Legislating higher MPG

In late June, the U.S. Senate voted to substantially increase the fuel efficiency of cars, light trucks and SUVs from the current average of 25 MPG to 35 mpg by 2020. The large vote margin, 65 to 27, caught many off-guard, especially the automobile and light truck makers who had successfully lobbied lawmakers and regulators for over 20 years to freeze their vehicles' mpg requirements. (A provision in the bill aimed at raising the mpg for heavy trucks was quashed.)

Now, however, with increasing interest in fuel conservation, a rise in mpg requirements is in the cards, but the details will remain unclear until probably the fall when the House of Representatives will take up the matter in earnest.

At issue are CAFE (corporate average fuel economy) standards, which look at the average fuel efficiency of all vehicles in a manufacturer's stable.

After the Senate action, automakers ramped up lobbying efforts with House members trying to mitigate what they consider the Senate bill's requirements that go too far and too fast. They enlisted the help of employees, dealers and consumers in an effort to convince House lawmakers that less restrictive legislation would be better.

One of the automakers' main interests for any House bill is to maintain the statutory difference between cars and light trucks, a distinction the Senate bill ignores. At a recent House hearing, Dave McMurdy, president & CEO of the Alliance of Automobile Manufacturers, testified: “Americans value fuel economy, but they also want passenger and cargo room, performance, towing ability and more. The fuel economy of light trucks can and should increase, but we need to acknowledge that light trucks and cars need separate fuel economy standards. Existing federal law rightfully separates it in the CAFE program by setting different fuel economy standards for each.”

Automakers support a House bill proposed by Reps. Baron Hill (D-IN), and Lee Terry (R-NE), that would increase corporate average fuel economy standards to 35 MPG for passenger cars by 2022 and 32 MPG for light trucks by 2022.

Automakers also are feeling pressure from California regulators who want to establish tailpipe emission limits that would essentially mandate vehicles with 40 MPG by 2016. The standards would require a waiver from EPA and, according to House documents, officials of the Dept. of Transportation lobbied federal lawmakers urging them to back the Bush administration's opposition to the California waiver request.

While federal law prohibits government officials from lobbying Congress on issues before them, there is no restriction on regulatory matters. However, in a letter to Transportation Secretary Mary Peters, Rep. Henry Waxman (D-CA) said that the lobbying effort amounted to an “improper hidden agenda” because the administration currently is assessing the merits of the California request.

The California waiver could end up being more important than Congressional actions, because 11 other states want to adopt the California model. Not only would the California regulation be more stringent than what's proposed in the Senate bill, but it would set a precedent for state-based standards instead of one national standard.

In addition, any regulatory change in fuel consumption standards will be based on a new method EPA is using to calculate MPG for 2008 models that will take into account faster speeds and acceleration, air conditioner use and colder outside temperatures. The upshot is that any new ratings will be a few mpg's lower than current ratings — another hurdle for light truck makers to overcome when complying with any new standards.