The Great Automotive Deregulation?

Late last year I wrote an article for this website titled “What Has the Government Done to Our Cars” decrying the way decades of excessive regulations have changed America’s automobiles for the worse

by Brad Pearce

Late last year I wrote an article for this website titled “What Has the Government Done to Our Cars” decrying the way decades of excessive regulations have changed America’s automobiles for the worse. Now, just months later, in what EPA Administrator Lee Zeldin is billing “the single largest deregulatory action in the history of the United States,” the Donald Trump administration has killed the “endangerment finding” which allowed the EPA to regulate “greenhouse gasses” as a threat to human health due to the risk of “climate change.” On top of this, the administration has reduced MPG requirements while Congress has removed penalties entirely, making those a “recommendation,” not a requirement. A New York Times article panicking about this modest bit of freedom, titled “With Latest Rollback, the U.S. Essentially Has No Clean-Car Rules” provides fascinating, and frankly chilling, insight into the minds of regulators and “experts.”

The common understanding of regulations is that since businesses maximize profit at the expense of other things which impact workers, consumers, and the general public, it is necessary to regulate their activity in the name of the public good. This is thought to have some direct economic cost to businesses and consumers, which is said to be either worth paying due to it saving lives or is made up by other savings such as, for example, the various economic costs of polluted air, like increased healthcare costs. Another reason is to safeguard access to resources, such as reducing oil consumption, which was the big thing when cars began to be heavily regulated in this regard in the 1970s, but which is no longer relevant in a world where the United States is a net oil exporter. Nevertheless “conservation” being its own good has been drilled into the heads of much of the public, so “reducing gas use” is still seen by many as necessary or desirable. Obviously, cars consume fuel and pollute the air, and can be regulated to do less of those things, though how well that works and if it is worth what it costs is a more complex topic.

However, over time environmentalists and regulators became increasingly against oil itself, and in 2009 the EPA began to regulate cars for “climate change,” as opposed to just pollutants which directly impact human health when breathed in, like nitrogen oxides (the emissions of which are still EPA regulated, though those standards may also be relaxed). Increasingly, politicians wanted to switch to electric-only cars, with the Joe Biden administration setting 2034 standards of around 50 MPG for cars and California trying to phase out new gas cars by 2035. As per the Times, the “endangerment finding” had allowed the EPA to push these standards more aggressively than fuel-economy rules alone could, “Setting targets so low they would eventually have become virtually impossible for gasoline engines to meet,” which they see as a good thing. The Trump administration has only rolled the MPG numbers back to 34.5 MPG for a full car lineup, which the article claims would lower them to “largely irrelevant levels,” though my 2002 Mazda Protege5—a small economy car—gets 24 MPG combined, so in fact this would still represent aggressive MPG regulation, if not for the fact that there is now a $0 fine for violations.

Where the “experts” move into unusual territory is by arguing that this de-regulation will hurt the auto industry, its future, and its ability to compete globally. It is one thing to think that subsidies and protective tariffs and the like are necessary for that purpose, but I know of no economic theory which posits that government regulations—universally considered to cost businesses money—help businesses remain profitable and globally competitive. Nevertheless, this appears to be what this entire regulatory cabal believes. One Margo T. Oge, the top EPA vehicle regulator under three presidents, says that if deregulation encourages the production of gas cars while China moves towards electric, “Our automakers are not going to survive.” Anne L. Kelly, from an advocacy group called Ceres, which works with businesses on their sustainability plans, lamented the risk of fragmented regulation across fifty states, and said “There is no world in which this is helpful for the auto industry,” as if Montana will force states to sell lower MPG vehicles. Meanwhile, unnamed “experts” said that any move towards “gas guzzlers” that can’t be sold in Europe or China could further “isolate” the U.S. market and “cede the future of automotive technology to Chinese electric vehicle giants like BYD.” One would imagine that automotive companies can simply decide if it is worth competing for those markets.

Another activist posing as an expert, Daniel Becker, the director of the “Safe Climate Transport Campaign” at the Center for Biological Diversity said that in addition to increased fuel costs at the pump to consumers and costs to climate, public health, and industrial competitiveness, the Trump administration “is telling American manufacturers, ‘You guys go build gasoline cars again…The Chinese government is telling its manufacturers, ‘You go build the advanced vehicles that are going to take over the world.’” The idea that Mr. Becker gives a whit about “fuel costs to consumers,” “industrial competitiveness,” or the rise of China is so laughable that it should not have been treated as credible by a journalist. Obviously he cares about exactly one thing, which is ending gas cars, but is willing to say whatever justifies that goal.

It is a constant dictum of the gas automobile haters that what Americans really want is good gas mileage, while at the same time they constantly decry Americans’ love of “gas-guzzlers.” There is no way to square the circle; they are simply trying to justify their use regulations to overcome consumer preference. The reality is that while some people do want cars with a low cost-per-mile to drive, so much nonsense is thrown on cars to get those results that has to be initially bought and then maintained that it’s not even clear what the savings are, particularly compared to buying a much cheaper older car that doesn’t meet modern fuel standards. “Sports Utility Vehicles” became popular because they count as “light trucks” and were able to avoid some of these asinine regulations. Further, many Americans drive trucks as their main vehicle, to the extent that the Ford F-150 has become a great symbol of American civilization. What’s more curious about all of the objections above is that these regulators and environmental activists are more or less saying that car companies don’t understand consumer preference or their competition and won’t respond to either. However, they claim that regulators and environmental activists understand both things and are the ones actually able to protect the interests of America’s auto industry.

In spite of all of the noise, it is unfortunately the case that for a few different reasons this may not turn out to be such a big deal. For one thing, the rule change still has to survive presumably endless court challenges. For another, Democrats will surely try to reverse this on a national level at the first available opportunity, though one person interviewed said it would take years to reissue and defend the old “endangerment” finding. Further, car manufacturers may not be willing to ignore fuel standards on any large scale despite Congress having removed the fines, figuring that they could still be punished in the future. Most importantly, while Congress is challenging California’s laws, manufacturers may decide it’s not worth it to make separate models that cannot be sold in California and other Democrat states. However, as to this last point, they did it in the past: in the early 1990s when cars were transitioning away from carburetors, some had a carbureted model only for sale outside of California, which as ever had the most strict regulations. As it stands, California is still trying to eliminate gas cars, so if companies want to make them at all they may have to just ignore that market.

Regardless of how large the impact, we should welcome this genuinely significant consumer deregulation, something so rare in American life. Most automotive environmental regulations have been based on a variety of lies and misplaced priorities, and it has gone on for too long. One hopes this might even open up a space for small new manufacturers of more old-fashioned cars without a crazy mess of computers. There is another lesson here though: liberals like to say something along the lines of, “No one enjoys making regulations, it is just necessary so corporations don’t kill people with their irresponsibility.” As per the sources found for this New York Times article, not only do these “experts” enjoy regulating, they have an ill-placed ideological belief in regulation as its own economic good.

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