Hidden Struggle over Behavioral Economics in the EPA's Repeal of the Endangerment Finding
The Environmental Protection Agency (EPA) proposed on July 29, 2025, to rescind the 2009 Endangerment Finding, a decision that could have significant implications on climate and energy efficiency regulations. This proposal aims to repeal all greenhouse gas (GHG) emission standards for light-, medium-, and heavy-duty vehicles and engines.
The EPA's rationale for the proposal argues several points, including a narrow legal interpretation of the Clean Air Act (CAA) and allegations of unreasonable scientific analysis in the 2009 Finding. The agency also claims that available technologies for vehicle emission control cannot effectively address climate change without potentially greater harm to public health and welfare.
The proposal is currently open for public comment, with a virtual public hearing scheduled for August 19-21, 2025, and comments due by September 15, 2025. If finalized, this action would eliminate the legal basis for existing vehicle GHG emission standards, potentially leading to significant rollbacks in climate-related vehicle regulations.
The 2009 Endangerment Finding was a formal determination that GHG emissions from new motor vehicles endanger public health and welfare, serving as the legal foundation for EPA climate regulations. The EPA's RIA for this proposal includes an alternative "revealed preference" analysis that estimates net benefits of the Endangerment Finding repeal ranging from $3.05 trillion to $8.18 trillion.
The debate over separating bias from legitimate preferences in energy-efficiency rulemakings has significant implications beyond the Endangerment Finding. The term "energy efficiency gap" describes the difference between the level of energy efficiency that appears cost-effective in theory and the lower level people actually choose in real life. Economists' models often assume rational, optimizing behavior, but real-world decisions often deviate from these assumptions due to cognitive biases like hyperbolic discounting and inattention.
In many energy-efficiency rulemakings, 80 to 90 percent of the total monetized benefits come from the government's calculations of consumers' avoided energy costs. However, the EPA's Endangerment Finding RIA challenges the government's conventional inclusion of full lifetime fuel savings as a benefit, potentially setting a precedent for how government evaluates climate and energy efficiency regulations generally.
For years, agencies have counted fuel and energy savings as a benefit of regulatory actions phasing out less-efficient devices, but this approach is questioned in Appendix B of EPA's RIA. In many cases, a dollar saved in fuel can be reinvested in the economy, compounding to boost growth and future welfare, while enjoyment from a car feature like more horsepower or a panoramic sunroof cannot be reinvested in the same way.
This proposal is highly controversial, with environmental and legal advocates rejecting the attempt to revoke the finding, arguing it ignores mainstream science and misinterprets legal precedents. The Endangerment Finding RIA is a rulemaking worth watching due to its potential impact on how government evaluates climate and energy efficiency regulations.
| Aspect | Current Status | |--------------------------------|-----------------------------------------------------------| | Proposal Date | July 29, 2025 | | Action | EPA proposes to repeal 2009 Endangerment Finding and all GHG vehicle emission standards | | Rationale | Legal reinterpretation of CAA, alleged unreliable science, technological feasibility concerns | | Legal Context | Cites West Virginia v EPA (2022), challenges Massachusetts v EPA (2007) authority | | Status | Open for public comment; hearings Aug 19-21, 2025; comments due Sept 15, 2025 | | Potential Impact | Rollback of EPA regulations on vehicle greenhouse gas emissions |
- The proposal to repeal the 2009 Endangerment Finding, put forth by the Environmental Protection Agency (EPA) on July 29, 2025, has instigated a significant debate within the realm of science, law, and finance.
- The EPA's contention that available vehicle emission control technologies may cause greater harm to public health and welfare, rather than alleviate climate change, is a contentious point in the industrial and environmental science communities.
- The sports of automobile and engine manufacturing industries, as well as the environmental and legal advocacy sector, have become involved in this discussion, with the former eagerly awaiting deregulation and the latter vehemently opposing the attempt to revoke the Endangerment Finding.
- The traditional method of calculating benefits of energy-efficiency regulations, which includes full lifetime fuel savings, has recently been called into question in the EPA's Endangerment Finding RIA, which could potentially trigger a shift in the approach to evaluating energy efficiency regulations.
- With rising concerns regarding climate change, the field of education-and-self-development is increasingly emphasizing the importance of understanding behavioral economics as it pertains to energy efficiency, as the "energy efficiency gap" illustrates the shortcomings of assuming perfectly rational consumer behavior in this domain.
