CAFE Regs Upheld; Cue the Whining

Jamie Lincoln Kitman

Jamie Lincoln Kitman | Dec 01, 2016

For automobile industry fans keeping score at home, the first big development of the Trumpozoic Era came yesterday when the EPA announced that it would hold firm on its 54.5 mile per gallon corporate average fuel economy (CAFE) requirement for 2025. At the behest of the automobile industry, the review was baked into new legislation passed back in 2009, when the industry -- just finished begging on its knees for taxpayer bailouts -- agreed to new, stricter standards, with the first increase in fuel economy federally mandated since the 1980s. Higher mileage was made possible by new technologies and made necessary by increased knowledge of the evils of climate change and air pollution, as well as high gasoline prices and the world's seeming insatiable demand for the stuff.

"Please sir, I want some more."

But then gas prices fell dramatically and unexpectedly and the industry – always at its happiest selling SUVs and pickups, its most profitable offerings – returned to its old, profligate ways, enabled by the fine print of the new regs, whose phrasing, of course, the industry had contributed to heavily. The new laws have lower mileage requirements for larger vehicles, lessening the burden of meeting the requirements for those who focus on larger cars – i.e., the American industry.  But even that wasn't good enough for the carmakers. They hate being told what to do, under any circumstance.

So even though a welter of state laws – and the regulatory and tax structures of many other countries where carmakers compete -- will continue to mandate stiff MPG gains in coming years, the industry has been looking to get the Feds to back off on the rules for a while, though prior to the election they were too bashful to talk too loudly about it. Instead, it let Republican congressman do the talking. “You can make a good intellectual case to repeal CAFE and let the market handle it,” U.S. Rep. Joe Barton, R-Texas, one of the petrochemical industry's greatest friends and beneficiaries, told a U.S. House Energy and Commerce Committee hearing in February, speaking of the Corporate Fuel Economy Standards overseen for EPA by the National Highway Traffic Safety Administration (NHTSA.) “If Mr. Trump is president…we’ll be back.”

"They hate being told what to do, under any circumstance." (Lexicon, Vikrum - Wikipedia)

Well, Mr. Trump is president and the industry and its Republicans are back, but the EPA, having completed its review of the industry's case against sticking to its 2009 regs and likely sensing its closing window of opportunity, made its move. And though the industry is largely mum for the once, its surrogates are howling the most popular refrain in the realm of environmental regulation – the sky is falling. Peter Weich, president of the National Automobile Dealers Association, an independent body obviously close to the carmakers, said “Washington today decided to make new cars and trucks more expensive for America’s working men and women. The outgoing administration has chosen to halt progress on fuel economy by enacting a policy that will delay the introduction of safer and cleaner vehicles by making them more expensive."

How maintaining already agreed upon feasible fuel mileage requirements will keep Americans from safer and cleaner vehicles takes some parsing, but longtime foe of regulation and protecting the public health, Grover Norquist of Americans for Tax Reform, agreed, relieving himself thusly:

"The EPA's push this week to finalize burdensome and costly new fuel-economy standards is clearly an affront to the incoming Trump administration…Such stringent and premature standards are unrealistic, and effectively put the government between consumer choice and American mobility."   

These gems of Orwellian Up Is Down-think attempt to make a point based on the oft-bruited but never borne out in reality theory that if cars are more fuel efficient people won't buy them because they won't like the packages they come in (smaller, more cramped, which demonstrably needn't be true) and more expensive. Of course, the industry has actually come along faster than they'd predicted, at much lower cost, to date, than they'd predicted, overstating cost to company and consumer being key elements of its historic opposition to regulation. As for the public whose interest it is purporting to defend, Consumers Union reports that its surveys show that "strong majorities of Americans believe increasing fuel efficiency is important (84%) and that the government should continue to set standards for higher fuel economy in cars and trucks (70%) - a belief supported by majorities of both Republicans and Democrats."

Airbags, crash and emission standards, and now this. You name it, they whined about it. 

Chicken Little pronouncements are, alas, the auto industry's long-lived go-to, when faced with any sort of regulation. Airbags, crash and emission standards, you name it, the industry is against it. It opposed the Clean Air Act of 1970, with GM arguing that it would need to lay off half a million workers and Henry Ford II wildly claiming that the company his grandfather founded would go out of business in the event the act was passed. In 1972, Ford executive Lee Iacocca made the same apocalyptic claim about universal use of catalytic converters, devices just "discovered" (actually long known to industry) that would enable the makers to meet the 1970 standards.

The catalytic converter didn't trigger the apocalypse; neither will the CAFE regs. 

They lied and exaggerated then and they lie and exaggerate now. They've met the existing standards, and sales and profits have never been higher, yet they're fighting doing what they'd already planned on doing. All in spite of the inevitable bad results that shall attach to their actions.

Automakers value certainty and they sell in world markets and states where the laws will remain strict, so their fiduciary responsibility to their shareholders ought to require them to be ahead of events and prepare for the worst, giving people cars they want that make the maximum contribution to running cleaning and less wastefully. So the petulance that leads them to fight this CAFE standard now creates a distraction that will leave them once again with egg on their faces when gas prices go up, as they inevitably will. They may even lose the fight – the EPA has truckloads of science undergirding their decision – and there's no question attempts to sidetrack the law will wind up in court, messily and expensively. Unless the industry decides it is irrevocably committed to remaining on the wrong side of history, here is a moment when they ought to stand down.


Get the Car Talk Newsletter