Previous Auto Industry Arguments Despite the Clean Car Program 9s public health, air quality and consumer advantages, manufacturers, dealers and their trade associations argue that the program will cost too much, is not technologically feasible and will hurt consumers, among other things. The Clean Cars Program is not the first time that automakers have been faced with regulations. At numerous points throughout the automobile 9s history, decision-makers have required industry to install technology that improves safety including seat belts and air bags, increases fuel economy through the Corporate Average Fuel Economy (CAFE) standards, or decreases air pollution emissions such as under the 1970 Clean Air Act.
Many of the predictions about economic catastrophe levied against the Clean Cars Program today are quite similar to those made in other cases. The 1970 Clean Air Act created emission standards for hydrocarbons and carbon monoxide for new cars in 1975 and a standard for nitrogen oxides in 1976 both designed to achieve a 90 percent reduction in emissions. The 1975 standards essentially required installation of catalytic converters.
Industry immediately said the standards could not be met. Lee Iacocca of Ford said that a one year extension was needed to ckeep us in business for another ... more. less.
year. d A General Motors executive named Ernie Starkman told the EPA that requiring catalytic converters on its 1975 MY vehicles would pose cunreasonable risk of business catastrophe d and could conceivably lead to ccomplete stoppage of the entire production. d In response to the Clean Air Act, Lee Iacocca at Ford issued a press statement saying that the provisions ccould prevent continued production of automobiles after January 1, 1975. Even if they do not stop production, they could lead to huge increases in the price of cars.<br><br> They could have a tremendous impact on all of American industry and could do irreparable damage to the American economy. And yet, in return for all of this, they would lead to only small improvements in the quality of air. d As it later turned out, auto industry cost estimates for the 1970s catalytic converter requirements were two times higher than the actual cost. Industry estimates claimed a price tag of nearly $3,000, but actual costs turned out to be only about $1,300.<br><br> In 1975, with the passage of the Environmental Policy and Conservation Act, CAFE standards further changed the face of the American automobile, and led to reductions in size and weight to improve fuel economy. Fuel economy was increased by 40 to 50 percent by MY 1980. General Motors and Ford quickly filed protests, contending the standards would require new, unproven technologies and would negatively impact consumers.<br><br> The National Highway Traffic Safety Administration rejected the automakers 9 claims and concluded that the standards could be met without a significant change in the mix of cars being sold. Later, when the Clinton Administration proposed stricter CAFE standards, manufacturers claimed that it would cost them 150,000 to 300,000 jobs. The Los Angeles Times investigated the number and found that they were based on the idea that instead of redesigning the cars, the automakers would need to close down all of their assembly lines for all cars that did not meet the standards.<br><br> The car companies 9 spurious claims continued when California tightened its emissions through the original LEV program in the 1990s. Sierra Research, who provides cost analyses for the auto industry, estimated costs that were 10 times higher than the actual cost of compliance for the original LEV program. For example, in 1994 the automakers claimed the cost of meeting the LEV standard to be as high as $788.<br><br> However, the actual costs were significantly lower 4only $83. Similarly dire predictions were made during the LEV II and ZEV rulemakings with automakers suggesting that the standards were not technically feasible, were too expensive and that CARB staff 9s costs analyses were underestimated and did not allow for sufficient lead time. Most recently, California adopted the Global Warming Pollution Standards component of the Clean Cars Program.<br><br> Automakers have said that the regulations will be too costly and that they will have to stop selling some of their largest vehicles, like SUVs, because they will not be able to cost-effectively reduce emissions enough to bring their fleet into compliance. As a result, they allege, consumer choice will be dampened and the industry and its dealers will suffer. Ronald Harbour, a private consultant who testified on behalf of the automakers said during the Vermont hearings where automakers challenged the Vermont standards, cI 9m not sure I 9m optimistic about the industry 9s future in total.<br><br> They 9ll all suffer sales declines because the cost of compliance is so high. d Similarly, at that same hearing, Reginald Modlin of DaimlerChrysler, testified the only car his company would be able to sell in Clean Car states by 2016 would be a tiny, two- person Mercedes Smart car developed for use in European cities. Sierra Research, commissioned by the Alliance of Automobile Manufacturers found that the average vehicle cost, under the global warming pollution standards, would increase by about $3,000. However, there were several flaws in the study, which led CARB to conclude that the industry 9s cost estimate numbers were unreliable.<br><br> Similarly, a District Court in Vermont also analyzed the numbers and found that the manufacturer 9s price estimates were cunsupported by the evidence. d The court went on to say that the automakers have cfailed to carry their burden to demonstrate that the regulation is not technologically feasible or economically practicable& given the flawed assumptions and overly conservative selection of technologies d utilized. Instead, the Court found that ccompliance is possible in the time period provided at a relatively reasonable cost. d Industry 9s current estimate for $3,000 per vehicle is three times higher than CARB 9s. Historically, CARB 9s estimates have also been higher than actual observed costs, although not as high as predictions made by industry.<br><br> As a result, even CARB 9s estimates may be too high. Specific Auto Industry Arguments to the Clean Cars Program One common argument has been that because the program increases vehicle prices, sales will take a hit and dealers will be hurt as a result. First, there is no evidence under the existing Clean Cars Program that vehicle sales have suffered or that automakers have been passing on the additional cost of the vehicles to consumers.<br><br> The Northeast States for Coordinated Air Use Management (NESCAUM) has documented no negative vehicle sales impact resulting from the program in the Northeast; instead, sales of vehicles have been steadily increasing. Second, as mentioned above, at other times over the past thirty years, manufacturers made similar claims about regulations. Nonetheless, vehicles sales in the United States have hovered between 13 and 17 million annually for the past two decades, with most year to year fluctuation attributable to changes in the general economy, as opposed to year to year price changes in the cost of vehicles themselves.<br><br> Even during model years where prices increased dramatically, vehicle sales remained high if other economic conditions remained positive. Using history as a guide, there is no indication that regulatory improvements have caused vehicle prices to exceed what consumers are able to pay. Instead, it demonstrates that the automobile industry is resilient and adaptable at being able to comply with needed regulations, while producing vehicles that consumers want and are able to afford.<br><br> Third, in an era of increasing gasoline prices and growing concern about global warming, there is consumer demand for vehicles that can lower operating costs and reduce our carbon footprint. Dealers and manufacturers may stand to benefit by selling cleaner vehicles. Remarks by Adam Lee, a third generation car dealer and President of Lee Automalls, bear this out.<br><br> Lee owns 11 Chrysler, General Motors, Honda, Nissan and Toyota dealerships in Maine. He said at an EPA hearing last year, cIf American car manufacturers don 9t start making more fuel-efficient cars, and quickly, not only will global warming continue to get worse, there may no longer be a domestic car industry. d Lee goes on to say, cI have been selling Priuses since they came out six years ago. And since that time every Toyota dealer has been selling them for list price and making a very nice profit on them.<br><br> Until recently, no one even asked for a discount. Demand was so strong that people stopped negotiating. This is a car dealer 9s dream.<br><br> A car people want so badly they don 9t negotiate. d He compares this to his sales of other vehicles. cRight now rebates on large cars, trucks and SUVs have never been higher. d As of May at his dealerships in Maine, there was a $4,000 rebate on the Ford Superduty, a $5,000 rebate on the Doge Ram truck, a $6,000 rebate on the Chevy Suburban and GMC Yukon, a $6,500 rebate for the Hummer and an $8,000 rebate for the Cadillac STS. Further supporting the idea that emissions reductions are consistent with business success, between 1990 and 2005, BMW 9s fleet average carbon dioxide emissions dropped 12 percent as its U.S.<br><br> sales volume increased fourfold. Fourth, in its analysis on the impacts of the global warming regulations on industry, CARB found only a negligible impact on automobile-affiliated businesses and expects no change in dealership profitability. Lastly, although there are concerns that requiring different vehicles in Arizona as compared to bordering states will make cross-border dealer trading more difficult, the EPA allows dealers in Clean Cars states to sell California-certified vehicles to customers in any state.<br><br> In addition, dealers in states adjacent to Clean Car states can stock and sell California-certified vehicles rather than federally-certified vehicles if they would want to capture the Arizona market. Opponents also claim that regulations are not needed to make less polluting vehicles available to Arizona drivers and that this can be done voluntarily. However, in the absence of such regulations, most improvements in auto technology in recent decades have been channeled into increased power, acceleration and size rather than reducing emissions.<br><br> Practically every recent move by U.S. automakers to adopt advanced features to reduce pollution can be traced to the influence of government regulations. In 1972, John DeLorean, Corporate Vice President for General Motors, said, cIn no instance, to my knowledge, has GM ever sold a car that was substantially more pollution-free than the law demanded 4even when we had the technology.<br><br> As a matter of fact, because the California laws were tougher, we sold ccleaner d cars there and cdirtier d cars throughout the rest of the nation. d Not surprisingly then, most automakers have chosen to market PZEV-compliant vehicles only in states that have adopted the Clean Cars Program. Adopting the Clean Cars Program would mean that Arizonans get better choices and have more access to cleaner, conventional cars and advanced-technology vehicles. Opponents have also claimed that cleaner cars are less safe.<br><br> Vehicle can be built to be cleaner, while maintaining safety. A lot of safety research has been done as it relates to Corporate Average Fuel Economy (CAFE) that is beginning to break down the correlation between weight of vehicles and safety. American Honda Motor Co.<br><br> has done at least four recent studies on the size, weight and safety of vehicles and concludes design and technology are the most critical issues. A 2002 study by the National Academy of Sciences found that engine and transmission technology is available that can cut global warming emissions without compromising safety. This finding is borne out by crash data: the Honda Civic and Volkswagen Jetta have lower driver fatality rates than the Ford Explorer, Dodge Ram or Toyota 4Runner.<br><br> Nonetheless, CARB, in developing the Clean Cars Program, was strictly prohibited from using weight reduction to meet the standards. As a result, weight reduction is not needed to comply with the Clean Cars Program. Moreover, history indicates that cars are getting more safe, not less, even as emissions regulations have gotten tighter.<br><br> The fatality rate per hundred million vehicle miles traveled has dropped from 5.7 in 1966 to 1.6 in 2001. Traffic fatalities totaled 53,041 in 1966 but declined to 43,000 in 2001 despite nearly 130 million additional vehicles and nearly 90 million additional drivers. A Vermont federal court heard testimony from both Plaintiffs and Defendants regarding safety and concluded that the greenhouse gas emission standards would not present a significant threat to public safety.<br><br> Opponents have also argued that because Arizona has a higher truck to car ratio, in order to meet the standards, manufacturers will have to reduce or eliminate sales of popular trucks and SUVs ( cmix shifting d). As a result, consumers would not be able to access the vehicles they want. After weeks of testimony in the Vermont District Court, Judge Sessions concluded that the auto industry can make any vehicle reduce its greenhouse gas emissions.<br><br> The Court thoroughly reviewed the issue of consumer choice and did cnot find convincing the claims that consumers will be deprived of their choice of vehicles, or that manufacturers will be forced to restrict or abandon their product lines. d Under the existing Clean Cars Program, reduced vehicle availability has not been a problem. Similarly, there is concern that diesel vehicles will not be available in Clean Car states. Despite concerns that farmers and small businesses reliant on diesel pick up trucks and vans will not be able to access such vehicles under the program, pick up trucks or vans currently certified with a diesel engine option with a Gross Vehicle Weight Rating of more than 8,500 pounds are not effected.<br><br> Some of the most common diesel trucks used for agriculture and business weigh over 8,500 pounds and include the F-250 Super Duty, GMC Sierra 3500 and Dodge Ram 2500. Moreover, the standards allow an exemption for diesels classified as cwork trucks d and do not apply to heavy-duty vehicles, like semis and buses. Diesel passenger vehicles, like the Volkswagen Golf TDI, are not CARB-certified.<br><br> But, diesel car makers are beginning to produce cleaner diesel engines, in large part because the federal tailpipe standards for diesel are being tightened up as well. The chairman of DaimlerChrysler announced at the North American International Auto Show in January 2006 that the company will market diesels soon that cmeet emissions regulations in all 50 states. d Therefore, there seems little factual evidence to support the notion that the standards would hurt diesel availability. Opponents also claim that ZEV is unneeded and too costly.<br><br> Given consumer demand for cleaner vehicles, there is reason to believe that consumers will want to purchase the PZEVs and AT-PZEVs that manufacturers bring to the market. Hybrid sales in 2007 steadily grew as gasoline prices again topped $3 per gallon, with projections for continued high prices. With this trend in sales and with the projection for gasoline prices, CARB staff expects sales of hybrid AT-PZEVs to remain healthy.<br><br> Moreover, there is no reason to believe that the ZEV standards that have been in place have been unachievable and could not be met in Arizona. All manufacturers are currently fully compliant with the ZEV regulation. In fact, the number of AT-PZEVs and PZEVs currently being produced exceed production requirements and many of the large manufacturers have banked enough AT-PZEV credits to comply with the program several years into the future.<br><br> In 2005, there were twice as many AT-PZEVs and 40 percent more PZEVs produced than were required to meet the standards. As a result, between 1994 and 2005, manufacturers sold 130 fuel cell vehicles; 4,400 battery electric vehicles; 26,000 neighborhood electric vehicles; 70,000 hybrid and compressed natural gas vehicles and 507,000 conventional PZEVs. As for rising ZEV requirements in the future, CARB has demonstrated its willingness to revise ZEV if manufacturers can make the case that the technology is not ready.<br><br> A few examples include: In 1996 CARB reevaluated the program and for cost and performance- based reasons, eliminated the 1998 requirements to allow for additional time for research and development. In 2003, finding prices that still were too high even at higher production levels CARB revised the program again to allow manufacturers to meet their ZEV requirements through the sale of AT-PZEVs and PZEVs, and delaying any pure ZEV requirements until 2012. Currently, CARB is considering whether it will again delay this requirement until 2015.<br><br> Yet another benefit of the program is the extended warranties and stronger emission standards that accompany cleaner vehicles. Vehicles that meet PZEV standards would need to meet zero evaporative emission standards and have extended warranties of 15 years or 150,000 miles on emission controls and related equipment, providing a solid consumer benefit and preventing the deterioration of the emission system over time, which increases pollution. Finally, opponents claim that there is not adequate cost-effective technology available to meet the standards.<br><br> However, off-the-shelf technology exists that can be used so that every manufacturer can cost-effectively meet the standards. CARB staff used a number of conservative assumptions in developing the regulations, such that they could be cost-effectively achievable for even manufacturers with the heaviest fleets. First, the regulations were developed so that General Motors 4the manufacturer with the heaviest fleet 4could meet the standards.<br><br> Second, CARB ensured that multiple feasible technological packages were available in each category. Third, CARB excluded any greenhouse gas reductions due to hybridization or weight. And, fourth, CARB assumed a fuel price of only $1.74 to determine cost-effectiveness of the technologies.<br><br> To support CARB 9s analysis, engineers at the Union of Concerned Scientists (UCS) have demonstrated that large emission reductions are possible using technology available today at a net savings to consumers. The UCS Vanguard minivan incorporates E85 flex fuel, stoichiometric direct injection, dual cam phasing, turbocharging, automated manual transmission, electric power steering, an improved efficiency alternator and an improved efficiency low leak air conditioner. Changes added $299 to the purchase price, but resulted in a lifetime consumer savings of $1,333 and reduced global warming emissions by 43 percent.<br><br> A number of vehicles currently on the market take advantage of the Vanguard 9s technologies. The Dodge Durango, Chevrolet Impala and GMC Sierra, for example, use flex fuel technology. The Chevrolet Tahoe, Pontiac Grand Prix and Jeep Commander use cylinder deactivation.<br><br> The Chevrolet Silverado, Dodge Ram, GMC Sierra, Jeep Cherokee, Saturn Ion and Volkswagen Jetta, for example, use stoichiometric direct injection. The Dodge Ram, GMC Sierra and Volkswagen Jetta, for example, use turbocharging. The Volkswagen Jetta also uses automatic manual transmission.<br><br> A number of vehicles use 6 speed transmissions, including the Chevrolet Silverado, Mercury Milan, GMC Yukon, Toyota Camry and the Ford Explorer. The Acura NSX and most Fiats use electric power steering. Beyond this, automakers 4regardless of the Clean Cars Program 4will need to produce cleaner cars to comply with standards in other countries.<br><br> Nine major regions (United States, European Union, Japan, Canada, Australia, China, South Korea, Taiwan and California) around the world have implemented or proposed various fuel economy and greenhouse gas emission standards. The European Union and Japan have the most stringent standards in the world. When the California greenhouse gas standards go into effect, they will narrow the gap between the United States and European standards, but the California standards would still be less stringent.<br><br> This and the fact that Honda produces 18 percent less heat trapping gas emissions than the other major automakers is evidence that automakers can produce vehicles 4and, in fact, already are 4with significantly less emissions. Finally, in its recent Opinion and Order, the Vermont District court spent considerable time analyzing the modeling, technologies and costs utilized by both proponents and opponents of the program. Thomas Austin, a senior partner at Sierra Research, an industry expert at the hearings contended that no manufacturer could meet the Clean Car standards without the use of a large percentage of hybrids and even considering that, three manufacturers 4Ford, General Motors and DaimlerChrysler 4would find it so costly that they would need to become truck-only companies in Clean Car states (seemingly contradicting other industry concerns that the standards would reduce availability of trucks and SUVs).<br><br> Austin estimated that the standards would add between $2,500 and $4,500 to the cost of vehicles. The Court found that Austin neglected to include many currently available and cost- effective technologies in his analysis, such as gasoline direct injection/turbo, camless valve actuation, rolling resistance improvements, reducing aerodynamic drag, continuously variable transmission and electronic power steering, making his estimates unreliable. The Court wrote, c[Austin] eliminated several low-cost technologies from his analysis.<br><br> In addition, some technologies excluded from his analysis as not cost-effective are nonetheless being used in increasing numbers independent of any attempt to comply with the regulations& Overall, a major flaw in Austin 9s analysis, and Plaintiffs 9 case, is his failure to justify the technologies and fuel that seem& to offer the most viable means currently to achieve reductions in greenhouse gas emissions. d