservation Act, which preempts all state laws “related to” fuel economy (the issue being whether California’s efforts to reduce CO2 emissions are fuel-economy regulations by another name).

In addition, the threat of a bifurcated regulatory regime — anathema to the auto industry — has allowed the state to inflict its policies on the rest of the country, as it did in negotiating environmental regulations with the Obama administration. Indeed, the industry so fears California that it has balked at Trump’s move and urged the parties toward compromise, wanting neither a lengthy legal battle over the waiver nor a two-tier system in the event that California wins in court.

But if we’re going to have national standards, they should be set by federal policymakers, and those policymakers should not be subject to the whims of a single state. This means the waiver has to go, and the administration should fight for this outcome in court.

Above all, however, we stress the simple reason we are in this mess: Congress delegated its legislative power to the executive branch rather than setting the standards itself. We should not see such massive policy swings — with hundreds of billions of dollars hanging in the balance — whenever the White House changes hands.

Congress did delegate this power to the Trump administration, though, and the administration is right to exercise that power as it deems appropriate.


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