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Two for One: A Very Bad Deal for Our Nation

David Friedman, , | April 10, 2017, 3:46 pm EST
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Imagine you are in the market for a new car. You are excited to buy one with a new technology that will warn you of an imminent crash so you have enough time to hit the brakes to save your son’s or daughter’s life and your own. The car salesman tells you he’s got just the car for you, and it comes with his new two-for-one deal. To get that one new feature, you have to give up two others, brakes and seat belts.

You’d never take that deal, but it is exactly the kind of situation the President has created for the National Highway Traffic Safety Administration (NHTSA) and every other agency responsible for protecting American’s health and safety.

This “two-for-one” executive order, signed January 30th, 2017, requires every agency to get rid of at least two regulations for every new one they seek to put in place to help make American’s lives better off. Making matters worse, the health, safety, and other regulations that must be eliminated must at least offset the industry investment required to meet the new regulation–regardless of the benefits of the new or older regulations!

So, take my not-so-hypothetical example above. When I was NHTSA’s Acting Administrator, we put out an advanced notice of proposed rulemaking that would require new cars to come equipped with radios that would allow them to “talk” to one another, sharing basic safety information that would allow a car car to warn the driver of another equipped vehicle on a collision course. This vehicle to vehicle, V2V, communication system is estimated to prevent 425,000–524,500 crashes per year when fully implemented. Saving lives and avoiding injuries would deliver savings of $53 to $71 billion, dwarfing the investments automakers would have to make to equip vehicles with the new technology, therefore delivering positive net benefits within 3-5 years.

But under the “two-for-one” executive order, those benefits just don’t matter, the lives saved and injuries avoided just don’t matter. Instead, other regulations, like those requiring seat belts and brakes, would need to be repealed to offset the investment costs… again, ignoring the lives lost and harmed along the way. And if those two don’t cut the costs to industry enough, even more would need to be eliminated, putting even more lives at risk.

When you consider that in 2015 alone, 35,092 people lost their lives and 2.44 million people were injured in traffic crashes in the United States, it is clear that the “two-for-one” executive order is a very bad deal for our nation.

Making matters worse, this same raw deal applies to fuel economy standards that NHTSA is set to finalize for 2022-2025 to help nearly double fuel economy compared to where we were at the beginning of the decade. So, will NHTSA have to repeal safety standards to make more room to cut the high cost of our oil use? I expect they would never make that trade. I expect it would be the same for the Department of Energy (DOE), where I had the opportunity to help establish efficiency standards for household and commercial appliances. I don’t think the DOE would repeal appliance efficiency standards that are estimated to save consumers more than $2 trillion by 2030 if they had to both offset the industry investment costs of new ones and ignore the benefits of them all.

The “two-for-one” executive order is good for only one thing: grinding to a halt federal efforts to save lives, protect our health, and help us spend less money fueling our cars and heating and cooling our homes.

Appendix: Background on Regulation at NHTSA

Posted in: Vehicles

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