House Republican Report Says CAFE Favors US Automakers

Written By Thomas Ponco on Friday, August 10, 2012 | 10:00 AM

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Published August 10, 2012


By Jeff Cobb



Most of the auto industry and the United Auto Workers Union support federal fuel economy mandates aimed at doubling efficiency by 2025, but some in Congress led by California Republican Darrell Issa are still trying to oppose them.



In the words of Republican opponents, the Corporate Average Fuel Economy (CAFE) rules were a product of "a raw political process designed to appease environmental extremists," and also "openly played automakers off of each other to gain a tactical advantage over the industry."



CAFE is unrealistic and favors bailed-out U.S. automakers following closed-door negotiations, says a report to be released today by the staff of Issa, chairman of the House Oversight and Government Reform Committee, and thus CAFE represents unethical lawmaking at the expense of Americans.



"The inevitable product of this reckless process was a pair of rulemakings that reflect ideology over science and politics over process," said the report, "Americans will be forced to drive expensive, unpopular and unsafe automobiles mandated by the Obama administration."



As reported originally by the Detroit News, Issa is following on with his agenda noted last fall to call into question the motives and legitimacy of the intended CAFE mandates.



Among the automakers that do oppose CAFE are Volkswagen AG, Daimler AG, and Japanese automakers, as observed by the Detroit News citing words written in notes obtained from Toyota.



For their part, Volkswagen and Daimler didn't sign agreements because they said CAFE gives an advantage to light trucks, primarily made by U.S.-based automakers.



Agreeing here and adding to the complaints was head of Toyota Motor Sales, Jim Lentz, who previously told former White House chief negotiator Ron Bloom that the Japanese automakers doing business in North America feel it is a raw deal.



According to the handwritten notes, "Japan is angry. Feel like they have been screwed," Lentz reportedly said.



The Japanese also lobbied for more flexibility to use car credits for meeting truck standards.



But they were denied, and Toyota’s Tundra pickup was excluded in the definition of “full-sized” pickup truck, while the Detroit automakers which profit heavily from such light duty mainstays in the marketplace, do have their full-size trucks included in the definition. As written, the rules favor this class of vehicle and let them lag along behind stricter rules for smaller vehicles.



As a major purveyor of hybrids, Toyota had also asked for but was denied credits for these types of vehicles seeing this as fair given that credits were extended to natural gas, flex-fuel and electric vehicles.




The CAFE rules were in short, an "old Detroit tactic. It may hurt me, but it hurts my competitors more," reported the Detroit News of words said to be written by Lentz.



The state of California was also seen as playing a key role in strong-arming efficiency mandates through. As a state that has right to refuse federal rules it does not like, and being the largest market, it carries a heavy stick at the negotiations table.



Among those who favor President Obama’s aim to reduce oil imports and use however, are proponents who describe CAFE as breaking through a logjam that had prevented stricter federal efficiency mandates.



The argument in favor of CAFE for the period 2017-2025 held by the Obama administration is that while adding an estimated $2,000 per vehicle the rules by 2025 – or $3,000, including added costs from the 2012-2016 rules finalized in 2010 – CAFE will more than pay for itself.



In short, rules will cost the industry $157.3 billion while saving $1.7 trillion at the pump, says the Obama administration, and thus proponents such as UAW President Bob King have said CAFE will be good for the economy, environment and national security.



The White House did not offer an official response to Issa and company, as spokesman Clark Stevens said he had not read the report as of yesterday. In an email he did offer some general thoughts on the latest attempts to obstruct passing of CAFE.



"Despite the efforts of a small few who are apparently opposed to steps that will protect Americans at the pump and reduce our reliance on foreign oil, the administration will continue to take steps to support this unprecedented agreement and ensure these savings for consumers are realized and the cars and trucks of the future are built here in America," he said.



Similarly, Maryland Representative Elijah Cummings, the Oversight Committee's senior Democrat, said in an e-mail Republicans are attacking something that stands to create jobs, save money and decrease petroleum dependence.



"Any allegations that the White House is seeking to weaken the auto industry are simply ridiculous — this is the White House that saved the auto industry from its near-collapse," he also said.



But citing emails of their own – these being between automakers and Obama administration officials, Issa’s report is repeating allegations similar to those we’ve also seen made by the National Auto Dealers Association.



"The impact of this process will not be immediate but will be felt by manufacturers forced to make, dealers forced to sell, and consumers forced to purchase far different, more expensive and less safe vehicles," said the report.



Where are things now? One thing most will benignly agree to is the rules were seen as a compromise all around.



Overall the yeas have outweighed the nays, not least of which among those in favor being environmental groups which initially wanted to see 62 mpg instead of the 54.4 mpg standard by 2025 that will amount to low 40s on window stickers.



"No one wants to see Congress fighting progress toward fuel efficiency, especially when the industry that is regulated supports the agreement," said Roland Hwang, transportation program director at Natural Resources Defense Council.



And at this point, despite vigorous attempts along the way to condemn the CAFE rules, it remains to be seen whether anyone will be able to stop them.



The final rules will be revealed Aug. 15, and are still believed to be on course as a standard to shape the industry through the remaining first quarter of this century.



Detroit News via Automotive News







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