How One Revision in the SAFE Rule Economic Analysis Obscures Billions of Dollars in Social Harms
This report is part of a series that documents how the assumptions underlying The Safer Affordable Fuel Efficient (SAFE) Vehicles Final Rule for Model Years 2021–2026 Passenger Cars and Light Trucks are skewed to make the rule look less harmful than it actually is. In this report, we focus on the rule’s estimate of vehicle sale price elasticity, which substantially inflates the rollback’s effect on new vehicle purchases.
The SAFE Rule’s Overstated Estimates of Vehicle-Price Impacts
This report is part of a series that documents how the assumptions underlying The Safer Affordable Fuel Efficient (SAFE) Vehicles Final Rule for Model Years 2021–2026 Passenger Cars and Light Trucks are skewed to make the rule look less harmful than it actually is. In the SAFE Rule, the Environmental Protection Agency and the National Highway Traffic Safety Administration have significantly rolled back the greenhouse gas emission and fuel economy standards for light vehicles established under the Obama Administration. This report highlights three critical problems in the agencies’ assumptions about vehicle prices.
The Administration’s Misleading Claims About Deregulatory Cost Savings
The Trump administration regularly boasts about the cost savings of rolling back regulations, focusing on industry profits without considering significant negative impacts. This policy brief address and counters the administration's cost savings claims and demonstrates that they should not be taken at face value.
The U.S. Environmental Protection Agency (EPA) is considering a new policy that would prohibit the agency from issuing regulations that rely on studies whose underlying data are not publicly available. While the EPA claims it is pursuing this policy in the interest of transparency, we argue that such a prohibition would greatly hinder, rather than help, the rulemaking process and would likely result in undesirable regulatory outcomes that fail to maximize economic welfare.
Why Withdrawing the 2022-2025 Standards Is Economically Flawed
The Environmental Protection Agency sets greenhouse gas emissions standards for cars and light trucks, and it periodically reevaluates these standards to make sure that car manufacturers can comply. In April 2018, EPA withdrew its previous determination that standards for model year 2022–2025 vehicles were appropriate and would improve public welfare, now saying that more recent information suggests that the standards are too stringent. Our policy brief shows that EPA’s claim—that new information indicates that the assumptions underlying the previous determination are unrealistic—is not supported by the evidence. In fact, the opposite is the case. Recent trends in fuel prices, vehicle sales, automaker compliance, and safety all indicate that the existing 2022–2025 standards can be met at low cost while delivering large benefits to consumers and the economy. EPA’s decision to withdraw the standards will instead cause regulatory uncertainty that will hurt the automotive sector while also harming the environment.
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