Feds to defend 54.5 mpg fuel efficiency proposal

October 12, 2011 http://detnews.com/article/20111012/AUTO01/110120391

Feds to defend 54.5 mpg fuel efficiency proposal

DAVID SHEPARDSON
/ Detroit News Washington Bureau

The Obama administration is defending its agreement with 13 major automakers to hike fuel efficiency standards to 54.5 mpg by 2025.

In written testimony obtained by The Detroit News ahead of a hearing Wednesday morning, officials with the National Highway Traffic Safety Administration and Environmental Protection Agency insist they will consider public input in crating the regulations and say consumers will benefit.

The hearing is titled “Running on Empty” — a sign of concern by Republicans about the deal.

Automakers, California and the White House reached a deal in late July to double current requirements in secret talks.

Rep. Darrell Issa, R-Calif., chairman of the House Oversight and Government Reform Committee, has asked automakers and the White House to disclose more about the talks — and complains that consumer demand isn’t being considered.

In joint testimony, EPA officials Margo Oge and Regina McCarthy also defended the deal.

The new requirements will “dramatically cut the oil we consume, saving billions of barrels of oil and saving American families well over a trillion dollars in fuel costs. This is a clear benefit to consumers, and will reduce operating cost for small businesses by providing substantial savings in fuel costs,” the EPA testimony says. “Consumers will continue to have access to the same full range of vehicle choices that they have today.”

NHTSA Administrator David Strickland also said the agency is committed to public input.

“We are also mindful of the legal requirements that govern the rulemaking process and are strictly adhering to those requirements in this rulemaking,” he will say, according to his written testimony. “The public will certainly have an opportunity to comment on every aspect of the agencies’ analysis and the proposal.”

But automakers are free to withdraw their support from the deal — and go to court to challenge the final regulations if they stray too much from the deal reached this summer.

Automakers won a nationwide program under the deal — meaning California joined by other states can’t set tougher rules — and can earn credits for building electric vehicles and other incentives to help meet the new requirements.

EPA and NHTSA were supposed to unveil the proposed regulation by the end of September — but have delayed the proposal until mid-November.

Both agencies pledge to consider input.

“EPA and NHTSA will carefully consider any such comments before making any final decisions on the standards,” the agencies said.

But Jeremy Anwyl, CEO of Edmunds.com, said the government needs to take into account consumer behavior.

“Up until now, consumers have been either ignored or misrepresented,” Anwyl’s testimony said, adding “consumers are definitely not on board. … At the end of the day, they are the ones who will be asked to buy and drive the vehicles our government is potentially demanding the car companies build.”

He said overly aggressive requirements “could easily destabilize an industry that is a vital engine of our collective prosperity.”

“If mandates trigger an escalation of prices, a reduction in consumer utility or the adoption of technologies before they have been proven, consumers will react,” he said. “We saw this play out before in the late ’70s and early ’80s when the domestic auto industry, torn between mandates for greater fuel efficiency and consumer demand for larger vehicles, introduced a generation of truly awful vehicles. The reputational damage from this era lingers today.”

But Roland Hwang, transportation program director at the Natural Resources Defense Council, who is also testifying strongly defended the deal.

“Far from ‘running on empty,’ these clean car and fuel economy standards will save Americans from emptying their wallets at the pump, stop the emptying of our national wealth for foreign oil, and cut the dangerous carbon pollution that is emptying our children’s future,” he said, according to his testimony.

He noted the new rules through 2025 are expected to save Americans $1.7 trillion at the pump, cost, reduce oil dependency by 12 billion barrels of oil, and cut heat-trapping pollution by about 6 billion metric tons.

Hwang said the deal shows that governing — by working together — can work.

“But maybe the most important result of the newest clean car agreement is what it shows about getting beyond political gridlock in today’s America. The president, the auto companies, states, labor and environmentalists have, once again, shown what it means to govern effectively and what can be accomplished by constructive compromise,” Hwang said.

Strickland also disputed suggested that boosting fuel standards too fast could harm safety.

“There is a feasible technology path that the industry could pursue to meet the standards that does not require unsafe levels of mass reduction,” his testimony says. “We absolutely will not require any manufacturer to do anything that would have a negative effect on safety.”

The new rules come on top of the 2012-16 requirements that will hike fuel efficiency to 34.1 mpg by 2016.

Those rules will save over 1.8 billion barrels of oil over the life of the vehicles and consumers will save on average $3,000 over the life of vehicles. But the rules will cost the industry $51.5 billion and add $950 to the cost of a new vehicle in 2016.

The Obama administration previously said a slightly more aggressive regulation in 2025 of 56.2 mpg would add at least $2,100 to the cost of a new vehicle by then. The administration has steadfastly refused to offer any estimate of the costs of its new rule.

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