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Future auto regulations are 'flawed,' industry group says

October 7, 2016
An automotive industry trade group said two federal agencies erred in a July draft report that concludes automakers are on track to meet future mileage and emissions standards and complained that the industry and public should be given more time to comment.
The Alliance of Automobile Manufacturers said the U.S. Environmental Protection Agency and the National Highway Traffic Safety Administration were "overly optimistic" and relied on "flawed assumptions" about automaker readiness to meet aggressive 2022 to 2025 gas-mileage targets meant to jolt the economy and reduce carbon emissions. The standards, referred to as Corporate Average Fuel Economy standards, were adopted in 2012.
The draft report "relies on flawed assumptions and modeling that cast an overly optimistic picture — one that does not accurately reflect consumer and market reality," the Alliance said Sept. 26.
The government report and the 60-day comment period that expired that day are part of a "midterm evaluation" of fuel economy and greenhouse gas emission regulations. The agencies must adopt a final rule on the regulations by April 2018. The Alliance asked the NHTSA and the U.S. EPA for more time but that request was denied.
The Alliance said the existing regulations were crafted at a time when gas prices were higher than they are now and are based on assumptions about consumer buying preferences that have changed in recent years. Sales of cars have dropped in recent years while sales of crossovers and SUVs have soared as they have become more fuel efficient.
"It’s important to get the Midterm Evaluation right," the Alliance said in its comments. "If proposed standards are inconsistent with consumer behavior, we’ll jeopardize the health of this industry, cost thousands of jobs, diminish environmental gains and sacrifice improved safety outcomes."
The NHTSA sharply disagrees, and says the industry has proven it can meet the 50.8 miles-per-gallon standard for cars and light-duty trucks by 2025.
During Congressional testimony last month, NHTSA Chief Counsel Paul Hemmersbaugh said the automotive industry has proven over the past four years that it is able to develop innovative gas, electric and hybrid technology to meet higher regulatory standards.
"Our new analysis confirms that the standards can be met largely with more efficient gasoline-powered cars," Hemmersbaugh said in his prepared testimony.
He said the industry is poised to make additional gains with even more fuel efficient gasoline engines as well as with higher sales of hybrids such as the Toyota Prius and electric cars such as the electric Chevy Bolt, which goes into production this month.
"In fact, many of today’s vehicle models ... are meeting future targets several years ahead of schedule," he said.
U.S. Rep Fred Upton, R-Michigan, in September urged regulators to consider the potential damage that tougher auto regulations could have on the industry if the future standards are not dialed back.
"The industry is doing well now, thanks in large part to pent-up demand after the last recession and very low interest rates that make financing about as cheap as it has ever been," Upton said during a Congressional hearing that he chaired. "But these two temporary factors will not last, and the industry will be stuck with these costly standards that increase every year."
The Center for Automotive Research, in Ann Arbor, Mich., also said that current vehicle fuel-economy requirements could harm the industry.
The nonpartisan organization concluded that U.S. auto factories and parts operations could slash up to 137,900 jobs through 2025 if the federal government’s existing CAFE standards remain in effect.
"If the value of fuel savings to the new-vehicle buyer falls short of the cost of mandated fuel-economy technologies, then U.S. automotive sales, production and manufacturing will fall with serious consequences for the U.S. economy," CAR researchers Sean McAlinden, Yen Chen, Michael Schultz and David Andrea said in a statement.