We’ll Cut Them Off at the Pass

Yesterday, Sheriff California and his posse of 14 other states fought a dramatic gun battle with sued the Environmental Protection Agency for denying approval of their 2002 state law mandating tough emissions standards. Since 2002, the California law has been tied up in court battles by various auto company lawyers. Federal courts (in California and Vermont Rulings) and a Supreme court ruling have given CA and co. the go-ahead- only the EPA “special waiver” on environmental laws was lacking. The EPA’s delayed the waiver for years, and finally rejected it a couple weeks ago, right on the heels of the Energy Bill passage.

Now, as you recall, the Energy Bill raised federal emissions standards (less and slower than the standards required by CA in 2002), and the EPA decided to deny CA the right to set its own state’s emission limits based on the idea that, by gum, if the Energy Bill is good enough for America, it’s good enough for California, dagnabbit. From the article linked above:

“We now have a more beneficial national approach to a national problem,” the agency said in a statement in response to the California suit.

That would be a blatant lie, actually- the CA rules are by far more environmentally beneficial, and would also be more beneficial to the nation. There are a lot of cars in CA.

The new U.S. energy law would require autos average 35 mpg by 2020, a 40 percent efficiency increase that could cut greenhouse gasses by 30 percent. The California law would boost mileage goals to more than 40 mpg by 2016…

“The new fuel economy law enacted in December expressly preserves California’s right to go farther under the Clean Air Act. It sets a floor, not a ceiling,” said David Doniger of the Natural Resources Defense Council, an environmental advocacy group.

Also, I thought states had rights? Aren’t Republican administrations supposed to love those things? I’m genuinely confused about this- we passed the 10th amendment for a reason.

The EPA has been allowing CA to have cleaner and stricter laws than the rest of the country for years- this is the first time their request for a waiver from the Agency has been denied. The denial was issued against the recommendation of the Agency’s own staff (as if they don’t have a staff for a reason). So, why? Why this hemming, hawing, indefensible denial?

(I have no constructive ideas- I’m getting stuck on “Because they’re total jerks” or “Because they just hate to see happy hippies” and that’s not helpful.)

Congress will be investigating, but I’m saving my optimism for the new court ruling. CA’s law has been through more court appearances than Britney Spears (or not), but unlike Ms. Spears, it’s gotten through them unscathed. Based on the “floor, not ceiling” nature of the Energy Bill emissions standards, the 10th Amendment, and the EPA being all sorts of sketchy about this, it looks like they have a pretty durn-tootin’ good case this time, too.

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10 Responses to “We’ll Cut Them Off at the Pass”


  1. 1 Mrcalculo January 4, 2008 at 2:21 pm

    How do you know the CA program is better than the National program without comparing their costs?

  2. 2 virescent January 4, 2008 at 8:27 pm

    Heh, loaded question, Calc. What costs, costs to whom, and how do we weigh different types of costs against each other? Here’s how I figure it.

    In 2002, CA passed the law giving car makers 7 years to begin reducing tailpipe emissions, with an end goal of something like 40% by 2016. This would be accomplished by a tiered increase to +30$ in average fuel economy across a few different auto types, for example to 43 mpg for passenger cars by 2016 (stats above, and at http://www.detnews.com/apps/pbcs.dll/article?AID=/20071109/AUTO01/711090350, and http://en.wikipedia.org/wiki/California_Air_Resources_Board#Legislation). The US law, passed in late 2007, would have an increase across a whole bunch of different auto types, to an average of 35 mpg for the whole fleet except some of it by 2020. Disparity in timelines can be accounted for by the 5 year gap between the bills’ passing. CAs bill actually gave car companies more time, but expected lower emissions for that time given. So, both bills do kind of basically the same thing, and they will have similar costs.

    OK, so who pays for that? Car companies, since they need to change their car designs, whip up some innovation, maybe change some manufacturing plants, and pay all the lawyers to sue CA. Citizens, since they’ll be charged higher prices for the better cars. And Governments, state and federal, might spend a little more in oversight.

    Ok, now the anti-costs. Who benefits? Car companies, since they’ll finally develop and implement the technology to make better cars that citizens and probably the rest of the world would want, and once they get it done they can save up by firing the lawyers. Citizens, because they’ll save on gas in the long run, and they won’t be breathing in all those pollutants, and they won’t be releasing as much CO2 into the air. All the the cute furry and creepy crawly and other living things- cleaner air, cooler planet. Government, since they’ll have a viable car industry to tax, and an economy that is based on innovation, not stagnation.

    Both plans have all those costs and benefits (and I bet many I missed, but I hope I got the big ones), but since the CA plans offers more total benefits, sooner, it’s the better plan. To design the cars for CA and the 14 other states, the car industry would have to work at the same rate as they would if they were obeying the national guidelines now, but they’d be further along at the end- fewer pollutants, less gas used, more savings for all.

    Me, personally, I weigh the pollution saved and innovation generated much higher than I do the “cost” of putting money into research. What’s your take?

  3. 3 MrCalculo January 5, 2008 at 1:52 pm

    I dont think it is a loaded question. What bothers me about the environmental movement in general is that environmental advocates do not give the costs of their programs in any normal way. Usually, as in your post above, it is deemed adequate to cite some gains from a given policy proposal as a reason to do it. I want to see numbers.

    When I say costs, I mean costs in the most general sense; add up the costs to everyone in society. In general, I do think most of the costs will actually be passed on to consumers. In a competitive environment (and the auto industry is very competitive), there are not large profit margins to absorb the cost of added regulation so prices have to go up. I am sure someone with far more knowledge than me could make an estimate for the total cost to people in CA, and this is the number that you should cite.

    Further, there are other, hidden costs to regulations. Lets say, for the sake of argument, that the cost of the above regulation is about 5 billion dollars. Could we spend that 5 billion in a way the helps more? My guess is that we could, and it is a debate that should be had. You cite better breathing air, lower global temperatures, etc as environmental gains. How much cleaner will the air be? How much lower will global temperatures be? I also do not know these numbers, but introspection tells me that since CA must account for quite a small share of total global pollution, the environmental impact will be muted.Fundamentally, such a number is very hard to calculate with any certainty. Another year of growth in China probably swamps any gains though. So does it make sense to spend 5 billion dollars on the gain we would get? Could we spend the same money and get more environmental bang for our buck through other methods? Is the environment the most important thing to spend all 5 billion dollars on? Why not feed poor people, or provide better healthcare?

    In addition, I do not trust you assertion that consumers will benefit in the long run. I cant see how you or I could know enough about the situation to determine that. It seems to me that if people already wanted “better” cars (there is a good example of begging the question with your phrasing) car companies would provide them. I conclude that people care less about efficient cars than you think they should, but I see no reason to assume your preferences are the right ones.

    There is no way car companies are better off under either plan. If they were, they could just pretend like the plan is in place even if there were no law. The fact that someone has to force them to change is a strong argument that they are going to be hurt by the increased regulation.

    I have so far discussed the costs of the programs in general, but one would ideally want to do this analysis across a range of policy proposals and pick the best one. I do agree on state’s rights grounds that this sort of thing should be left up to states in most cases; I was merely challenging your analysis that says CA has made the right decision.

    There are some interesting posts on this very debate at one of my all-time favorite blogs, volokh.com.

  4. 4 virescent January 6, 2008 at 3:42 pm

    On its surface, the question appears to not be loaded- but we have entirely different sets of assumptions on how to measure and weight and act on these costs (as we are quickly pointing out to those reading). So yes, it’s packed with all sorts of traps for both of us. (For the readers- Mrcalculo and I have been friends and having debates of this nature for many years, so it’s cool! we’re friendly still! we can call each other wrong all day then move on to more important stuff, like what we had for dinner!)

    What bothers me most about economists is that you demand Perfect and Complete information, and will not act until you get it. My second pet peeve with the econ types is that you see no gain in anything until a dollar value can be placed upon it by some Authority.

    I think the biggest costs of this will be borne by the auto industry at first, until (we agree on this) they are passed straight to the consumer. You asked me to compare the costs of the CA program to the costs of the national program (and let’s go ahead and assume that by “CA program” we mean “CA and similar programs of 14 other states”). Building better cars for CA will require similar innovations and some manufacturing changes for car companies as building better cars for the entire nation would, but since fewer of the better cars would need to be built, fewer manufacturing changes would need to be made. So, slightly smaller cost to Auto Companies, and then passed on to consumers who buy new cars in 15 very populous states, plus where ever else they decide to sell them (manufacting costs rise as production increases, of course). My point is, we get the innovation we so desperately need whether the feds or the CA program takes place, we get it faster from CA, and the car companies can manage their production to keep costs lower for a bit with the CA program. Under my calculus, the CA program wins, since the most important thing to me is that innovation and manufacturing changes occur, cars get much more efficient, much more quickly, plus look, the other costs are all about the same.

    I’m not going to spend my day estimating the percentage of population in these states, the cost of innovation in this industry given that these more efficient cars are already being built by some companies, the percentage of people who buy new cars, the percentage of people who won’t buy new cars if they cost more, and all the other numbers I need to give you the data you desire: I have things to do, and the relative cost analysis does quite well to satisfy me, and the rest of the world that doesn’t have an econ degree (speaking of assumptive speech, this is the “normal way” people estimate costs).

    Ok, environmental benefits, measuring of. There are also numbers on how many cars there are in CA+14 other states, how much they produce carbon, what percentage of carbon emissions for the us this is, and on and on and on. CA, with its huge population, and the 14 other states, some of which are more populous than others, together might not with their regulations change emissions more than a few percentage points. But if the cars are made for those people, other people will then be able to buy them. It is a fallacy to limit any potential impact of better car technology to merely the states that mandate their existance- car companies have this product that people can use, why wouldn’t they sell them to other places? You’re correct, we can’t calculate the numbers of the impact with any certainty, but that is no reason to dimiss the impacts: we know that it can only be larger than we can predict, especially given how big an issue this is perceived to be by so many people all over the world. The CA program pushes us in the right direction more than the national program, so its impact can only be larger than that of the National program over time. Thus, again, it’s better.

    Re your comparisons of money spent on this to money spent on Other Good Works. I thought we’d agreed that most of the cost would be eventually borne by the consumer, so this is a weird comparison: give people a choice of spending 3,000 extra on a car, or giving 3,000 straight to a food bank. I bet most would pick the car. People spending their own money each get to pick this cost for themselves, we can’t tell them to spend their money differently. Maybe you’re talking about an additional, mysterious, hidden cost borne entirely by a government- should they take the hidden cost or the give the money to China so they’ll clean up a coal plant or two? Also, if we’re worried about hidden costs, what about the hidden benefits? Are we ignoring those, because they’re as hard to calculate as hidden costs? Go ahead and run all the numbers for all the possibilities for all the money government could spend, then let me know what costs the least to do the most Good. Meanwhile, I’d like CA to be able to implement their law, which they have planned and researched already, and decided is the best use for their money (the national law has been enacted too, the CA program doesn’t by any means hinder that, so we only really have to pick “both” or “feds”).

    When you give me your results, I’ll have some actual Good done to show you. People with more experience and insight than either of us have done the math on this, and it works for them- let them do their thing. What’s the worst that could happen? I mean, it’s just California, after all, they’re going to act all crazy with their granola no matter what we do.

    Also, yes, when I talk about better cars from this law that’s assumptive speech, but all else being equal, cars that use less gas to go more places and emit fewer emissions while they do it makes a better car, and I hope we can agree on that.

    Point me to some Volokh posts on this?

  5. 5 virescent January 10, 2008 at 2:44 pm

    A clarification of the emissions numbers, EPA vs California. California wins, despite misleading EPA claims.

    http://dotearth.blogs.nytimes.com/2008/01/09/faulty-epa-climate-math-on-california-car-plan/

    Includes a summary of and link to the numbers , which put emissions savings under the CA plan at 75% more than under the federal plan.

  6. 6 Mrcalculo January 15, 2008 at 1:06 pm

    “What bothers me most about economists is that you demand Perfect and Complete information, and will not act until you get it. My second pet peeve with the econ types is that you see no gain in anything until a dollar value can be placed upon it by some Authority.”

    If any economist demands perfect and complete information in all cases he is a fool. Some of the most important research in economics over the last 50 years has been in cases were there is not perfect and complete information. The market for lemons, Bayesian game theory, and most realistic microeconomic models are all salient examples.

    No, economists do not demand perfect and complete information. Instead, we demand, or at least should demand, as much information as possible, sensible estimates where not possible, and a degree of humility about what we can and can’t measure. I am not saying we should not act until we know everything, I am instead saying that before we act we should have as good an idea as we can about our actions and what options we are giving up by taking them.
    On to humility. Part of this is recognizing that even the most well-informed researchers or policy makers are fairly poorly equipped to determining the total cost/benefit analysis of most major policy decisions. The market may contain a lot of information aggregated across thousands of engaged participants, and in lieu of a strong counterargument, my default is to trust what the market says more than what any one person or group of people say (especially when they do not personally have to bear the costs of their actions). For instance, how do we determine how much worse off people are when we make them drive smaller cars? Some aspects of this we can tell pretty easily, and we may even be able to quantify the benefits. However, the fact that people must be told to drive smaller cars should tell us than on net we are making them worse off. I am reluctant to override personal decisions faced with this kind of evidence.

    Healthy skepticism of any authority is a good thing, but discounting authority entirely, especially the authority of the market, is a recipe for disaster.

    “My point is, we get the innovation we so desperately need whether the feds or the CA program takes place, we get it faster from CA, and the car companies can manage their production to keep costs lower for a bit with the CA program.”

    Why are you so sure you know the optimal rate of R&D in the auto industry? This seems like a hard question to answer and I trust the auto companies and consumers much more than I trust you. There are more of them, they think about this stuff more, and they have a bigger stake in the outcome.

    “I’m not going to spend my day estimating the percentage of population in these states, the cost of innovation in this industry given that these more efficient cars are already being built by some companies, the percentage of people who buy new cars, the percentage of people who won’t buy new cars if they cost more, and all the other numbers I need to give you the data you desire.”

    I am not surprised you can’t do the calculation; you are a busy girl with other things to do. It does bother me that very often no one bothers to really do the calculation. These numbers should be calculated and should be available.

    “Ok, environmental benefits, measuring of. There are also numbers on how many cars there are in CA+14 other states, how much they produce carbon, what percentage of carbon emissions for the us this is, and on and on and on. CA, with its huge population, and the 14 other states, some of which are more populous than others, together might not with their regulations change emissions more than a few percentage points.”

    Yes, but what is the benefit from that? Do global temps fall? By a significant amount? How many species are saved? Why do we care if species are saved? Is it cheaper to fight any bad effects through higher taxes and more direct action? These are all relevant questions. If you tell me that plan A reduces CO2 emissions by x percent, I have no way of knowing how much good that will do. I am not a climatologist, but my understanding is that the gains are small and uncertain.

    “But if the cars are made for those people, other people will then be able to buy them. It is a fallacy to limit any potential impact of better car technology to merely the states that mandate their existance- car companies have this product that people can use, why wouldn’t they sell them to other places?”

    I assume they would not because they cost more and people must not want the cars that much; if they did no regulation would be needed. Maybe a small number of people would want them, but the fact that they are not numerous enough to spur auto companies to develop new models independently means that the change is economically inefficient.

    “Re your comparisons of money spent on this to money spent on Other Good Works. I thought we’d agreed that most of the cost would be eventually borne by the consumer, so this is a weird comparison: give people a choice of spending 3,000 extra on a car, or giving 3,000 straight to a food bank. People spending their own money each get to pick this cost for themselves, we can’t tell them to spend their money differently.”

    I agree I made this point poorly. The idea is this. Regulations impose costs on consumers. This is equivalent to taxing them to reduce their disposable income by some amount that in principle we can estimate. So both regulation and taxation have same net effect. If, as a society, we think it is okay to reduce incomes by the amount related to the regulation in order to achieve some environmental benefit, then it is fair to ask why we would not tax people the same amount and spend the money some other way.

    “Also, if we’re worried about hidden costs, what about the hidden benefits? Are we ignoring those, because they’re as hard to calculate as hidden costs?”

    Your point about hidden benefits is a good one. If there are some, we should try to think about their magnitude and take them into account. Of course there is no way to tell in a definite sense which expenditure of public money will do the most good, so anything we do will be guess work to some degree. This uncertainty does not mean that some uses aren’t pretty clearly superior to others. Since these hidden benefits are also hard to find, I think there is even more reason to default to what the market says rather than impose regulation from the outside.

    “Also, yes, when I talk about better cars from this law that’s assumptive speech, but all else being equal, cars that use less gas to go more places and emit fewer emissions while they do it makes a better car, and I hope we can agree on that.”

    I would agree on that, but all else is not equal. These cars are more expensive, may be less safe, and by definition can’t cater to as wide a variety of tastes. Since the per mile cost of driving falls with more efficient vehicles, people will drive more, which may mean an increase in healthcare costs related to auto accidents. So I do not think it is clear that these cars are better, and since people must be forced to produce them, my guess is that they are worse.

  7. 7 virescent January 19, 2008 at 3:42 pm

    You make some excellent points about cost analysis, and I agree with you that a meaningful comparison of costs to whom and benefits is a lovely idea. Maybe some of the problem we have finding these estimates is, these cost comparisons are so easily skewed by anyone doing them- auto companies count costs to themselves as more important than consumers count costs them themselves for buying the cars and the gas to put in them, and environmental types weight emissions costs differently than other actors. So none of these analyses are going to match up, and we’re left at the same point again: once we have these cost estimates all together, how do we weight each one? Who do we trust?

    You trust the market. I don’t see any of your healthy skepticism of authority in your trust in the market. I know, you argue that it’s better to trust the amalgamation of numerous decisions and actions by numerous groups of people, as they settle on their preferences and price points, but that’s the kind of thinking that launched American Idol. If everybody likes it, it has to be the Best choice? Well, no. Perhaps we’re not after good or best choices, though, we’ve after “optimal” choices.

    The market has determined that the optimal method of functioning is based on fossil fuels, because they’re cheap. This has other implications for life that the market doesn’t take into account, but hey, if it’s not part of the market, it’s quite obviously not important. Right?

    I don’t trust the auto industry calculations and consumer calculations on this at all. First of all, the consumer calculations are entirely determined by what the auto industry provides. There aren’t that many efficient cars- hybrids of otherwise- on the market, but when there are, people buy them like delicious, buttery hotcakes. The resale values of hybrids are fantastic (I know, I did a lot of research when I bought mine used), and they don’t wait around on car lots for long. The auto industry- by this, I mean the American auto industry- sits around wringing their hands about who is going to buy efficient cars after frantically lobbying congress to not make them change a thing, and meanwhile Toyota and Honda are already selling scads of efficient cars, taking up huge chunks of sales in the US.

    Meanwhile, these very same American car makers are advertising green tinged photos of SUVs in order to convince the public that their cars are ecofriendly. As long as they don’t actually have to change how efficient their cars are, they’ll try and sell us efficiency. At the Detroit Auto show a couple weeks ago, American companies tried to put the best faces on their failed lobbying efforts by unveiling a bunch of new more efficent vehicles that will someday be in production. The very actions of their conceptual designers and their marketing teams show that American automakers know the value of becoming more efficient, and how much consumers want to perceive them as such: why then, do they work so hard at not actually having to do it? At best, that’s market hypocrisy in it’s most transparent form.

    You argue for the market balance as it is now. Both the California and Federal laws are designed to tip the market balance in the same ways. It seems like you’re not so much against the Federal plan over the California plan, but the idea of the market balance being changed by either, since consumers and auto companies are doing such a good job of balancing things right now. If that’s true, why are companies so aware in their ads that consumers want more efficient cars? The balance has changed for everyone but the carmakers, and it’s taking a governmental push to make that happen in a timely and efficient manner for the environment and the consumer.

    If you want auto industry estimates on the cost to them and consumers, BusinessWeek published on article (http://www.businessweek.com/lifestyle/content/jan2008/bw20080115_583092.htm) detailing how scared US automakers are that no want wants expensive, efficient cars. They might be right- even though Toyota isn’t having a problem selling their relatively expensive Prius, or any of their much less expensive, very safe, efficient sedans. Plus, you and I both know that the only way for these efficient cars to become less expensive is to make lots of them- so how is stalling on producing them now going to reduce the cost sooner?

    BW gives auto industry numbers on the costs, but no indication of what these costs signify- what kinds of changes will be made, if there are alternatives- nothing. And, being BW, they don’t question at all the laments of the put-upon industry.

    They do suggest an alternative- instead of having car companies make more efficient cars, why not tax gas more, so customers suddenly want the cars that aren’t being made? Politicians are too cowardly to vote in this measure that will impact the people directly, is the conclusion. But I disagree with them. By requiring companies to make the cars and give consumers a choice, they make options available at the same time as the price of gas is going up, anyhow. It’s not a lopsided tax on one group that will only be slowly remedied in the market by the American auto industry. Plus, if consumers hurt by the tax need a more efficient car, they have to buy from Honda or Toyota now anyway- Detroit will lose even more sales.

    I know this response ranged further afield than our discussion has so far, but I think that’s where we wanted it to go anyway. I do love all sorts of responses, but I am considering another post that may be a good place to discuss our fundamental point of disagreement, which I think is you saying market decisions are wise as we can get, and my idea that wisdom is not market generated, but can be used to make markets operate better. Don’t let that stop you from replying here, but I might answer somewhere else and take longer to answer you here- this is getting long, and hard for others to follow.

  8. 8 Bruce January 20, 2008 at 12:06 pm

    You really need to remove the green house gas issue from your discussion. It is a hypothetical concept and has recently been shown to have no merit. The average temperature of the Earth was highest in 1998 and has for all practical purposes been flat every since 2001 (which was lower average temp than 1998, the peak average temperature of Earth).

    A nice article on this is at:
    http://www.boston.com/bostonglobe/editorial_opinion/oped/articles/2008/01/06/br_r_r_where_did_global_warming_go/

    If you research this issue, you will find that many scientist are getting on this band wagon instead of the Al Gore and other alarmist (who have very little knowledge on the subject)band wagon.

    I could be wrong, but maybe it is worth a look for you instead of quoting inaccurate or misleading information

  9. 9 Bruce January 20, 2008 at 12:18 pm

    Here is another interesting article that is based on real information and really brings home the facts on global warming:

    http://www.nzherald.co.nz/section/2/story.cfm?c_id=2&objectid=10485990&pnum=2

    And another interesting link:

    http://epw.senate.gov/public/index.cfm?FuseAction=Minority.Blogs&ContentRecord_id=f80a6386-802a-23ad-40c8-3c63dc2d02cb

    How much do you think the politicians listened to the scientist and the facts?

  10. 10 virescent January 20, 2008 at 1:15 pm

    Bruce,

    Thank you for your links to those articles. I have read them, and many others like them. I can go ahead and cite “interesting articles based on real information” to really bring home the facts for you that show the exact opposite of yours, and we’d be at an impasse. So I’ll respond, a little.

    The article from the Boston globe is an op-ed that claims that, since it has been very cold in some places, global warming is obviously a vicious myth. That’s a very uninformed conclusion- even climate change skeptics know that weather changes and climate changes are not the same thing- and if it were especially hot one day, it would prove this man’s conclusion wrong, based on his own premises. Changes in climate will cause freak weather incidents. The high number of especially cold (and especially hot, dry, and wet) weather events is evidence of a shift in climate. Climate change, you see? The science is reported here (http://www.wmo.int/pages/mediacentre/press_releases/pr_791_e.html). Note it’s a report by a scientific body, not an op-ed.

    The other two articles are commentaries on how some scientists disagree with the IPCC, Al Gore, jumping to bad policy decisions from climate reports, and climate change scare tactics. Those are all more or less legitimate stances (I’ll take issue with the IPCC one to a point), and none of those stances disproves climate change.

    I disagree with climate change scare tactics, bad policy, and some of what Al Gore does, though I agree with the science reviewed by the IPCC. Interesting articles, but I wish they’d presented an actual critique on or comparison of science to “debunk” climate change- then you’d have a point. As it stands, we both think climate change shouldn’t be dealt with by crazies and bad government decisions.

    So, if you were hoping to convince me that everything I’ve read and considered and researched is wrong with a few inflammatory op-eds and imprecise critiques, sorry. If you’re looking for a legitimate debate on climate change and ways to deal with it, do stop by again: I love considered input, even from people whose opinions differ from my own. If you’re looking to bait a global warming loony, try somebody else.


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