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Thursday, May 10, 2007

Cost-Benefit Language Inserted in Fuel Economy Bill

Monday, the Senate Commerce Committee sent a vehicle fuel economy reform bill to the floor. The bill would do some good by providing more information on fuel efficiency to car buyers and increasing funding for our national fuel economy program — the Corporate Average Fuel Economy (CAFE) standard run by the National Highway Traffic Safety Administration (NHTSA).

However, the bill would also mark a shift in the legislative view of vehicle fuel economy — from protecting the environment and strengthening national security to making economic factors a paramount consideration.

The legislation (S. 357) originally set a standard based on national need. However, amendments in committee (from Sens. Daniel Inouye (D-HI) and Ted Stevens (R-AK)) inserted a cost-effectiveness provision which could allow NHTSA to undermine the entire program.

NHTSA may promulgate a weaker standard if the statutorily mandate standard "is shown not to be cost effective." Yes, stricter fuel economy standards will impose costs on automakers which will then be passed on to consumers. But what about all the intangible benefits? Although the legislation would instruct NHTSA to consider benefits like "national security" and "human health," NHTSA will not be able to monetize them. The cost-effectiveness provision does no good, and only serves to provide the current and future administrations with an opportunity to give breaks to industry.

America's enormous appetite for fuel makes us beholden to foreign exporters, and increasing emissions accelerate global warming and jeopardize public health. Americans do not have a choice in dealing with these dangers — neither should NHTSA.

For more on the bill, visit Public Citizen.