President Obama hails 'historic' auto emission deal

President hails pact on auto emissions and fuel efficiency
David Shepardson and Gordon Trowbridge / Detroit News Washington Bureau

Washington -- The agreement of 10 of the world's largest auto companies to a sweeping government regulation mandating sharply higher fuel efficiency standards and tailpipe emissions limits came after months of secret negotiations -- and automakers' realization that they had little bargaining power.

President Barack Obama announced the deal at a Rose Garden ceremony, flanked by Detroit's Big Three automakers and the president of the United Auto Workers. Obama called the deal "an historic agreement to help America break its dependence on oil, reduce harmful pollution and begin the transition to a clean energy economy."

Behind the scenes, automakers had received an 11-page draft of the proposal from the White House by Sunday night and agreed to sign off on the deal. The May 17 draft of the deal, obtained by The Detroit News, was nearly identical to the 19-page notice released to great fanfare Tuesday.

The pact requires automakers to meet a fleet-wide average of 35.5 miles per gallon by 2016 -- with passenger cars averaging 39 mpg and light trucks 30 mpg. The new regulations begin with the 2012 model year and call for 5 percent average annual increases.

California Gov. Arnold Schwarzenegger told reporters outside the White House that talks had gone through the weekend.

"During this last weekend, we negotiated and the negotiations got very intense and all of a sudden they all clicked and we came together," Schwarzenegger said.

The agreement came after months of talks -- one-on-one conference calls with officials, especially Carol Browner, the head of the White House climate office, and her special assistant, Jody Freeman, a former Harvard law school professor.

Two key events helped resolve years of squabbling over emissions and fuel efficiency.

• In April 2007, the Supreme Court granted the Environmental Protection Agency sweeping authority to limit tailpipe emissions. During the campaign, Obama vowed to grant California and 13 other states the right to impose a 30-percent cut in tailpipe emission by 2016 and the EPA was set to decide by June 30.

Obama is doing "basically exactly what he said he would do," said Dieter Zetsche, Daimler's AG chairman. He said the administration listened to the arguments of the automakers.

• Secondly, automakers faced growing pressure in Congress -- where California's delegation has increasing clout -- to do more to limit emissions.

The automakers had also lost a string of court decisions in attempts to block the California requirements.

At the same time, some automakers had more pressing concerns. General Motors Corp. and Chrysler LLC have accepted billions in government loans and need billions more.

About a month ago, the acting head of the National Highway Traffic Safety Administration, Ron Medford, flew to California to meet with the California Air Resources Board to discuss the tailpipe standards, said Mary Nichols, chair of the board.

"The auto companies were willing to make a deal for a long time," Nichols said.

"They had seen the handwriting on the wall and knew that some emissions controls were coming."

In exchange for agreeing to meet the California tailpipe emissions limits, automakers will get a slower run-up in the first few years of the new regulations, which being in the 2012 model year.

And they'll be held to a single, national standard -- not separate laws set by multiple states.

They also will push for more credits -- similar to what they can get on fuel efficiency standards that will soften the impact of the new requirements, expected to add $1,300 to new vehicle price.

Smaller automakers signed on to the pact after the EPA agreed to extend a phase-in period for them. That provision was part of the California emissions scheme.

Volkswagen AG's Stefan Jacoby praised that flexibility for smaller manufacturing as one reason the company endorsed the compromise.

The final agreement is a sweeping change for automakers -- who until late 2007 had successfully blocked increases in passenger car fuel efficiency requirements for nearly three decades.

"In 2007, there was a lot of push back. But by 2008, because of the huge increase in fuel price and the impact it had on demand, everybody got a glimpse of what the future looks like," said Jim Lentz, Toyota Motor's top U.S. executive.

Lentz said it was a major achievement to get automakers to agree, likening the whole process to "herding cats."

"If we are going to make billion-dollar investments in new powertrains, we have to have a pretty good idea of where they are going to fit," Lentz said.

He noted that Toyota is already finalizing its lineup now for 2012.

"We couldn't delay this much further," Lentz said.