In 1997, 2000, and 2001, the U.S. Environmental Protection Agency (EPA) published rules establishing a series of new emissions mandates for heavy-duty trucks to be phased-in between model years (MY) 2004 and 2010. Typical of EPA’s motor vehicle standards, these “technology forcing” mandates analyzed the development and implementation of new emission control strategies and technologies.
The adoption of these new control strategies and technologies directly resulted in higher prices for new heavy-duty trucks. These mandates also resulted in significantly higher operating costs, attributable largely to increased maintenance requirements, reduced reliability, and lower fuel economy. Together, these higher prices and operating costs led to significant disruptions in the new truck marketplace. These included significant layoffs caused by unprecedented truck pre-buys and sales “cliffs,” capital constraints for truck and engine manufacturers (OEMs), suppliers, and dealers; and the departure of certain businesses from the heavy-duty truck market.
This paper examines the degree to which, and possible reasons why, EPA’s estimated regulatory impact dramatically underestimated real world costs of the regulation. An analysis of actual sales data, including cost escalators associated with the MY 2004-10 standards, shows that EPA underestimated compliance costs by a factor of 2-5. These higher-than-projected costs resulted in, among other things, significantly lower-than-projected new truck sales which necessarily reduced the environmental benefits associated with these standards. While it is an important issue, this paper does not attempt to quantify the degree to which EPA’s projected environmental benefits were not realized.
• Press Release: "NADA/ATD Study EPA Underestimated Emission Control Costs for Model Year 2004-2010 Heavy-Duty Trucks"
• Full Paper: "A Look Back at EPA’s and Other Impact Projections for Model Year 2004-2010 Heavy-Duty Truck Emissions Standards"