NADA warns of 'irreparable' harm from state CO2 rules

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Auto dealers today launched a fresh assault on plans to allow California and at least a dozen other states to enforce their own greenhouse gas emissions rules for cars and trucks.

In a new analysis of state rules on carbon dioxide emissions, the National Automobile Dealers Association warned that such regulations risk "irreparable harm" to an already struggling auto industry.

The association called for new congressional hearings on the issue.

During his campaign, President Barack Obama said states should be allowed to enforce their own rules.

Lisa Jackson, Obama's EPA administrator, vowed during her Senate confirmation hearing to "immediately revisit" the issue.

Regulating fuel economy

In December 2007, President George W. Bush's EPA denied states the waiver they need to enforce the rules. The denial came at the same time Congress and Bush enacted a 40 percent increase in federal fuel economy standards for the 2011-20 model years.

Automakers and their allies have long argued that state greenhouse gas rules are an improper attempt by states to regulate fuel economy, a federal responsibility. Federal courts have rejected industry challenges to the state rules.

States with the rules along with environmental groups have accused the industry of foot-dragging, recalcitrance and scare-mongering.

Now, NADA's study warns of "unintended consequences," particularly economic harm to a battered industry.

"It makes no sense for the federal government to aid the auto industry with one hand and then burden it with a duplicative rule that regulates fuel economy completely differently than the federal government," said David Regan, NADA's vice president for legislative affairs.

He referred to the $17.4 billion in emergency loans already approved for General Motors and Chrysler LLC. Additional aid has been pledged to captive finance companies. More requests for help are pending.

Problems with overlap

NADA's report, called "Patchwork Proven" and made public today, draws these conclusions about state rules, which originated with the California Air Resources Board:

• An automaker could comply in California and offer the exact same choice of vehicles in another CARB state and yet still be out of compliance, solely because of different consumer demand for different types of vehicles.

• If the patchwork were to take effect in all 50 states, it would result in a 50-state patchwork, because an automaker would have to manage 50 unique state fleets to individually meet CARB's standard 50 times.

• The patchwork would create a "cross-border sales loophole," because CARB's regulation does not regulate cars imported from non-CARB states that are registered in CARB states.

• Several automakers and potentially new entrants from China and India would be exempt from CARB's regulation until 2016, provided they limit their sales in California.

"In light of the extraordinary economic challenges facing the country and the fact that the federal government is now a stakeholder in two domestic automakers, policymakers must closely consider whether now is the right time to regulate fuel economy twice under two different systems," Regan said in a statement.

"Since Congress had not acted to increase fuel economy standards when California's request was filed," he said, "hearings are necessary to examine the conflicts between state-based fuel economy regulations and the federal corporate average fuel economy (CAFE) program."

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