Saturday, February 17, 2007

NHTSA fuel bill may cost Big 3

Tuesday, February 06, 2007
NHTSA fuel bill may cost Big 3
Agency poised to push economy credit system domestic automakers say will favor competitors.
David Shepardson / Detroit News Washington Bureau

WASHINGTON -- The head of the National Highway Traffic Safety Administration said Monday the agency will submit a bill to reform vehicle fuel economy mandates that could be costly for Detroit's Big 3.

NHTSA administrator Nicole Nason told reporters Monday during a conference call "we expect to send legislation very soon … as soon as this week we hope."

The announcement was unexpected since her boss, Transportation Secretary Mary Peters, said last month it would be "several months" before a bill was hammered out.

Last year, the Bush administration proposed a bare-bones three-page bill that gave the administration authority to rewrite passenger car fuel economy rules without input from Congress and called for concrete targets. Many in Congress -- including some conservative Republicans -- want a specific numerical mandate. Some would require vehicles to average 40 miles per gallon within 10 years.

In March 2006, NHTSA reworked light truck rules, creating a size-based system. The rules aim to save 10.7 billion gallons of fuel, raising average fuel economy from 21.6 mpg to 24 mpg by 2011. It will cost automakers an estimated $6.2 billion, according to a government estimate, for just a 1.2 percent increase in fuel economy per year.

Nason said the bill will be "similar to last year's proposal" but will also include language to create a "credit trading system," which would allow automakers to buy and sell credits among themselves to meet requirements.

Domestic automakers -- which have lower fuel economy averages than Toyota and Honda -- have strenuously opposed a system, saying they could be required to give their competitors millions of dollars to comply. "Why would we take cash they don't have and give it to their competitors?" asked U.S. Rep. Mike Rogers, R-Brighton.

In his State of the Union address, President Bush proposed cutting gasoline usage 20 percent by 2017 -- in part, by improving the fuel economy of the cars and trucks.

Bush also proposed automakers increase fuel economy an average of 4 percent yearly -- beginning in September 2009 for passenger cars and 2011 for light trucks.

Those improvements, Bush said, could save the nation 8.5 billion gallons of gasoline annually by 2017. Bush also wants to increase the use of alternative fuels seven-fold by 2017.

Automakers have long opposed and successfully blocked increases in fuel economy rules for passenger cars, though publicly said they support "technically achievable" fuel economy increases.

Foreign and domestic automakers also have called Bush's proposal "very aggressive," but haven't opposed it.

Nason is to testify later this month in front of Dingell's committee. Several other climate change hearings are in the works, including an appearance by former Vice President Al Gore before Dingell's committee on March 21.

Nason said to complete congressionally mandated rule making, it proposes to spend $500,000 more. NHTSA has several major rule makings, including side-impact protection and roof strength, to finish by 2008.

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