Seems more like it meets the letter of the law.

The spirit was surely be too accelerate efficiency by ensuring all manufacturers improve. That has been negated; reducing the necessary efficiency for some manufacturers just because others are doing well.

It's like if you allowed multiple people to mix blood samples for a DUI check. Sure, there'd have to be less drinking over all, but some would still be drunk af and the effectiveness of the law would be greatly reduced.

Not a great analogy. CO2 emissions are a global phenomenon, so the average emission level is exactly what matters. Drunkenness is not.