"WELL, THERE IS no question, as far as American Motors is concerned . . . that we will meet the standards." So said a vice president of that company in 1977, addressing a Senate investigation of auto industry compliance with standards designed to double the fuel efficiency of American automobiles by 1985. Two years later American Motors is back on Capitol Hill, but this time the company is asking for a special amendment to exempt it from those same standards that it now says it will not be able to meet beginning in 1982. What caused the change?
The most important factor was AMC's merger with the French manufacturer Renault. Fuel-efficient Renaults will enter production in Wisconsin in 1983, but they will not help AMC meet the efficiency standard because these cars will be less than 75 percent American-made. The 75 percent threshold was adopted to protect the U.S. balance of payments and to meet the problem created by "captive imports" that American manufacturers could use to meet the fleet-average standards while American-made cars from the same company remained inefficient and non-competitive.
What AMC is asking for is an amendment allowing it to count up to 150,000 foreign-made cars (half of its total production) as being domestically produced. Such a provision, it argues, would be of no use to the other manufacturers and would serve the national interest by increasing, in the long run, the number of fuel-efficient cars traveling American roads. While there is something to both these arguments, an AMC-only bill could trigger a number of other amendments -- the Chrysler amendment, the Ford amendment and so on -- and threaten the momentum of fuel economy improvements. Some also find it hard to justify rewarding a company for its failure to plan ahead -- the standards, after all, were enacted in 1975 and have not been altered since.
But the strongest argument against granting AMC's request is that in 1975 Congress anticipated just the kind of difficulty AMC is now encountering and, in a model job of regulation-setting, drafted a bill that has ample flexibility to deal with the problem without jeopardizing its goals. The law allows the financial penalties that would otherwise have to be paid for failing to meet the standard to be waived if the company can show a good reason for its failure and if payment of the penalties would threaten competition within the auto industry. The law also includes a provision that allows auto companies that exceed the fuel standard in a given year to "bank" their savings, carrying them forward to the next year or back to the previous one. An extension of that allowance from one year to three years is almost certain to be approved by Congress very soon. The Department of Transportation calculates that under these conditions American Motors will not have to pay any penalties at all until 1985, and perhaps not even then.
The 1975 auto efficiency law is still the only major energy conservation measure operating in this country. It has saved consumers billions in gasoline costs and its impact is just beginning to be felt. Given the double protection of the three-year banking allowance and the final safety net of a waiver of any remaining penalties, the possible cost to American Motors of failing to meet the standards seems far outweighed by the national need to save oil and, therefore, by the importance of keeping the law intact.
American Motors' request for special treatment -- coming even while Congress is debating a bail-out for Chrysler -- is strong evidence that, for symbolic reasons if nothing else, no company wants to be the first to fail to meet the fuel efficiency standards. That strong impetus is worth preserving.