Speaking as a guy who remembers it well. It was not only the government and emissions.
It was the insurance companies as well. Huge tariffs on cubic inches as far as costs of policies. Car companies wanted to "under-rate" the actual horsepower as who would buy a car you couldn't insure. And shortly thereafter costs of gas skyrocketed, further causing the car companies to tone it down so they could sell cars..............
Could you imagine if insurance companies, the government, and the oil companies didn't due what they did! We'd all be driving 1000 horsepower cars...............
swi66