Jan 8 - McClatchy-Tribune Regional News - Justin Hyde Detroit Free Press



The Bush administration declined Wednesday to put into place tough new fuel economy rules for cars and trucks, letting the incoming Obama administration decide how to balance cutting Americans' demand for oil with billions of dollars in new costs for struggling Detroit automakers.

In a statement, the U.S. Department of Transportation said the industry's financial decline will require the Obama administration to conduct a thorough review of the fuel economy rules, and that the work already done should allow the next administration to finish ahead of an April 1 deadline set by the 2007 energy bill.

The delay, widely expected by the industry, adds yet another variable to an uncertain outlook for 2009.

"Manufacturers need certainty, and this decision only further delays their ability to finalize future product plans," said Charles Territo, a spokesman for the Alliance of Automobile Manufacturers. "We look forward to working with the Obama administration to provide them with any information they need to complete this rulemaking."

While President George W. Bush ordered the National Highway Traffic Safety Administration to finish the fuel economy rules for the 2011 through 2015 model years by the end of 2008, the final rule has been stuck in limbo since November when regulators signed off on it.

People familiar with the new rule say it makes several changes to what the government had originally proposed, setting an average of 31.8 m.p.g. for new vehicles by 2015, 0.2 m.p.g. higher than the draft version.

But the original rule was expected to cost the industry $47 billion to meet, with Detroit's three automakers forced to shoulder $31 billion of that cost. Automakers had sought several changes to the proposal, while environmental groups had said it should be stronger in the wake of $4-a-gallon gasoline last summer.

Those changes, along with the automakers' own move toward more efficient models, actually reduced the cost of the final rule to $36 billion industry-wide. Costs are not broken down by company.

Just as the rule was finished in November, Detroit automakers came to Washington seeking $34 billion in aid to survive one of the worst economic downturns in the industry's history. None expects auto sales to rebound this year from the 15-year lows hit in 2008.

Obama and several members of his prospective cabinet support forcing the industry to comply with California's state laws limiting global warming pollution from vehicles, which automakers contend will act like state-by-state fuel economy rules. The proposed Bush administration rule claimed the federal standards overrode California law, a contention that several states and environmental groups have vowed to challenge in court.

Without the rule, automakers will have to wait a number of months for the new administration to pick staffers and rework the standards. Given that the designs and fuel efficiency of most 2011 models have been frozen by now, any new rule will likely have to start with 2012, although the new administration could stretch out the years covered.

Dan Becker, director of the Safe Climate Campaign, said the Obama administration should set standards of at least 35 m.p.g. by 2015 and 42.5 m.p.g. by 2020. While the Bush rule was "far from perfect, it was a step forward and failure to issue it may delay the arrival of cleaner cars."

U.S. Rep. John Dingell, D-Mich., said he too wished the Bush administration had acted, given the serious problems facing the country.

"This may compel the new administration to do this with great haste, as opposed to great haste and great care, because both have to be done," said the Dearborn Democrat.

Contact JUSTIN HYDE at 202-906-8204 or jhyde@freepress.com.

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