Shift in Attitude : Regulators Rediscover the Auto
Suddenly, it seems, government regulators have rediscovered the automobile. And Detroit feels under siege.
From Sacramento to Washington, state and federal officials are taking a renewed interest in tightening the environmental, energy and safety-related regulations that directly affect the cars Americans drive.
Coming hard on the heels of the laissez faire Reagan era, during which the auto industry almost always found a sympathetic ear in Washington, this tough new regulatory climate has hit Detroit’s auto makers with quite a jolt.
“We do feel lots of pressure right now,” acknowledges Richard Climish, executive director of the environmental activities staff at General Motors.
Regulatory Pace Quickens
“There is no question that the pace of regulation has picked up,” adds Thomas Hanna, president of the Motor Vehicle Manufacturers Assn., the domestic auto industry’s trade group.
That represents a dramatic change from the past eight years. After all, under President Ronald Reagan, the federal government consistently eased back on a wide range of auto-related regulations, most notably those covering fuel economy standards and bumper strength, and delayed or quashed many others.
But now, with polls showing heightened public concern over long-range environmental problems such as global warming and acid rain, as well as over more immediate catastrophes like the Exxon Valdez oil spill in Alaska, both auto executives and environmental experts believe the car is once again coming under mounting scrutiny in George Bush’s Washington and elsewhere as the source of much of America’s pollution problem.
“All of that is just coming together now, and my guess is that it will play well throughout the ‘90s,” says Jim Lents, executive officer of the South Coast Air Quality Management District.
National Priority Rises
Already, this shift in attitudes, among both political leaders and the public, seems to be giving automotive-related environmental and health and safety issues a higher national priority than ever before.
California officials, for instance, note that, despite decades of state-level regulatory activity, the car is still responsible for at least half of California’s severe air pollution problem. So, as California seeks ever-stiffer air quality standards, the car will remain the central focus of regulatory activity in the most pollution-conscious state in the nation.
In fact, auto industry officials acknowledge, the imposition of a wide array of tougher state and federal regulations affecting the car now seems inevitable, forcing them to rapidly alter their future car and truck product programs--while continuing to complain about the increased regulation.
“All of our product decisions, all of our engine and power-train decisions, are dominated” by concerns over fuel economy and related regulations, says Kelly M. Brown, Ford’s executive engineer for fuel economy and emission controls. “It gets involved in everything we do; too much so, I would think.”
The most recent government action to set off alarms in Detroit came, of course, just this week in Los Angeles, when state officials approved a dramatic and controversial 20-year plan to reduce smog in the Los Angeles Basin. Among other things, the plan mandates that by the end of 1998, 40% of all cars and trucks sold in the region must run on alternate, clean-burning fuels, such as methanol. In addition, statewide rules calling for far tougher tailpipe emission standards by 1993 will be imposed.
The auto makers were quick to respond. “Some aspects of the air quality plan could be difficult for GM to meet,” warned William Ott, GM’s spokesman in Los Angeles.
“We all want clean air but we sure want to maintain the economic vitality of the Southland,” he added.
Face New Pressures
But besides California, Detroit’s auto makers now face new pressures from a wide range of other states that are taking new anti-pollution initiatives, after having grown frustrated with the federal government’s failure to clean up the nation’s air.
Just last week, for example, eight Northeastern states announced a plan to adopt California’s more stringent air quality standards beginning in the early 1990s.
The states of New Jersey, New York, Massachusetts, Maine, Vermont, Connecticut, Rhode Island, and New Hampshire said they would impose the tougher standards, rather than weaker existing federal regulations, by 1993. The tougher laws would focus on the tighter auto tailpipe emission standards just announced in California, which could add $150 to the cost of the average car.
In effect, the move by the Northeastern states would force the auto industry to dramatically expand the number of low-emission vehicles, known in Detroit as “California cars,” that they already produce for sale only in California. But industry officials warn that the addition of cars bound for the Northeast to that low-emission production mix will create a “bureaucratic nightmare” that would “Balkanize” their distribution systems.
“If auto manufacturers are forced to respond to a patchwork of different emissions standards throughout the nation, production, distribution and sales of vehicles will become increasingly complex and costly to consumers,” GM said in a statement following the action by the Northeastern states.
Pushing Other Rules
State and city governments are also aggressively pushing other types of auto-related environmental regulations--and seem to have grabbed the auto industry’s attention in the process.
Vermont, for instance, has proposed to ban cars by the early 1990s equipped with air conditioners that emit chemicals harmful to the upper atmosphere’s ozone layer. The City of Irvine, meanwhile, has proposed requiring service stations and repair shops to install new equipment to recycle the chemicals when performing maintenance on car air conditioners, which could increase repair prices.
Faced with such local pressures, as well as with an international environmental accord to reduce the use of such chemicals, the major American and Japanese auto makers, have said they will modify their air conditioner systems by the mid-1990s to eliminate the types of Freon gas that damage the upper ozone layer.
Washington, prodded in part by such state and local actions, has also been the site of a dramatic increase in auto-related regulatory activity.
This fall, for instance, new federal rules will require for the first time that every car come equipped with either air bags or automatic seat belts--ending a 20-year struggle between Detroit and auto safety advocates. The auto industry has complied, and plans to install air bags in millions of new 1990 models--but not before raising sticker prices by as much as $700 to cover the added costs.
Washington also moved earlier this year to get tougher on gas-guzzling cars, when the Bush Administration increased the fuel economy standards for the 1990 model year. The federal government now requires that the average mileage of all of the cars each company sells must be at least 27.5 miles per gallon, one mile per gallon higher than the Reagan Administration had mandated.
Yet many in Congress don’t feel that goes far enough. Arguing that the development of more fuel-efficient cars would help curtail global warming, some in Congress are now calling for fleet-wide averages of as high as 40 miles per gallon, levels that auto industry officials say would all but kill large-car production.
“If you are planning to have cars configured anything like they are today, the fuel economy improvements will have to be incremental,” says Hanna of MVMA. “You can see what kinds of cars get 40 miles per gallon today,” he adds.
“It’s not possible today,” adds Climish of GM, “to make a 40-mile-per-gallon car that can hold six people and drive on a freeway.”
In the midst of the wrangling over mileage standards, Detroit and Washington are also now at odds over the proposed revisions to the Clean Air Act.
Already Complaining
While the domestic auto makers generally support the Bush Administration’s clean air proposal, Detroit is bracing for far tougher congressional action. And they are already complaining that the Bush plan requiring the production of 500,000 alternate-fuel vehicles by 1995 presents them with an unrealistic timetable for the development of efficient and durable fuel systems.
Yet despite their public complaints, the auto makers are already quietly scrambling to modify their future car and truck development plans to adjust to the new regulatory climate.
Ford, for instance, has virtually scrapped its most ambitious future truck development project because of mounting concerns that Washington will soon impose stricter mileage and tailpipe emission standards on light trucks.
In another complex strategic move, Ford has also decided to buy more foreign parts for two of its large U.S.-built cars--the Ford Crown Victoria and Mercury Marquis--in order to count them as imports and make it easier for the company to comply with the fuel economy regulations.
Ford is thus taking advantage of a little-known--and unintended--loophole in the federal mileage standards that forces auto makers to count their U.S.-built cars and their imports under separate fleet averages when complying with the standards. The rules say that only cars with at least 75% U.S. content can be counted in the domestic fleet.
Ford’s move will help the remainder of its domestic fleet meet the higher 27.5-mile-per-gallon standard; in its separate import fleet, the Crown Victoria and Marquis will be offset by Ford’s small, fuel-efficient imports.
The irony of turning a big American car into an import in order to comply with federal rules has not been lost on Ford executives--who insist they did not take the action for political effect.
“Sure, this struck us as absurd,” says Brown. “Nobody was really thrilled about doing it, but it was something we had to do.”
General Motors is also revising its product plans in order to keep up with the changing politics on the environment. Company executives reportedly are mulling whether to drop plans to continue the Chevrolet Camaro and Pontiac Firebird with a new design in the early 1990s because of growing concerns that sports cars won’t be able to meet future mileage and emissions standards.
GM officials also reportedly question whether cars with manual transmissions will be able to survive a tough revision of the Clean Air Act. Automotive News, an industry trade publication, said this week that GM engineers believe that its cars and light trucks equipped with V-8 engines and manual transmissions may not be able to meet the emission requirements of the Bush proposal. Engineers say excess hydrocarbon pollutants are often emitted during manual gear shifting.
Industry officials say that the public should be aware that such product decisions could become necessary trade-offs in the face of tougher environmental laws.
As environmental and energy regulations get stricter, “you run up to barriers of providing cars that are useful to people,” warns Hanna.
But environmental specialists take such warnings and threats with a grain of salt.
They say that in private meetings, auto executives now seem resigned to the fact that tougher regulations are coming, and so seem more willing to participate in the process, rather than to fight at every turn.
As a result, Detroit is expressing a willingness to cooperate with regulators that was never evident in the 1970s or early 1980s, government officials say. In areas where the two sides remain in conflict, environmentalists say, Detroit is now at least providing realistic alternatives.
“The attitude in Detroit is still fairly conservative, but it is changing,” says Bill Sessa, spokesman for the California Air Resources Board in Sacramento.
Learning to compromise, however, doesn’t mean the auto makers like what is going on. “The car has always been a convenient whipping post on the environment,” complains Brown of Ford.
Adds GM’s Climish: “I don’t think the public will be satisfied until we get (car emissions) down to zero.”
