The Detroit News
Bills target fuel rule costs
Stabenow legislation would allow automakers to issue $12 billion in tax-free bonds
By David Shepardson
June 28, 2007
Copyright © 2007 The Detroit News

WASHINGTON -- As legislators debate whether to force automakers to spend billions to improve the fuel efficiency of their vehicles, there are growing calls to offer the companies financial support to help them do it.

Michigan Sen. Debbie Stabenow, D-Lansing, and John Kerry, D-Mass, are expected to propose legislation today that would allow automakers to issue up to $12 billion in tax-free, private activity bonds to pay for facilities to develop alternative vehicles and their components.

It's the latest in a series of proposals designed to help automakers clear technology hurdles.

Under the Stabenow plan, the U.S. Treasury would spend up to $1.5 billion to subsidize bonds to finance the cost of retrofitting auto factories built before1981. The bonds would be capped at $4 billion per automaker and could be issued between 2008 and 2013.

The proposal comes as General Motors Corp. and Ford Motor Co. are in the process of closing a total of more than 25 plants as they reduce capacity in the wake of declining market share.

In February, U.S. Rep. Mike Rogers, R-Brighton, introduced a proposal to offer up to $20 billion in federally backed loan guarantees to automakers and suppliers to cut the cost of obtaining capital.

This week, the House Energy and Commerce committee is considering a package of six energy efficiency bills, including two that would help automakers with costs. There is also lots of action behind the scenes as Republicans and Democrats plan rival fuel economy measures.

One of the bills expected to pass the committee creates a grant program to support development of flexible fuel vehicles by U.S. automakers. Another would create an advanced battery loan guarantee program and a grant program to help convert facilities to build plug-in hybrid vehicles. A separate grant program would support plug-in hybrids. The committee hasn't said how much money these programs would offer.The action follows the Senate's approval last week of an energy bill that raises Corporate Average Fuel Economy standards 40 percent by 2020 to 35 miles per gallon for cars and trucks combined. Automakers have said it will cost billions to meet the mandate.

The Senate bill offers grants, loan guarantees and funding to support research into hybrids, advanced diesel and battery technologies, and biofuels.

Now all eyes are on House Speaker Nancy Pelosi, D-Calif., and Rep. Ed Markey, D-Mass., the chairman of the House select committee on global warming. Markey may seek to introduce a fuel economy amendment in mid-July when the full House takes up the package of energy bills.

Markey's bill calls for raising CAFÉ standards to 35 mpg, as well, but by 2018. He declined to introduce his bill Wednesday during a hearing on the six energy bills. "We will pass a tough fuel economy standard soon, just as the Senate has done," he said.

In the meantime, U.S. Rep John Dingell, D-Dearborn, chairman of the House Energy and Commerce committee, and Fred Upton, R-St. Joseph, are working on a draft fuel economy measure, Upton said in an interview.

Upton has been meeting regularly with automakers on the issue. Dingell called the CEOs of GM, Ford and the Chrysler Group on Friday to emphasize the importance of working with Congress to pass a realistic increase.

Dingell said Wednesday climate change legislation this fall should include increases in vehicle efficiency. The legislation will "require a reduction in U.S. greenhouse gas emissions of between 60 and perhaps as much 80 percent by 2050."

The committee's ranking Republican, Joe Barton of Texas, said he and others had prepared amendments to deal with fuel economy regulations in a "more responsible way" than the Senate.

Copyright © 2007 The Detroit News