White House Releases Fuel Efficiency Rules — Will the Loophole Make it in?

Transportation Secretary Ray LaHood and Environmental Protection Agency chief Lisa Jackson will head to the White House briefing room this afternoon to release the final version of fuel-economy rules that will bring the nation’s auto fleet to an average of 35.5. miles per gallon by 2016.

610x.jpgTransportation Secretary Ray LaHood (Photo: AP)

Both officials are expected to emphasize the environmental benefits of the new efficiency rules, which were the product of behind-the-scenes negotiations between the Obama administration, the auto industry, and pollution regulators in California — which got the ball rolling with its battle to impose stronger emissions standards.

LaHood described the new fuel rules as "bring[ing] our nation a step closer to a future where the vehicles we drive would actually help us to solve our energy and environmental challenges, rather than contribute to them."

But as Streetsblog Capitol Hill noted earlier this month, a loophole that exempts many foreign luxury cars could make it into the new efficiency standard.

The provision would relax the fuel rules for companies that sell fewer than 400,000 vehicles in the U.S., a list that is likely to include BMW, Volkswagen, Mitsubishi, Subaru, and other well-known automakers.

Indeed, the popular conception of a gas-guzzler is often a hulking SUV, but smaller luxury cars can be just as fuel-inefficient. The Mercedes-Benz gets an average of less than 20 mpg, a fuel efficiency comparable to the Ford Ranger compact pickup truck, while BMW’s M Series of sportscars get an average of less than 15 mpg.

Will the exemption — which auto lobbyists call the "German provision," according to the Wall Street Journal — show up in the final efficiency rules? If it does, domestic automakers and environmental groups could make their discontent known during the 60-day window for public commentary on the new standard, leaving the door open for a rollback.

Once the rules are added to the federal government’s regulations.gov website, anyone — from Streetsblog readers to industry representatives — is free to weigh in. Stay tuned…

  • I looked into this issue and concluded that it would be better for the market if auto manufacturers were able to buy and sell fuel efficiency credits to each other. That way, BMW and Mercedes would have an incentive to make their cars more fuel efficient, but they wouldn’t necessarily be held to the full standard if that’s what their customers were willing to pay for. On the flip side, companies that make fuel efficient cars get a nice side business in selling credits.

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