Auto Lobby Hits the Senate

By: Mike Bartley

Auto executives and dealers aggressively lobbied undecided senators last Tuesday with a significant vote on increasing fuel economy regulations expected as early as today. The act is expected to bolster support for a compromise proposal that would mitigate legislation moving through the Senate that calls for noteworthy increases in the Corporate Average Fuel Economy or CAFÉ.

A vote on the compromise mileage bill sponsored by a half-dozen lawmakers spearheaded by Sens. Carl Levin, D-Detroit, Mark Pryor, D-Ark., and Kit Bond, R-Mo., is expected today, despite the fact that some supporters were pushing for more time to round up votes or strike a compromise.

The Legislature appears determined to produce a more stringent fuel economy mandate because of the growing concerns about global warming and dependence on foreign oil. The current Senate fuel economy proposal, part of an intensive energy bill, calls for increasing standards 40 percent to 35 miles per gallon for cars and trucks combined by 2020, followed by four percent annual raises through 2030 to 52 mpg. Detroit's automakers said that the bill would cripple the industry. But this stand is dismissed by supporters of the bill and environmentalists as alarmist.

The Levin-Pryor-Bond compromise bill supported by automakers would set minimum CAFE requirements at 36 mpg for passenger cars by 2022 and 30 mpg for light trucks by 2025. Compared to the Senate bill, the compromise proposal is far more lenient. While automakers, including the Toyota Motor Corp., said that it would be difficult and costly to meet that standard, they are reluctantly backing it.

Tom LaSorda, the CEO of DaimlerChrysler AG's Chrysler Group, made a surprise visit last Tuesday to Capitol Hill. LaSorda joined Ford Motor Co.'s president of the Americas Mark Fields; General Motors Corp. sales chief Mark LaNeve; GM environmental executive Beth Lowery; and dozens of auto dealers. "The bottom line is we are counting votes," said Sen. Debbie Stabenow, D-Lansing, also a sponsor of the compromise bill. "It is very, very close."

Even Steve Feinberg, the head of the private equity firm Cerberus Capital Management LP, met with Sen. Jon Tester, D-Mont. last week to solicit timely support for the compromise bill. "They talked about CAFE," said Matt McKenna, Tester's spokesman. Feinberg was joined by a Cerberus lobbyist, former Louisiana Sen. John Breaux.

Chrysler may have the most to lose from a stringent mandate because its lineup is 70 percent trucks. In a letter to employees last week, LaSorda said that the alternative legislation "will cost our company $11.2 billion over the first five years," but that would be "far less than the tougher bill." The current energy bill "puts us out of business," LaSorda wrote. "For the first five years alone, it's estimated to add up to a staggering $6,700, almost a 40 percent increase, to the cost of every Chrysler vehicle."

Auto executives zeroed in on undecided senators such as Tester, Mary Landrieu, D-La., and David Vitter, R-La. "Frankly, if the head of GM wanted a meeting this week he probably wouldn't have gotten it," said McKenna, a spokesman for Tester. "But since they were with Montana GM dealers, they got in the door."

LaNeve said that his meetings with senators, including Tester, Landrieu and Vitter, went well. "We need to be better on CAFE," he said. "We need it done in a reasonable way that still provides customer choice. You can't provide towing capability, people-hauling capability, off-road capability off a vehicle built on a car chassis."

The compromise bill got solid support among Republicans. They said that the compromise bill has gained support, but were not confident. The events unfold like and more are expected to be unraveled in the coming weeks.

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