Court Ruling Unlikely to Settle Fight Over Light-Truck Fuel Economy

Environmentalists hail a California appeals court decision to invalidate the Bush Admin.’s corporate average fuel economy standards for light trucks, but it remains unclear how deeply the ruling could impact auto makers.

“It’s a mixed blessing,” says Walter McManus, an analyst at the University of Michigan’s Transportation Research Institute.

In other words, the decision may delay a hike in stricter fuel-economy standards for pickups, vans and SUVs, but it also could prompt Congress to arrive at a new standard more quickly.

“The risk of Congress doing something is higher,” McManus suggests.

The Senate already has passed energy legislation that calls for cars and trucks to meet a combined standard of 35 mpg (6.7 L/100 km) by 2020. Auto makers oppose that hike, saying cars and trucks should remain separate because they perform different duties. The industry favors a House bill that would keep cars and truck apart and raise the standard to between 32 mpg (7.4 L/100 km) and 35 mpg by 2022.

Current CAFE rules call for pickups, vans and SUVs to meet a minimum fleet-wide standard of 22.2 mpg (10.6 L/100 km) in 2008. The rule rejected by the court called for a standard of 24 mpg (9.8 L/100 km) by 2011.

Marc Levinson, an analyst with J.P. Morgan Securities Inc., says the court’s decision gives auto makers some breathing room.

“We would guess that tougher fuel-economy rules for light trucks probably won’t take effect before model year 2012,” he says in a research note to investors.

Levinson anticipates it will take the National Highway Traffic Safety Admin. another two years to draft a new standard.

The 9th U.S. Circuit Court of Appeals threw out the new standard in a ruling Nov. 15 because NHTSA failed to account for the greenhouse gases emitted by automobiles.

The court also faulted NHTSA for keeping cars and trucks separate, which leaves open the so-called “SUV loophole.” The ruling further determined that NHTSA failed to set standards for the 8,500 lbs.-10,000 lbs. (3,860 kg-4,540 kg) gross vehicle weight rating class.

In the 90-page ruling, Judge Betty Fletcher calls the standard “arbitrary and capricious,” adding that “(NHTSA) cannot put a thumb on the scale by undervaluing the benefits and overvaluing the costs of more stringent standards.”

Eleven states, the District of Columbia, City of New York and four environmental groups originally filed the complaint and now claim victory.

“This decision is a stinging rebuke to the Bush Admin.its continued insistence on ignoring the law and stubborn refusal to take meaningful steps to address global warming pollution from automobiles,” Pat Gallagher, director-environmental law program for the Sierra Club, says in a statement.

The Alliance of Automobile Manufacturers, a lobbyist for the industry, says the court’s decision jeopardizes four years of auto makers’ product planning, which began when the light-truck standard was announced 19 months ago.

“Any further changes to the program would only delay the progress that manufacturers have made towards increasing fleet-wide fuel economy,” Dave McCurdy, the lobby’s president and CEO, says in a statement.

NHTSA declines comment on the court’s ruling and is referring inquiries to the Department of Justice.

“We’re still reviewing the court’s ruling and considering all options,” a DOJ spokesman says.

What that means is the 9th Circuit’s decision could come under scrutiny by a higher court.

“They’ve been overturned more than any circuit in the nation, so it might not be over until the Supreme Court sings,” McManus says.