Obama's Fuel Economy Standards Threaten the Economy

Remember when, in the State of the Union address, President Barack Obama promised to launch an assault on needless, duplicative, wasteful federal agencies and regulations? Neither does he.

Thanks to Obama, the U.S. government now has three agencies--the National Highway Transportation Safety Administration, the Environmental Protection Agency, and the California Air Resources Board--involved in the effort to improve through mandates the fuel economy of U.S. passenger vehicles.

Before 2009, when the current administration added EPA and CARB to the mix, the issue was more or less the sole province of NHTSA. [Check out editorial cartoons about energy policy.]

Why the change? Under the old rules Congress required NHTSA to consider what an increase in the Corporate Average Fuel Economy or CAFE standard would do to jobs and to the affordability and safety of vehicles in the U.S. passenger fleet. EPA and CARB are bound by no such rules; indeed CARB, as a state agency, is largely outside the jurisdiction of the U.S. Congress--which is probably why EPA and CARB are the ones drafting the next round of fuel economy regulations.

The standard for model year 2016 is already 35.5 miles per gallon, which the auto industry says will reduce greenhouse gas emissions by 960 million metric tons and save 1.8 billion barrels of oil at a cost to it of more than $50 billion. But that's not good enough. [See political cartoons about gas prices.]

Federal regulators at the EPA, working with their counterparts in Sacramento at CARB, are trying to get around Congress in an effort to mandate that the CAFE standard be bumped all the way up to 56 miles per gallon for model years 2017 to 2025, a move that is certain to batter the already teetering U.S. auto industry even further while making cars less safe and more expensive.

U.S. Rep. Steve Austria is trying to put a stop to this. The Ohio Republican successfully amended the Interior and Environment Appropriations Bill for Fiscal Year 2012 so that NHTSA may continue to regulate fuel economy according to the program Congress established--rather than EPA and CARB. The Austria Amendment bars EPA from spending funds to write its own new duplicative rules and prohibits it from spending funds to allow California to enforce fuel economy rules separate from what NHTSA determines is necessary.

It's important to consider the ramifications an increase in the CAFE standard would have for the U.S. economy. Leaving NHTSA in charge of the implementation and rule-making, as Austria's amendment provides, makes sure that happens. Going down the path Obama wants, with multiple regulators crafting a so-called "national plan" raises costs and may put more than two hundred thousands U.S. jobs at risk according to industry estimates. Despite what critics of the change back say, there is nothing that would prevent NHTSA from writing new rules for future model years that take into account market demand and consumer acceptance of new electric vehicle technology.

[See a roundup of cartoons about the economy]

Admittedly, CAFE standards are something of a muddle-headed policy to begin with but that's no excuse for making things worse. Parceling out the responsibility for drafting and enforcing new standards is merely a way for Obama to get around Congress. It's bad practice from a constitutional standpoint and what it is intended to do would generate bad policy. In short, it's a loser across the board. The president should make good on his promise to streamline government and get EPA and CARB out of the CAFE business for good.

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