Cornering CAFE

Since 1975, the federal government has required that automakers boost the gasoline mileage of their fleets to meet Corporate Average Fuel Economy (CAFE) standards. But some free-market advocates claim the government has ignored the trade-off between higher gas mileage and safety, causing what they call "death by regulation." A federal appeals court recently agreed.

Smaller cars generally get better gas mileage but are usually less safe in accidents. A 1988 study by Robert Crandall of the Brookings Institution and John Graham of Harvard estimated that a 27.5-mpg standard would increase traffic deaths by 14 percent to 27 percent per model-year fleet—2,200 to 3,900 extra highway fatalities a year. Beginning with model year 1985 cars, the CAFE standard was 27.5 miles per gallon.

The National Highway Traffic Safety Administration (NHTSA) can legally adjust any CAFE standard it finds "unfeasible." For MY 1986–88, NHTSA lowered the standard to 26 mpg. But by MY 1990, the agency had restored the 27.5-mpg standard.

Last July, the Competitive Enterprise Institute and Consumer Alert sued NHTSA, arguing that it hadn't addressed the trade-off between downsizing and safety. On February 19, a panel of the U.S. Court of Appeals for the District of Columbia Circuit agreed. The court noted that NHTSA could have argued that safety isn't important or that reduced oil consumption is worth the cost in lives. Instead, Judge Stephen Williams wrote, NHTSA "fudged the analysis, held the standard at 27.5, and, with the help of statistical legerdemain, [concluded] that its decision had no safety cost at all. "

Buoyed by the ruling, Rep. Bob McEwen (R–Ohio), who unsuccessfully introduced a bill last session to repeal CAFE standards altogether, plans to try again. CEI Chief Counsel Sam Kazman, who argued the case, says, "I couldn't have written a better decision myself."