General Motors Corp. and Ford Motor Co. today will urge a Senate subcommittee to relax federal fuel economy standards that would place both companies in violation of federal law and subject them to hundreds of millions of dollars in fines.
The two big domestic car manufacturers will be joined in their testimony before the Senate subcommittee on energy regulation and conservation by a group representing foreign auto makers, particularly builders of larger European models.
GM and Ford will be opposed by Chrysler Corp., the nation's third largest car company, which contends that any relaxation of fuel standards would give its two main U.S. rivals an unfair competitive advantage and constitute a reward for failure to obey the law.
At issue is the corporate average fuel economy (CAFE) standard set by the Motor Vehicle Information and Cost Savings Act, which became effective in 1978. The law establishes an average fuel economy level of 27.5 miles per gallon for all new-car fleets sold in the United States in 1985 and later.
GM is estimating a 1985-model, new-car fleet CAFE of 25.1 mpg, and Ford is predicting 25.9 mpg. Both companies say that they do not expect to reach 27.5 mpg by the 1986 model year, which begins next fall.
Chrysler says its new-car fleet average will be on target at 27.5 mpg.
GM last March 1 asked the National Highway Traffic Safety Administration to roll back the 27.5 mpg standard to 26 mpg, beginning with 1986-model cars. Ford also requested a reduction to 26 mpg, but said it would only need the lower standard for three years beginning with model year 1986.
Under the law, NHTSA has the authority to reduce the standard if it determines that -- based on market and other conditions -- "the maximum feasible level of fuel economy is other than 27.5 mpg." A NHTSA official said yesterday that agency administrator Diane K. Steed "might give some indication" in her subcommittee testimony today "on how NHTSA might rule" in the matter. He declined further comment.
Changes in regulations affecting CAFE standards must occur before the beginning of the model year in which the change is scheduled to take effect. According to NHTSA officials, that means the agency must rule on the GM and Ford petitions before the fall.
Companies failing to meet the standard could be assessed $5 for each tenth of a mile per gallon they fall below it. That penalty is multiplied by each car in an automaker's new-car fleet.
GM could wind up paying $500 million in penalties for the 1985-model year for failing to meet the 27.5 mpg rule. Ford could face a $150 million fine without those credits, Ford officials said.
But the penalties are not nearly as onerous as the stigma of operating outside of the law, said Helen Petrauskas, Ford's vice president for environmental safety and engineering.