Fuel economy deal near
Fuel economy deal near
By 2020: Automakers would get help, retain jobs
November 27, 2007
WASHINGTON — Congressional negotiators are close to agreement on an increase in fuel economy standards to 35 miles per gallon by 2020, with some caveats to satisfy U.S. automakers, people familiar with the talks told the Free Press on Monday.
The compromise would preserve the distinction between cars and trucks, something Detroit automakers have fought for, while giving federal regulators strict limits on how to put the increases into place. It also would include a provision backed by the UAW aimed at keeping small-car production in the United States.
People familiar with the talks under way Monday afternoon said Democratic leaders want to have a deal by later this week as part of a larger energy bill that would come to a vote in the House and Senate as soon as a week from Wednesday.
Passing an energy package with bipartisan support would give Democrats a much-welcomed victory, because only two weeks of sessions remain before Congress recesses for the year and lawmakers face a backlog of appropriations and other tough bills.
Several details were still undecided late Monday as industry officials continued to huddle on Capitol Hill.
"There is no deal at this point," said Jodi Seth, spokeswoman for Rep. John Dingell, the Dearborn Democrat who’s leading talks in the House. "We’re still in negotiations."
For Detroit’s automakers, such a compromise might represent shelter from a storm of court rulings, state laws and public opinion calling for even tougher fuel economy standards. President George W. Bush has ordered federal agencies to release drafts of their planned fuel economy increases for vehicles in 2012 and beyond by the end of the year, and recent rulings by the Supreme Court and others have given regulators new powers to rewrite such rules.
Dingell’s Senate counterparts in the talks, Daniel Inouye of Hawaii and Dianne Feinstein of California, were the main backers of a Senate bill passed in June setting a 35-m.p.g. standard for the industry by 2020 that eliminated the distinction between cars and trucks, a provision Detroit automakers and Japan-based Toyota called unrealistic.
After opposing the Senate bill, Dingell released a letter to House Speaker Nancy Pelosi last week saying the bill could be used as a framework for a compromise. Industry sources said in recent weeks that the 35-m.p.g. target had become unavoidable, but some automakers were still pushing for more time beyond 2020 to meet it, a clause Senate backers appear unwilling to give up.
An SUV loophole?
General Motors Corp., Ford Motor Co., Chrysler LLC and Toyota Motor Corp. all had backed a plan in the House to raise standards to 32-35 m.p.g. by 2022, while preserving the distinction between cars and trucks.
Environmental groups have long claimed the distinction is an SUV loophole that allowed automakers to sell gas-guzzling vehicles under rules originally designed for work trucks.
The people familiar with the talks, who requested anonymity because of the talks’ sensitive nature, said the deal on the table would preserve different rules for cars and trucks. However, it would still require the industry to hit a 35-m.p.g. average by 2020 with no exceptions but with limits on how federal regulators could write the final standards.
All sides had agreed regulators would set a specific fuel economy target for every vehicle based on its size. Backers of higher standards wanted the same system to apply to all vehicles, but automakers argue trucks are used differently than cars and require a different system for setting fuel economy targets.
The compromise also extends credits for flexible-fuel vehicles, a key point for Detroit automakers. And it preserves domestic car production rules that the UAW argues keep 17,000 workers employed in U.S. plants — a provision the Senate bill had left out to win the support of Republican senators and Japan-based Nissan Motor Co.
Dingell had said in his letter that any fuel economy increase also should include some kind of aid for domestic automakers, which would face higher costs for meeting the standards than their foreign competitors.
It was not clear Monday what kind of aid might be included, but several lawmakers have proposed tax credits for automakers that revamp older factories for building hybrids or vehicles with other advanced technology.
Automakers want enough time
A spokesman for the Alliance of Automobile Manufacturers, which includes GM, Ford, Chrysler and Toyota, said any deal would have to address some of the industry’s concerns, such as having enough time to develop more efficient models.
"We are optimistic that a compromise can be reached that can be supported by the industry and signed into law by the president," spokesman Charles Territo said.
Outside of the fuel economy debate, Democratic leaders must resolve disagreements with Republicans over other parts of the energy bill, including tax proposals and standards for renewable sources of electricity.
But the fuel economy increases had drawn the most potential opposition from within the Democratic Party. If Dingell persuades other Democrats to back a fuel economy compromise, congressional staffers said the rest of the bill could fall into place.
