White House threatens veto of energy bill

Wrangling over key provisions imperils hike in fuel economy standard to 35 mpg by 2020.

David Shepardson / Detroit News Washington Bureau

WASHINGTON -- The White House threatened to veto a bill to improve energy efficiency Monday, putting in serious doubt the fate of the first increase in fuel economy standards in more than two decades.

House Speaker Nancy Pelosi, D-Calif., and Rep. John Dingell, D-Dearborn, chairman of the House Energy and Commerce Committee, agreed late Friday on a deal that would increase fleetwide corporate average fuel economy mandates to 35 miles per gallon by 2020, a 40 percent increase over the current average. Automakers also had agreed to the framework of the legislation.

But the bill's failure to identify which federal agency would be responsible for setting fuel efficiency and emissions standards may threaten its passage.

"It appears Congress may intend to produce a bill the president cannot sign," Al Hubbard, the White House director of the National Economic Council, wrote in a letter to Pelosi on Monday.

The National Highway Traffic Safety Administration has authority to set CAFE standards, but in April the U.S. Supreme Court said the Environmental Protection Agency has the authority to regulate vehicle carbon dioxide emissions under the Clean Air Act. Sorting out that discrepancy is a critical task for automakers.

There are other issues in the energy bill that are problematic for the White House and some members of Congress. Those objections include requiring utilities to produce 15 percent of electricity through renewable sources and rolling back $16 billion in tax breaks for oil companies. Also to be finalized is a mandate to require 36 billion gallons of alternative fuels, especially ethanol, by 2022.

But a sticking point for Dingell and other Michigan legislators is the question of setting CAFE standards. Dingell had lost an effort to ensure that the EPA and NHTSA set standards that don't conflict -- the very issue the White House weighed in on Monday. In an interview Saturday, Dingell complained that the White House "hadn't offered me any help."

Some Republicans also were concerned about the bill and suggested its final outcome was in doubt.

"The domestic automakers capitulated because they had a gun pointed to their head by Nancy Pelosi," said Rep. Candice Miller, R-St. Clair Shores.

Pelosi and Hubbard met Monday afternoon at the Capitol for more than an hour. Pelosi's spokesman, Drew Hammill, said it was "a thorough discussion as the speaker described the efforts of the House and Senate leaders to craft comprehensive energy security legislation. The speaker is hopeful that, when the president reviews the final bill language, he will join the business, labor and environmental communities and support this legislation."

Ford officials said Monday the fuel economy mandates would be a "stretch."

"We have to do it, and we have the best people in the industry getting ready to do it," Ford Executive Chairman Bill Ford Jr. said at an event in Dearborn.

"We worked very hard with the members of Congress to come up with a deal that we could live with."

Dingell and Michigan's two senators won key concessions sought by the auto industry, including retaining separate standards for cars and trucks, extending a credit for building flex-fuel vehicles and retaining provisions designed to maintain small car production in the United States.

Sen. Debbie Stabenow, D-Lansing, said she wouldn't support the bill unless it had several financial measures designed to aid automakers and customers who buy advanced technology vehicles such as hybrids.

Stabenow said she was working to include $15 billion to $20 billion in federally backed loan guarantees to help domestic automakers retool plants older than 20 years.

She also said she had won support for $700 million in consumer tax incentives to buy advanced technology vehicles. She was still negotiating for up to $1.8 billion for manufacturing tax credits and advanced battery research.

Stabenow spoke with Pelosi on Sunday night about the need for auto incentives to be part of the final package.

"The regulations are real, and the funding needs to be real," Stabenow said, saying that Pelosi suggested the two issues might need to be split up.

Sen. Carl Levin, D-Detroit, said Monday that Dingell "got the best deal he possibly could" but said he was far from satisfied with the bill.

Rep. Mike Rogers, R-Brighton, a member of the House Energy and Commerce Committee, described the fuel economy deal as "the best of the worst set of options."

"This bill seems to be a swing and a miss," Rogers said.

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