By MIKE SPECTOR
WASHINGTON — The heads of Detroit’s struggling Big Three auto makers appealed directly to lawmakers on Capitol Hill Wednesday amid intensifying debate over raising fuel-economy standards.
The chief executives of General Motors Corp., Ford Motor Co. and DaimlerChrysler AG’s soon-to-be-sold Chrysler Group planned to meet with Senate Majority leader Harry Reid (D., Nev.) and other congressional leaders Wednesday in an attempt to steer fuel-economy debate back in their direction.
Amid growing pressure to curb greenhouse-gas emissions, lawmakers are considering a bevy of proposals to mandate increased fuel economy in cars and trucks. The auto industry has in recent days ramped up lobbying efforts as some of those proposals, which get tough on auto makers, have come to the fore.
Ostensibly, Detroit’s auto executives descended on Capitol Hill to attend a manufacturing summit sponsored by Michigan Democratic Sen. Debbie Stabenow, an event intended to highlight several industry challenges, including soaring health-care costs and trade imbalances.
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But those issues will be overshadowed over the next week in Washington by the prospect of increased fuel-efficiency regulations for American vehicles. As early as next week, the Senate will debate a bill requiring auto makers to build cars and trucks that achieve a fleetwide 35 miles per gallon by 2020, a considerable jump from the current average of about 25 mpg. On Thursday, a House Energy and Commerce subcommittee holds a hearing on its own fuel economy legislation.
In ongoing discussions with Mr. Reid and other lawmakers, the auto executives have reiterated their opposition to the current Senate bill and the need for “closer study” of other proposals, according to people familiar with the matter. Other proposals include a potential amendment by Sen. Carl Levin, a Michigan Democrat and industry ally, and the current draft legislation in the House.
Auto Makers’ Fears
Detroit’s auto makers fear that stringent new fuel economy requirements – known as Corporate Average Fuel Economy, or CAFE – could cost them billions while they are already bleeding red ink in their core North American operations. One Bush administration estimate put the cost of 4% annual increases in mileage standards at $85 billion for GM, Ford and Chrysler, and the auto makers fear it could cost more.
“Frankly, it’s time to move beyond exclusive reliance on historical regulatory approaches like CAFE that clearly haven’t solved” America’s problem with foreign-oil dependence, GM CEO Rick Wagoner told manufacturers and senators — including presidential candidates Hillary Clinton and Joe Biden — during a Captiol Hill luncheon. Mr. Biden has been a vocal proponent of stiffening fuel-economy regulations.
Auto makers have argued that Americans’ oil addiction has only worsened amid CAFE regulations and that costly mileage rules would divert investment from promising fuel-saving technologies such as plug-in hybrids.
Auto makers have long resisted fuel-economy increases. Despite Mr. Wagoner’s comments, industry leaders are resigned to some kind of regulatory increase amid mounting political pressure to address global climate change. “The usual hard line of resisting any and all CAFE increases isn’t likely to be viable this time around,” says a person familiar with auto makers’ thinking, adding that auto companies now have to “express a willingness to stretch” toward higher mileage targets.
In doing so, auto makers plan to vigorously lobby for the most favorable legislation possible. Specifically, auto makers hope to soften the current Senate bill approved by that chamber’s commerce committee in early May.
In their meetings with various lawmakers, Mr. Wagoner, Ford’s Mr. Mulally and Chrysler’s Tom LaSorda, while not indicating outright support, were expected to express their desire to take a “careful look” at some emerging proposals that contain potentially favorable provisions.
Mr. Levin’s proposal, for example, would differ from the current Senate bill in some key ways. Most significantly, it would allow auto makers to avoid fuel-economy regulations all together if they demonstrate they intend to build vehicles that would get far better mileage than required by CAFE, such as gasoline-electric hybrids and flex-fuel vehicles capable of running on E85, a blend of 85% ethanol and 15% gasoline.
The proposal, also crafted by Ms. Stabenow and other lawmakers Mr. Levin declined to name, would also maintain the regulatory distinction between passenger cars and light trucks, allowing light trucks to meet a lower standard. Under the Levin proposal, passenger cars would have to achieve an average 36 mpg by 2022 while trucks would have to achieve a 30 mpg average by 2025 – considerably more lead time than allowed by the current Senate bill. In additon, car makers would have to meet those targets only if regulators determine they are “maximum feasible” goals.
Levin Proposal
Mr. Levin also proposes an “attribute-based” CAFE system much desired by Detroit’s auto makers and Japan’s Toyota Motor Corp. The system would assign bigger vehicles lower mileage targets and tougher standards for smaller cars and could allow companies to sell more profitable fuel-thirsty cars and trucks without having to rev up sales of lower-margin, better-mileage vehicles.
In the House, lawmakers on an Energy and Commerce subcommittee plan to hear testimony Thursday from auto industry representatives on drafted alternative fuels legislation that would increase mileage to 36 mpg for passenger cars by 2021 and 30 mpg for light trucks by 2024.
But most controversially, the bill — in its current form — would block states such as California from implementing their own curbs on greenhouse-gas emissions from vehicles, as well as effectively reverse a recent Supreme Court ruling that empowered the Environmental Protection Agency to regulate tailpipe emissions.
House Speaker Nancy Pelosi of California said Tuesday she wouldn’t support legislation that hamstrung her state.
Rep. John Dingell, a Michigan Democrat and industry supporter, is chairman of the Energy and Commerce committee and released a statement late Tuesday night saying the House draft moves the U.S. closer to addressing climate change and energy security.
One provision — critics say loophole — that auto makers are pushing in any potential law is extension of credits for so-called flexible-fuel vehicles that can run on E85, a mix of 85% ethanol and 15% gasoline, or biodiesel. Under the provision, an auto maker gets credit for the mileage a flex-fuel vehicle would achieve if it ran on an alternative fuel.
But because of the current dearth in the U.S. market for fuels like E85, those vehicles usually run on plain-old gasoline, failing to get the promised mileage.
“The bad news is that details matter a lot and what the auto industry and their allies are proposing is not progress but a combination of the status quo and rollbacks,” said Kevin Curtis, vice president at National Environmental Trust. He and other environmentalists gathered on a conference call Wednesday to counter a recent ad blitz by auto makers urging Americans to oppose stringent fuel-economy increases.
Auto makers say they will have to downsize vehicles to make them more fuel efficient, resulting in less safe cars and trucks. But critics say the industry can use existing technologies — such as better engines and stronger, lighter metals — to keep vehicles at their current size without sacrificing mileage or safety.
–Maya Jackson-Randall contributed to this article.