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Congress in the Driver's Seat
Its Clout Waning, the Auto Industry Is Losing Its Ability to Steer Policy

By Kimberly Kindy and Kendra Marr
Washington Post Staff Writers
Wednesday, February 4, 2009

Rep. John D. Dingell of Michigan walked onto a stage across from a "green car" exhibit last night at the Washington Auto Show and was honored as a "true champion of the automotive industry."

The Detroit area Democrat was given a trophy with a crystal steering wheel, a gesture that signaled the end of an era -- one in which automakers ruled Congress, easily deflected pressure to build fuel-efficient cars and packed their trademark shows with super-size SUVs perched on fake mountaintops.

The ousting of Dingell late last year from his chairmanship of the House Energy and Commerce Committee by Rep. Henry A. Waxman (D-Calif.) was a public step in what politicians and lobbyists say has been a gradual erosion of the auto industry's clout in Washington and in state legislatures.

President Obama's move last week to support strict California vehicle emission standards was another blow to the industry, already reeling from financial pressures and dismal sales; the Big Three automakers yesterday said that January sales were down -- 55 percent at Chrysler, 49 percent at General Motors and 39 percent at Ford -- compared with a year ago.

For decades, advocates such as Dingell protected the industry from demands for more fuel-efficient vehicles, while sophisticated and expensive lobbying and legal strategies -- some taxpayer-funded -- also helped the carmakers fight off challenges.

But that kind of rock-solid support in Congress has worn away, as many members say they have been repeatedly misled by the companies' promises of reform and complaints that new initiatives would spell financial ruin. It was a sentiment voiced last fall, when lawmakers considered whether they should provide as much as $25 billion to prevent the industry's collapse.

Even after accepting billions of dollars from the federal government, and as they gear up to plead for billions more, automakers are continuing to fight efforts by the Obama administration and congressional Democrats to bolster fuel-efficiency standards.

They responded to Obama's support of the California effort, which 13 other states are poised to follow, by sending more lobbyists into statehouses. They have spent an estimated $10 million in legal fees to challenge efforts in California, Vermont, Rhode Island and New Mexico, according to Sierra Club lawyer David Bookbinder, who is fighting automakers' actions.

In Washington, the auto industry spent $65 million last year to lobby Congress, ranking 16th among all industries, according to the Center for Responsive Politics. Its efforts largely focused on developing a national fuel economy and emissions standard weaker than the one proposed by California.

Industry leaders continue to argue that Congress is trying to force them to build cars Americans don't want, at least as long as gas prices remain low.

In an interview, Waxman said, "I voted for money for the bailout because I want them to survive, but this makes me think that they have not yet stopped being controlled by their own self-interest." He added: "They are being shortsighted. This type of conduct has done a great deal of harm to America and the industry."

Until very recently, the relationship between automakers and policymakers went something like this: The industry asserted its position, and leaders in Washington largely acquiesced.

In 1971, that played out in a secret meeting in which then-Ford executive Lee Iacocca asked President Richard M. Nixon for a delay in laws mandating airbags, lest the company have to spend more than $4 billion. The request, captured on Watergate tapes, was granted.

In the early 1990s, the industry's hold on Washington remained firm as President George H.W. Bush sided with it over a push by environmentalists and some members of Congress to improve fuel economy. Automakers argued that smaller, more fuel-efficient models weren't as safe as large vehicles, and taxpayer money was used to provide evidence: The Transportation Department financed crash tests that pitted small cars against large ones. The first four tests showed small vehicles faring well. Then the department rammed a 4,000-pound Ford Crown Victoria into a 2,300-pound Suzuki Swift, crushing it.

The department provided Congress only footage of the Suzuki's fate. At the same time, the auto industry rolled out an advertising campaign with a voiceover that said, "Fuel economy is important, but safety is vital."

When, despite their efforts, automakers were unable to defeat increases in fuel economy, they promised to develop more fuel-efficient models -- so long as taxpayers footed the bill.

The most expensive effort came in 1993, when Vice President Al Gore asked the Big Three to create a car of the future. More than $1.25 billion in federal funds went to the project, and each company built a prototype that got 80 miles per gallon. But none of the vehicles made it to the assembly line because the automakers said they would cost too much to mass-produce.

As Congress geared up for another attempt to pass new standards in 1999, automakers went after members in their districts -- placing newspaper ads that showed men in cowboy hats leaning against pickup trucks and warned readers they may lose their ability to own minivans and big trucks. The campaign worked.

Daniel Becker, an environmental lawyer with the Sierra Club at the time, said he decided it was time to work around Congress. "Having been blocked at every step along the way in Washington, we decided to take it to California," he said.

It was a change in tactics that sent automakers into a panic. California regulators had a history of forcing changes on the industry -- they were the first to require catalytic converters, seat belts and unleaded fuel -- that led to nationwide alterations because of the state's large market.

California did not have the power to set fuel economy standards, but Becker reasoned that if the state passed more rigorous emissions standards, a move allowed under the Clean Air Act, it could appeal to the Environmental Protection Agency for a waiver to enforce the law. It had already requested and received 55 waivers from federal regulators.

Automakers were livid at the ploy, since vehicle emissions can be reduced only if fuel efficiency is improved. "It's like arguing there's a difference between 12 inches and a foot," said Charles Territo, spokesman for the Alliance of Automobile Manufacturers.

Becker found a California lawmaker interested in carrying the legislation: Fran Pavley, a Prius-driving former eighth-grade schoolteacher newly elected to the state Assembly.

Pavley and her allies turned to Hollywood for help. Paul Newman called female legislators, compelling them to ask Pavley to make sure they were on the list of supporters. Warren Beatty recruited other lawmakers, including Sen. John McCain (R-Ariz.), who contacted moderate Republicans who might not be swayed by movie stars.

On the other side, automakers recruited car dealers, who lobbied lawmakers and convinced popular Los Angeles radio hosts John Kobylt and Ken Chiampou to join their cause. For months, the "John and Ken Show" told car lovers they would lose their right to buy sport-utility vehicles and other cars if the law passed. Listeners wrote more than 100,000 protest letters to lawmakers and jammed their phone lines.

A few days before the bill came up for its first vote, Pavley began receiving death threats. A police detail was assigned to protect her.

The bitter battle ended in 2002 with a victory for Pavley and the environmentalists -- by a single vote. It was the first time in decades that the auto industry had failed to block or water down legislation that would force major changes in fuel economy standards.

Carmakers responded by going to court.

"Usually they would send in their engineers to the [California] Air Resources Board. There they'd work it out nerd to nerd," Bookbinder said. "Not this time. They said, 'It's illegal, and we can't do it.' "

Lawyers representing the auto industry declined to comment, citing pending appeals. They have argued in court that fuel economy standards must be set by the federal government, not states, and that California regulators have not accurately portrayed the costs. Automakers' studies place the cost between $2,000 and $7,000 per car, compared with California's estimate of between $1,060 and $1,500.

As other states followed California's lead and the number of cases grew, auto executives returned to Congress in 2006, after losing their first case in California. They complained that the states were creating a patchwork of laws that would make retooling assembly lines impossible.

If fuel-efficiency standards must be increased, they said, they wanted Congress to handle it.

But auto executives soon learned that concerns about a reliance on foreign oil, as well as their tactics, had turned some of their congressional allies against them. At a 2007 Capitol Hill luncheon, auto chiefs from GM, Ford and Chrysler, who had asked for a national standard, nevertheless told lawmakers they needed to scale back their demands or the industry would be decimated.

Sen. Byron L. Dorgan (D-N.D.), who had faithfully sided with the industry for years, had had enough. "I think this issue is over," Dorgan told the executives. "I think your position is yesterday forever."

Not quite. Dingell stepped in on the industry's behalf and persuaded lawmakers to weaken the bill. The final version called for raising the average fuel economy from 27 to 35 miles per gallon by 2020. The California law requires automobiles to get 43.7 mpg by 2016.

But Dingell's action cost him. To get his way, he crossed House Speaker Nancy Pelosi (D-Calif.), and although Pelosi did not later take a public position on the committee leadership battle between Dingell and Waxman, she also did not step in to defend the longtime chairman.

"I have found a fair amount of unhappiness means you are doing your job," Dingell said in an interview about his role as an auto industry advocate. "There are many opinions, but just one set of facts. I went with the facts."

Automakers and their supporters are now pointing their efforts toward a national standard for fuel economy and emissions. They have begun talks with the Obama administration, members of Congress and state leaders in an effort to reach a consensus, although they acknowledge that they're not entirely sure what approach to take in the new administration.

Industry officials said they are asking the EPA, in addition to reviewing California's right to adopt its own standards, to look at the cost of mass-producing vehicles that would meet them.

And they are asking Congress to pass laws that will spur consumers to buy such vehicles. Industry leaders, including Bob Lutz, GM's vice chairman of global product development, said drivers in Europe are willing to own smaller cars because gas costs so much more there. Without such incentives, "it puts us in the industry in the position where we are at war with the customer," Lutz said.

Regardless, some trade groups acknowledge that the landscape has changed, and they are promising to work more cooperatively.

"Has the industry lost its power to say no?" asked Dave McCurdy, president of the Alliance of Automobile Manufacturers. "The industry is saying, 'Yes, however. . . . Yes, let's work it out.' It's a different starting point in the discussion. The nature of the industry has changed."

Research editor Alice Crites and staff researcher Lucy Shackelford contributed to this report.

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