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CORPORATE AVERAGE FUEL ECONOMY (CAFE) STANDARDS

There are many injuries on American roadways because national fuel economy standards raise the price of cars, disincentivizing people from purchasing newer, safer vehicles.

Congress requires the Secretary of Transportation to set national fuel economy standards for new motor vehicles sold in the United States. This mandate was established in the Energy Policy and Conservation Act of 1975 (EPCA),6 a law passed in the wake of the Arab oil embargo to promote greater energy efficiency and lessen the national security threat of U.S. dependence on foreign oil.

The statute directs DOT to prescribe the “maximum feasible” mileage requirements for different categories of internal-combustion engine (ICE) automobiles for each model year. The standards must be achievable using available ICE technologies running on gasoline, diesel fuel, or similar combustible fuels and must not be set so high as to prevent automakers from profitably producing new vehicles at sufficient volume to meet consumer demand.

Congress recognized that the ICE-powered automobile has been instrumen- tal to advancing the mobility and prosperity of the American people and that the domestic mass production of new ICE vehicles generates millions of jobs and remains critical to the overall health of the U.S. economy and the strength of the nation’s industrial base. Accordingly, Congress took care to ensure that the mileage requirements issued by DOT would not undermine the vitality of America’s auto industry or interfere with the market economics that drives consumer demand for new vehicles.

This rulemaking authority, which has been delegated by the Secretary to the National Highway Traffic Safety Administration, is exclusive to DOT. EPCA expressly preempts states from adopting or enforcing any different requirement “related to fuel economy standards” for new motor vehicles. While the statute instructs DOT to consult with the Department of Energy and the Environmental Protection Agency (EPA) in formulating its standards, no other federal agency, including EPA, has clear authority to set fuel economy requirements in place of NHTSA. The Clean Air Act7 gives EPA general authority to establish emissions limits for new motor vehicles for air pollutants that are found to pose a danger to humans. However, there is no reason to believe Congress ever contemplated that EPA’s authority to address automotive air pollution might be used to displace or supersede NHTSA’s fuel economy mandate under EPCA.

Congress chose to assign the power to set fuel economy standards to DOT rather than EPA. This was not only because DOT understands the technologies and economics of the auto industry, but also because NHTSA is the nation’s leading motor vehicle safety regulator, and Congress sought to ensure that fuel economy requirements would not adversely affect highway safety. Unfortunately, the Biden Administration has flouted these statutory limitations in nearly every respect. The predictable result is higher expected transportation costs for Americans.

Moreover, and contrary to Congress’s design, the Biden EPA has been given preeminence in the regulation of fuel economy through the setting of carbon dioxide emissions limits for new motor vehicles under the Clean Air Act. Because carbon dioxide emissions levels correspond to mileage in automobiles powered by fossil fuels, these EPA rules are de facto fuel economy requirements that apply independently of NHTSA’s standards. The Biden Administration has also granted California a special waiver under the Clean Air Act that permits the California Air Resources Board (CARB) to issue its own fuel economy directives, notwithstanding EPCA’s prohibition on state standards. Under this waiver, CARB has ordered automakers to phase out the sale of ICE-powered automobiles in California and transition to the production of zero-emission vehicles by 2035. The Clean Air Act allows other states to follow California’s requirements; thus, CARB is effectively determining fuel economy policies for the entire nation. As a result of these regulatory actions, automobiles will be significantly more expensive to produce, there will be fewer affordable new vehicle options for Amer- ican families, and fewer new vehicles will be sold in the U.S. That will do more than

In pursuit of an anti–fossil fuel climate agenda never approved by Congress, the Biden Administration has raised fuel economy requirements to levels that cannot realistically be met by most categories of ICE vehicles. The purpose is to force the auto industry to transition away from traditional technologies to the production of electric vehicles (EVs) and compel Americans to accept costly EVs despite a clear and persistent consumer preference for ICE-powered vehicles. In further support of this agenda, federal regulators administer a scheme of generous fuel economy credits that subsidize EV producers such as Tesla at the expense of legacy automakers.

translate into a loss of auto industry jobs for American workers: It will also mean a significant increase in traffic deaths and injuries. As fewer new cars are purchased, the price of used cars will rise, and more Americans will be left driving older cars, which traffic statistics show are much less safe than newer vehicles. NHTSA itself has acknowledged that the Biden Administration’s fuel economy standards will generate hundreds of additional fatalities and thousands of additional injuries on U.S. highways. Because older cars also produce more harmful air pollution, the aging of America’s fleet will also have negative consequences for air quality. In addition, the Biden Administration’s efforts to accelerate EV sales by reg- ulatory fiat work against the national security interests of the United States in contravention of Congress’s goals under EPCA. Increasing the production of EVs will make the U.S. more dependent on China and other foreign countries that control the supply and processing of rare earth minerals that are needed for EV batteries. And the faster deployment of EVs will put a major strain on America’s vulnerable power grid, requiring large investments in critical infrastructure and a big boost in the nation’s electricity production, including from gas-fired and oil- fired power plants.

In exchange for all of these harmful effects—on traffic safety, consumer choice, American jobs, the nation’s air quality, and U.S. national security—the Biden fuel economy regulations are predicted to have no meaningful effect on global tem- perature trends over the long term.8 The next Administration must return the federal fuel economy program to the limits established by Congress. The standards issued by NHTSA must be reset at reasonable levels that are technologically feasible for ICE automobiles and con- sistent with an increase in domestic auto production and healthy growth in the sale of safer and more affordable new vehicles. To achieve these goals, the next Administration should:

Reduce proposed fuel economy levels. The Administration should consider returning to the minimum average fuel economy levels specified by Congress for model year 2020 vehicles: levels aimed at achieving a fleet-wide average of 35 miles per gallon. Consideration should be given to maintaining the standards at those levels for the near term in order to promote the objectives laid out by Congress.

Ensure that DOT again exercises priority in the setting of fuel economy standards. Any EPA limits on carbon dioxide emissions, even if authorized under the Clean Air Act, must support and work in harmony with DOT standards and must not override them or usurp DOT’s regulatory role under EPCA. For example, EPA could regulate air conditioning systems and leave engine standards to DOT.

Revoke the special waiver granted to California by the Biden Administration. California has no valid basis under the Clean Air Act to claim an extraordinary or unique air quality impact from carbon dioxide emissions, and EPCA is clear that under no circumstances may a state agency regulate fuel economy in place of DOT. The federal government should therefore exercise its preemptive authority over CARB and take all steps necessary to invalidate any inconsistent fuel economy requirements imposed by CARB, including its ban on sales of internal combustion engines.

FEDERAL HIGHWAY ADMINISTRATION

Seek to refocus the FHWA on maintaining and improving the highway system. Remove or reform rules and regulations that hamper state governments. Reduce the amount of federal involvement in local infrastructure decisions.

The Federal Highway Administration (FHWA) has jurisdiction over the inter- state highway system, which is vital for the transportation of goods and people throughout the country. The FHWA, in conjunction with state DOTs, works to ensure the quality and safety of highways and bridges. However, over the course of decades, presidential Administrations and Con- gress have caused the FHWA to go beyond its original mission. The variety of infrastructure projects now eligible for funding through the FHWA include fer- ryboat terminals, hiking trails, bicycle lanes, and local sidewalks. In many cases, such projects should be the sole responsibility of local or state governments, not dependent on FHWA funding. For local projects, federal involvement adds red tape and bureaucratic delays rather than value.

The Biden Administration has broadened the FHWA’s scope by emphasizing the priorities of progressive activists instead of pursuing practical goals. These policies include a focus on “equity,” a nebulous concept that in practice means awarding grants to favored identity groups, as well as imposing obligations on states concern- ing carbon dioxide emissions from highway traffic—areas not encompassed within FHWA’s statutory authorities. Furthermore, the Biden Administration’s embrace of the “Vision Zero” approach to safety often means actively seeking congestion for automobiles to reduce speeds. Finally, the Administration has sought to use a “guidance memo” to impose policies not enacted by Congress, most notably to make it harder for growing states to expand highway capacity. Instead, the next Administration should:

AVIATION

Americans value the ability to travel safely and inexpensively by air. In the United States, the private sector has developed the world’s safest, most effective passenger and cargo air transport networks. Current policies threaten to undo that legacy and to strangle the development of new technologies such as drones and “advanced air mobility,” including small aircraft to serve as air taxis or to conduct quiet vertical flights.

Starting in the 1970s, deregulation and increased competition turned air travel from a luxury to an affordable travel option enjoyed by most Americans. The United States has four major airlines, each with roughly 20 percent of the domestic market. They compete with each other over the vast majority of routes. Several smaller carriers provide additional competition and other options for travelers. The current Administration’s policies are self-contradictory. In order to pla- cate specific labor groups, the Biden Administration not only opposes the growth of the major airlines, which would reduce the price of air travel, but also opposes measures—such as low-fare foreign competition and joint ventures of smaller U.S. carriers—that would increase competition. Another problematic area is aviation consumer protection. Congress has autho- rized DOT to prohibit specific “unfair and deceptive practices” in the airline industry after undertaking a hearing process—authority exercised by the Office of Aviation Consumer Protection within the General Counsel’s Office. Beginning with the Obama Administration, this authority has been used to justify broad new regulations—in the name of achieving “fair” competition—that would impose burdensome disclosure mandates and other costly requirements without a sufficient process for gathering supporting evidence. The Trump Administration reformed the process for issuing such “unfair and deceptive practices” rules,9 but the Biden Administration promptly reversed those reforms.10 A new Administration should restore them. In general, the next Administration should focus its efforts on making air travel more affordable and abundant, increasing safety, increasing competition to benefit the flying public, and removing obstacles to the rapid deployment of emerging aviation technologies that hold the promise of improved safety, compe- tition, opportunity, and growth. To achieve a more level playing field and increase options for the traveling public, the next Administration should:

Publicly indicate that a new Administration would support joint- venture efforts by smaller carriers (for example, Jet Blue and Spirit) to achieve scale necessary to reduce costs and compete more effectively with the larger carriers.

Review foreign ownership and control limitations and, if necessary, work with Congress to change existing statutes. Worldwide investors are providing access to capital to foreign airlines for innovations and new equipment purchases that U.S. airlines cannot match. The U.S. should use the Committee on Foreign Investment in the United States (CFIUS) process to keep out nefarious foreign actors while allowing investment from investors in designated like-minded countries so long as U.S.-based investors maintain plurality ownership.

Establish a New Entry Initiative that commits the federal government to approving or rejecting the applications of new air carriers within 12 months. Initiate a rulemaking to allocate slot-pairs more consistently to airlines at capacity-controlled airports on the primary basis of safety, maximizing capacity, and competition.

In a perfect world, the market would dictate these options, but in the highly regulated international aviation sector, the current incentives are to keep out com- petitors. Slot regulations have not been updated since the 1990s. Well-meaning legislation and the pilot shortage are adversely affecting aviation safety. In the wake of the 2009 Colgan Airlines crash, all commercial pilots and copilots were required to have 1,500 flight hours. Today, facing a pilot shortage, larger and safer twin-engine planes with two pilots are being phased out of service at smaller airports and replaced by single-engine planes that have only one pilot. This trend could be reversed if copilots were required to have fewer flight hours or could count certified simulator training.

Federal subsidies are also distorting the commercial market. The Essential Air Service (EAS) program subsidizes flights to 200 small airports that are not otherwise commercially viable. The program was established in the 1970s as a temporary measure to cushion deregulation. It has since been made permanent. Finally ending the program would free hundreds of pilots to serve larger markets with more passengers. A new Administration could reform regulations to encour- age airports in lower-served areas of the nation.

International air travel is regulated and restricted by individual treaties between the United States and other countries. The new Administration should remain committed to the laudatory goal of “Open Skies.” However, many of the largest emerging markets are not fully open, and our aviation policies should reflect that reality and ensure that U.S. air carriers compete on a level playing field. Specifically, so long as U.S. carriers are not able to fly over Russian airspace, the U.S. should not allow foreign carriers serving markets in East Asia and South Asia to enjoy a com- petitive advantage by continuing to allow them to fly to the U.S. China has failed to put in place several of the policies to which it has already agreed; the U.S. should not offer additional negotiations until the Chinese implement the agreements they have already signed.

The current Administration’s policies in several areas that affect aviation and limit America’s future opportunities for growth are internally inconsistent. In addition to a New Entry Initiative, the new Administration should establish an interagency clearinghouse to drive consistent policies across the government on spectrum, drones, and advanced air mobility.