Trump Administration Finalizes Rationalization of Fuel Economy Mandates

Today the Trump administration finalized the second half of its proposed rule to correct the overreach of the Obama administration’s Corporate Average Fuel Economy (CAFE) regulations. The first half came last fall when the administration halted California’s ability to force fuel economy standards on the other 49 states. Today’s second half brings fuel economy mandates back to the real world of achievable improvements instead of the Obama administration’s backdoor electric vehicle mandate. This rationalizing is an important victory for consumers, providing more choice and more affordable vehicles, and a victory for automakers, who can focus on technological improvements rather than scrambling to meet overreaching bureaucratic mandates.

The CAFE program is a relic of the 1970’s oil crises. As domestic oil production declined, many people came to fear US dependency on foreign oil. Whatever the legitimacy of that justification 40 years ago, the world has changed substantially since then. The United States is now the largest oil producer in the world and a substantial exporter. In reality, the CAFE program should be repealed entirely as obsolete. But if we are to have it, it should do the least harm possible.

The Obama administration, in contrast, saw the CAFE program as an opportunity to impose its environmental agenda. The CAFE mandates proposed by the Obama administration in 2012 were set so high that they were in effect impossible to meet – at least with cars using internal combustion engines. The mandates were so excessive that compliance was impossible without special credits given for producing electric vehicles. The 2012 mandates were thus effectively a backdoor electric vehicle mandate, forcing automakers to produce electric vehicles regardless of consumer demand. And boy, do consumers not want them. Since 2012 consumers have only accelerated their transition to SUVs and light trucks. Today over 70% of cars sold are these larger vehicles.

The rule finalized today by the administration recognizes the overreach of the previous Obama mandates as well as the realities of the current car market. The rule calls for fleet-wide fuel efficiency to increase by 1.5% per year (in contrast to the Obama effective level of 5% per year). This increase is attainable by carmakers, while still allowing for consumer choice. More importantly, by right-sizing the mandates, this rule would reduce the cost of new cars during the next five years. Reducing the cost of new cars encourages fleet turnover, which increases safety and has environmental benefits. Instead of holding on to older, less safe, less efficient vehicles, consumers will be better able to upgrade. The average age of the US vehicle fleet is about 12 years, the highest it has even been.

Ultimately the rule finalized today reduces the cost of new vehicles, increases consumer choice, and will improve the overall safety of vehicles on the road. What it does not do it try to force consumers to purchase electric vehicles, which is why the environmental left and their allies in the media are on the attack. The administration’s rejection of social engineering should be applauded. The CAFE program is long past its sell-by date, but today’s rule at least minimizes the program’s regulatory damage.