CQ TODAY
July 23, 2007 – 8:00 p.m.
Auto Industry Shifts Gears After Defeat

By the time the automobile industry got around to backing a modest increase in fuel efficiency standards last month, it was too late. The Senate adopted a stronger standard a week later.

It’s a mistake that carmakers and auto workers are determined not to make in the House, where lobbyists on both sides are vying for votes as the leadership prepares to bring an energy bill to the floor as early as next week.

“We’ve tried to convince folks to coalesce around what I would consider moderate increases in fuel economy,” said Alan Reuther, legislative director for the United Auto Workers union. “It’s the old adage that you can’t beat something with nothing.”

The Alliance of Automobile Manufacturers has come out early and forcefully in favor of a House bill (HR 2927) by Barron P. Hill, D-Ind., and Lee Terry, R-Neb. Their bill would leave separate regulations in place for cars and “light trucks,” such as sport utility vehicles, while setting the overall fuel economy at 32 to 35 miles per gallon by 2022.

House Democratic leaders support language similar to that in the Senate version of an energy bill (HR 6), which would eliminate the distinction for cars and light trucks. It also would require each manufacturer’s vehicle fleet to average at least 35 miles per gallon by 2020.

For more than two decades, the auto industry — usually with the support of Michigan Democrat John D. Dingell, the powerful House Energy and Commerce chairman — has fended off efforts to legislate better vehicle mileage.

The industry’s willingness to compromise represents a significant political shift, but fissures exposed during the Senate lobbying campaign threaten to hurt carmakers in the House as well.

The fractured industry coalition was too slow in backing a less stringent alternative proposed by Sen. Carl Levin, D-Mich., adding to credibility problems with allies who warned the time had come to update the Corporate Average Fuel Economy (CAFE) standards.

“Some realized that this was a new day, but there was a sense of wanting to present a unified industry front,” said Cody Lusk, president of the American International Automobile Dealers Association. “By the time you had a consensus, it just happened too quickly.”

Even when the industry did speak up, Nissan Motor Co. split off and endorsed the core of the Senate deal — a combined standard for cars and light trucks.

Some congressional aides say the industry failed to appreciate new political forces, driven by mounting concerns about global warming, the security of foreign oil supplies and higher energy prices. Even the Bush administration, with an aversion to regulating industry, is urging immediate action on the issue.

“There are moments in time when it really doesn’t matter what the industry thinks,” a Senate Republican aide said. “They get led, they get pushed, they get shoved.”

House Showdown

Dingell sought to postpone the House debate by waiting to address fuel economy standards in climate legislation this fall. A lobbyist for American carmakers suggested many senators agreed to the deal last month assuming that Dingell would take care of things in the House — or at least negotiate a viable compromise in conference.

But the industry expects that Speaker Nancy Pelosi, D-Calif., will roll over Dingell on CAFE standards once the energy legislation starts moving.

Massachusetts Democrat Edward J. Markey, sponsor of the leading House CAFE bill (HR 1506), has refused to be pinned down on strategy.

Aides and lobbyists expect Pelosi to pursue floor action if she can guarantee the votes. But she also could try to bring a bill out of conference with the Senate language, forcing an up-or-down vote on the broader bill.

The National Automobile Dealers Association flew 100 dealers into Washington last week to lobby some 150 lawmakers on behalf of the Hill-Terry proposal. Even Dingell has suggested he could support the idea. “He still thinks there’s a smarter way to do this, but he’s been around for a long time,” a Dingell aide said. “He’s a politician. He’s maintaining his options.”

Divided Industry Coalition

But the industry coalition remains divided even on the Hill-Terry bill. The auto workers union has joined most manufacturers in backing the compromise, but at least one trade association representing dealers — who have long endorsed moderate fuel efficiency increases — has yet to endorse anything.

Meanwhile, Joe L. Barton of Texas, the ranking Republican on Dingell’s committee, opposes Hill-Terry because it would require a separate standard for tailpipe greenhouse gas emissions. Barton said he and Dingell could beat Pelosi if they teamed up. “If we’re together,” he added. “Right now we’re not.”

Nissan’s role in the House debate is uncertain. The Association of International Automobile Manufacturers, an industry trade group, hasn’t weighed in at least in part because Nissan is a member. Competitors have griped that Nissan endorsed the Senate CAFE language to compensate for lagging sales of larger vehicles by shifting the market toward smaller ones.

“They are trying to change the rules because they haven’t been able to compete,” said an industry representative.

No Favoritism

Nissan spokeswoman Janine Ginivan said a single standard for cars and light trucks simply works better for the company.

“We are trying to preserve the jobs we have created in Tennessee and Mississippi,” she said. “We didn’t have a good year for trucks, but neither did the industry.”

Aides and lobbyists have speculated that Nissan swayed Republican Sens. Lamar Alexander of Tennessee and Trent Lott of Mississippi, whose states are home to Nissan plants.

Lott said his constituents also include Toyota employees and that his decision wasn’t intended to favor any particular company.

“I talked to Nissan. I talked to all of them,” said Lott, who dislikes CAFE mandates but sees them as a necessary step under current circumstances. “What I was trying to find was the best of the bad answers.”

Source: CQ Today
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