In August 2023, the National Highway Traffic Safety Administration (NHTSA) proposed a regulation to strengthen corporate average fuel economy standards for passenger cars, light trucks, and heavy-duty pickup trucks and vans. The standards apply to model years 2027–2032 for passenger cars and light trucks and model years 2030–2035 for heavy-duty vehicles.
In our comment letter, we explain that while the Proposed Rule and its accompanying regulatory impact analysis offer useful starting points, NHTSA should take further steps to ensure the complete presentation of regulatory benefits and costs and should select a regulatory option that best promotes social welfare, consistent with the agency’s legal obligations. In particular, our letter recommends that:
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NHTSA should presumptively select the alternatives that will maximize net benefits, yet the Proposed Rule fails to do so for both vehicle classes without compelling justifications. Currently, NHTSA’s modeling concludes that the most stringent alternatives would result in greater net benefits than the proposed standards. While NHTSA selects these less net-beneficial alternatives based on its weighing of the statutory factors, its particular analysis of applicable economic factors is unpersuasive.
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NHTSA should assess a broader range of alternatives that decouple stringency increases for light trucks from those for passenger cars and that impose non-linear stringency increases, which could further maximize net benefits. Additionally, NHTSA should consider flattening its footprint curve to discourage vehicle upsizing as a likely compliance strategy, as upsizing could undo many of the efficiency gains NHTSA seeks and thereby lower net benefits.
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NHTSA should conduct additional economic analysis around key parameters to ensure robust consideration of regulatory benefits and costs and to enable the agency to make the most informed choice between alternatives. In particular, NHTSA should conduct additional analysis using climate-damage valuations and social discount rates from draft guidance documents that reflect the best available science and economics. NHTSA should also conduct additional analysis to ensure the accuracy of its cost, baseline, and scrappage modeling. Such changes would show that the costs of the Proposed Rule and its alternatives are lower—and the benefits greater—than NHTSA currently estimates.
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While NHTSA appropriately conducts dozens of sensitivity analyses, it should conduct additional analyses around key parameters to ensure robustness and transparency. For one, NHTSA should perform additional analyses with the Environmental Protection Agency’s (EPA) to-be-finalized tailpipe rule in the baseline. Additionally, EPA should perform an “unconstrained” analysis that considers all likely means of compliance.
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NHTSA should conduct a more balanced literature review that captures the extensive evidence supporting the energy efficiency gap.
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NHTSA should add several arguments to bolster its conclusion that the Proposed Rule is severable.
We also submitted joint comments with a coalition of other environmental groups on NHTSA’s use of the social cost of greenhouses gases in the Proposed Rule. In those comments, we offer extensive justification for the inclusion of global damages and the use of low discount rates. We also affirm that the Proposed Rule’s climate-damage valuations represent lower-bound estimates and recommend that NHTSA conduct additional analysis using draft updated valuations that the federal Environmental Protection Agency released late last year.