Vermont battles car industry

Arguments start today in first court test of whether states can set emissions standards.

David Shepardson / Detroit News Washington Bureau

WASHINGTON -- What may be the single biggest legal challenge to face the auto industry in decades goes to trial today in Vermont.

A federal judge will hear opening arguments in a lawsuit filed by automakers and car dealers challenging the Green Mountain state's right to impose tough auto emissions standards on new cars and trucks.

At issue is Vermont's decision, along with nine other states, to adopt California's 2004 tailpipe emission rules. Beginning in 2009, the regulations require automakers to increase the fuel economy of vehicles by about 25 percent to reduce carbon dioxide emissions, which have been linked to global warming.

General Motors Corp., DaimlerChrysler AG and the Alliance of Automobile Manufacturers, a Washington trade association that represents automakers, along with several dealerships, filed federal lawsuits to bar the new rules from taking effect in California, Rhode Island and Vermont.

The Vermont case opens today in U.S. District Court in Burlington, the city that is also home to Ben & Jerry's, known for its liberal leanings, and is run by Mayor Bob Kiss, a member of the Vermont Progressive Party, a far-left political group whose platform calls cars "a public health threat."

The trial amounts to the first court test of whether states can mandate emissions levels. It comes a week after the U.S. Supreme Court ruled that carbon dioxide emissions can be regulated as an air pollutant.

Vermont says the state's environment is at stake -- even the health of its storied maple syrup industry -- if automakers don't reduce greenhouse gas emissions.

Meeting the regulations in the states that adopted California's rules could cost the auto industry tens of billions of dollars, based on a comparison to a less stringent fuel economy proposal outlined by President Bush that has an estimated cost of $114 billion.

Automakers say they may have to close dealerships in states that adopt the California rules, or stop selling some of their least fuel-efficient but most profitable models, such as big trucks and sport utility vehicles, and make hybrid versions of more models.

California officials estimate new vehicle sales in the state will drop 4.7 percent -- 90,000 vehicles -- by 2020 under the rules.

Environmentalists say tough tailpipe emissions restrictions are necessary to reduce the growing amount of carbon dioxide in the atmosphere. They note that U.S. automobiles account for about 6 percent of worldwide man-made carbon dioxide emissions.

The legal challenge in Vermont follows California's order that automakers meet tailpipe emissions limits beginning in 2009 that increase annually to cut emissions up to 40 percent by 2016. Maryland is considering becoming the next state to adopt the standards.

Under the rules, passenger cars would likely have to average 43 miles per gallon by 2016 -- far above any proposal in Congress to raise the standard from today's 27.5 mpg standard, which has been unchanged in two decades.

President Bush's proposal would raise fuel economy standards an average 4 percent yearly beginning in September 2009 for passenger cars -- though the final number would be set through the regulatory process.

An analysis by the National Highway Traffic Safety Administration says it would cost the auto industry $114 billion to comply with Bush's plan between 2010 and 2017, including $85 billion for Detroit's Big Three. That proposal would bring fuel economy mandates to about 34 mpg by 2017 for cars -- far below the California mandate.

Dave McCurdy, head of the Alliance of Automotive Manufacturers, said the companies it represents support a "national, federal, economy-wide approach to addressing greenhouse gases."

Last week, the U.S. Supreme Court ruled that the U.S. Environmental Protection Agency has the right to regulate carbon dioxide as an "air pollutant" and had to explain why it has opted not to do so.

California is allowed to set its own rules under the 1970 Clean Air Act and other states can choose to adopt the Golden State's tougher regulations.

The Supreme Court decision gave automakers hope because it noted that a separate law gives the federal government, through the Department of Transportation, sole power to set fuel economy standards. Automakers believe California's regulation is "preempted" by the federal regulations.

You can reach David Shepardson at (202) 662-8735 or dshepardson@detnews.com.