The Environmental Protection Agency will hold a hearing today at the behest of President Obama on whether California and 13 other states should be allowed to regulate vehicle tailpipe emissions.
It’s a matter of utmost importance to carmakers, which have argued that compliance could cost them billions of dollars amid the industry’s worst downturn in decades. Yet no automakers will be testifying at the Washington hearing to rebut environmental groups and others favoring strict rules.
Instead, two trade groups representing the largest car companies will make what are expected to be measured presentations focused on being “a part of solutions that work,” General Motors spokesman Greg Martin said. The only fireworks are expected to come from a car dealers group.
Is this a kinder, gentler auto industry? Not likely. Instead, say experts familiar with the industry and Capitol Hill, the automakers are just being political realists. With all automakers hurting, and GM and Chrysler requesting $21.6 billion on top of the $17.4 billion in taxpayer funding they’ve already received, now is hardly the time to protest.
“I think they’re under a lot of pressure to be quiet because they’re asking for billions and billions of dollars,” said Adam Lee, president of 12 Maine dealerships and a supporter of more stringent emissions rules.
The silent treatment marks an about-face for the industry, which has long opposed stricter regulation, including the seat belt and catalytic converter. When California adopted its rule requiring carmakers to cut greenhouse gas emissions by 30% by 2016, automakers took the lead in fighting it, suing multiple times to block it.
They lost but delayed implementation by almost five years. In December 2007, the Bush administration denied a normally pro forma waiver California needed from the EPA to begin implementing the regulation.
But Obama called on the EPA to revisit the waiver, saying that “now is the time to make tough choices.”
Since then, the administration has discussed the implications of a waiver -- and the potential for a blanket national policy on emissions and fuel economy standards -- with the automakers as part of the ongoing restructuring talks.
Congressional leaders have pressured automakers to comply with California’s standards as a condition of government loans. House Speaker Nancy Pelosi (D-Calif.) and Financial Services Committee Chairman Barney Frank (D-Mass.) sent a letter to the heads of Chrysler and General Motors last month, saying they expected the companies’ restructuring proposals to include plans to meet or exceed “the emissions standards adopted by California and other states, if they receive federal approval, and become a long-term global leader in the production of fuel- efficient and advanced technology vehicles.”
Facing that kind of pressure can force changes in strategy, said David Doniger, a lawyer for the Natural Resources Defense Council who has squared off with the auto industry on the issue of California’s vehicle emissions regulations for years. The automakers have “signaled a change in their posture,” Doniger said.
According to the Alliance of Automobile Manufacturers, which represents most of the largest automakers, the industry’s posture hasn’t changed.
“We share [Obama’s] goals,” said Dave McCurdy, the trade group’s president. “The Alliance supports a single, nationwide program that is administered by the federal government.”
Whether that is the administration’s goal remains to be seen. Although the White House has given signals that it is interested in a national vehicle emissions rule down the road, it also has indicated to California regulators that it is interested in first testing such a standard on the state level.
In testimony to be presented today, Eric Fedewa, vice president of the consulting firm CSM Worldwide, said the tough rules would “further damage companies that are struggling, like GM, Ford, Chrysler and much of their supply base, and potentially destabilize relatively healthy companies like Toyota and Nissan.”
Along with CSM, the most vocal critics of the California rule likely will be the National Auto Dealers Assn., which seems to be taking on the role of a stalking horse for the politically cautious automakers.
“When you look at the practical implications, there are enormous problems presented,” said Andrew Koblenz, vice president of legal and regulatory affairs for the dealers group.