EPA Mandates for Trucks Underestimated Costs

The Environmental Protection Agency (EPA) underestimated the compliance costs of its medium- and heavy-truck mandates for the years 2004-20010 by a factor of two to five, according to the National Automobile Dealers Association (NADA) and American Truck Dealers (ATD). In a report issued March 8, 2012, NADA/ATD questioned the agency’s cost analysis when creating emissions mandates for model year (MY) 2004-2010 commercial trucks.

The new report is one of few studies comparing EPA cost predictions to the actual costs of meeting the agency’s motor vehicle emissions mandate. The report states, as a result of this study, that EPA mandates caused commercial vehicles to cost considerably more. This depressed sales of new vehicles and delayed the environmental benefits sought by the mandates. This in turn had a serious effect on companies and on the number of truck driving jobs available.

The NADA/ATD examination of emissions mandates for 2004-2010 medium- and heavy-duty trucks reveals the dangers of mandating well into the future based on far-in-advance predictions. The study provides solid documentation of the real-world difficulties these mandates can cause in the market. The trucking industry suffered as a result of these far-future predictions.

According to NADA/ATD, the results of this current study should be considered a warning for the proposed fuel economy regulations for MY 2017-2025 light-duty vehicles. Such vehicles are already affected by previous fuel economy updates from the administration. When all mandates are in place, the average purchase price of a light-duty vehicle will increase by $3,000, based on estimates from the National Highway Traffic Safety Administration (NHTSA) and EPA, the report said.

NADA/ATD warns that buyers faced with higher vehicle costs because of regulatory mandates will react in the same way that commercial truck buyers and trucking companies reacted, and choose not to buy those vehicles, seeking out lower-cost vehicles or used vehicles, or opting to delay buying a new vehicle.

The NADA/ATD study’s importance lies in its study of the actual costs of mandates to the trucking industry, compared to the proposed costs. In revealing that actual costs reached 200% to 500% of the proposed costs, the study highlighted the flaws in the EPA’s cost proposal process.

While the proposed costs of EPA emissions mandates were prepared and created in good faith, these proposals illustrate that financial predictions made for events and circumstances far in the future are extremely likely to undershoot the actual costs by, as seen in this case, a factor of as much as five. In the case of the commercial trucking mandates, these additional costs were absorbed by trucking companies, making fewer truck driving jobs available.

Truckers and trucking companies obviously do not want to harm the environment. The problem is that the emissions mandates from the EPA were so poorly planned, in terms of proposed costs, that new truck sales declined and older trucks stayed on the road. This had exactly the opposite effect on emissions that the EPA had in mind.

For emissions mandates to work they must be based on the real-world costs to truck owners and drivers.

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