Fuel Economy Regulations

The Three-Agency Regulation of Light-Duty Fuel Economy
A Flawed Fuel Economy Structure Produces a Flawed Result

In 2012 the Obama administration issued fuel-economy standards that set a light-duty target fleet-wide standard of 54.5 mpg by 2025 at an average per vehicle cost of nearly $3,000. This rule made a significant change: Instead of having one regulator (the National Highway Traffic Safety Administration [NHTSA]) designated by Congress, the Obama administration empowered the Environmental Protection Agency (EPA), and the California Air Resources Board (CARB) to also regulate fuel economy. The total cost of all the Obama administration fuel-economy regulations is $209 billion.

The 2012 standards included a mid-term evaluation of model year (MY) 2022 through MY 2025 mandates to review their appropriateness, based on updated information, by April 2018. Following the 2016 election, EPA rushed through an evaluation, stating in January 2017 that no changes to the mandates were necessary.

On March 15, President Trump announced that he was negating the Obama administration’s January 2017 decision and that the midterm evaluation process would resume as originally contemplated. On August 24, NHTSA and EPA jointly proposed new standards for MY 2021-26, including potentially freezing the standards at 2020 levels (43.9 mpg for cars, 31.3 for light-duty trucks). The proposed rulemaking also stated that state regulation of fuel economy (i.e., by CARB) was preempted under federal law and was thus void. A final decision on the new standards is expected around March 30, 2019.

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                                                                      September 14, 2018

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