The Gas Hog An Endangered Species? New Proposals Seek To Reduce Autos' Fuel Consumption

On August 23, 1973, the Environmental Protection Agency announced that it would request auto manufacturers to label 1974 model year cars to show customers the model's weight, probable mile-per-gallon rating, and estimated operating cost.¹ The proposed program is to be voluntary, although EPA's Assistant Administrator, Robert Sansom, noted that the Federal Trade Commission may already possess the authority to make such disclosure mandatory.

Several European manufacturers whose products have received high ratings on EPA's gas mileage test immediately welcomed the proposal. Detroit's automakers were initially noncommittal, although a spokesman for Ford protested that variation in driving conditions and driving styles made accurate prediction of gas mileage difficult. Sansom's pointed warning that "if the consumer can't see a label on the car, that ought to tell him something" apparently hit home. On September 12, the agency announced that General Motors, Ford, Chrysler, and eight foreign manufacturers, together accounting for some ninety percent of the new car market in the United States, had agreed to place labels on their cars. Many other companies are still considering the proposal. Only one, Peugeot, has formally rejected it.

Reducing the consumption of petroleum used by automobiles could have a substantial beneficial effect on the nation's air pollution problems, its balance of payments, and its energy use. Transportation (of all kinds) is responsible for more than half the total weight of air pollution emissions in the country.² Automobile use accounts for around 14 percent of the energy used in this country.³ Transportation of all kinds used more than half the domestic petroleum budget;⁴ presently 23 percent of the nation's petroleum is imported, but some sources estimate that by 1985 57 percent will have to be imported.⁵

EPA has presented the automakers with a choice of labels for their cars. The first is a table showing average mile per gallon performance and fuel costs for cars in different weight categories, as measured by the agency in uniform tests simulating commuting conditions, with the weight class of the particular vehicle indicated. The second label would show the results of EPA's tests of the individual model in addition to the information on the first type of label. According to EPA, the initial response indicates that 80 percent of foreign cars, but only 35 percent of U.S.-made autos, will carry the more specific labels. In either case, the information shows forcefully the long-term costs to the consumer of indulging a taste for big cars — for example, a 4,500 pound car costs twice as much to fuel as one weighing 2,500 pounds — and might help curb "impulse buying" of needlessly large and powerful autos.

In addition to these proposed labels, on August 24, 1973, Deputy Assistant Secretary of the Interior Eric Zausner told the New York Times that his agency was working in cooperation with the Department of Transportation, the Council on Environmental Quality, and EPA to develop legislation that would tax new autos according to their weight, horsepower, or both.

Not all the impetus for decreasing autos' size and increasing their efficiency comes from the Executive Branch, however. At the same time, Congress is considering a variety of bills with similar purposes. Congressman Wyatt's bill (H.R. 9108) would place a graduated bodyweight tax on automobiles, and an absolute upper limit of 3,500 pounds, substantially below levels for currently produced full-sized cars. Bills introduced by Congressman Vanik (H.R. 7531) and by Senators Moss (S.2036), Hollings (S. 1903), and Jackson (S. 2176) would set a graduated tax on the energy-efficiency of autos, as measured by their mile-per-gallon ratios, an approach which has long been used successfully in Europe to help keep autos small.⁶ [3 ELR 10144] Hollings' and Jackson's proposals include minimum efficiency standards as well, and several of the bills would require labeling to show rates of fuel consumption. The proposals vary in their severity; Vanik would place a $256 tax on autos which test at less than 7 miles per gallon, while the Moss bill sets a $900 fee for cars in that category.

The proposals advanced for dealing with the problem of the unnecessarily large car offer a useful illustration of three major approaches — to be discussed very briefly in this Comment — to environmental protection generally; public education, conventional direct regulation, and an array of economic incentives. EPA's labeling program assumes that better informed citizens will make purchases more advantageous to themselves and the environment; direct regulation is exemplified by suggestions for minimum efficiency or maximum weight standards, and would involve legal prohibition of non-complying autos. The category of incentives for environmentally beneficial activities — and disincentives for those which are harmful — would include the proposed graduated tax on autos' mile per gallon ratios, a method which would encourage the manufacture and purchase of efficient cars without denying the right to own and operate big autos to citizens prepared to pay the price.

It is debatable whether this latter approach aims primarily for what economists would call "substitution effects" or "internalization of costs." The former refers to the alternative products, and behavior patterns which an individual will adopt when a charge makes a particular activity or commodity more expensive than it is worth to him. "Internalization of costs," on the other hand, denotes incorporation into the selling price of a product or service its full social costs, long term as well as short. The same change might have dual purposes: for example, a liquor tax might be designed both to discourage alcohol consumption and increase purchases of non-alcoholic beverages while at the same time it would finance programs to educate the young on the dangers of alcohol abuse and to rehabilitate alcoholics. A tax on mile per gallon would seem clearly to fall primarily in the category of taxes designed to achieve substitution effects, as the dollar cost of remedying depletions of energy resources and increases in air pollution remains highly speculative, while the basic need for some form of transportation remains high.

In recent years, with greater public awareness of the extent to which the entire taxpaying public is often made to bear the cost of environmental damage caused by a relatively small segment of the population, increasing attention has been paid to the economic incentives approach.⁷ User charges for sewage treatment plants, mandated by the Federal Water Pollution Control Act Amendments of 1972,⁸ serve both to impose the cost of combating pollution on the polluters themselves and to induce them to find ways of reducing their effluent output. In a very different context, the same principle is at work in the decision of the Vermont Public Service Board to abandon its how flat fee for new electrical hookups (a system which benefited builders of rural second homes at the expense of town dwellers) and make each new subscriber pay the full cost of running lines to his house. In addition to easing the burden on existing subscribers, the Board's action tacitly increases the cost of new homes in rural Vermont and thereby decreases the demand for them.⁹

1. 38 F.R. 22943 (Aug. 27, 1973).

2. U.S. Bureau of Census, Statistical Abstract of the United States: 1971, 92nd ed., 1971.

3. Drawn from figures contained in Hirst, Energy Intensiveness of Passenger and Freight Transport Modes, 1950-1970, Oak Ridge National Laboratory, National Science Foundation Environmental Program publication ORNL-NSF-EP-44 (April, 1973).

4. Id.

5. U.S. Bureau of Mines, U.S. Energy Use at New High in 1971, News Release, March 31, 1972, and National Petroleum Council, U.S. Energy Outlook: An Initial Appraisal 1971-1985, Washington, D.C. 1971.

6. New York Times, Aug. 28, 1973, p. 45.

7. See generally, Selig, Effluent Charges On Air and Water Pollution, Environmental Law Institute, Washington, D.C., 1973.

8. 33 U.S.C. 1151, et seq., ELR 41101.

9. Comment, Vermont Acts to Check Land Speculators, Developers, 3 ELR 10130 (Aug. 1973).