The Cost of Deregulation: Economic Implications of Rescinding the EPA Endangerment Finding

Recently, the Trump administration has mounted an aggressive campaign of environmental deregulation in an attempt to reduce American business and consumer costs. On February 12, 2026, the Environmental Protection Agency (EPA) rolled back the 2009 EPA Greenhouse Gas "Endangerment Finding" (EPA “Final Rule” 2009), which was the scientific and legal basis for the U.S. government to regulate greenhouse gas emissions. This is the largest single deregulation in U.S. history, and the administration claims that it will save taxpayers over $1 trillion by lowering compliance costs for the automotive industry. However, while deregulation may provide some short-term benefits for automakers and energy producers, it raises an important economic question: will the short-term gains for the few outweigh the long-term consequences for health, energy consumption, and global warming for the many?

The 2009 Endangerment Finding stemmed from the U.S. Supreme Court’s ruling in Massachusetts v. EPA (Massachusetts v. EPA 2007). Several states, localities, and private organizations petitioned the EPA to regulate greenhouse gases (GHGs) from motor vehicles, but were denied on the grounds that the EPA lacked authority to regulate GHGs under the Clean Air Act. The case was brought to the Supreme Court, where it was decided that GHGs are air pollutants and the EPA must make a “science-based” determination on regulation unrelated to political or economic pressures. Following the ruling, the EPA published its 2009 Endangerment Finding (EPA “Final Rule” 2009), which determined that six GHGs pose a threat to public health and that emissions from motor vehicles would contribute to this atmospheric pollution. Almost all U.S. federal emission regulations pertaining to motor vehicles, power plants, and oil & gas operations can be traced back to this finding.

The Trump administration contends that the scientific evidence used to make the decision was outdated and focused on global rather than local impact. To obtain a basis to combat the overwhelming scientific consensus (Lynas et al. 2021), the EPA and the Department of Energy (DOE) “arranged for five hand-picked skeptics of the effects of climate change to form a Climate Working Group….The Climate Working Group worked in secret for months to produce a report (Climate Working Group 2025) for the DOE and the EPA that would provide justification for their predetermined goal of rescinding the Endangerment Finding” (Environmental Defence Fund v. Wright 2025). In January, the U.S. Court for the District of Massachusetts issued a judgment that the Trump administration violated the law by secretly forming the Climate Working Group, but the EPA was cleared of any connection. Still, the EPA used the Climate Working Group’s findings in earlier proposals for deregulation. 

After Loper Bright Enterprises vs Raimondo (Loper Bright 2024), the EPA had the legal backing to reduce its own political power. In line with the judgment, they argued that only Congress has the power to issue such sweeping regulations and that the EPA has overstepped its delegated powers. 

The Trump administration is overturning the regulatory landscape and changing the EPA’s course. The administration has reframed the agency’s priorities from protecting human health and the environment towards reducing consumer and industry costs. EPA Administrator Lee Zeldin says his job is to “lower the cost of buying a car, heating a home, and running a business” (EPA “Deregulatory” 2025). Contrary to this, the EPA has deprioritized regulations on industrial pollution and their impacts on public health, notably excluding the overall impact on consumers’ wallets.

The Basic Economic Drivers:

The EPA claims that the environmental regulations surrounding vehicle manufacturing and technology cost Americans $1.3 trillion, which breaks down into $1.1 trillion from lower prices by automakers who no longer have to meet emission standards, and $200 billion from reduced spending on electric vehicles and charging infrastructure. They claim that the average person would save $2,400 per vehicle (EPA “Rescission 1” 2009) without environmental regulations. However, the argument considers only the costs and not the substantial economic, social, and environmental benefits of transitioning to renewable energy.

According to the EPA’s Regulatory Impact Analysis from 2024, the regulations under the Biden administration would provide $2.1 trillion in net benefits over 30 years (EPA “Regulatory Impact Analysis” 2024). Regulations have also proven to lower the cost of owning a car. The start-stop feature can, in certain situations, save gas in the long term (Linkov 2024), and updated tailpipe emissions standards could save individual drivers up to $6,000 over the course of the lives of their vehicles (EPA “Biden-Harris Administration” 2024). The EPA also previously found that for every $1 in compliance costs for companies, $77 would be delivered in benefits to the American people (EPA “Finalizes Stronger Standards” 2024). The Trump administration’s benefits are straightforward: price-tag reductions, but they come at the cost of lurking climate and health challenges that will eclipse these short-term gains.

The Healthcare Cost:

There is economic healthcare value for the average American that stems from regulations. However, this value is often overlooked as it is challenging to express in terms of a quantitative monetary value. John Walke, senior attorney for the Natural Resources Defense Council (NRDC), explains: “The EPA’s previous analyses have shown trillions of dollars of economic benefits from protecting public health and welfare under the Clean Air Act. These benefits came from strong health protections that vastly outweigh polluter compliance costs. The Trump administration has declared war on clean air, and it does not care about the casualties” (“EPA Said to Ignore” 2026). Clean air regulations save billions of dollars: the annual value of related health benefits attributable to the standards through 2055 is estimated to total $6.4 billion to $13 billion (EPA “Multi-Pollutant Emissions Standards” 2024). According to NBER research, air pollution isn't just a natural problem; it's a budget problem. When PM2.5 levels rise, healthcare spending spikes by nearly 3% over the following months. This represents a massive unseen tax where consumers are forced to divert their money into medical treatments for conditions that are entirely preventable through better environmental policy (Barwick 2018). Worker productivity is also negatively impacted by air pollution, which is an additional incurred cost to both the public and private sectors (Zivin and Neidell 2012).

Transition to a Green Economy 

The Inflation Reduction Act and the Infrastructure bill kicked off the transition towards renewable energy, but these bipartisan efforts have been gutted of funding by the Trump administration, along with green tax breaks. Additionally, the administration spearheaded the “single largest deregulatory action in U.S. history,” incentivizing gas guzzling vehicles that pump pollutants into the air (EPA “President Trump” 2025). The deregulation of the EPA is a major victory for the oil companies and biofuel manufacturers, who have long fought against these vehicle regulations

The U.S. automotive industry is at a tipping point. Legacy firms like Ford and GM must choose whether to prioritize static efficiency over the dynamic efficiency required to compete in the future global EV market. The opportunity cost of abandoning EV innovation has decreased in the short run, leading these firms to treat the regulatory shift as a form of regulatory rent. By pivoting back to gas-powered fleets, these companies capture immediate producer surplus but risk falling behind. They are accumulating technical debt against first-movers like Tesla and subsidized foreign competitors like BYD, who are already achieving superior economies of scale. Consequently, this strategic retreat may lead to stranded assets of their existing EV investments, creating a permanent barrier to entry that leaves the American automotive industry as domestic niche players in an increasingly electrified global economy (Ewing 2026). Investing in EVs is an investment in grid resilience and economic sovereignty. As highlighted in recent technical reviews, the transition to V2G technology transforms the national fleet into a $4.5 trillion energy storage asset (Bhatti 2024). Furthermore, the shift to solid-state batteries and digital-twin manufacturing reduces the 'innovation lag,' ensuring that the U.S. automotive industry remains a global leader in high-margin technology rather than a sunset provider of inefficient, gas-dependent machinery. Under the Biden administration, growth was possible and could have created a new path for the U.S. economy to grow (Cosier 2024). However, now gas companies have been given leeway to continue on without change.

With shifting regulations and unclear climate policy, the auto industry and investors are left in limbo. The EPA has also decided that it will repeal some of its data collection programs, essentially removing emission reporting standards for motor vehicles. Data shortages are already one of the largest problems in quantifying the economic effects of climate change. Now there will be one less data point that investors and climate experts can use: the EPA will stop quantifying the health benefits of reducing air pollution, like the “cost estimates of avoided asthma attacks and premature deaths” (Davenport 2026). How can the U.S. accurately evaluate the costs of its economy when the Trump administration is deliberately obscuring data and trampling on renewable energy and EV markets? 

The Trump administration attempts to save the money of American consumers through environmental deregulation, but it is a short-term facade. There are clear, measurable economic benefits of environmental regulation, particularly by reducing healthcare costs, improving fuel efficiency, and encouraging innovation in cleaner technologies. However, they involve leaving our country’s reliance on gas and oil in the past. It is harder to quantify the economic costs of pollution that result from the EPA’s deregulation because of the long-term nature of health and climate impacts, but there is an undeniable body of evidence that shows we are only hurting ourselves. The money saved upfront on new cars will undoubtedly come at the expense of household budgets, and more importantly, the health and well-being of the American people. Whether the EPA had overstepped its jurisdiction or not, Congress must take action to set our economy back on course. 

Works Cited

Ambrose, Jillian. "Why Has BP Pulled the Plug on Its Green Ambitions?" The Guardian, 26 Feb. 2025, www.theguardian.com/business/2025/feb/26/why-has-bp-pulled-the-plug-on-its-green-ambitions.

Barwick, Panle Jia, et al. The Healthcare Cost of Air Pollution: Evidence from the World’s Largest Payment Network. Working Paper no. 24688, National Bureau of Economic Research, June 2018, https://www.nber.org/papers/w24688.

Bhatti, Abdul Rauf, et al. "Recent Advancements in Electric Vehicles: A Comprehensive Review." Results in Engineering, vol. 22, June 2024, art. 102237, https://doi.org/10.1016/j.rineng.2024.102237.

Climate Working Group. A Critical Review of Impacts of Greenhouse Gas Emissions on the U.S. Climate. U.S. Department of Energy, 23 July 2025, www.energy.gov/sites/default/files/2025-07/DOE_Critical_Review_of_Impacts_of_GHG_Emissions_on_the_US_Climate_July_2025.pdf.

Cosier, Susan. "As Demand Grows for Electric Cars, So Does the Market for Green Jobs in the EV Industry." NRDC, 15 Feb. 2024, www.nrdc.org/stories/demand-grows-electric-cars-does-market-green-jobs-ev-industry.

Davenport, Coral. "EPA to Change How It Calculates the Benefits of Air Pollution Rules." The New York Times, 12 Jan. 2026, www.nytimes.com/2026/01/12/climate/trump-epa-air-pollution.html.

Environmental Defense Fund, et al. v. Christopher Wright, et al. Case No. 1:25-cv-12249, U.S. District Court for the District of Massachusetts, 12 Aug. 2025. Environmental Defense Fund, library.edf.org/AssetLink/0kdlw6oq5v8hsvj152eqx01b0qn74uuq.pdf.

Environmental Protection Agency. "Endangerment and Cause or Contribute Findings for Greenhouse Gases Under Section 202(a) of the Clean Air Act; Final Rule." Federal Register, vol. 74, no. 239, 15 Dec. 2009, pp. 66496-546, www.epa.gov/sites/default/files/2021-05/documents/federal_register-epa-hq-oar-2009-0171-dec.15-09.pdf.

Environmental Protection Agency. "Multi-Pollutant Emissions Standards for Model Years 2027 and Later Light-Duty and Medium-Duty Vehicles; Final Rule." Federal Register, vol. 89, no. 76, 18 Apr. 2024, pp. 27842-972, www.govinfo.gov/content/pkg/FR-2024-04-18/pdf/2024-06214.pdf.

"EPA Said to Ignore Benefit of Saving Lives." NRDC, 12 Jan. 2026, www.nrdc.org/reaction/epa-said-ignore-benefit-saving-lives.

Ewing, Jack. "Ford and GM, Once Rivals in an E.V. Race, Now Jointly Abandon It." The New York Times, 3 Mar. 2026, www.nytimes.com/2026/03/03/business/ford-gm-ev-self-driving-cars-china.html.

Linkov, Jon. "Does a Start-Stop Function Really Improve a Car's Fuel Economy?" Consumer Reports, 25 Apr. 2024, www.consumerreports.org/cars/fuel-economy-efficiency/does-start-stop-function-really-improve-cars-fuel-economy-a1028235974/.

Loper Bright Enterprises v. Raimondo. 603 U.S. ___. Supreme Court of the United States. 2024. SupremeCourt.gov, www.supremecourt.gov/opinions/23pdf/22-451_7m58.pdf.

Lynas, Mark, et al. "Greater than 99% Consensus on Human Caused Climate Change in the Peer-Reviewed Scientific Literature." Environmental Research Letters, vol. 16, no. 11, 19 Oct. 2021, art. 114005, https://doi.org/10.1088/1748-9326/ac2966.

Massachusetts v. Environmental Protection Agency. 549 U.S. 497. Supreme Court of the United States. 2007. Justia US Supreme Court Center, supreme.justia.com/cases/federal/us/549/497/.

United States, Environmental Protection Agency. "Biden-Harris Administration Finalizes Strongest-Ever Pollution Standards for Cars That Position U.S. Companies and Workers to Lead the Clean Vehicle Future." EPA.gov, 20 Mar. 2024, www.epa.gov/newsreleases/biden-harris-administration-finalizes-strongest-ever-pollution-standards-cars-position.

United States, Environmental Protection Agency. "EPA Finalizes Stronger Standards for Harmful Soot Pollution, Significantly Increasing Health and Clean Air Protections for Families, Workers, and Communities." EPA.gov, 7 Feb. 2024, www.epa.gov/newsreleases/epa-finalizes-stronger-standards-harmful-soot-pollution-significantly-increasing.

United States, Environmental Protection Agency. "EPA Launches Biggest Deregulatory Action in U.S. History." EPA.gov, 12 Mar. 2025, www.epa.gov/newsreleases/epa-launches-biggest-deregulatory-action-us-history.

United States, Environmental Protection Agency. "President Trump and Administrator Zeldin Deliver Single Largest Deregulatory Action in U.S. History." EPA.gov, 12 Mar. 2025, www.epa.gov/newsreleases/president-trump-and-administrator-zeldin-deliver-single-largest-deregulatory-action-us.

United States, Environmental Protection Agency. Regulatory Impact Analysis for the Final National Emission Standards for Hazardous Air Pollutants: Coal- and Oil-Fired Electric Utility Steam Generating Units Review of the Residual Risk and Technology Review. Office of Air Quality Planning and Standards, Apr. 2024, EPA-452/R-24-005, www.epa.gov/system/files/documents/2024-04/2024-mats-rtr-final-ria-final.pdf.

United States, Environmental Protection Agency. Rescission of the Greenhouse Gas Endangerment Finding and Motor Vehicle Greenhouse Gas Emission Standards Under the Clean Air Act: Regulatory Impact Analysis. Office of Transportation and Air Quality, Feb. 2026, EPA-420-R-26-002, nepis.epa.gov/Exe/ZyPDF.cgi/P101HV06.PDF?Dockey=P101HV06.PDF.

Zivin, Joshua Graff, and Matthew Neidell. "The Impact of Pollution on Worker Productivity." American Economic Review, vol. 102, no. 7, Dec. 2012, pp. 3652-73. JSTOR, https://doi.org/10.1257/aer.102.7.3652.