Auto lobby grudgingly strikes deal

The acceleration of fuel economy standards announced Tuesday by the Obama administration marks a stark reversal for a domestic auto lobby that once had its way in Washington.

Automakers were such a powerful inside-the-Beltway force that Congress not only refused to compel Detroit to meet higher mileage requirements — it prevented federal regulators from even considering the idea, with last-minute amendments to federal highway laws.

{mosads}For years, the environmental groups that challenged the auto industry ended up as legislative road-kill.

“If the CAFE [Corporate Average Fuel Economy] standard had been a vehicle, it would have been on blocks,” said Lowell Ungar, director of policy at the Alliance to Save Energy, an advocate of higher fuel standards. “It didn’t change for a couple of decades. Now they’ve turned into a sports car.”

Domestic automakers in particular resisted higher efficiency rules, arguing that they were a safety hazard because they would force drivers into smaller cars and that they gave foreign automakers that already made smaller vehicles a market advantage.

The political dynamics began to shift in 2007, when Democratic leaders used their new majority powers to push through the first increase to fuel economy standards for cars since the 1970s, in part to reduce carbon dioxide emissions they blamed for warming the planet.

This year, the industry’s fortunes took an even sharper turn as the economy tanked and two major domestic manufacturers, General Motors and Chrysler, were forced to turn to Washington for billions of dollars in bailout money to survive.

That set the stage, according to some sources, for the deal announced Tuesday, which will force both domestic and foreign automakers to make and sell cars and trucks that collectively are more than 30 percent more fuel-efficient than the models available today.

“You can’t engage the same way when you are being scrutinized and your business plans are being analyzed and you need the support of the government,” said one auto lobbyist.

Auto executives joined state officials, environmentalists and members of the administration during a Tuesday press conference in which President Obama announced the new rules.

The new proposal requires an average fuel economy of 35 miles per gallon by 2016. It would save 1.8 billion barrels of oil and would cut carbon emissions by the equivalent of removing 177 million cars from the road.

{mosads}The new fuel standards could add $700 to the average cost of a car. The previous fuel economy standard was projected to add $600 to the sticker price, for a total price bump of $1,300 compared to a vehicle sold today.

Administration officials said fuel savings would offset those higher costs for consumers.

The issue of cost was one of the main arguments U.S. automakers used to turn back calls for mileage improvements. The other was safety concerns. The industry claimed that higher fuel standards meant smaller cars, which meant more traffic deaths.

But those arguments were missing on Tuesday. Instead, auto lobbyists focused on what they felt they gained from the compromise: a single national standard that was flexible enough to offer consumers a variety of vehicle types.

“What’s significant about the announcement is it launches a new beginning, an era of cooperation,” said Dave McCurdy, the former Democratic congressman and now head of the Alliance of Automobile Manufacturers. In a statement, he said the industry welcomed a compromise that he said would allow for automakers to continue to offer a mix of large, medium and small vehicles.

California and other states had fought in recent years to adopt their own standard. The Environmental Protection Agency (EPA), meanwhile, may have added its voice to federal regulations thanks to a Supreme Court decision that gave it the ability to regulate carbon dioxide under existing authority provided by the Clean Air Act.

Automakers were concerned the combination of activity would lead to a patchwork of rules that would have made compliance tough.

{mosads}“You looked at it and said this is an absolute nightmare,” said Michael Stanton, a longtime industry lobbyist who now runs the Association of International Automobile Manufacturers.

The standard announced Tuesday is based on the rule California had crafted and 13 other states and the District of Columbia had said they would also adopt if the EPA granted a necessary waiver. Under the agreement, California will agree to adhere to the federal program until its expiration in 2016.

Sources pointed to several factors that led to the ultimate resolution in addition to the threat of a patchwork of standards.

Sue Cischke, Ford Motor Co. vice president for sustainability, said the industry decided two years ago to “be for something and not just against everything.”

White House press secretary Robert Gibbs disputed that there was a link between the federal aid and the agreement announced Tuesday, noting the involvement of Ford and foreign auto companies that had not sought federal financial help.

“I’m simply saying that the notion that two of the 10 companies represented here received — are receiving — assistance played a role in the other eight agreeing on something that they have generally been on the opposite side of for the better part of 20 years — I just don’t think that makes sense,” Gibbs said.

Regardless of the reasons that drove the auto industry to the table, it is clear that the political winds had changed.
“If you told me on Sunday that I would be going to the White House on Tuesday for an announcement of a 35 miles per gallon fuel standard, I would have said no way,” said Ann Mesnikoff, who directs the Sierra Club’s green transportation program.

Sam Youngman contributed to this article.