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Carmakers are poised to make deal on fuel rules

From freep| June 06 , 2007

After more than 30 years of staunch opposition to federal oversight, the U.S. auto industry appears ready to argue for higher fuel economy standards to block tougher proposals that several automakers worry could cripple their finances.

The latest sign came in a quiet posting of a draft bill from the House Energy and Commerce Committee, chaired by U.S. Rep. John Dingell, D-Mich., the industry's top champion on Capitol Hill.

The draft proposes the industry meet mileage standards of at least 36 miles per gallon for cars after 2021 and 30 m.p.g. for trucks after 2024, or roughly 32.5 m.p.g. overall.

Those mileage figures match a proposal overseen by U.S. Sen. Carl Levin, D-Mich.

Levin's proposal, with slightly different time frames, was offered last week as an alternative to a Senate bill forcing the industry to average 35 m.p.g. by 2020.

Both alternatives would ease the industry's burden toward meeting such standards, and the Dingell committee draft would block states and the Environmental Protection Agency from regulating fuel economy through greenhouse gas emissions.

Automakers have been in private discussions with lawmakers for weeks over fuel economy issues, and executives acknowledge the need to tackle the debate head-on. With its two top defenders on Capitol Hill now proposing similar standards that include some increases, the industry has an outline of ideas it can pitch to other lawmakers.

Senate Democrats plan to bring their bill up for debate next week as part of a package of energy proposals that enjoy broad support. That momentum -- thanks to global warming concerns, rising gasoline prices and energy independence worries -- has forced the auto industry to either find an increase it could support or risk getting sidelined in the debate.

The leaders of Detroit's three automakers, along with UAW President Ron Gettelfinger, are scheduled to visit Capitol Hill on Wednesday, where they plan to lobby lawmakers on several [email protected]@[email protected]@

The House draft, on which Dingell's committee plans to hear testimony Thursday, has drawn a sharp response from opponents.

"The fuel economy portion of the legislation is even weaker than the goals proposed" by President George W. Bush, said Rep. Ed Markey, D-Mass., the House's main proponent of higher fuel economy standards. "If we aren't careful, we could end up making our situation worse, not better."

Detroit automakers, led by General Motors Corp., have railed against federal fuel economy rules since they were established in 1975, saying they forced them to build vehicles that consumers didn't want and added thousands of dollars per vehicle in costs.

Earlier this year, GM Chairman Rick Wagoner called the Corporate Average Fuel Economy rules a "failed system," and said it distracted from more worthy efforts such as increasing alternative fuels. And GM Vice Chairman Bob Lutz once compared federal fuel economy rules with forcing people to lose weight by selling clothes only in smaller sizes.

Foreign automakers have been more sanguine in general about fuel economy rules, but all have opposed the Senate Democrats' proposal as unobtainable. In addition to the 35 m.p.g. target, the bill requires increases of 4% per year after 2020; the industry's most recent gains have been roughly 2% a year.

The Alliance of Automobile Manufacturers -- the trade group that includes GM, Ford Motor Co., the Chrysler Group and Toyota Motor Co. -- did not have any immediate reaction to the draft. But the Alliance of International Automobile Manufacturers said it supported the draft proposal.

The draft is "more challenging for some automakers than others, but certainly it's a responsible proposal that takes into consideration the state of the industry," said Mike Stanton, president of AIAM, which includes Toyota, Honda and Nissan. "It moves the country forward in the way that it needs to go."@@[email protected]@

The draft proposal issued by Rep. Rick Boucher, D-Va., chairman of a subcommittee of the Energy and Commerce Committee, contains several provisions automakers will gladly support.

In addition to reversing a U.S. Supreme Court decision last month allowing the EPA to regulate fuel economy, it would block California and other states from setting their own fuel economy standards.

California officials have threatened to sue the EPA if it doesn't grant, by October, permission for California's standards, which would essentially force automakers to hit a target of 43 m.p.g. by 2016. If California's waiver wins approval, 11 other states could follow suit.

"It's disturbing but not surprising that Chairman Dingell's proposals would require no improvements until 2022, and overturn a Supreme Court decision and the laws of 12 states controlling global warming pollution from automobiles," said Dan Becker, director of the global warming program for the Sierra Club.

The draft bill also provides incentives for any U.S. manufacturers of advanced battery technology necessary for high-tech vehicles such as plug-in hybrids, and gives automakers grants to retool closed plants for building hybrids and flexible-fuel vehicles.

Dingell has said that the Senate proposals stood little chance in the House. He and Boucher have said they would prefer to replace fuel economy rules for automakers with broader proposals aimed at reducing emissions of carbon dioxide across the economy.

The proposal "moves towards an eventual economy-wide greenhouse gas control program," Boucher said in a letter accompanying the draft.

Dingell has been driving committee members to meet a deadline set by House Speaker Nancy Pelosi, D-Calif., to craft energy proposals by July 4.

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