U.S. Seeks Lower Auto Mileage Rule : Job Losses Feared as GM, Ford Are Unable to Meet 1986 Fuel Standard

WASHINGTON — The Transportation Department, saying that the nation’s two largest automobile manufacturers would be unable to meet the federal fuel economy standard now scheduled to apply to 1986 models, proposed Thursday that the standard be rolled back to its 1983 level.

The decision, which the department said is necessary to save 110,000 jobs in the auto industry, was attacked immediately as a cave-in to major auto makers and an ominous sign that the nation is abandoning its goal of energy self-sufficiency.

General Motors Corp. and Ford Motor Co. had insisted that the 1986 standard--that each company’s fleet average 27.5 miles per gallon--would have forced them to cut back their production of large, high-performance cars to avoid millions of dollars in civil penalties.

The same standard is already in effect for 1985 cars, and both GM and Ford failed to meet it.

Ford Avoided Penalties

Ford avoided penalties by taking credit for exceeding standards in previous years. GM said that it hopes to achieve the same result by exceeding standards in the three subsequent years.

The new standard of 26 miles per gallon--assuming the Transportation Department formally adopts it after public hearings scheduled for Aug. 8 and 9--will apply to the auto makers’ 1986 fleets, which will begin appearing in showrooms this fall.

But the department’s National Highway Traffic Safety Administration delayed action on a request from the auto makers for similar reductions for the 1987 and 1988 model years, when the standard is now scheduled to remain at 27.5 miles per gallon in the Environmental Protection Agency’s fuel economy ratings.

In announcing the decision, the NHTSA said that the current standard, mandated by Congress a decade ago, “does not meet the statutory test of ‘economic practicability.’ GM and Ford are not expected to meet the 27.5 standard, and serious adverse economic consequences, including plant closing, unemployment and restrictions on consumer choice, could result.”

The Commerce Department had estimated that 110,000 American jobs would be lost if the standard is not changed, according to Robert Ross, a spokesman for the NHTSA.

The decision was immediately denounced by environmentalists, consumer groups and Chrysler Corp. Chairman Lee A. Iacocca, whose company’s fleet is dominated by small, fuel-efficient automobiles and would have met the new standard.

‘Unfair to American People’

“I’m a little more than unhappy . . . . “ Iacocca said. “It’s unfair to Chrysler but, more importantly, it’s unfair to the American people . . . . We are about to put a tombstone up, and it’s going to read: ‘Here Lies America’s Energy Policy.’ ”

Clarence Ditlow, executive director of the Center for Automobile Safety, said that the rollback represents “a complete about-face” by the federal government, which until last year was looking at the prospect of increasing the standard beyond 27.5 miles per gallon.

“Simply put, the Department of Transportation has destroyed the most effective fuel economy program in existence,” Ditlow said. “If they don’t reverse their decision, we’re going to sue.”

Ditlow, arguing that the technology to meet the higher standard already exists, said that the rollback would violate the intent of Congress, which in 1975 adopted a schedule requiring auto makers to meet the 27.5 miles-per-gallon standard for model years beginning with 1985. Congress authorized the NHTSA to ease the schedule if it proved unfeasible--but also to raise the standard to the “maximum feasible” level.

Joan Claybrook, a former NHTSA administrator who is now director of the consumer group Public Citizen, said that the decision represents a “quashing of the development of new technology and advanced fuel-economy capability.”

Penalties Called Affordable

John Hammond, director of automotive consulting for Data Resources Inc., of Lexington, Mass., said that GM and Ford easily could have afforded the substantial civil penalties they would have been required to pay under the more stringent standards if they had continued to produce larger cars. The penalty is $50 per car for every mile per gallon by which a company’s fleet falls short of the government mileage standard.

“The total would have been millions of dollars,” Hammond said. “But GM could have made it up with the sale of 40,000 more large cars. For GM, that’s a drop in the bucket.”

GM already has incurred nearly $600 million in penalties for 1984 and 1985 model cars, when the standard was first 27 and then 27.5 miles per gallon.

Under the NHTSA’s regulations, GM can offset those penalties if it exceeds the standard for any of the next three years--a prospect that would grow more likely if the 1986 standard is reduced to 26 miles per gallon.