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Big 3 win with new fuel rules

Automakers say lower standards save jobs, boost safety; environmentalists disappointed

By Jeff Plungis / Detroit News Washington Bureau


WASHINGTON -- The auto industry is on the verge of a significant victory with the expected passage of a new energy bill that will do little to force automakers to make more fuel-efficient vehicles.

After first shelving plans in both the U.S. House and Senate to substantially increase fuel economy, Congress now has scaled back mandates even further.

Automakers fiercely opposed aggressive new fuel economy requirements, which they said would force them to downsize their vehicles -- going against consumer demand for big, powerful cars and trucks -- and could lead to major job losses. They also argued smaller, lighter vehicles would compromise safety.

The energy bill does not mandate a specific oil savings goal and doesn't require the National Highway Traffic Safety Administration to write new fuel economy rules for cars in addition to SUVs and other light trucks. It also does not set a deadline for NHTSA to issue its fuel economy rules, a change from an earlier version of the bill.

The bill, if it becomes law, also creates more administrative hurdles for NHTSA to clear to increase fuel economy standards in the future.

Environmental groups are decrying the bill as a major missed opportunity. They argue getting more miles per gallon of gas would reduce America's dependence on foreign oil and preserve the environment.

"This bill does nothing to advance the efficiency of our fleet of vehicles," said Kara Saul Rinaldi, policy director of the Alliance to Save Energy, a Washington watchdog group. "It's very disappointing."

Under the Corporate Average Fuel Economy program, automakers' fleets of cars must average 27.5 mpg. Their fleets of SUVs, pickups and vans must average 20.7 mpg.

There were lopsided, bipartisan votes in the House and Senate against proposals that would have raised fuel economy requirements for both cars and light trucks to as high as 36 mpg by 2013. The auto industry got a major assist from the United Auto Workers in lobbying against the higher CAFE standards.

Industry supporters said those votes made it clear lawmakers from both parties wanted to leave the final decision to the regulators. The final bill will preserve jobs and minimize the safety risks inherent in downsizing vehicles to achieve better fuel economy, they said.

"The decisions will be based on sound science rather than political whim," said Eron Shosteck, spokesman for the Alliance of Automobile Manufacturers. "That's good for consumers, and it's good for anybody who works at an auto plant or for an auto supplier."

Safety, jobs play role

The legislation will create additional hurdles for NHTSA to write its CAFE regulations. Currently, the agency must consider technological feasibility, economic practicability and the need to conserve energy when determining fuel economy requirements.

Under the energy bill, NHTSA also will have to consider safety and the impact of fuel economy on employment levels in the United States.

The energy bill could be finalized as early as this week. Legislative leaders have put the bill on the official schedule and are pressing their chairmen to resolve their differences. But there still are some contentious issues to resolve, such as whether to subsidize ethanol production, how to allocate tax credits for energy producers and deregulation of electrical utilities. Those disagreements between House and Senate Republicans could still scuttle the bill.

If it survives those tests, the final energy bill will be a marked turnaround from what automakers faced when Congress first started to tackle energy issues. The Bush administration made reworking energy policy a major priority in early 2001.

There were concerns about the rising percentage of oil coming from other countries. There was recognition that fuel economy had actually gotten worse as more Americans shifted from cars to SUVs and other light trucks. And there was sentiment to make cars more efficient to help slow the buildup of greenhouse gases in the atmosphere.

Leading Republicans on the influential House Energy and Commerce Committee, including chairman Rep. W.J. "Billy" Tauzin, R-La., and Rep. Joe Barton, R-Texas, were advocating a hard look at automotive fuel economy. Tauzin, who had recently crossed paths with the auto industry over the Ford-Firestone tire debacle, gave automakers a particular reason to worry.

Tauzin and Barton backed off when the auto industry's lobbying kicked into high gear. Both opposed a plan to require light trucks to meet the same 27.5 mpg fuel economy standard as cars.

Eventually, Rep. John Dingell, D-Dearborn, brokered a deal on the industry's behalf. The House adopted Dingell's plan, which was backed by Tauzin, requiring the National Highway Traffic Safety Administration to raise fuel-economy requirements enough to save 5 billion gallons of gasoline.

The final energy bill will not require the NHTSA to achieve any specific oil savings goal.

Changes to bill

The conference committee also has dropped language written by Sen. Carl Levin, D-Detroit, that called for NHTSA to come up with a new fuel economy for cars in addition to SUVs and other light trucks.

Under current law, NHTSA must issue the light truck standard each model year. NHTSA recently raised the fleet average requirement for light trucks from 20.7 mpg to 22.2 mpg for the 2007 model year.

Since the CAFE program began in 1975, the fleet requirement for cars has been set by Congress, rising from 18.0 mpg for the 1978 model year to 27.5 mpg in 1990.

NHTSA is expected to begin its formal rule-making process for 2008 and later model years within the next few weeks.

House and Senate negotiators also dropped a deadline for NHTSA to complete its regulation. Under the bill that passed the Senate, NHTSA would have been required to finalize its rule on light trucks within 15 months.

"This bill has been going downhill since it started," said Joan Claybrook, president of Public Citizen, a Washington consumer group. "This is a do-nothing bill for the consumer and the American public."

Among the few outstanding issues of concern to automakers is whether the bill will include continuation of an alternative fuel program popular with Detroit's automakers.

For several years, the Big Three have earned credits toward their Corporate Average Fuel Economy requirements by selling so-called flex-fuel vehicles, which can run on either gasoline or a cleaner alternative like ethanol or natural gas.

Environmentalists have long derided the flex-fuel program, arguing that the vehicles are rarely driven on their alternative fuel. The groups claim the program actually hurts the environment by allowing Detroit's automakers to sell more gas guzzlers and still meet the requirements of the CAFE program.

You can reach Jeff Plungis at (202) 662-7378 or jplungis@detnews.com.

charliemike

Low-sulfur diesel solves this problem ... if Congress would only realize this and get their heads out of Big Oil's crotches.

gavriil

Totally makes sense politically. Way too many people lost their jobs, especially in manufacturing. No room for passing bills that may worsen the situtation currently.

But that does not mean that we wont see better fuel mileage from all automakers anyway. Competition will force them to do so. Toyota and others with their aggressive Hybrid strategy, will force GM and Ford to follow. Although both are already having a few hybrid vehicles ready for the very near future (e.g. Escape and Silverado).

gavriil

Way too much money for this to happen any time soon. Diesel wont succeed in the USA. Hybrids will though. And Europe is way behind in even theritically accepting Hybrids. Like we are with Diesel.

charliemike

We could have 40mpg+ Jeep Grand Cherokees ...

The reason we don't have it is Big Oil.

I believe that if we had low-sulfur diesel people would buy it. The big part of the turn off from diesel right now is the smell.