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Auto Dealers Oppose Proposed Fuel-Economy Rules

Source: WSJ - Josh Mitchell

Posted on 15 Sep 2011

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The nation's politically influential auto dealers are revving up a lobbying effort to block fuel-economy rules proposed by the Obama administration, emboldened by the administration's recent retreat on tougher smog regulations.

More than 400 dealers are set to fly to Washington in coming days to press legislation that would block the automobile rules for at least a year. They argue the new rules—which would raise the average fuel economy of new cars and light trucks to 54.5 miles a gallon over the next 14 years—would be too costly and lead to job losses.

"This is our No. 1 issue and we're putting the full weight of NADA behind it," said Bailey Wood, a lobbyist for the National Automobile Dealers Association, an industry trade group. "The Obama administration wants to put a check mark in this box and pretend it's done."
Major auto makers, the White House and the state of California reached a handshake agreement this summer on annual emissions and fuel-efficiency targets for autos sold between 2017 to 2025. The 54.5 mpg target is roughly double today's standard. A formal proposal could come as early as this month.

An amendment to a bill approved this summer by the House Appropriations Committee would block the Environmental Protection Agency, which is working with the Transportation Department, from drafting the rules for another year. Auto dealers are pushing for the measure, sponsored by Rep. Steve Austria (R., Ohio), to be included in a broad government-funding package that could be taken up later this year.

Major auto makers, including General Motors Co., Toyota Motors Corp., Ford Motor Co. and Honda Motors Co., agreed to the new fuel economy targets, even after some initially voiced concerns that such a big leap in targets could depress sales. They said their main objective is a national standard that will preclude states from setting a patchwork of individual standards.

Gloria Bergquist, a spokeswoman for the Alliance of Automobile Manufacturers, the industry's main trade group, said major auto makers are focused on working with federal regulators on drafting the 2017-2025 regulations and haven't taken a position on the legislation proposed by Rep. Austria.

NADA's push comes amid continued criticism from Republicans, including GOP presidential candidates, that regulations proposed by the Obama administration are burdening businesses at a time when the unemployment rate remains above 9%. Earlier this month, President Obama asked the EPA to withdraw an air-quality rule that businesses said would cost jobs.

White House officials have said the proposed fuel-efficiency targets could raise average vehicle prices by roughly $2,000 to $3,000 but that consumers would recoup those costs in gas savings, since all cars would be more fuel efficient. They have touted the standards as a way to help the environment while saving consumers money at the pump and reducing the nation's dependence on imported oil.

The cost assessment came under fire at a House Oversight Committee hearing Wednesday. John Graham, a former top regulator under the George W. Bush administration, said the Obama White House had understated the costs of the proposal, in part because the savings on gas might not be so high. Cass Sunstein, Mr. Obama's regulatory czar, said the administration's projections are based on a detailed analysis.

"It's too much, too soon, too fast," said Mr. Wood of the dealers' association. "I think everyone is starting to look at overregulation and how it impacts the economy and how it impacts jobs."

Roland Hwang of the Natural Resources Defense Council, an environmental group that lobbied for the new standards, said blocking the mileage rules would not only harm the environment but would be "counterproductive" to the industry by creating uncertainty.

"It was a hard-fought negotiation to get to the agreement and trying to undo this agreement is just going to create chaos to the auto industry as a whole," Mr. Hwang said, adding that the new rules would help auto makers plan future lineups. "It seems more ideologically driven that what is pragmatic and practical."

The auto dealers have twice succeeded in getting congressional Democrats to defy the Obama White House. In late 2009, they successfully pushed legislation to set up an arbitration process to reinstate dealers closed during the bankruptcy reorganizations of General Motors and Chrysler Group LLC. Months later, auto dealers won an exemption from the financial-regulatory overhaul.