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Detroit News - 2008-04-03

Carmakers fight fuel rules state by state

Industry hopes to convince them not to adopt Calif.'s tougher emissions regulations.

David Shepardson / Detroit News Washington Bureau

WASHINGTON -- Automakers are taking their battle against even tougher fuel efficiency requirements from the nation's capital to state capitals around the country.

The Alliance of Automobile Manufacturers, the trade group that represents Detroit's Big Three, Toyota Motor Corp., Daimler AG and five other automakers, is trying to convince states not to adopt California's emissions rules, which are stricter than federal regulations and would require a 30 percent reduction in tailpipe emissions by 2016. That would force automakers to build cars that average 43.7 miles per gallon and light trucks that average 27 mpg.

At least 20 states have already adopted California's standards or are considering doing so. Since the beginning of the year, Dave McCurdy, CEO of the auto alliance and a former Democratic congressman from Oklahoma, has met with the governors of Utah, Wyoming, Minnesota, New Hampshire and Montana, as well as numerous state legislators.

Last year, automakers grudgingly supported tougher standards but insist that they're best achieved through federal mandates. New fuel rules call for an industrywide fleet average of 35 mpg by 2020, a 40 percent increase over today's standards.

"We get it. There is a different message. Our actions speak louder than our words," McCurdy said, emphasizing the dramatic impact of the new federal requirement and comparing the industry's response to actions in a poker game.

"We've anted up. The wedding band is there, the car keys are there, the house mortgage," McCurdy said, noting the billions automakers are spending to meet the new standards. "We're all in."

But automakers contend that allowing states to impose their own standards would lead to a patchwork of regulations, requiring state-by-state compliance. They say such an approach could force them to stop selling some vehicles in some states.

McCurdy has had some success in his lobbying effort.

In November, a panel created by Montana Gov. Brian Schweitzer proposed that the state adopt California's standards. But after McCurdy met with Schweitzer on March 18, the governor expressed support for national standards.

"It would be preferable to have national action," said Schweitzer's natural resources policy director, Mike Volesky. "Automakers aren't going to manufacturer cars to meet the standards for our tiny market of 900,000 residents."

So far, 12 states have adopted California's standards: Connecticut, Maine, Massachusetts, New Jersey, New York, Oregon, Pennsylvania, Rhode Island, Vermont, Maryland, New Mexico and Washington. The governors of Colorado, Arizona, Florida and Utah have said they will adopt them. And North Carolina, Illinois, New Hampshire and Minnesota are among states considering adopting them.

Many western states have joined the Western Climate Initiative, which may decide to implement the California standards as a group.

That's one of the reasons McCurdy met with Wyoming Gov. Dave Freudenthal, chair of the Western Governors Association.

California needs a waiver from the Environmental Protection Agency to allow it and the other states to put new rules into place. On Dec. 19, the EPA rejected the request; the same day, President Bush signed the energy bill that included the new federal fuel economy requirements.

Since then, California and the states have sued the EPA to reverse the decision, and Congress has held hearings investigating the decision. All three presidential candidates have endorsed overturning the EPA decision.

"It's not going to end, this challenge of informing decision-makers as to what this industry is doing, how vital it is and that we want to be part of the solution," McCurdy said.

McCurdy also plans to meet with proponents of California's rules, including Massachusetts Gov. Deval Patrick later this month. He also has been meeting with a wide range of groups, including speaking to the U.S. Conference of Mayors and Hispanic Chamber of Commerce, about the California issue.

The alliance prepared a "playbook" for policymakers that highlights the energy bill's new requirements and the challenges automakers face. The group is working with consultants and lobbyists in all 50 states.

A key argument automakers and auto dealers are making is the economic impact of auto sales in the states.

"Twenty-four percent of sales tax revenue in California comes from new cars sales; in Utah, it's about 18 percent," McCurdy said. "They have to be careful before they embrace something that may not be helpful."

California argues the cuts are essential to protect the environment and technically feasible, though it admits they would hike the price of new vehicles.

Lisa Page, a spokeswoman for California Gov. Arnold Schwarzenegger spokeswoman, said he hasn't directly lobbied other governors, but his "top environmental officials have been sharing the details of our greenhouse gas emissions reduction programs, including tailpipe emissions standards, and encouraging their adoption."

Individual automakers are mostly sitting out the state-by-state debate, leaving the heavy lifting to the alliance. But all major automakers, including Honda Motor Co., Toyota Motor Corp. and Nissan Motor Co., oppose California's push to set state-by-state rules.

You can reach David Shepardson at (202) 662-8735 or dshepardson@detnews.com.