WASHINGTON Automakers and their allies have
stepped up lobbying to convince states that a proposal by
California to cut tailpipe emissions sharply to fight global
warming could further depress the struggling U.S. industry.
There is concern among General Motors Corp, Ford Motor Co,
Chrysler LLC -- and supporters in Congress and at state level
-- that the California initiative may survive court challenges
and possibly be adopted by New York, Pennsylvania, and more
than a dozen other states.
Adding pressure is a fresh U.S. Senate proposal that would
force the administration of George W. Bush to let California
enforce its plan, which has been in federal legal limbo since
Prospects of the bill becoming law are uncertain, though it
illustrates that powerful lawmakers, including leading
Democratic presidential candidates, want stronger environmental
protection than industry is prepared to deliver.
The California proposal calls for a 30 percent reduction in
car emissions over eight years beginning in 2009, equal to a
fuel efficiency target of 43 miles per gallon for cars and some
light trucks. A new U.S. energy law, reluctantly backed by
Detroit as the "devil you know," requires a 35 mpg average by
2020 -- 40 percent better than today's performance.
Industry executives and their allies said in interviews
that a federal standard alongside a more challenging policy for
certain states would wreak havoc with design and production
plans and increase costs exponentially.
U.S. automakers, sandwiched between sliding sales and a
softening economy on one side and a new mandate on the other,
are scrambling to respond with more efficient engines and
research on alternative fuels. The impact of December's energy
law alone at GM is $6,000 per vehicle, the company estimates.
Dave McCurdy, chief executive of the Alliance of Automobile
Manufacturers, said in an interview that the industry's lead
trade group would redouble efforts to "educate" states that
have committed to or are thinking about adopting the measure.
McCurdy said the California-inspired initiative would
result in a "patchwork quilt of inconsistent and competing fuel
economy programs" that would lead to "confusion, inefficiency,
and uncertainty for automakers and consumers."
Automakers have reason for worry after they and the Bush
administration lost key court decisions last year in suits
related to mileage improvements and the California case.
Moreover, Environmental Protection Agency documents
released by a Senate committee last week showed agency staff
concluded the EPA would probably win a suit by automakers if it
granted California a waiver from current law to proceed with
its plans, but that the agency would likely lose if it denied
California's bid and the state sued. That is exactly what
happened after the EPA in December rejected California.
The appeals court in San Francisco has no timetable to rule
on the challenge but carmakers hope for a change of venue.
PRESIDENTIAL RACE TOPIC
Executives interviewed prefer to let McCurdy speak for
them. But some said privately their best hope may rest with the
Supreme Court. They agreed all bets were off if Democrats
widened their majority in Congress and won the White House.
Hoping to boost their influence if that occurs in November,
financial contributions to Democrats by manufacturers are about
even with Republicans for the first time in years. In 2006,
automakers gave to Republicans by a 2-to-1 margin, according to
federal campaign finance data compiled by opensecrets.org.
U.S. automakers are in the midst of severe restructuring,
closing plants and slashing jobs as they battle the loss of
market share to Japanese rivals.
Michigan Attorney General Mike Cox warned of new pain if
California wins. "I would urge all concerned to move
cautiously, especially with respect to an industry that
contributes significantly to GDP," Cox said last week.
Cox said industry estimates show net auto-related job
losses of between 60,000 and 100,000 if California were to
impose its standard and other states were to follow suit.
Michigan, which would be hardest hit, has lost more than
350,000 manufacturing jobs since 2001, mainly in autos. The
state's 7.5 percent jobless rate is the nation's highest.
Shares of Ford and GM have fallen by just under 20 percent
in the past year, though GM has regained some value. Chrysler
is privately held.
Although industry warns of steep job losses in the
politically important states of Michigan and Ohio, Democratic
presidential candidates Sens Barack Obama and Hillary Clinton
signed on to the Senate bill proposed by California's Barbara
Boxer. Explaining their support, Clinton and Obama touted the
benefits of tough measures to fight global warming.
Gov. Edward Rendell of Pennsylvania is skeptical of
Detroit's claims on emissions. The Democratic governor told
Congress that carmakers previously dismissed safety mandates as
too tough and then made millions of vehicles at huge profits.
"It's baloney," Rendell said. "It's what the auto industry
has been telling us for years and years."
(Editing by Braden Reddall)