House of Representatives Investigates Fuel-economy Deal

A few short months ago, the Obama administration announced its fuel-economy proposal, hailing it as a win-win. Endorsed by auto manufacturers and environmentalists alike, the aggressive set of standards had the appearance of a good old-fashioned political compromise. But in the weeks after the standards were introduced, there has been revisionist thinking on the proposal.

Some environmentalists have expressed disappointment that the standards were more stringent. Their goal was 60 miles per gallon. Meanwhile, some auto industry groups have proclaimed that the mpg bogeys proposed by the standards will be much more difficult -- and more expensive -- to reach than the administration claims. Now, Congress -- specifically the House Committee on Oversight and Government Reform, chaired by Republican Rep. Darrell Issa of California -- has held a hearing to question the Environmental Protection Agency’s (EPA) decision to impose those costly new standards. One major issue is whether or not the EPA has the authority to impose any fuel-economy standards at all.

“The Environmental Protection Agency is carrying out a power grab of breathtaking proportions,” says Senior Fellow Marlo Lewis of the Competitive Enterprise Institute, a conservative think-tank based in Washington, D.C. “The Clean Air Act was neither designed nor intended to regulate greenhouse gases, and it provides no authority to regulate fuel economy.”

The EPA claims that it has the authority to regulate fuel economy because so-called greenhouse gas emissions are inextricably linked to climate change. By labeling greenhouse gases as “pollution” responsible for “global warming,” the agency says regulating fuel economy is merely an implementation of the Clean Air Act. But, as Lewis notes in his testimony, the Clean Air Act was enacted in 1970, “almost two decades before global warming emerged as a public concern and five years before Congress enacted the nation’s first fuel-economy statute.” Thus, he suggests that Congress had no intention of allowing the EPA to construct standards for fuel economy.

So why have the car companies apparently signed on to the proposed standards rather than opposing them on the grounds that they would cause substantial harm to the industry and car buyers? Lewis says the EPA pursued a strategy of “regulatory extortion,” confronting auto companies with the economically ruinous prospect of allowing state-by-state fuel economy and greenhouse gas regulations if they did not waive their right to sue the EPA and sign on to the president’s proposal.

The EPA has asserted its power to regulate fuel economy despite the fact that a federal stature titled the Energy Policy and Conservation Act expressly prohibits states from adopting laws or regulations related to fuel economy. In the same act, Congress delegated the responsibility to regulate fuel economy to the National Highway Traffic Safety Administration (NHTSA).

Currently, no vehicles except plug-ins or battery-electric cars meet the 54.5 mpg standard that has been proposed for 2025. The administration has claimed that the standards can be met at a cost of something like $2,000 per vehicle, but others say the cost could well be more than $10,000 per car. The Defour Group estimates that 220,000 jobs may be gone by 2025 as the auto industry struggles to meet the new standards. In this era in which job creation -- not destruction -- is so important, the probability that the standards will cost jobs is a key reason why the House is taking a long look at the proposed standards.
 

by Luigi Fraschini