The Arcane World of CAFE Standards
The Administrative Procedures Act requires federal agencies to “promulgate” rules and regulations (sometimes called “administrative law”) through a public process, usually published in the Federal Register and ultimately inserted in the Code of Federal Regulations as published by the National Archives and Records Administration under 50 different “titles.” Readers of IH usually deal with only a few rules (EPA and OSHA, for example) from the well over 50 federal, regulatory agencies.
One of the pending sets of directives evolving and posing business pressures for readers are CAFE (Corporate Average Fuel Economy) standards. These regulations affect the automotive sector, including manufacture, repair, maintenance, recycling and sales, plus assorted areas that relate to air toxics, emission standards and compliance reporting. Keep in mind that all of these rules, which will change the way the auto industry and manufacturing supply chain does business, are issued without Congressional approval and are exclusively the “interpretation” of umbrella rules made by agency bureaucrats.
CAFE standards were first issued in 1978 after Congress passed a 1975 law intended to improve average fuel economy of cars and light trucks. From 1979-1991, all road vehicles were targeted. Several automakers, however, choose to pay penalties rather than attempt to comply. Jaguar, Porsche, Mercedes, Volvo and Fiat, for example, paid a 2010 penalty of $24 million rather than bend to U.S. federal rules as compared to customer vehicle-performance expectations.
Be mindful that there are often other unseen impositions such as (possibly) mandated use of E15 (15% ethyl-alcohol gasoline additive instead of the regionally mandated 10% today), which reportedly has an enormous impact on internal-combustion engine performance and life. Think about what a close call it is for political hacks on Capitol Hill, worrying about support gained or lost with corn farmers who originated the alcohol supply chain or unions who want to keep their jobs in a viable U.S. automotive sector. Take my word for it – after 50 years of watching and participating, politicians win and the public loses both ways.
During a 10-year period ending in 2002, the EPA kept urging more fuel-efficient vehicles while the National Highway Traffic Safety Administration (NHTSA) expressed concerns that, to get better efficiency, smaller vehicles led to increased traffic-accident fatalities (1,300-2,600 more per year according to the NHTSA).
On Dec. 19, 2007, President Bush signed the Energy Independence Act, setting auto fuel-economy goals of 35 mpg by 2020. Starting in 2011, CAFE standards related to car “footprint” were determined as the product of wheelbase and track width – the larger the footprint, the lower the fuel economy required.
Can you believe that automakers would lengthen the wheelbase to increase the footprint rather than make other substantive changes? (Politicians are usually not too swift when it comes to recognizing reality.) Another industry additive is getting “credits” for exceeding goals that carry forward to offset other models’ shortfalls from the same manufacturer. Do you know how to say “hokey deal?”
Then on July 29, 2011, President Obama announced an agreement with 13 automakers to increase fuel-economy standards to 54.5 mpg by 2025. Volkswagen was the only major automaker to say, “We ain’t doing it.” Currently, the CAFE penalty is $55 per vehicle for every 1 mpg under the 54.5 limit. This new standard will cost every new vehicle buyer some unknown amount of money. (According to the EPA, $455 per car is an across-the-board average, but it could be as much as $10,000 per car according to the Center for Automotive Research as reported in a Heritage Foundation study).
It will cost the automotive industry an estimated $135 billion to comply from 2017-2025. So, the obvious question is why does Congress allow unelected bureaucrats to cost John Q. Public a lot of bucks for marginal (if any) benefit?
Being fuel efficient is a no-brainer. Obviously, the public wants and needs auto efficiency in an increased-fuel-cost world. And it is worth saving crude oil, but the White House hype about saving 1.8 billion barrels of oil is an outrageous and unjustified lie. It is estimated that 220,000 American jobs will be lost due to this feel-good regulation, of which the public has no real control other than to tell their Congressman and Senator to rein in the regulatory process or get thrown out of office. IH