Based on a recent court ruling and the law, the Competitive Enterprise Institute (CEI) says updated nationwide corporate average fuel economy (CAFE) standards imposed by U.S Environmental Protection Agency (EPA) in December 2021 relied on an invalidated metric.

Because of this the CEI filed a formal request in February with Michael Regan, EPA administrator, to place the new standards on hold and reconsider them.
The new CAFE standards, which apply to vehicles from model years 2023 through 2026, restore and extend greenhouse gas and fuel economy rules for cars and light-duty trucks, requiring a 5 percent per year increase in fuel economy, first developed under President Barack Obama. Under President Donald Trump, EPA revised those standards downward, setting an annual increase for average fuel economy of 1.5 percent through 2026, rather than 2025 as Obamaâs rules did. The EPA has now reversed course again, reinstituting the 5 percent annual increase through 2026.
No âsocial cost of carbonâ
Four individuals joined CEI in challenging the new CAFE standards based on a ruling issued days earlier by U.S. District Judge James Cain that the âsocial cost of carbonâ (SCC) evaluation relied upon by EPA to justify the final rule is likely unlawful and cannot be used by EPA officials in making policy.
The SCC evaluation was the product of the Interagency Working Group (IWG) on the Social Cost of Greenhouse Gases.
Specifically, Cain barred the EPA, the IWG, and other federal officials and agencies from relying not just on the work product of the IWG but also its methodology considering global effects, discount rates, and time horizons. Cain further required these officials and agencies to âreturn to the guidance of EPAâs 2003 Circular A-4 in conducting any regulatory analysis.â
Cainâs injunction also bars executive agencies from adopting, employing, treating as binding, or relying (in any way) upon any estimates of âsocial cost of greenhouse gasesâ based on global effects or that uses discount rates other than the 3 and 7 percent rates authorized by Circular A-4.
Cain also prohibited defendants from relying upon or implementing Section 5 of President Bidenâs Executive Order 13990 âin any manner.â Section 5, entitled âAccounting for the Benefits of Reducing Climate Pollution,â states â[i]t is essential that agencies capture the full costs of greenhouse gas emissions as accurately as possible, including by taking global damages into account.â
The law requires reconsideration
CEIâs petition points to statutory language in the Clean Air Act requiring the EPA administrator to convene a proceeding for reconsideration of the rule âif the grounds for [objecting to a final rule] arose after the period for public comment (but within the time specified for judicial review) and if such objection is of central relevance to the outcome of the rule.â
CEIâs letter cites EPAâs own admission that its fuel economy standards rely on the IGWâs estimates of the âglobal social benefits of CO2, CH4, and N2O emission reductions.â
Those improperly used calculations produced alleged global climate benefits that dwarf non-emission benefits.
If the EPAâs cost-benefit analysis were to be corrected in accordance with Cainâs order, using a 7 percent discount rate, CEI contends the result would show a net harm, not a benefit, from implementing the stricter fuel economy standards.
Moreover, CEI contends, as long as Cainâs order stands, the EPA cannot legally implement the new standards even if it ignores the IGW social cost of carbon assessments.
âEstimates Are Too Speculativeâ
Cain was right to block the use of the SCC which was built on flawed assumptions and improper methodologies, says Marlo Lewis, Jr., a senior fellow at CEI.
âWhatever its value as an academic pursuit, the SCC estimates are too speculative and assumption-driven to inform policy decisions,â said Lewis. âIndeed, the SCC estimates are easily manipulated for political purposes.â
âThe Obama, and now Biden, IWGâs process for estimating climate-related externalities is a case in point,â said Lewis. âAll of the IWGâs methodological decisions have the effect of increasing SCC values, to name a few, the use of below-market discount rates, an analysis period extending far beyond the limits of reasonable speculation, outdated climate sensitivity assumptions, unscientific depreciation of CO2 fertilization benefits, unjustified pessimism regarding human adaptive capabilities, implausible âreturn to coalâ baseline emission scenarios, and net-benefit calculations that misleadingly compare domestic costs to supposed global benefits.â
âFuel Economy Mandates Should Endâ
CAFE standards are obsolete and should be abolished, says Timothy Benson, a policy analyst at The Heartland Institute.
âCAFE standards were created by the Energy Policy Conservation Act in 1975 in direct response to the oil embargo imposed by OPEC in 1973, a problem that is no longer a problem, and wonât be one again,â said Benson. âMoreover, car and light-truck emissions in the United States account for only roughly 1.5 percent of all human-caused greenhouse gas emissions, a fraction that will become even smaller as emissions from developing countries rise.
âThese standards add thousands of dollars to the price of new cars and increase the price for used cars, for no significant environmental benefit,â said Benson. âThe idea that consumers can be made better off by restricting their freedom to choose, the presumption that lies at the bottom of all proposals to impose or raise CAFE standards, is falseâgovernment enforced fuel economy mandates should end.â
This piece originally appeared at HeartlandDailyNews.com and has been republished here with permission.