EPA’s Collusion with the Auto Industry

President Trump is constantly asserting that his election campaign did not collude with the Russian government, and while his assertion may be questionable, there is no question that EPA Administrator Scott Pruitt is colluding with industry to deregulate our environment. Colluding can be defined as conspiring to deceive, and while Pruitt is quite open in his effort to reduce regulation, he argues that deregulation will not impair environmental quality. That is deceptive and total nonsense. I assume he must know that deregulation will degrade the environment but has concluded that in this fact-challenged era he can say anything and get away with it.

The latest example of EPA’s capture by industry was reported in the Wall Street Journal last week. According to the Journal’s Mike Spector:

“The Environmental Protection Agency has tentatively concluded that future vehicle emissions standards should be eased, a decision long lobbied for by car companies that argued looming regulations are too stringent and need revision. The EPA has drafted a so-called final determination that outlines arguments for relaxing standards requiring auto makers to cut emissions enough so vehicles sold average more than 50 miles a gallon by 2025, said a person familiar with the matter.”

The auto industry’s main argument for relaxing the standards is that people want big cars and big cars use a lot of gasoline. This is the same industry that argued that seat belts, airbags and catalytic converters would destroy their business. The American auto industry’s lack of strategy and imagination nearly led to its destruction in the recession of 2008 and continues to threaten it today.

Yes, people like big cars, but they don’t like to pay for terrible gas mileage. Americans would be happy to get more than 12 miles to the gallon. Perhaps one of our auto giants could build an SUV that gets better gas mileage, or maybe one might engineer an electric SUV. Over the past half century, the regulatory requirements for auto safety and environmental performance have forced the auto industry to hire engineers and scientists that have not only made vehicles lighter, safer and more efficient, but they have added computer-driven technologies not required by law that have advanced the fundamental design of motor vehicles. Electronic controls have replaced mechanical moving parts, enhancing the reliability of motor vehicles. Hi-tech features have enhanced the experience of being in a new automobile. Regulation tends to force technological innovation, and that innovation makes the American motor vehicle more globally competitive, not less.

But auto industry lobbyists do not get paid to advance regulation; they get paid to incite fear and prevent government from developing new rules. As Spector reports:

“Auto makers contend that complying with the current standards would ultimately cost them $200 billion and threaten jobs. Vehicle prices could also rise, leading consumers to keep older automobiles that pollute more longer, the companies argue.”

This is the same tired argument these folks rolled out when they opposed seat belts. They always argue that “job killing regulations” will harm workers and consumers. Tell that to the parents in the auto showroom asking the salesperson about the safety features of the car. Many of them are more than willing to pay a little extra to protect their children from harm. Tell that to the workers employed making seat belts and air bags. People like big cars, but they’d like them more if they were fuel efficient, safe and cost less to run. The auto industry should give their engineers the resources to innovate and encourage them to achieve the goals set in the regulations. They may be pleasantly surprised by the results.

Then there is the issue of California’s air pollution standards. Since the Clean Air Act was enacted in 1970, California has been permitted to develop air pollution control standards for motor vehicles that are more stringent than federal regulations. Under the Obama Administration, California and the federal government agreed to adopt similar standards, enabling the auto industry to build a single vehicle for the entire American market. Trump and Pruitt are clearly targeting California’s air pollution rules and doing this amounts to a backdoor repeal of the Clean Air Act. Robinson Meyer in a recent Atlantic Magazine article detailed the threat to California’s rules and provided this background on the history of the issue:

“California is written into the Clean Air Act by name: At any time, it can ask the EPA administrator for a waiver to restrict tailpipe pollution more stringently than the federal government. If its proposed rules are “at least as protective of public health and welfare” as the EPA’s, then the administrator must grant the waiver. This power is reserved alone for California, and it only covers pollution from cars. No other state can ask for a waiver. (In all of federal law, this might be the only time that a specific state is given special authority under such a major statute.) Under the same provision, any other state can choose to adopt California’s more stringent standards. Fifteen states currently opt for the tougher rules, including Georgia, Pennsylvania, North Carolina, and the entire New York metro area. This means that California’s rules actually cover 135 million people, more than 40 percent of the U.S. population.”

Given the specific statutory basis for California’s rules, any effort to eliminate their powers would require a change in the Clean Air Act that I do not believe Congress will ever support. Any attempt by Trump and Pruitt to circumvent the statute would result in extensive litigation, uncertainty and probably a win in court for California.

The political support for environmental protection remains widespread and bipartisan. This is especially true for air pollution, because as I often say, “people like to breathe.” They’ve gotten used to it and would like to continue. We saw environmental protection’s political support in last week’s bipartisan budget deal. Trump and Pruitt proposed cutting EPA’s budget by 30 percent, but Congress provided the same $8.1 billion budget the agency is currently operating under. Through administrative action and inaction Pruitt can choose to spend less, but the mandate to cut has been eliminated, and the effort to destroy EPA will need to resume with the slow, incremental path currently underway.

The Trump Administration and the auto industry seem to believe that government is an impediment to the success of the auto industry. It’s interesting that the industry did not make that argument during the Great Recession when they flew on their corporate jets to Washington to beg for a taxpayer bailout. I can look past the self-interest and hypocrisy, but the lack of imagination and poor understanding of the modern global economy is harder to dismiss. America has been built around personal transit. Other than the energy industry itself, no single industry is more important for America’s transition to a renewable resource-based economy. We need motor vehicles to develop and utilize cutting edge technologies. We need more Tesla and less GM.

President Trump’s advocacy for mid-twentieth century businesses like coal, steel and oil is a clear indication that he does not understand the service and technological basis of wealth in the twenty-first century. To remain competitive we must advance technologically, and that progress must be encouraged throughout our economy and throughout our society. The new budget restored Trump’s proposed cuts in scientific research and even added new resources for science. At least some of our representatives in Congress understand the relationship of science and technology to economic growth.

American industry reflexively resists regulation and is finding the Trump Administration more than willing to work closely with them to eliminate rules. This is short-sighted and may impair America’s environmental quality and global competitiveness. EPA’s collusion with the auto industry will do little to advance Scott Pruitt’s political ambitions and even less to promote America’s motor vehicle business.