WASHINGTON WATCH Tailpipe Emissions Legislation
Revs Up In the past month, the issue of tailpipe emissions has come to the forefront at both the state and federal level. The ramifications of current deliberations will affect not only automakers, but also consumers and automotive service professionals.
On one front, carmakers began a trial in Vermont last week - the first of several cases - challenging the right of a state to impose tailpipe emissions requirements. While on another front, automakers pledged on March 14 to work with Congress at the federal level toward reducing tailpipe reductions.
Resistance at the state level Nine states, including Vermont, have adopted California's tailpipe emissions rule that requires automakers to improve fuel economy to an average 40 miles per gallon for passenger cars and reduce emissions by 40 percent by 2016. A group of automakers filed federal lawsuits to bar the new rules from taking effect - first in Vermont, followed by pending cases in Rhode Island and California.
The
'Boutique' ProblemOther industries have faced the
problem of varying legislation in a number of states for its
products. For example, the petroleum industry has faced cost,
production and logistical challenges with regard to distinct
"boutique" fuels particular to certain states.
However, requiring different "boutique" vehicles for
different states presents a difficult hurdle before carmakers. The
auto industry - The Big Three in particular - is in a tenuous
financial state. Unlike oil companies with huge profits and cash
flows, the automakers' financials suggest they have neither the
cash reserves nor the profits to be sustainable in the boutique
vehicle business, let alone wage long, expensive litigious
battles.
Carmakers are showing that they are willing to expend money,
effort and time - huge amounts of it, by their own admission - to
protect not only their trade secrets, but also battle the
immediate actions that state legislation would require.
Without any new vehicle sales to support these expenses, bottom
lines are directly eroded. The irony that these funds can be found
within an industry purportedly under financial duress should not
be overlooked. At issue in the Vermont case is whether a state can impose new standards on vehicle tailpipe emissions. The American International Automobile Dealers Association (AIADA) reports that, in preparation for the trial, executives at General Motors (GM), DaimlerChrysler, Ford, Nissan, Toyota and Honda filed sworn affidavits last week asking the judge to bar the public from parts of the trial to proprietary trade secrets.
"Automakers are committed to a trial that provides as much press access to the public as can be achieved while preserving the fundamental trade secrets," says Andrew Clubok, a lawyer for the automakers.
In addition, automakers have committed funds, effort and time to preparing for the Vermont case. For example, AIADA reported that Toyota reviewed 500,000 pages of material in response to a subpoena from the state and turned over 1,600 pages of proprietary information. "Some is so sensitive that only one or two people within all of Toyota's North American operations have access to it," AIADA quotes Toyota attorney Elizabeth Gibson as saying.
Cooperation federally Energy and Commerce committee Chairman John Dingle (D-MI), in an address that opened the Energy and Air Quality (E&AQ) subcommittee global warming hearing on March 14 said, "According to the [U.S.] Environmental Protection Agency, approximately 16 percent of greenhouse gas emissions are attributed to passenger cars. As this committee takes action to address climate change, the committee must consider these emissions, in addition to other large greenhouse contributors." House Speaker Nancy Pelosi (D-CA) has set June 1, 2007, as her deadline for submitting global warming and energy federal legislation, in order to have it ready for debate in Congress by July 4. Automakers have already met with key committees and subcommittees of Congress regarding tailpipe emissions. Of primary concern to carmakers is a plan being developed by the Energy and Commerce committee to mandate reductions in greenhouse gas emissions from tailpipes, smokestacks and other sources. E&AQ subcommittee Chairman Rick Boucher (D-VA) told automakers that Pelosi has reassured him that the subcommittee would have the time it needs and that, if necessary, a bill mandating reductions in greenhouse gases will not be part of the July floor agenda. At that hearing, the heads of GM, Toyota, DaimlerChrysler, and Ford promised, for the first time ever at the federal level, to work with the committee on that plan. AIADA reports that John DeCicco, a senior fellow at Environmental Defense, issued a statement calling the automakers' position "a major breakthrough." "Automobiles have always been at the center of the climate change debate," he added, "and getting this leading industry's support for a national cap on carbon represents a major shift."
A paradox of their own making For automakers, separate and distinct state legislation would increase the per-unit cost of manufacturing cars that can be sold in each and every jurisdiction nationwide. This also presupposes automakers could meet any imposed legislated deadlines - which may be more politically motivated in nature with 2008 elections approaching - than realistically achievable from an environmental standpoint. On the one hand, automakers see merit in spending large amounts of cash at the state level to resist changes and delay the implementation of new regulations - legislation that moved forward, despite vigorous reluctance and resistance, for whom litigation today is now their last stand. On the other hand, automakers are applying money and other resources to cooperate at the federal level, where legislation is still in the formation stages and where time isn't holding an imminent "loaded gun" as closely to the heads of automakers. Between the two evils - state versus federal legislation - if they must choose, it looks like automakers would prefer federal 50-state tailpipe regulation that would dovetail more suitably with the manufacturing of 50-state vehicles. It is ironic that the automakers now want to be involved in the federal lawmaking process, when they resisted doing so at the state level. The trouble is, automakers may end up having to live with legislation and regulations both by state and federal edict. This leads to a few questions:
* What if the automakers had bought into California's initiative to improve tailpipe emissions originally?
* Had they cooperated and collaborated as socially responsible stakeholders, rather than resistant, affected parties, would the legislation and regulatory timing subsequently put forth by California and adopted by other states be more palatable for them?
* In the end, would they have avoided a more costly paradox of their own making: fighting legislation at one level, while participating in a legislative effort on another?
Lessons learned need application At the hearing, Dingle advised, "It is time to stop emphasizing what is wrong and what will not work. We need to talk about what can be done and what can work. This should no longer be a political discussion; the time has come for us to discuss policy." Indeed, the experiences of the past can serve as lessons learned going forward. Work toward better cooperation and legislation, rather than dogmatic, blind opposition. Better to have a voice than to comply with on what other voices agree. Better an informed, nationwide federal edict than the specter of a state-by-state hodgepodge. It is a lesson that carmakers learned with other issues, such as Right To
Repair, where collaboration and cooperation by automakers have been an investment that continues to pay dividends from a viable, voluntary, less costly and non-legislated solution. The failure by automakers to perceive the tailpipe emissions issue in a similar light has escalated to legislation in several states, more pending at the federal level, and associated costs with each. Such are the unintended consequences of rigidly fueling a status quo. That's no way to run a business. It's almost like paying for something twice.
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