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CAFE Upgrade Unlikely

Even though gasoline prices are soaring and the political landscape seems ripe for a new way of addressing the nation’s increasing demand for oil, the prospects for forcing automakers to increase vehicle fuel efficiency standards for the first time in 30 years appear to be remote.

Indeed, the recent proclamation by Senate Energy and Natural Resources Chairman Pete Domenici (R-N.M.) that Congress should consider raising the Corporate Average Fuel Economy standards has found little traction in the Senate and an absolute rejection in the House.

Even Domenici and Sen. Larry Craig (R-Idaho), two recent CAFE converts, acknowledged that pushing the issue will take a Herculean legislative effort — and even then it may not succeed.

“There may need to be some regulatory adjustment [to CAFE], but that comes with a price,” Craig said, citing the need to couple any increases in CAFE standards with measures that also increase oil production.

“You have to see what you can put it together with,” Domenici said of the deal-making that is to come. “I’m working on it, but it’s hard to work because it’s dealing with two, three different committees.”

Indeed, Domenici, from his perch on the Energy panel, doesn’t actually have jurisdiction over changes in CAFE; Commerce, Science and Transportation Chairman Ted Stevens (R-Alaska) does.

Stevens hasn’t indicated whether he agrees with Domenici, but he has expressed a willingness to hold hearings on the issue.

“Once we are through the immediate problems of helping those devastated by Hurricane Katrina, the Commerce Committee will turn to long-term issues, such as CAFE” and issues involving the Federal Trade Commission, Stevens said through a spokesman.

But even if Stevens joins Domenici, there’s still another obstacle: House Energy and Commerce Chairman Joe Barton (R-Texas) has flatly refused to include increased CAFE standards in any new energy bill that comes out of his committee. Congress passed a mammoth energy bill in July filled with incentives for more oil production, but it was criticized by many for having little to no effect on the price of gas.

Barton’s rejection of changing CAFE standards is exactly why automakers say they are not sweating this latest flurry of interest in the issue on Capitol Hill.

“Any talk of just raising the [standards] is going nowhere,” said one industry lobbyist.

Meanwhile, Domenici and other CAFE defenders face a mammoth task in flipping votes in the Senate. Just this summer, the Senate defeated by a 28-67 vote a proposal by Sen. Dick Durbin (D-Ill.) to raise CAFE standards.

But Sen. John McCain (R-Ariz.) said he hopes the issue will ripen over the next couple of weeks, as Members get more and more feedback from their home states.

“I don’t think the Senate has fully heard from their constituents on this yet,” he said. “The biggest complaint is not [the war in] Iraq. It’s not [the federal government’s response to] Katrina. It’s gas prices.”

But Sen. Debbie Stabenow (D-Mich.), who represents much of the auto industry’s headquarters in Detroit, said she doesn’t see the votes changing anytime soon.

Another thing automakers have in their favor is that Domenici and Craig are unlikely to push for radical changes to CAFE, unlike the Durbin proposal, which would have required automakers to increase the average fuel efficiency of passenger cars from 27.5 miles per gallon to 40 mpg. Pickup trucks would have had to increase their average efficiency from 20.7 mpg to 27.5 mpg.

Craig said he would prefer to alter CAFE standards along the lines of what the National Highway Traffic Safety Administration has already proposed, or in another way that does not set a specific fuel efficiency number for an automaker’s entire fleet of cars. NHTSA unveiled a plan in August that would set mileage goals for light trucks, minivans and sport utility vehicles based on size, rather than having those less fuel-efficient models count toward their entire fleet’s average.

Indeed, the new proposed rules are designed to address complaints from U.S. automakers that the CAFE standards unfairly discriminate against their dominance in the “light truck” market, while favoring foreign manufacturers whose primary business is in passenger cars.

But Dan Becker, director of the Sierra Club’s global warming program, said the new NHTSA rules could, perversely, allow American carmakers to produce fewer fuel-efficient models.

“The more big trucks you make, the lower your [CAFE] standard,” he noted.

Meanwhile, environmentalists say other tradeoffs included in Domenici’s plan might be hard for them to stomach.

“It’s still unlikely they’ll do [CAFE changes] without pillaging and plundering at the same time,” Becker said.

Domenici has offered to couple an oil conservation measure, such as increased CAFE standards, with measures designed to increase oil production in politically and environmentally sensitive areas. In fact, Domenici is hoping that his CAFE proposal will be the breakthrough he needs to increase oil and natural gas drilling off the Florida coast.

However, that prospect drew a filibuster threat from Florida Senators against the New Mexican’s energy bill earlier this year. And, even though Republican and Democratic Senators from the Northeast, as well as those from California, would likely embrace any increase in CAFE standards, they are just as likely to join the Florida Senators’ filibuster based on fears that drilling off of their coastal waters might be Congress’ next target.

Domenici’s plan also includes incentives to upgrade oil refineries and to build new ones as a way of increasing production capacity in the United States. Environmentalists oppose such measures too. Barton’s bill, which could be unveiled this week, is expected to focus almost exclusively on refining capacity.

Becker complained that both Domenici and Barton are essentially “looking at all the things that were too controversial to pass in the energy bill” when it cleared both chambers in July.