The Regulatory Studies Program (RSP) of the Mercatus Center at George Mason University is dedicated to advancing knowledge of the impact of regulation on society. As part of its mission, RSP conducts careful and independent analyses employing contemporary economic scholarship to assess rulemaking proposals from the perspective of the public interest. In accordance with the approach of the Mercatus RSP, this comment on the Department of Transportation’s (DOT) National Highway Traffic Safety Administration (NHTSA) proposed rulemaking does not represent the views of any particular affected party or special-interest group but is designed to assist the Department of Transportation (DOT) as it seeks to exercise its regulatory function in a coherent manner.
The Mercatus Center Report Card (“ Report Card”) follows an approach to evaluation used by the Mercatus Center since 2008 to evaluate the quality and use of the Regulatory Impact Analysis (RIA) that is required to be carried out as part of the case for an economically significant proposed rulemaking published by a federal agency. The Report Card identifies key issues and best practices in the regulatory process and highlights issues of concern applying to specific regulations. It evaluates the quality of regulatory analysis, scoring each area on a 0 to 5 scale, but does not evaluate whether the proposed rule is economically efficient, likely to meet fairness considerations, or a good public policy in any other sense. This public interest comment examines the quality of the underlying analysis contained in the proposed rulemaking going beyond the score provided by the Report Card (details of which are attached as an appendix to this comment).
The proposed rulemaking (NPRM) for the Federal Motor Vehicle Safety Standards; Electronic Stability Control Systems for Heavy Vehicles received a Report Card score of 33 out of 60, i.e., 55 percent. This is a modest score reflecting underlying problems in the RIA concerning the tendency of engineering analysis to overlook key economic issues, resulting in a poorly focused treatment of the purpose behind the regulatory change. There was also a notable tendency to use extrapolated economic data in a manner that created spurious precision in benefit-cost calculations, which on close inspection are revealed to be cost-effectiveness analyses rather than benefit-cost exercises. In effect, the analysis runs roughshod over the requirement that new federal regulation can be expected to produce benefits that outweigh costs. It creates an impression that NHTSA has used selected economic data to support a decision already made largely on the basis of safety studies.
NHTSA seeks to establish a new Federal Motor Vehicle Safety Standard (No. 136) that would require electronic stability control (ESC) systems to be fitted as standard on truck tractors and certain passenger buses with a gross vehicle weight rating of greater than 26,000 pounds (vehicles not using air brakes are excluded from the NPRM). ESC systems work by automatically applying computer-controlled braking selectively at separate wheels and inducing lower engine torque output to reduce rollovers and mitigate severe under-steer or over-steer conditions that lead to loss of control in a vehicle. Such systems are widely adopted in passenger and other light vehicles but less so in truck tractors and large buses. Nonetheless, growth in take-up of ESC systems is occurring without a regulatory mandate and, according to its entry in the Federal Register, NHTSA expects that from 2012 on about 26 percent of new truck tractors and 80 percent of new buses will be equipped with ESC systems. It believes that ESC systems would prevent 40 to 56 percent of “un-tripped” rollover crashes (those not connected with an obstacle but related to momentum of the vehicle) and 14 percent of loss-of-control crashes.
One obvious question is whether the industry will adopt ESC just as quickly without the proposed regulation, as seen already in the case of passenger and other light road vehicles: after all, operator liability for tort damages is likely to be reduced by accident-preventing technology. NHTSA needs to show that there is a market failure in the first place and then demonstrate that the proposed regulation is the most efficient way to correct the failure. It is not clear from the NPRM whether NHTSA has considered other influences on un-tripped-rollover and loss-of- control crashes, e.g., road layout, training for driving procedures, and factors causing driver fatigue and technology limiting its effects. It is important to consider all alternatives unless NHTSA is content to present incomplete and therefore misleading evidence that favors selected regulatory change.