The U.S. Environmental Protection Agency (EPA) and the Department of Transportation (DOT) have begun the process for setting fuel efficiency standards for light-duty vehicles (cars and light-duty trucks) for model years 2017 through 2025. The regulatory initiative comes at a time in which the EPA is under bipartisan attack for addressing climate change issues in the absence of congressional action.

In April, EPA and DOT issued a joint rule that set fuel efficiency standards for model years 2012 through 2016. The rule marked the first time in U.S. history that the federal government had written regulations aimed specifically at reducing greenhouse gas emissions and stemming the impact of global climate change.

On Sept. 30, the agencies published a notice of intent asking for comment on four different miles-per-gallon (mpg) requirements of increasing stringency. (The notice of intent is not an official notice of proposed rulemaking, which will come after the agencies publish at least one more preliminary notice.) The proposals would require average mpg levels in 2025 of 47, 51, 56, and 62, leading to carbon dioxide outputs of 190, 173, 158, and 143 grams per mile, respectively. The agencies did not state a preference among the four options. The new standards would prevent hundreds of millions of metric tons of climate-altering CO2 emissions and save hundreds of millions of barrels of oil.

The latest effort is in response to President Obama's May 21 Presidential Memorandum Regarding Fuel Efficiency Standards instructing EPA and DOT to propose the new rule by Sept. 30, 2011. The memo directs the agencies to develop a process that includes public participation and technical assessments leading to the standards. The joint rulemaking is one part of a coordinated national program described in the memo intended "to produce a new generation of clean vehicles."

The notice of intent comes amidst attacks on EPA's authority to regulate greenhouse gases under the Clean Air Act. According to a Wall Street Journal article, EPA is a favorite target of politicians in this election season. Opponents of EPA's regulatory activity on a range of environmental issues claim new regulations will be overly burdensome on businesses at a time when they are struggling. The Journal article notes that these criticisms come from both sides of the political aisle.

These claims by opponents are nearly identical to the claims business groups and anti-regulatory politicians have been making for years – that the burden and cost of regulations hurt small business and are job killers. Yet evidence of increased burden and costly regulations is scant. Instead, studies show regulations to have extensive economic benefits. In one such study, released in October, the Small Business Majority and the Main Street Alliance, two small business advocacy organizations, presented more evidence of the benefits of regulations under the Clean Air Act.

The report, The Clean Air Act's Economic Benefits Past, Present and Future, noted that as the country marks the 40th anniversary of the Clean Air Act (CAA) this year:

EPA’s authority under the CAA is coming under threat from members of Congress that would delay or limit the Agency’s ability to regulate greenhouse gas emissions and other pollution. This has negative implications for many businesses, large and small, that have enacted new practices to reduce their carbon footprint as part of their new business models. It could also hamper the growth of the clean energy sector of the economy—a sector that a majority of small business owners view as essential to their ability to compete.

The report cited studies done by EPA, the Office of Management and Budget (OMB), and others that showed 1) substantial economic benefits of regulations that far exceeded the costs by more than 40 to one in the first 20 years of the act, for example; 2) that emissions of air pollutants have declined substantially while U.S. Gross Domestic Product (GDP) has increased (a 41 percent decline in emissions and a 64 percent GDP increase); and 3) that technological innovations – such as catalytic converters and direct fuel injection – resulting from environmental regulations, and especially the CAA, created about 1.3 million jobs between 1977 and 1991.

In addition, the report concluded that both "[i]ndustry and government economists alike have overestimated the costs of the Clean Air Act, anywhere from 500% to more than 1,000%." One cause of this miscalculation, according to the report, is that regulatory compliance spawns new technologies that ultimately lower the compliance costs to businesses as they adjust to new regulations and adopt new technologies. "Such innovations also allowed the U.S. to become a world leader in environmental control technologies—exports of environmental technologies grew by 130 percent between 1993 and 2003, and were valued at $30 billion in 2004," the report noted.

The Senate failed in 2010 to pass legislation to establish a cap-and-trade regime to regulate greenhouse gases after the House passed a bill in June. Given the fractious nature of Congress, it seems less likely that significant legislation to address climate and energy issues will pass in a new Congress, leaving EPA to address a wide range of issues under its statutory mandates.