California Sues EPA to Maintain Automobile CAFE Standards That Hurt the Poor

How cowardly politicians avoid telling voters that they should pay more for the privilege of driving

Syda Productions/Dreamstime

The Environmental Protection Agency last month launched a new rule-making process that aims at rolling back Obama-Era Corporate Average Fuel Economy (CAFE) standards. In addition, the EPA is looking to revoke the long-standing regulatory waiver that allows California to set its own automobile fuel efficiency and emissions standards.

When the auto industry was on the ropes during the financial crisis ten years ago, the Obama administration in exchange for bailout funds extracted a promise from the car companies that they would achieve a fleet-wide fuel efficiency of 54.5 miles per gallon on new cars by 2025. "At every step in the process the analysis has shown that the greenhouse gas emissions standards for cars and light trucks remain affordable and effective through 2025, and will save American drivers billions of dollars at the pump while protecting our health and the environment," said outgoing EPA head Gina McCarthy in 2016.

That was then. Shortly after Trump administration minions had taken over various federal regulatory agencies, carmakers sought some loosening of the Obama CAFE standards. Environmentalists and Democratic politicians vowed to fight to maintain the stricter CAFE standards. Yesterday, California and 17 other states filed a lawsuit in the United States Court of Appeals for the District of Columbia Circuit arguing that by opening up a new fuel economy rule-making that the agency has "acted arbitrarily and capriciously, failed to follow its own regulations and violated the Clean Air Act."

Lowering harmful air pollutants is a worthy goal, but mandating CAFE standards is a dumb and inefficient way to help clear the air. California Attorney General Xavier Becerra is just just wrong when he asserts that CAFE standards are "a boon for hardworking American families." As I have earlier reported whatever else CAFE standards may do, they especially hurt the poor:

In a new study contrasting the effects on consumers of energy efficiency standards versus energy taxes, the Georgetown economist Arik Levinson notes that both energy efficiency standards and energy taxes function as a regressive tax, taking a larger percentage of a lower income and a smaller percentage of a higher income. His analysis aims to find out which is more regressive—in other words, which is worse for poor Americans.

Levinson cites earlier research that estimates a gasoline tax would cost 71 percent less than the comparable CAFE policy per gallon of fuel saved. Meanwhile, a 2013 study calculates that CAFE standards cost more than six times as much as a corresponding gas tax for the same reduction in fuel consumption. In other words, if policy makers want people to use less fuel and drive more fuel-efficient cars, taxing gasoline is a much cheaper way to achieve that goal than mandating automobile fuel efficiency. Levinson concludes that "efficiency standards are, ironically, inefficient."

I have long been a critic of CAFE standards. Back in 2009, for example, I concluded that Obama's proposed CAFE standards operate as an inefficient stealth tax on driving. It's inefficient because drivers pay more, car companies make less money, and state and federal governments don't get any extra revenues. If activists and politicians want Americans to drive more fuel-efficient cars, the simple and honest thing to do would be to substantially raise gasoline taxes concluded a 2002 National Academy of Sciences report. Ultimately, I argued, setting CAFE standards is just a way for cowardly politicians to avoid telling their fellow citizens that they should pay more for the privilege of driving. If that's what our political leaders think, then they should just be honest and come out in favor of higher fuel taxes.

Interestingly, President Trump endorsed in February the idea of a 25 cents per gallon gasoline tax to fund repairing America's highways. Higher gas taxes would also have the side effect of incentivizing people to buy more fuel-efficient cars and drive less. In this case, President Trump's gas tax is a bit more straightforward than the Democratic politicians' defense of Obama-era CAFE standards.

Comments

[Rockabilly]

Comrade Moonbeam will fix this, relax comrades, you're in good hands!

[SQRLSY One]

Comrade Moonbeam has a master-monster plan to run ALL Californicator vehicles on the purest distilled essences of the slightest hints of homeopantheistic fumes of Gaia-worship and the smuggest of self-righteousness! ALL HAIL, Cumrade!!!

[Mr. Gus]

Can I have a cumtwat, cumrade?

[SQRLSY One]

One lightly toasted, slightly greasy cumtwat, hairs on the side, cumming right up!

[Cynical Asshole]

Ultimately, I argued, setting CAFE standards is just a way for cowardly politicians to avoid telling their fellow citizens that they should pay more for the privilege of driving. If that's what our political leaders think, then they should just be honest

Politicians being honest? HAAHAHAHAHAHAHAHA!!!1!111!!!!!!

[Scarecrow Repair & Chippering]

One of my amusements is watching politicians find ever more ways of trying to hide all the new revenue they raise. All people really need to know is that federal, state, and local governments spend around $8-9T a year, which comes to $24-27K per person. Yes, the feds borrow, but that's still $20K per person, and much more for the children.

The progressive taxes can only raise so much. I I once looked into how much wealth the top ten US billionaires had, and it's pathetic how the proggies keep on ranting about confiscating their wealth. First off, even if all that wealth was pure cash and could be confiscated, it wouldn't even eliminate one year's deficit, let alone do anything meaningful to the national debt. Secondly, most of that wealth is not cash, it's stocks and bonds; the only way to turn it into cash is to sell it, and the only people who could buy it have just had all their wealth confiscated!

So the pols have to look to other taxes, almost all of which are regressive. Sales tax, gas tax, soda tax, property tax -- all regressive. Yet the proggies keep on lapping it up, as if all those taxes on the poor are somehow noble and exalted. Just as they think government paychecks turn ordinary people into angels, so it is with theft -- angelic if the government takes it, even if they take it from the poor.

[Jerryskids]

"At every step in the process the analysis has shown that the greenhouse gas emissions standards for cars and light trucks remain affordable and effective through 2025, and will save American drivers billions of dollars at the pump while protecting our health and the environment," said outgoing EPA head Gina McCarthy in 2016.

She went on to ruefully add, "It's a shame that people are either too damn stupid to save money by buying better cars, so crazy they can't understand basic economics, or so evil that they will intentionally waste money buying crappy cars just to ruin the environment. The only way they'll do what's for their own good is if we hold a gun to their heads, the bastards, and sometimes I think we should just shoot them all and be done with it."

[Sevo]

CA politicos care so much about the poor, they want to make sure there are plenty of them around.

[Libertymike]

Do you ever throw some coin to homeless guys?

[Don't look at me.]

Does throwing coins AT them count?

[Sevo]

"Do you ever throw some coin to homeless guys?"

Used to long ago before the SF Gov't paid them more than I was making starting my first company.
Since then, I've always asked them for contributions to start a new company; then they can apply for a job.
I don't get any money.

[LarryA]

"The theory that CAFE standards are regressive is based on the faulty assumption that poor people need cars. Once we complete all our gas-tax-funded projects, poor people will be able to take mass transit everywhere we want them to go."

[/sarc]

[JFree]

The main problem with CAFE standards (and gas tax) is that it doesn't fix the main long-term issue of pricing energy usage, pollution, etc. All CAFE standards did in its first iteration was make cars bigger (see SUV) because of the distorted incentive for mfrs to stick station wagons on a light-truck chassis when the boomers first had millennials.

It is true that the real determinant of gas usage and externalities is at the point of vehicle purchase - not at the gas pump. So it should be capitalized into the vehicle price. But that pricing mechanism can only work if it is delivering money to/from buyers/sellers. So small efficient cars can be more profitable - and there's an incentive to 'retire' big old smokies (which is often what the poor drive cuz they can't afford the new car).

Instead its the usual bureaucratic BS.

[Sevo]

See? JFree thinks he's a far better social engineer than those in charge!

"It is true that the real determinant of gas usage and externalities is at the point of vehicle purchase - not at the gas pump. So it should be capitalized into the vehicle price. But that pricing mechanism can only work if it is delivering money to/from buyers/sellers. So small efficient cars can be more profitable - and there's an incentive to 'retire' big old smokies (which is often what the poor drive cuz they can't afford the new car)."

It's just the wrong people fucking up the market. If the right people fucked up the market, it would STAY fucked up!
Right, JFree?
Hint: You don't know what you're posting about. You'd look smarter than you are if you shut up.

[Christophe]

That sounds wrong. For starters subsidizing any vehicle, no matter how efficient, is going to move some people at the margin from not owning a vehicle at all to owning one. If the goal is reducing emissions, then that part ends up working against your goal.

I also remember a program designed to move people to more efficient cars by subsidizing trade-ins. Cash-for-clunkers was a great success with no accidental negative side effects whatsoever 😛

[Sevo]

"Cash-for-clunkers was a great success with no accidental negative side effects"
Obo LOVED it!

[JFree]

I'm not talking about any subsidies coming from outside that market. None at all. I'm talking about creating an 'expected lifetime pollution right' as a separate thing - and attaching that to the price of the vehicle.

You want the right to pollute public air (with your open exhaust system or your draw on the electric/fuel grid) - you damn well pay for it - up front. Otherwise, no driving on public property. For new cars, that immediately lowers the effective cost of smaller efficient cars v big inefficient ones cuz less 'lifetime pollution rights' required. Mfrs receive those rights (in order to attach them to the new cars they make) from car recyclers who create those rights by retiring existing cars (and separating the depreciated pollution rights from the cars they grind). Retiring the big smokies will generate more credits than retiring smaller efficient cars - newer more than fully-depreciated. People who want less pollution overall can drive up the cost of those pollution rights by buying them from the recyclers and taking them out of circulation.

Govt just needs to create the right itself and define it fully so the pricing system can use it - and seed/distribute those rights to current vehicle owners.

It's basically an attempt to actually make the Coase stuff work and move it out of useless. Obviously the details aren't easy but if markets work, then it should work.

[Nardz]

This is, possibly, the stupidest thing I've ever read.

[Gilbert Martin]

"It is true that the real determinant of gas usage and externalities is at the point of vehicle purchase "

Peddling the old unproven "externalities" claim, eh?

Well now that's an affirmative condition claim so the burden of proof is on you.

The negative always prevails by default unless those making the affirmative condition can unequivocally and absolutely definitively prove it to be so.

You can't prove it exists at all much less quantify any amount that should be "priced in" to the price of any vehicle.

[JFree]

Proof is fucking easy. All people do at the pump is fill up their existing car. Every mile they drive - and hence all the gas they use and pollutants they exhaust is based on their existing car. The miles/year they drive is pretty constant - same shops, same workplace, same kids to same school. It is why gas prices going up just squeezes people. They have to spend less in other categories cuz gas is pretty inelastic demand. Maybe different leisure driving or combining trips - but that's damn near irrelevant.

So the only serious way they are gonna reduce their gas/pollutants is when they buy a different car (or otherwise change their mode of transportation). Right now that expected gas/pollutant use is NOT priced into the vehicle. The sticker on the window requires math skills to convert that to some annualized cost - and to then discount that to the present so one can actually compare total costs up front. 98% of Americans don't have that level of math skill. So instead they just get gobsmacked when gas prices go up - and yell drillbabydrill to make sure that pols deliver them some 'free lunch' by making gas prices go down.

What that price is? Well that is what the market itself can do - but the 'pollution right' first has to created and turned from a public bad into a private bad.

[SimonP]

And then, in another post, a Reason contributor explains why gas taxes are really sub-optimal vis-a-vis mileage use taxes, so we should be employing those instead. And then another would come forward to explain why all the tracking and monitoring that would be necessary to track mileage is a threat to privacy and "freedom," etc.

I'm certainly open to any well-founded argument that there are better ways to achieve desired policy. When they are offered as concern-troll arguments to undermine support for one politically-palatable mechanism, however, I am skeptical of the author's motives. Put together a political consensus in support of this more efficient gas tax you're describing, and then sure, let's go with that. Otherwise, stuff it.

[Christophe]

We already have a gas tax. Increasing/decreasing it doesn't sound too hard. It happens all the time already.

The people saying mileage-based user fees are more efficient are right too, but there's no reason to use a bad option just because the alternative is still not optimal.

[Christophe]

The people saying mileage-based user fees are more efficient are right too

I should be more specific:

- If you want to finance roads, user fees are optimal.
- If you want to reduce fuel usage below what market equilibrium would achieve with user fees, tax fuel usage. Pigouvian taxes are more efficient than any other intervention.
- If you want to pretend that reducing fuel usage has no costs, use an obscure, inefficient method optimized for not showing up on anyone's receipt, like CAFE standards.

[JFree]

If you want to finance roads, user fees are optimal.

No. Roads increase the value of nearby land - because they provide access from that land to all the other land in the US. They should be funded via land tax. Maintenance can be financed by user fees - but not the roadspace and construction itself. And financing that via land tax also reduces the cronyism of land speculators who currently lobby/own the process for determining where roads get built.

[Gilbert Martin]

So it's back to peddling Georgist nonsense.

[JFree]

I would suggest you go to a local transport/road council meeting. Obviously you don't know shit about WHO actually lobbies for these things. A land tax just ensures that the people lobbying for it are the ones who will PAY for it too.

[Ogre]

Speaking as a land owner, who already shells out a grand a year for schools I don't use, let me extend a cordial and hearty "Fuck you, pay for it yourself, asshole".

[Ogre]

Speaking of shelling out a grand a year for schools I don't use... I'm willing to accept the idea that I'm paying a grand a year to ensure that the local utes have a basic grasp of civilization shithammered into their little skulls. I have to say, I'm not getting good value for my dollar. The little bastards can't even read, write, or make change. But they can feel oppressed just fine. And I'm paying for that shit.

[Rev. Arthur L. Kirkland]

Another meeting of Libertarians For Polluters And Pollution convened by reason.com.

Carry on, clingers.

[Sevo]

Rev. Arthur L. Kirkland|5.1.18 @ 8:11PM|#
"Another meeting of Libertarians For Polluters And Pollution convened by reason.com."

Another imbecilic post by a scumbag slaver.
Fuck off, slaver.

[Rev. Arthur ?. Kirkland]

You can tell I'm a deep and serious thinker because even when you explicitly endorse reducing harmful pollutants and suggest a big-government program to that end, I cavalierly dismiss you as being pro-pollution and -polluters because you criticized an inferior approach.

Hail Hydra, clingers.

[Sevo]

Not bad.

[Raoul Duke]

How many MPG does that there high speed train get?

[paris1]

Ron Bailey:
We've already raised the gas tax in California this year to the tune of 12 cents per gallon. And what did it get us?
Last Thursday's announcement by the state's Transportation Agency listed grant recipients for some $2.6B of the tax money for a total of 28 projects, none of them involving road upkeep! The awards include $28.6M for zero emission buses in Anaheim, $40.5M for light rail vehicles in Sacramento and $330M to build out Los Angeles' rail transit network.
What the hell are you thinking advocating increased Federal gas taxes as a means of achieving some totally arbitrary efficiency standard? As libertarians, our job is not finding new and creative ways to feed the beast!

[Sevo]

"As libertarians, our job is not finding new and creative ways to feed the beast!"

Pretty sure Bailey's desire is lowering stuff that makes the air brown, and I can see that as desirable.
But we have an unproven assumption here: That any reduced mileage will do what is claimed, given the already pretty tidy exhausts from modern cars (see graph #2 in Bailey's EPA link).
So before we debate the most effective way to do something, we really need to establish that the thing needs to, and can be, done within realistic costs.
IOWs, yeah.

[Rev. Arthur ?. Kirkland]

Well, reduced consumption will inherently lower emissions at least at the margin, even if in absolute amounts it might be meaningless given modern emissions technology. And raising the price of a normal good reduces consumption of that good. So even if Bailey's overestimating the ultimate benefit, he's not screwing up the basics; increasing the price of gasoline will reduce the consumption of gasoline and thus reduce emissions.

On the other hand, CAFE standards, by mandating efficiency, run straight into the Jevons Paradox. If you reduce the cost of driving a mile (by reducing the amount of gas needed to drive a mile), you get more miles driven. Even if that use increase isn't enough to fully offset the efficiency gains in a mature economy, technology diffuses. Higher CAFE standards means better fuel-efficiency technology is developed, which then means (after a lag for the cost of the tech to come down) increased car-miles traveled in China . . . which can even mean worse pollution net. Particularly if, say, China has inferior emissions standards, and those extra miles are driven in cars with cheaper, inferior emissions control systems.

[Ogre]

you also create cars that are inherently unsafe, because the only way to make cars more efficient at this point is to make them lighter. And the only way to make them lighter at this point is to start sacrificing structural integrity.

[I'm Not Sure]

"President Trump endorsed in February the idea of a 25 cents per gallon gasoline tax to fund repairing America's highways."

Fund highway repairs? Yeah, sure- until a Dem is elected and that 25 cents per gallon is siphoned off to pay for more choo-choos for progressives who want to virtue signal by using mass transit but don't want to ride on buses with the common folk.

[DenverJ]

In this case, President Trump's gas tax is a bit more straightforward than the Democratic politicians' defense of Obama-era CAFE standards.

Unpossibble! Everything Trump has ever done, referenced, or even look at, is wrong!
Cereally though, doesn't a gas tax soon get to the point of diminishing returns? As vehicles become more efficient, they use less fuel, reducing the tax paid per mile. I don't know if CAFE changes that, I guess, because under both systems the best way to improve MPG is to lessen vehicle weight, wich reduces road wear.

[Emotional Opposition Animal]

It's not just vehicle weight. When the current federal gas tax rates were passed, most cars did not have onboard computers, tire pressure sensors, or even fuel injection. Also hybrids didn't exist.

The gas tax should be indexed to average fuel efficiency, to allow it to sort of be a mileage tax.

[Sevo]

"The gas tax should be indexed to average fuel efficiency, to allow it to sort of be a mileage tax."
One more dimbulb social inguneer!

[Greg F]

I guess, because under both systems the best way to improve MPG is to lessen vehicle weight, wich reduces road wear.

Also works in places that have snow when light cars end up in the ditch. Not much road wear going to happen when your car is in a ditch.

[JFree]

The average weight of a passenger vehicle in the US has gone from 3200 lbs in the 1980's to 4000+ lbs now - more if you include fatter people now. Plus or minus a bit - the heaviest vehicles since the pre-1974 roadboats.

Are you saying that that was some deliberate choice of consumers because of all the extra snow we have now?

Or is it because 'family vehicles' (read station wagons) used to be on a car chassis - and now 'family vehicles' (read SUV's) are on a light-truck chassis - because of the CAFE loophole. And once everyone else gets bigger, then you have to too. Otherwise it ain't snow that'll run you off the road into a ditch.

[JFree]

I live in one of those states with snow and ice and mountains. And it wasn't the 'vehicle weight' that mattered - then or now. In the 70's and before, the most popular car here were the AMC brands. And it was Subaru that took over. Because they both offered 4WD or AWD on pretty much all their vehicles - small or large.

[Sevo]

Oh, look! If teachers get what they want, they'll end the strike!

"Arizona #RedForEd Organizers Will Call Off Historic Strike If Budget Passes"
[...]
"Gov. Doug Ducey came out with a proposal for a 20 percent pay raise by 2020 two weeks ago. Organizers and teachers initially rejected the plan, saying the details were unacceptable and unsustainable in a possibly changing economy."
http://fronterasdesk.org/content/638245
/arizona-redfored-organizers-will-
call-historic-strike-if-budget-passes

But then:
"Teachers Have the Nation's Highest Retirement Costs. But They'll Never See the Benefits"
[...]
"and strikes in West Virginia, Oklahoma, Kentucky, and perhaps Arizona, [...] teachers, like other workers in the American economy, are forgoing base salary increases in favor of in-kind benefits."
http://educationnext.org/teachers-
have-nations-highest-retirement-
costs-never-see-benefits/

Yeah, giving up the raises like: "Those details include a 9 percent pay raise by next year, plus 5 percent raises in the next two consecutive years after. This was on top of a 1 percent raise already built into the budget originally proposed before the #RedForEd movement."
From the first link.
End Pub Sec Unions NOW!

[jmlandry]

Yeah, and they only work half of the year. Nurses and teachers will always have the high road, they are beyond criticism.

Then you have people like me landlords and car salesman. No respect no sympathy no nothing.

I have always wondered if I run a government subsidized rental property and I need a new roof, can I go to the taxpayers for a bond referendum? Or am I stuck just getting Market rent for my property? Maybe I should try it, the school's get away with it...

[Emotional Opposition Animal]

If only there were a system for determining the monetary value of a good, such as teacher labor.

[Sevo]

"If only there were a system for determining the monetary value of a good, such as teacher labor."

I'm guessing that's sarc, given your lefty proclivities.
There are two, quite simply:
1) Do not negotiate with the union, negotiate with the individual (and fire those who are incompetent.)
2) Remove education from tax support and let the educators compete for the parents' money.

[jmlandry]

I like turtles, and weed.

It was funny, CARB California air resources board mandated all of these regulations back in the 90s. None of them came to fruition. As if a politician mandating something will create technologically innovative and efficient vehicles. I don't have time to look it up. fucking commies.

The production of too many useful things, results in too many useless people.

[loveconstitution1789]

There is just no authority for states to force the federal government to keep laws/regulations.

This lawsuit should be laughed out of court with all costs against the plaintiff states.

[ChuckNorrisBeardFist]

California Attorney General Xavier Becerra is just just wrong - just stop there. He's always wrong.

[LarryA]

California and 17 other states filed a lawsuit...

The most depressing part of this article is that there are apparently 17 state governments, including Connecticut, Delaware, Illinois, Iowa, Maine, Maryland, Massachusetts, Minnesota, New Jersey, New York, Oregon, Pennsylvania, Rhode Island, Vermont, Virginia, Washington, and the District (not a state, but...) of Columbia, who are still stupid enough to join in anything the California government thinks is smart.

Money quote:
We're not looking to pick a fight with the Trump Administration, but...