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Porsche, other car companies lobby to ease new fuel efficiency standards

The Hill
by Jim Snyder and Silla Brush

A Porsche Carrera can go 0 to 60 in under five seconds. But can it go from 26 miles per gallon to over 40 in six years?

It would be a tough road, the luxury automaker says, which is why Porsche has sent lobbyists to the White House seeking changes to proposed fuel economy and tailpipe emissions standards.

Porsche and other automakers that serve niche markets argue the new standards could slow down sales in the United States. As the administration fleshes out the new standards before the spring, a broad range of car companies will likely lobby regulatory officials.

The standards were an early victory for the Obama administration on an issue that automakers and environmentalists had clashed over for years.

Fuel economy standards for cars had not been raised in three decades, but under a compromise plan unveiled in March automakers pledged to improve the efficiency of their cars in exchange for a single federal standard.

Frustrated by inaction in Washington, California regulators were working to raise standards on their own, which spurred concerns among automakers of an eventual patchwork of fuel economy regulations. Under the agreement negotiated by the administration, California pledged not to move forward with a new standard until 2016 at the earliest.

The problem for Porsche and other companies is the rule is structured in a way that forces them to increase their fuel economy levels at a faster clip than other automakers do.

Porsche, for example, must go from an average fuel economy of 26.2 mpg to 41.4 mpg by 2016, according to one chart company lobbyists have shown administration officials.

The new standards will be impossible to meet, said John Cline, a lobbyist at the C2 Group representing Porsche. The automaker has paid C2 $90,000 this year to lobby on the matter.

Cline and others representing Porsche met in late November with officials at the Office of Management and Budget (OMB), according to administration records. Lobbyists and representatives for Jaguar Land Rover also met with administration officials earlier in November about the fuel economy standards.

Jaguar Land Rover hired PACE LLP to lobby on fuel standards in the third quarter and spent $20,000, according to congressional lobbying records.

A PACE lobbyist represented the company at the November meeting, according to OMB records.

“All of our manufacturers are committed to meeting the goals of the program, but there are still many questions that remain about how implementation and how compliance will be handled,” said Charles Territo, spokesman at the Alliance of Automobile Manufacturers, which includes Porsche and Jaguar Land Rover.

Cline said Porsche is committed to improving the fuel economy of its fleet. It is planning on introducing a hybrid version of its sport utility vehicle, Cayenne, sometime in 2012. Cline added that Porsche is ready to meet annual percentage increases in fuel efficiency, but the new rules would require a year-to-year boost of 10 percent.

The problem is that Porsche makes a relatively small number of cars, about 100,000 a year, and relatively few models. Most of its cars are classified as small passenger vehicles, which have the highest bar to meet under the new fuel economy rules.

But the company is also satisfying a market worried more about speed, handling and a certain cool factor than about fuel economy. General Motors can offset its Corvette, which gets poor fuel mileage, with a Malibu. Porsche can’t.

“We just can’t get there technologically,” Cline said.

The company only recently has met the 27 mpg the National Highway Traffic Safety Administration (NHTSA) requires. Customers now pay up to $300 more for a Porsche as a penalty for failing to meet those standards.

One concern the car company has is the penalty the Environmental Protection Agency (EPA) will apply for failure to meet its standards. EPA is new to the issue, which has previously been handled by NHTSA.

Both agencies are involved in the rulemaking under way.

EPA can now regulate carbon dioxide and other greenhouse gas emissions through the Clean Air Act. The agency is working on a corresponding emissions rule to NHTSA’s corporate average fuel economy.

Cline said OMB officials listened to his company’s argument, without indicating which way they were leaning.

The company is hoping that government regulators moderate the requirements for fuel economy increases.

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