SEMA eNews Vol. 11, No. 18, May 1, 2008

FEDERAL REGULATORS PROPOSE TOUGH FUEL ECONOMY STANDARDS FOR NEW CARS

The National Highway Traffic Safety Administration (NHTSA) has proposed a dramatic increase in fuel economy standards to be phased-in between model years 2011 and 2015. The NHTSA would set average fuel economy standards at 35.7 miles per gallon for passenger cars (currently 27.5 mpg) and 28.6 mpg for light trucks (currently 22.5 mpg) by model year 2015.  When averaged together, the combined car/light-truck standard would be 31.6 mpg. The NHTSA estimates that it would add an average cost of $650 per new passenger car and $979 per new truck by 2015, while saving about $100 billion in gas costs for consumers.

The NHTSA’s proposal translates into a 4.6% annual increase in fuel economy gains through model year 2015. This is a more aggressive approach than the anticipated 4% time table established by lawmakers under the SEMA-supported federal energy law enacted last December, which mandates an industry car/truck fleet average of 35 mpg by model year 2020. 

Under the new regulations, the NHTSA would set an industry-wide fleet target but fuel economy numbers for specific models would be based on vehicle-size attributes. The NHTSA first established this approach when it revised the light-truck fuel rules in 2006. Individual car companies would have flexibility on how to achieve the rules, whether placing more emphasis on hybrids or reducing vehicle size and weight. The regulations would include a program allowing automakers to apply and trade credits when they exceed fleet requirements.

The NHTSA’s rule would also prevent any state from regulating tailpipe carbon dioxide emissions from automobiles since CO2, a byproduct of burned fossil fuels, is directly related to fuel consumption. The federal government has sole jurisdiction for establishing fuel economy standards. Last December, the U.S. Environmental Protection Agency (EPA) cited the new energy law as justification for denying California’s waiver request to regulate CO2 emissions from automobiles starting in 2009. The EPA contends that the federal law would be more effective and have the added benefit of taking a federal approach, which provides a national solution as opposed to a potential patchwork of state rules.  The EPA ruling is subject to lawsuits filed by California and a number of other states and legislation in Congress to overturn the decision.

The NHTSA will accept public comments through early summer. It intends to issue a final rule by January, 2008.  For additional information, contact Stuart Gosswein at stuartg@sema.org.

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