An op-ed piece in  The Washington Post praises the wisdom of Congress that refused to renew the 45-cent-per-gallon tax credit for corn-based ethanol and the 54-cent-per-gallon tariff on imported ethanol, thereby exposing alcohol to the rough treatment of the market. Also not extended was the tax credit for installing a charger at home or in a commercial location.

The WaPo thinks killing the $6 billion incentive to turn corn into fuel, and letting EV owners buy their own charger was righteous, but only a half-measure. Congress should have finished the job and should have finished handing out $7,500 tax credits to buyers of EVs. The WaPo thinks it’s a waste, and the technology is going nowhere.

 “Evidence is mounting that President Obama was overly optimistic to pledge that there would be 1 million EVs on the road by 2015. Electric cars are not likely to form a significant part of the solution to America’s dependence on foreign oil, or to global warming, in the near future. They simply pose too many issues of price and practicality to attract a large segment of the car-buying public. More prosaic fuel-economy innovations such as conventional hybrids, clean-diesel cars and advanced gasoline engines all show much more promise than electrics.”

 What say you? Kill the credit or let it live?

A one-year ‘time out’ is necessary as EPA and (California) are setting national fuel economy standards without explicit authorization by Congress, under laws not designed to regulate fuel economy

According to the DetN, “the proposal would let the National Highway Traffic Safety Administration go forward with setting fuel economy requirements, but under the law it could only set new requirements through 2021.” And unlike past battles over CAFE, opposition this time around does not appear to be coming from the OEMs, but from NADA, the new car dealer lobby group. The only OEM to not sign onto proposed 2017-2025 standards is Volkswagen, which is reportedly in talks with regulators over the proposal.

Meanwhile, environmental groups lashed back at NADA, with a number of groups sending a letter to the lobbying group arguing that

These standards are supported by major automakers, the United Auto Workers, California and other clean car states, and numerous consumer, environmental, business and national security organizations. By continuing to oppose these standards, NADA is trying to sell Congress, dealers and the American people a lemon

The response from dealers?

Dealers face the customer every day and fully understand what will happen if vehicle prices rise $3,000 to $10,000. None of the organizations that sent this letter, DOT (Department of Transportation) or EPA, fully understand the cost of these fuel economy increases and the impact that it will have on auto sales.

The revived debate comes just days after Edmunds CEO Jeremy Anwyl argued that proposed regulations failed to take consumer preference into account. With Rep Darryl Issa attacking CAFE and GHG regulation on all fronts, and with plenty to criticize in the proposed standards, expect this debate to rage on.

A top congressional leader on Wednesday made clear his opposition to President Obama’s idea of spending $10 billion to create a national infrastructure bank (view details). The bank, part of the White House jobs bill, would offer public subsidy for the financing of “public private partnerships” — which most often would take the form of a toll road. The chairman of the US House Transportation Committee said at a hearing the president’s plan would not advance.

“A national infrastructure bank is dead on arrival in the House of Representatives,” Chairman John Mica (R-Florida) said. “If you want a recipe to put off job creation, adopt that national infrastructure bank proposal.”

Opponents called the proposal a “distraction” from the issue of a long-term highway program reauthorization bill which would include funding for state-level toll road banks. Already, thirty-two states have their own infrastructure banks which have financed $6.3 billion in loan agreements along the same lines as the proposed federal bank.

“Many people are skeptical that bureaucrats in Washington would have any idea which transportation projects are most deserving of receiving a federal loan,” Highways and Transit subcommittee Chairman John J. Duncan, Jr (R-Tennessee) said. “This skepticism is why Congress has already established the state infrastructure bank program in SAFETEA-LU.”

In addition, the US Department of Transportation already provides federal credit for transportation projects under the Transportation Infrastructure Finance and Innovation Act (TIFIA), which has offered $8.4 billion in project finance. Dozens of other financing mechanisms are offered by the Federal Highway Administration.

“Why build one when you could build two for twice the price?” Representative Howard Coble (R-North Carolina) said sarcastically.

Democrats offered the only backing for the bank idea.

“Before Wall Street destroyed the economy, I had said, ‘Well, I really don’t see the need for an infrastructure bank — most of the states have good credit and they can go out and borrow on their own at very good rates,” said subcommittee Ranking Member Peter DeFazio (D-Oregon). “But that isn’t the case any more. The states need guarantees, they need help, many are against their borrowing limits, and most of the banks generously bailed out by Congress — not by me, I didn’t vote for it — aren’t lending. Credit and bond markets are tight.”

DeFazio only supports the use of the bank only for water, sewer and energy projects. He does not support tolls on existing interstates.

[Courtesy: Thenewspaper.com]

In addition to being a representative from Pennsylvania, Republican Mike Kelly is also a Chevrolet dealer whose family has sold Chevys since 1953. But in recent hearings on government fuel economy ratings, he laid into his brand’s green halo car, the Chevy Volt with surprising zeal. Or, not-so-surprising, when you realize that he decided to run for congress in the wake of the bailout-era dealer cull.

I’m a Chevrolet dealer… we have a Chevy Volt on the lot, it’s been there now for four weeks. We’ve had one person come in to look at it, just to see what it actually looks like… Here’s a car that costs $45,763. I can stock that car for probably a year and then have to sell it at some ridiculous price. By the way, I just received some additional information from Chevrolet: in addition to the $7,500 [federal] tax credit, Pennsylvania is going to throw another $3,500 to anybody foolish enough to buy one of these cars, somehow giving them $11,000 of taxpayer money to buy this Volt.

When you look at this, it makes absolutely no sense. I can stock a Chevy Cruze, which is about a $17,500 car and turns every 30 to 40 days out of inventory… or I can have a Volt, which never turns and creates nothing for me on the lot except interest costs… So a lot of these things that we’re seeing going on have a tremendous economic impact on people who are being asked to stock them and sell them. There is no market for this car. I do have some friends who have sold them, and they’re mostly to people who have an academic interest in it, or municipalities who are asking to buy these cars.

With dealers like that, who needs competitors? Seriously, Kelly even says he fired the guy who ordered a Volt for his dealership… which he then counts against the Volt’s job creation record. Hit the jump for the rest of his quote.

I can tell you… as far as job creation, the guy who ordered that Volt for my store is no longer in that job. So it actually worked against him. I was told that the reason that car is on our lot is that General Motors told him he had to stock it. I said “let me understand. I told you that under no circumstances were you to order a Volt,” and he said “yeah.” “So, why did you order it?” “Because General Motors told me.” “Is this the same General Motors that tried to take my Cadillac franchise from me? These are the guys you’re listening to, but the guy who signs your paycheck doesn’t have as much influence as the guys who tried to take away the franchise?”

So clearly Kelly has his reasons for disliking his business partners at GM, but bashing a car that Chevy managers insist is a brand-building halo is still surprising. In any case, this somewhat rambling but fascinating critique eventually led to question “do you see any market for this car at all?” directed at Edmunds CEO Jeremy Anwyl… who first took the opportunity to defend the Volt.

Well, there’s a little bit of good news. First, you mentioned that it did create some traffic for you, albeit one person. But that is something the car companies tout, that these vehicles do attract some interest, some traffic, not necessarily buyers. And let me also say, the Volt is actually a very nice vehicle. We actually bought one ourselves, it’s in the long-term fleet… people actually enjoy it.

But then came the bad news.

The problem that I think you’ve outlined is really twofold. One of them is that there are all sorts of inducements for people to be buying these vehicles… and yet when you look at whose been buying these vehicles, and there are people buying them, they are at the very high end of the demographic scale… Right now we’re seeing people who would have bought that vehicles anyway, without a tax credit, getting the tax credit at the expense of other taxpayers, and you have to wonder about the wisdom of that.

The second part of the Anwyl’s critique would have to wait, because after getting in one last knock at the Volt, Kelly was out of time. Rep Jackie Speier (D-CA) was next in line, and she jumped on Kelly’s Volt-bashing, telling him

First of all, to Mr Kelly, send that Volt to California! It doesn’t have to stay on your lot, because there is a waiting list in my district, at my Chevrolet dealership, of six months to get a Chevy Volt.

To which Kelly replied,

Give me the name of the dealer, and I’ll send it out there right away. If he’ll pick up the transportation cost, I’d love to do that.

The name was exchanged, and jokes were made about bipartisanship and “working together.” Then the partisan back-and-forth continued. You gotta love Congress.

The Congressional Subcommittee on Regulatory Affairs, Stimulus Oversight and Government Spending held hearings this week on proposed CAFE standards, as part of Chairman Darryl Issa’s investigation of the regulations. The first panel’s testimony can be seen in its entirety in the video above (all prepared testimony can be found in PDF format here), and it’s worth watching. Though the predictable D.C. partisanship certainly shows up, Anwyl’s testimony was the highlight the hearing, being a tough but fair analysis of the standards. Hit the jump for a brief roundup.

The panel in question had two clearly partisan witnesses: Marlo Lewis of the Competitive Enterprise Institute, and Roland Hwang of the Natural Resources Defense Council. But the contributions of both Edmunds CEO Jeremy Anwyl and Ohio-based independent trucker Scott Grenerth were authentic and revealing, despite being very different in content. While Grenerth provided a ground-level perspective on practical issues with new truck emissions regulation (which is not really our department here at TTAC), Anwyl provided the most germane testimony for students of the passenger car industry: a critique of the lack of consumer input in new standards.

His argument is not complicated, and his submitted testimony (along with graphs and commentary) can be found here. In his own words,

I have three points to make this morning.

The first is that — up until now — consumers have been either ignored or misrepresented.

The second is that consumers matter.

The third is that consumers are definitely not on board.

In support of his first point, Anwyl cites the EPA’s own presentations which list environmental groups, auto firms, technology suppliers, labor unions, governmental agencies and EV charging firms as “stakeholders,” without ever referring to consumers. He goes on to argue that

I know there have been polls showing consumers “want” higher mileage standards. These polls are worse than meaningless; they are grossly misleading. Instead of polls, we should first and foremost be guided by what consumers are actually doing; by actual purchases.

And, argues Anwyl, consumers are not buying cars for fuel efficiency. Using Edmunds.com market data and its proprietary market simulator (which looks to be fairly strong considering Edmunds’ strong record in our new Grade The Analysts feature), Anwyl shows that even among subcompact purchases, fuel economy maxes out as a 15% vehicle attribute weighting. In every segment, fuel economy is a less-important attribute than “brand.” Moreover, Anwyl points out that consumers expect a 12-month return on investment in fuel-saving options like hybrid drivetrains, when in fact they tend to run much longer than that (6-9 years for Camry, for example).

Anwyl sums up

I do have some good news: looking back, the auto industry seems to have delivered the impossible. They have added features, increased safety, elevated performance—and delivered increased fuel economy. Much of this during a period when CAFE standards were stable. I credit mostly the advance of technology and expect this progress to continue. But if mandates trigger an escalation of prices, a reduction in consumer utility or the adoption of technologies before they have been proven, consumers will react. We saw this play out before in the late Seventies and early Eighties when the domestic auto industry, torn between mandates for greater fuel efficiency and consumer demand for larger vehicles, introduced a generation of truly awful vehicles. The reputational damage from this era lingers today.

Push too far, too fast and we could easily destabilize an industry that is a vital engine of our collective prosperity.

Remember when cars, especially Toyotas, suddenly had a mind of their own, started accelerating, leaving their drivers helpless and hapless? It was in the beginning of 2010. The media cited scores of allegedly killed people. Source: The NHTSA complaint database. When complaints skyrocketed, the media wrote about a dramatic increase of complaints. Now, have a look at the graph above.

This graph was compiled by Edmunds. It is a simple report. It shows the number of all complaints about all cars of any manufacturer per month. We see that in February 2010 the number of complaints exploded, it was high in March, and then consolidated at a slightly higher level than at the end of 2009. In a straight line analysis, the complaints should be approximately where they are.

Then why the jump in February and March 2010? It was the height of the witch-hunt. The height of the fakery on ABC News. It was the fools hearings on the hill.

When that was over, suddenly, as if driven by ghosts, the cars behaved again. After Toyota had been declared ghost-free by the NHTSA in February 2011, there was even a little dip in the reports. Then, all fell back to normal.

For those who are still desperate to read something into this crowd-sourced list, here a little table, also courtesy of Edmunds. It shows the YTD complaints trough August 2011, along with the rolling 12 month market share, for the top ten recipients of complaints. As you can see, things are pretty much as they should be. People seem to complain a lot about Chrysler though…

Witch-hunts had been with us since ancient times. In Sub-Saharan Africa, India, and Saudi Arabia, people are still tried and sentenced for witchcraft. The graph you are looking at shows that witch-hunts are alive and well in America.

In a report released earlier this week [PDF], the EPA Inspector General criticized the Technical Support Document for the portion of greenhouse gas regulation dealing with “Endangerment,” or the possible effects of greenhouse gasses. Inspector General Arthur A. Elkins Jr. summed up his office’s findings [PDF], writing

The OIG evaluated EPA’s compliance with established policy and procedures in the development of the endangerment finding, including processes for ensuring information quality. We concluded that the technical support document that accompanied EPA’s endangerment finding is a highly influential scientific assessment and thus required a more rigorous EPA peer review than occurred. EPA did not certify whether it complied with OMB’s or its own peer review policies in either the proposed or final endangerment findings as required. While it may be debatable what impact, if any, this had on EPA’s finding, it is clear that EPA did not follow all required steps for a highly influential scientific assessment. We also noted that documentation of events and analyses could be improved.

Oy vey. Greenhouse gas science controversy. So, what’s the problem really about?

The question basically comes down to the way the EPA assesses outside data, and whether data assessments were worthy of the Technical Support Document (TSD)’s importance. Or, to put it into DC style “summary.”

In our opinion, the TSD was a highly influential scientific assessment because EPA weighed the strength of the available science by its choices of information, data, studies, and conclusions included in and excluded from the TSD. EPA officials told us they did not consider the TSD a highly influential scientific assessment. EPA noted that the TSD consisted only of science that was previously peer reviewed, and that these reviews were deemed adequate under the Agency’s policy. EPA had the TSD reviewed by a panel of 12 federal climate change scientists. This review did not meet all OMB requirements for peer review of a highly influential scientific assessment primarily because the review results and EPA’s response were not publicly reported, and because 1 of the 12 reviewers was an EPA employee.

EPA’s guidance for assessing data generated by other organizations does not include procedures for conducting such assessments or require EPA to document its assessment. EPA provided statements in its final findings notice and supporting TSD that generally addressed the Agency’s assessment factors for evaluating scientific and technical information, and explained its rationale for accepting other organizations’ data. However, no supporting documentation was available to show what analyses the Agency conducted prior to disseminating the information.

But, there’s one more thing that the Inspector General wants to make perfectly clear:

We made no determination regarding the impact that EPA’s information quality control systems may have had on the scientific information used to support the finding. We did not test the validity of the scientific or technical information used to support the endangerment finding, nor did we evaluate the merit of EPA’s conclusions or analyses.

Accordingly the major Republican attack on the back of this report hasn’t been on the basis of GHG regulation science, but at procedural issues, most especially concerning transparency. With more than a dash of the requisite economic populism. In a statement today, House Oversight Committee Chair Darrell Issa argued

Improved fuel efficiency is a worthy goal. Unfortunately, the path pursued by the Obama Administration has the potential to increase vehicle costs for consumers, reduce passenger safety and ultimately impact American jobs. We cannot afford job-killing regulations forced through the process without regard to these consequences at a time of economic vulnerability. Further, there are real questions about the transparency of new standards negotiated in secrecy without adequate public input or concern for jobs and consumer choices.

With the news that they have delayed the release of these standards until November, it would seem the Administration is having difficulty fitting a pre-determined conclusion driven by outside special interests and the California Air Resources Board into the statutory structure created by Congress.

The general conclusion of that last sentence may seem like nothing more than a twist of the partisan knife, but there’s truth there. Earlier in the year the EPA had to coax CARB into waiting for “studies examining the technological and financial ramifications” before announcing new CAFE standards, indicating that the recent delay of the new rule until mid-November could be related to those studies. And this EPA Inspector General report just adds fuel to that fire. On the other hand, the DetN reports that the Obama Administration has already addressed Issa’s transparency concerns, noting

White House counsel Kathryn Ruemmler told Issa the government will conduct a traditional rule-writing process.

“The agencies have made clear that they intend to conduct a public rulemaking with additional opportunity for public comment,” she wrote in the Sept. 8 letter obtained by The Detroit News that has not been made public.

But Issa’s not just going after the EPA. Bloomberg reports he’s taking on NHTSA (the other agency tasked with writing CAFE) as well. Issa fired off a letter to Transportation Secretary Ray LaHood, in which he thundered

“I am concerned about the negative impact these standards could have on the safety of automobiles, the possibility that the National Highway Traffic Safety Administration acted outside the scope of congressionally delegated authority and the lack of transparency in the process leading up to the agreement”

Transparency? Scope of powers? Not my department. Safety? Well, there again Issa has done his homework. As an EPA supplemental Notice Of Intent notes

for the 2017-2025 NPRM, NHTSA and EPA will conduct an analysis of the effects of the proposed standards on vehicle safety, including societal effects. CARB is undertaking and coordinating with EPA and NHTSA on a study of how a future vehicle design that incorporates high levels of mass reduction complies with vehicle safety standards and voluntary safety guidelines. NHTSA is also initiating a new study of the feasible amount of mass reduction based on a mid-size passenger car platform, and the effects of several advanced mass reduction design concepts on fleet safety. The NHTSA studies are being coordinated with EPA, DOE, and CARB.The agencies expect that several, but not all of these studies will be completed in time to inform the NPRM. Others are expected to be completed in time to inform the final rule [Emphasis added]

In other words, Issa is concluding that a delay in the final rule could be related to this study… which could affect safety. But lets face it, cars have never been safer… and unless the EPA has a mess on its hands with this report, this could easily end up being seen as what the kids call “concern trolling.” And some will likely conclude that’s the case based on the sheer scope of Issa’s assault on GHG regulation. Issa also sent a letter to EPA Administrator Lisa Jackson today, in which, Bloomberg tells us

Issa also questioned the EPA’s role in writing a previous fuel-economy rule that takes effect next year, saying it negotiated with automakers around the same time General Motors Corp. and Chrysler LLC were getting U.S. bailout money. The timing “heightens the concern that the administration used the promise of taxpayer dollars to obtain GM and Chrysler’s support for the new fuel economy standards

This is probably the bridge too far. Issa has been harping on that theory for well over a year now, and it’s got him nowhere. And no surprise: the Obama Administration has always given the auto bailout a thin green veneer, so a successful investigation by Issa would only prove that the greenwashing had something behind it. Furthermore, the CAFE rules he’s talking about are riddled with loopholes,  and the subsequent version is even more riddled, and with larger loopholes. And that jives with what I’ve heard from industry lobbyists, who generally downplayed CARB’s power to pull the White House to the left, let alone the White House’s ability to set impossible standards. The line I got was that overhauling GM and Chrysler gave the government a “look under the hood,” which helped it see the OEM perspective on regulation.

Be that as it may, Issa is launching investigations into how the EPA and NHTSA handled auto GHG emissions regulation, adding to his ongoing investigation of the Obama Administration’s role in CAFE [PDF letter of investigation here]. He says his staff will “further review” the “serious questions” raised by the EPA Inspector General’s report. Say what you want about the guy’s politics, when he moves on something, he moves on something. And he’s definitely earning his title as Obama’s “Annoyer-in-Chief.”

The Detroit News reports that the only Republican in Washington with subpoena power, Rep Darrel Issa has written a letter asking Ford CEO Alan Mulally for “a full and complete explanation of Ford’s decision” to stop running an advertisement that was critical of the TARP-funded auto bailout.

In a letter, Issa asks Ford if any White House, Treasury or other federal employee discussed the ad with any Ford employee “at any time via any manner of communication” and asks the automaker to turn over any documents connected to any discussion by Oct. 12.

Spokeswoman Meghan Keck said Ford will cooperate, but reiterated that the White House didn’t pressure the Dearborn automaker.

Ford took the ad off of Youtube after “individuals inside the White House questioned whether the copy was publicly denigrating the controversial bailout policy CEO Alan Mulally repeatedly supported in the dark days of late 2008,” according to Daniel Howes of the Detroit News. The same day Ford restored the video, and denied that White House pressure led to the takedown. Color us curious as to how Mulally is going to explain this little episode…

UPDATE: The Washington Post’s Plum Line reports

Editor’s note: When I wrote about OnStar’s latest round of privacy concerns, I didn’t realize that the chairman of the Senate Judiciary subcommittee on privacy, technology and the law had voiced his own concerns in a letter published just the day before. Here is the letter, as published at Senator Franken’s website. OnStar has already said it will respond to specifically to the concerns of Senators Franken and Coons.

Ms. Linda Marshall, President
OnStar Corporation
400 Renaissance Center
Detroit, MI 48265

Dear Ms. Marshall:

We are writing to express our serious concern with OnStar’s announcement earlier this week that it would continue to track the GPS locations of its customers’ vehicles even if those customers have affirmatively ended their contractual plans with OnStar.  In this email announcement, OnStar informs its current and former subscribers that it reserves the right to track their locations “for any purpose, at any time.”  It appears that the only way to stop this tracking is to actually call OnStar and request that the data connection between OnStar and the vehicle be terminated; this service is not available online.  OnStar further reserves the right to share or sell location data with “credit card processors,” “data management companies,” OnStar’s “affiliates,” or “any third party” provided that OnStar is satisfied that the data cannot be traced back to individual customers.  See OnStar, Privacy Statement: Effective as of December 2011.  In a nutshell, OnStar is telling its current and former customers that it can track their location anywhere, anytime—even if they cancel their subscriptions—and then give or sell that information to anyone as long as OnStar deems it safe to do so.

OnStar’s actions appear to violate basic principles of privacy and fairness for OnStar’s approximately six million customers—especially for those customers who have already ended their relationships with your company.  OnStar’s assurances that it will protect its customers by “anonymizing” precise GPS records of their location are undermined by a broad body of research showing that it is extraordinarily difficult to successfully anonymize highly personal data like location.  See generally Paul Ohm, Broken Promises of Privacy: Responding to the Surprising Failure of Anonymization, 5 UCLA Law Review 1701 (2010) and Marco Gruteser and Baik Hoh, On the Anonymity of Periodic Location Samples, in Second International Conference on Security in Pervasive Computing, Boppard, Germany (2005) at 179-192.  If a data set shows the exact location where a car starts every morning, the roads that car travels on its morning commute, the office where it is parked during business hours, and the schools where it stops on its way home, it is unnecessary for that data set to include a name or license plate for it to be connected to an individual and his or her family.

We urge you to reconsider these decisions.  We also urge you to better inform your customers of their ramifications.  To that end, we request that you provide answers to the following questions:

1.      Does OnStar believe that its actions comply with federal law?
2.      Will OnStar allow its customers to deactivate their data connections online?
3.      If a customer deactivates their data connection, will OnStar delete the existing location information they have gathered for that customer?  Or does OnStar reserve the right to store and sell that information regardless of deactivation?
4.      Has OnStar ever suffered a breach of its customers’ location data?
5.      Has OnStar ever suffered a breach of any of its customers’ private information?
6.      How will OnStar protect non-anonymized data on its servers in light of recent breaches at major institutions like Citibank, Sony and the International Monetary Fund?
7.      How exactly will OnStar anonymize its location data?
8.      Will OnStar seek its customers’ consent before sharing or selling their location data to third parties?  Does OnStar believe it is legally required to do so?
9.      Will OnStar inform its customers of the entities to whom it sells location data?
10.  Has OnStar already disclosed or sold any of its customers’ location data with third parties?  Which third parties?
11.  Will OnStar agree to stop the tracking, sharing, and sale of location data for customers that have ended their subscriptions to OnStar services?

We believe that OnStar’s actions underscore the urgent need for prompt congressional action to enact privacy laws that protect private, sensitive information like location.  In the meantime, we believe that it is the responsibility of corporate citizens like OnStar to take every step possible to safeguard the privacy of their customers.

We appreciate your prompt attention to this matter.

Sincerely,

Al Franken                                                                                          Christopher A. Coons
Chairman, Subcommittee on                                                               United States Senator
Privacy, Technology and the Law

With the high political drama surrounding America’s debt ceiling crisis, last Friday’s CAFE announcement received much less attention from the media than it might have. But, flying even further beneath the radar is an attempt by Republicans to undo the fuel economy agreement that was the result of long negotiations. According to the NYT, some 39 “anti environmental” riders were attached to an Interior Department and EPA appropriations bill, including one which reads

Sec. 453. None of the funds made available under this Act shall be used— (1) to prepare, propose, promulgate, finalize, implement, or enforce any regulation pursuant to section 202 of the Clean Air Act (42 U.S.C. 7521) regarding the regulation of any greenhouse gas emissions from new motor vehicles or new motor vehicle engines that are manufactured after model year 2016 to address climate change.

Though one rider, which would have prevented any new listings on the Endangered Species Act lists of threatened and endangered species, was defeated, the NYT reports that the fuel economy rider is still pending. Politico adds that the bill is scheduled to go to the House floor today, but that President Obama is already threatening to veto the bill. Having worked with California, environmental groups and the auto industry to hammer out a compromise, it’s unlikely that the White House will approve any final bill that includes a measure to gut the new 2016-2025 standard… but the fact that Republicans are trying to eliminate the EPA’s ability to regulate fuel economy indicates that someone, somewhere wouldn’t mind seeing the newly-approved CAFE standard gutted.

With congress deadlocked on the debt ceiling, President Obama used today’s ceremony announcing (although not fully revealing) a 2025 CAFE standard to contrast fuel economy standard negotiations with the chaos on Capitol Hill. ABC quotes the President saying

You are all demonstrating what can happen when people put aside differences.  These folks are competitors.  You’ve got labor and business.  But they decided:  We’re going to work together to achieve something important and lasting for the country. So when it comes to tackling the deficit or it comes to growing the economy… the American people are demanding the same kind of resolve, the same kind of spirit of compromise, the same kind of problem solving that all these folks on stage have shown. They’re demanding that people come together and find common ground… That’s what I’m fighting for.  That’s what this debate is all about.  That’s what the American people want.

But getting a bunch of auto CEOs in the same room to agree on one 2025 “number” is a lot easier than breaking a political deadlock: after all, the standard could well be changed during the 2017 review period, so nobody is agreeing to anything set in stone past 2016. And the saber-rattling continues, as industry consultants predict doom for the post-2016 period, when the truck standard hits the same 5% annual improvement rate as cars. Besides, Volkswagen and Daimler are the equivalent in this situation of holdouts in the congress, refusing to appear at today’s ceremony and protesting the proposed standard in the media. And when the final rules is announced, this coalition of exemplary compromise could fall apart, as the Sierra Club threatens

As the administration moves forward to finalize the standard, it is critical that they avoid weakening loopholes and giveaways for the industry, and we look forward to working with them to ensure the strongest 2025 fuel efficiency and pollution standards possible to benefit American families and workers.

Defections on the right and left? Continued saber rattling? No concrete agreement yet in any case? Sounds a lot like congress, actually…

It’s getting a little predictable. Go to a big car event like the North American International Auto Show or the Society of Automotive Engineers (SAE) World Congress and you’re going to see politicians and government officials. I suppose that’s to be expected, but to be honest, I’m a little ticked off at how our public servants get a large megaphone at those events without bearing any of the costs that you, I, or a car company would have to pay for for the same treatment.

For the past three years particularly because of the meltdown of the domestic automakers, the bailout and the US Treasury’s subsequent stakes in GM (still held) and Chrysler (divested so that Fiat could own more), but really since the beginning of time, politicians and auto shows went together. I remember, after a press conference where Wayne County (MI) executive Robert Ficano exchanged gifts with the chairman of the People’s Army owned automaker Changfeng, asking Mr. Ficano just how many Changfeng employees voted in Wayne County. During the ’08 presidential election, most of the primary candidates on the Republican side visited the show’s press preview.

That was before ‘carmaggedon’ in Detroit. Now the politicians are as thick as flies, drawn like moths to the lights of the tv crews and the chance to have a free soapbox in front of over 5,000 reporters. You should have seen them rush to preen next to Sergio Marchionne. Like I said, it ticks me off. Marchionee and Fiat had to spend big bucks to be on the floor at Cobo Hall. Rental for a large exhibit at the NAIAS must surely run into 7 figures, plus construction costs. If our esteemed ed Ed wanted to have a press conference at the Detroit show, it would have cost our corporate overlords beaucoup bux. However, when Nancy Pelosi and Steny Hoyer want to hold a press conference at that same show, the organizers, most likely out of a sense of self-preservation, make that lecturn, microphone and CCTV available gratis.

That’s not bad enough. This past January, a congressional delegation of more than two dozen members of congress and over a dozen support personnel, led by then Speaker Pelosi and including, it should be pointed out, members of the Michigan delegation like representatives Gary Peters, Sander Levin, Fred Upton, Pete Hoekstra, and John Dingell as well as senators Levin, Stabenow visited Detroit for the NAIAS. The government accountability group Judicial Watch filed a Freedom Of Information Act request for the cost of that delegation. It turns out that you and I paid over $34,000 for travel, food, ground transportation in Michigan, and incidentals so that Mrs. Pelosi and her colleagues could get that free microphone [Ed: for that amount, we could have covered that show]. To be sure, some of that money stayed in Detroit. Metro Cars, the livery service, and Fishbone’s restaurant, along with the Old Shillelagh, a bar, did okay. They spent $128.77 on hospitality room supplies like Doritos, Cheetos and Coke. Fourteen hotel rooms were booked at $275/night.

Pelosi had asked for military jets, but that was turned down and the delegation flew commercial which cost $24K, except for the congressional physician and some military support staff. At the show, one member of the delegation, I think it was Steve LaTourette from Ohio, told me that he drove himself, in his own car, which as car enthusiasts I suppose we should salute. A request for reimbursement for $228 for use of a personal car was submitted.

At the time, Pelosi’s office explained the need for the trip in the following terms:

Our bipartisan delegation will visit Detroit to see first-hand the innovative technologies the industry is investing in to create the jobs of the future and to ensure our national competitiveness,” Speaker Nancy Pelosi said. “We go to Detroit with our commitment to continue to preserve our manufacturing base, which is essential to our economic and national security

In the wake of Judicial Watch’s investigation, Drew Hammill, a Pelosi spokesman, defended the trip.

“Congress made an historic commitment to the auto industry to drive innovation and modernization, and to save hundreds of thousands of jobs.It was critical that taxpayer dollars received proper oversight and the bipartisan visit was critical to that process.”

You can read the complete FOIA response here.

With CAFE negotiations heating up, safety regulation coming down the pipe and the UAW pushing for another round of “retooling” loans, GM is upping its profile in the nation’s capitol with a new ad campaign aimed at policymakers. The DetN reports

A Washington-based spokesman for the automaker, Greg Martin, said the effort is to make sure policy makers “are aware of GM’s contribution to our nation’s economic and competitive strength.”

GM has a broader story than just profits and sales, he said.

“GM has started an ad campaign in select Washington publications because there’s more to GM’s resurgence than just increased sales and profitability,” Martin said. “GM is also an auto company investing heavily in America’s future, creating new jobs and inventing solutions and technologies that will make a real difference in energy and safety.”

But the waves of coming auto-related regulations may not actually have motivated the ad so much as the fact that the government is likely to sell off its remaining 26% share in GM by the end of the year (if not by the end of the Summer), and they’re facing an $11b loss at current stock prices. By emphasizing that the auto bailout created a positive corporate citizen rather than just a newly-profitable company, GM likely hopes to convince the government that the political downsides of taking a big loss on The General was ultimately worth it. And that’s an important PR step in the short term as well, as CAFE negotiations are giving rise to bailout-tinged rhetorical attacks on the automaker. For example, Ralph Nader tells the Freep

We give GM billions of dollars, and what do taxpayers get in return? Opposition to a policy that will clearly save them money and give them better cars,

An anonymous tipster has sent us a copy of a letter from the Michigan congressional delegation to President Obama [PDF here, or hit the jump for an embedded copy], which calls his proposal for a 56.2 MPG CAFE standard by 2025 “overly aggressive and not reasonably feasible.” The letter is remarkable in the sense that the major signatories are Democrats, and yet it attacks the President’s proposal with more vigor than many inside the industry. The letter also confirms that that the Detroit-based automakers already rely on CAFE’s “credit” loopholes in order to meet the 2012-2016 standard, a stunning admission of how far behind Detroit still lags in fleet fuel economy. And rather than taking responsibility for their situation, the MI representatives blame CAFE for Detroit’s low fleet efficiency, arguing that “manufacturers that produce primarily smaller vehicles will have an unfair advantage.” Moreover, the MI reps don’t just admit that Detroit is behind its competition, but even goes as far as to argue that “the overall targets currently proposed may exceed what is technologically achievable for the the US automakers that produce and sell the majority of the larger pickup trucks and sport utility vehicles that US families and businesses -and tens of thousands of autoworkers- depend on.”

In short, the letter strikes me as a shockingly old-school display of excuses and apologia that stands in sharp contrast to the “green car revival” narrative that Detroit and D.C. pushed so hard during the bailout. And frankly, I’d be embarrassed if I ran one of the largest automakers in the world and I was reduced to pleading my inability, on technological grounds no less, to achieve a 56.2 MPG fleet average (which in “window sticker” terms, translates to about 41 MPG EPA) within 15 years… even though CAFE is riddled with loopholes that make it easier to continue building thirsty trucks. If Detroit were actually leading the charge for a gas tax (or offering any kind of market-driven alternative), it might have some credibility on this issue, but as things stand this strikes me as nothing more than whining. So much for America’s “can-do” spirit…

Well, I just wrote about 1,500 words on this topic which our post editor just obligingly disappeared into the digital void, wiping out over an hour of work. This was, perhaps, an appropriate turn of events, however, as the majority of those 1,500 words were used to describe the frustrating political stalemate that played out over the last two days of hearings on “The Lasting Implications of the GM Bailout.” The dynamics of the government’s exit from GM seem to have changed little since I wrote “Government Motors: The Exit Strategy,” and the hearings focused on the political implications of the bailout. Having determined that the bailout will help the President’s reelection in midwestern states, the White House (as represented by auto task force member Ron Bloom) sought to retrench its “things would have been worse” position, and Republicans attacked on all fronts for the very same reason. The government’s favorable treatment of UAW-represented workers, especially in comparison to Delphi’s non-UAW retirees was a major point of attack, and the committee caused Bloom deny (under oath) having ever said that “I did this all for the unions,” despite the fact that both the Detroit News’s David Shepardson and Bloom’s task force colleague  Steve Rattner have quoted him directly. Emails obtained by The Daily Caller were also presented as (more) evidence that the government intervened in a number of day-to-day decisions at GM, including the Delphi retiree issue.

Ultimately, the Republicans landed some serious body blows on the policy, although nothing radically new was presented. Bloom, meanwhile, defended the bailout by arguing that the alternative would have been much worse. In short, the political stalemate over the auto bailout continues… much to GM’s dismay. And since insiders are indicating that any collusion to boost GM’s stock price in order to improve the taxpayers’ return would be worse than a larger loss, a $10b+ loss is as good as guaranteed. Which means the Republican attacks will continue and the political trench warfare over the issue will only continue.

[Watch the bailout hearings here]

Cracks continued to in the ethanol industry’s once-impregnable political vanguard, as the San Francisco Chronicle reports that the Senate has voted to roll back the Volumetric Ethanol Excise Tax Credit (VEETC) as well as import tariffs on foreign-produced ethanol. This rollback of multi-billion-dollar ethanol credits failed earlier in the week, when the Detroit News reports automakers came out in opposition of a bill that would have required that 95% of all cars built in the US be capable of running 85% ethanol by 2017. The Senate did fail to pass a repeal of a government ethanol blending mandate that underpins the VEETC, however, and funding is moving forward for ethanol blending pumps. Still, the Senate’s repeal of VEETC alone means taxpayers could save over $5b per year on subsidies, and as one expert puts it

“Looks like we’re going to be relying on the biofuels mandates to make sure blenders use biofuels, rather than bribing them to use it with $6 billion,” [Bruce Babcock, professor of economics and the director of the Center for Agricultural and Rural Development at Iowa State University] said.

In fact, Babcock thinks killing the subsidy could help ethanol because it would come out from the stigma of being a subsidized industry. And removing the subsidy may strengthen support for the mandate, and the tariff on imports.

Over to you, House of Representatives…

If it were up to the candidates for president on the Republican side, we would be driving foreign cars; they would have let the auto industry in America go down the tubes,

These were the words of Democratic National Committee Chair Rep. Debbie Wasserman Schultz (D-Fla.) at a breakfast put on by the Christian Acienec Monitor. But, as TheHill‘s Michael O’Brien reports, Ms Wasserman Shultz owns a 2010 Infiniti FX35 that is built by Nissan in Tochigi, Japan. And, adds O’Brien, “The car appears to be hers, since its license plate includes her initials” (it is, see picture above). The congresswoman’s response (through a spokesperson):

They can try to distract from the issue if they want. But if Republican opposition researchers are snooping around garages, they should know that if Republicans — who said that we should let the U.S. auto industry go bankrupt — had their way, they wouldn’t find a single American made car anywhere.

*Sigh*

The average price of regular unleaded gasoline was $3.96 this week, an increase of 38 percent over the same time last year. US Senator Rand Paul (R-Kentucky) on Tuesday proposed to temporarily reduce that cost by 18.4 cent cents by suspending the federal gas tax. Under the freshman lawmaker’s plan, the highway trust fund would be replenished by reducing payments made to foreign governments.

“Let’s have a gas tax holiday,” Paul said in a floor speech. “Let’s take the money from foreign aid and let’s give it back to the American people who worked hard to earn it…. That would help people, that would lower the price of gasoline and that would be a stimulus to the economy.”

A four-month suspension would cost about $10 billion, about as much as the US spends on monetary assistance overseas. Paul blasted Senate Democrats for attempting to impose financial penalties on the five largest petroleum firms, which earned record profits last year, as a means of reducing the price at the pump.

“Their solution is to raise taxes on oil companies,” Paul said. “Do you know what taxes are? Taxes are simply a cost. If you run a business and I raise your costs, you’ll raise your prices. So let’s see, prices are too high, so we’re going to raise the costs which will raise the prices further. It makes absolutely no sense.”

Last year, ExxonMobil’s net income of $30.5 billion was just 8.2 percent of its $370 billion in sales, including all of the firms business ventures beyond oil. Many other industries enjoy much higher profit margins, such as beverage companies, computer equipment suppliers, pharmaceutical companies and the manufacturing sector.

Senator Tom Coburn (R-Oklahoma) argued that members of Congress shared the bulk of the blame for the high price of gasoline by running deficits of $1.5 trillion a year. He suggested fiscal restraint as a cost reduction measure.

“Do my colleagues know why oil is expensive today?” Coburn said. “It is because the dollar is on its back and oil is priced in dollars. If we want the price of oil to go down, as it has this week and the tail end of last week, we want the value of the dollar to go up, because the world trades oil in dollars. Why is the dollar down? The dollar is down because an incompetent Congress continues to spend money we don’t have on things we don’t absolutely need. If we want the dollar to improve in value, what we have to do is hold the Congress accountable for doing what they were elected to do, which is live within our means.”

[Courtesy:Thenewspaper.com]

Speaking at Nissan’s Smyrna, TN electric car factory, Transportation Secretary Ray LaHood noted that his staff is working with Congress to make federal tax credits for plug-in car purchases available as a rebate on the dealer level, saying

We’d like for people to get a $7,500 rebate on the day they buy the Leaf. We’re doing a lot of talking about it. When you give people that incentive to buy a battery-powered car, they’ll do it. We know these incentives help.

Speaking to Automotive News [sub], LaHood even went as far as to argue that the new direction for the tax credits, which were previously only claimable when filing taxes, would be successful for the reason that it would make the credits more like the Cash For Clunkers program. Apparently LaHood has completely forgotten how riddled with waste, inefficiency, fraud, confusion, delays, unintended consequences and all-purpose madness that program was. And that’s just scraping the surface. Foolish as it is to subsidize vehicles during the “fleecing the early adopters” phase of a new technology rollout (perhaps we should be saving stimulus for the inevitable “trough of disappointment”?), making those credits available at the dealer level is even worse, increasing the hype and incurring C4C-like downsides along the way.

The war of words over a possible 62 MPG 2025 CAFE standard is accelerating this week, as letters in support of the standard [sub] are vying with industry responses against the proposal for media attention. And though environmentalists are quick to point out the often-misunderstood difference between EPA and CAFE mileage ratings (a fact that even the industry-friendly Automotive News [sub] concedes, if only in a blog post], the industry’s response is miles away from any kind of compromise, saying

The alliance believes it is inappropriate to be promoting any specific fuel economy/greenhouse gas at this point

How’s that for some old-school, don’t-tread-on-me corporate attitude? No room for compromise, no sense of nuance… and yet, that doesn’t actually represent the industry’s position at all.

Toyota, a member of the AAM, has already publicly stated that it has no problem with any future CAFE standards. VP Jim Colon explains:

The administration is engaged. That’s the direction Toyota is already going. Whatever goal they establish, Toyota will be prepared to meet. If it’s 62 miles a gallon, we’ll be able to achieve that.

And, if anything, Toyota’s compliant attitude is the product of pressure from Hyundai, which recently took the industry-leading step of publishing its sales-weighted fleet average fuel economy on a monthly basis. Hyundai USA CEO John Krafcik has been outspoken about his brand’s plan to “overcomply” with CAFE, pointing out that Hyundai’s Elantra will reach 50 MPG CAFE combined by its 2015 redesign, a good 10 years before the 62 MPG standard might take effect.

But despite the industry’s tough position and internal dissent, the AAM does bring up one strong argument in this war of words: that, whaerever it ends up, the standard

should not be arbitrary numbers, chosen before the necessary analyses are completed.

This accusation does stick to California’s Air Resource Board, which has insisted on a 62 MPG 2025 standard since long before feasibility studies were complete. At the same time, the accusation is fairly irrelevant at this point. The AAM has little credibility given the dissent in its ranks, as the industry is split on whether 62 MPG is reasonable and achievable, or a coming apocalypse. And as long as the anti-62 MPG faction fails to convince the rest of their industry to hold the line at (say) a 50 MPG standard, though, it’s probably doomed to fail.

Yesterday evening I directed some ire at President Obama’s continued reliance on ethanol as a major plank of his do-nothing transportation/energy agenda, noting

That extra money for 10,000 E15-capable pumps? That’s because no gas station owner will pay to install a pump for a kind of fuel that only cars built since 2001 can use… and which the auto industry has tried to ban. And why E15 in the first place? Because blenders can’t sell enough E10 to blend the government-mandated amount of ethanol and collect their $6b this year in “blender’s credits” to do so. A subsidy to support a subsidy which in turn props up yet another subsidy (I may have missed a subsidy in there somewhere). You can’t make this stuff up.

The “cornerstone” subsidy that all other ethanol subsidies support is the Volumetric Ethanol Excise Tax Credit, or VEETC, or “blender’s credit,” a $6b per year subsidy that directs 45 cents to refiners for every gallon of ethanol they blend with gasoline. The VEETC nearly died in December’s lame duck session, only to be revived as a way to buy votes for the President’s tax policy. Now, however, The State Column reports that a bipartisan Senate bill has been introduced that would eliminate both the VEETC and import tariffs on foreign-made ethanol. And with a rash of bad news coming out about ethanol, this could just be the opportunity to kill this wasteful government subsidy with fire.

Where to start with the myriad reasons to end government support of a fuel that has done little besides replacing High Fructose Corn Syrup as the number one “stealth subsidy” for the agricultural business? Let’s begin with news that proves the futility of underwriting this failed fuel, namely the Detroit News‘s report that ethanol production actually dropped 1.5% last year, despite the billions in subsidies it receives. Just as the VEETC needs subsidies in order to stimulate market demand for the fuel blends it already subsidizes, this dispatch proves that no amount of government money is a substitute for organic market demand. If the government needed an excuse to cut bait, this should be enough.

Another sign that ethanol subsidies have reached the limits of their efficacy: a report from GreenCarCongress, showing that 75% of all hybrid and AFV (alternative fuel vehicles) in the US are E85 “flex fuel” vehicles. That’s a sign of success you say? Think again. E85 consumption in 2009 only hit 71,213 thousand gasoline-equivalent gallons, which means each “green” flex fuel vehicle uses about 1/10th of one gallon of E85 per year. So even if people (or governments) buy flex fuel cars, they still choose not to run E85… which is no surprise, given that E85 regularly returns worse fuel economy. Unfortunately, the government’s ethanol blending mandate will basically require a huge sift back to E85 in order to work, so once again the government is trying to subsidize through a brick wall.

And as discouraging as these short-term signals are for the government’s attempts to create a sustainable ethanol industry (if, in fact that was the goal of ethanol subsidies), when stacked against the long-term costs one gets a real sense of the waste involved. According to a new book published by Stanford’s Hoover Institute,taxpayers will have spent “nearly half a trillion dollars” between 2008 and 2017 on a fuel that nobody wants to use. That’s right, Five Hundred Billion Dollars, or enough for more than ten auto bailouts (assuming zero payback). And while we spend $6b this year on the VEETC en route to that staggering price tag, the head of the Renewable Fuel Association still has the gall to whine that “the future of biofuels is tied to the price of oil.” Anyone else just throw up a little bit?

But despite all these signs that ethanol subsidies are accomplishing nothing at a huge cost, this new bill to eliminate the VEETC and ethanol import tariffs is no sure thing. Remember, far more than being about the environment or energy security, ethanol is about politics… namely the fact that Iowa is a key early presidential primary that no candidate wants to lose. Even the arch-Greenie Al Gore himself admits that he “regrets” his support for ethanol, but

One of the reasons I made that mistake is that I paid particular attention to the farmers in my home state of Tennessee, and I had a certain fondness for the farmers in the state of Iowa because I was about to run for president

With a presidential election looming in 2012, any efforts to kill ethanol subsidies will be met with stiff opposition from grandstanding presidential hopefuls, hoping to steal the Iowa primary. Here’s hoping that, for once, policy actually trumps politics.

Hackles were raised here at TTAC and around the internet this week, when a draft version of the Transportation Opportunity Act circulated, tipping us to the administration’s preference for pay-per-mile road taxation. According to that version of the bill,

section [2218] would establish a Surface Transportation Revenue Alternatives Office within the Federal Highway Administration. The office would analyze the feasibility of implementing a national mileage-based user fee system that would convey prices to users to reflect system use and other travel externalities and serve as a funding source for surface transportation programs.

TTAC has been tracking and criticizing attempts at pay-per-mile taxation (both state and federal) since at least 2007, and because Transportation Secretary Ray LaHood had previously come out in support of pay-per-mile road taxes, we weren’t surprised by the TOA’s inclusion of a move towards pay-per-mile. And because the White House smacked LaHood down the last time he praised pay-per-mile, we aren’t all that surprised to find The Hill reporting that the White House is disavowing any interest in pay-per-mile. Spokesfolks explain:

This is not a bill supported by the administration. This was an early working draft proposal that was never formally circulated within the administration, does not take into account the advice of the president’s senior advisers, economic team or Cabinet officials, and does not represent the views of the president

So fear not, Americans opposed to a GPS tracker in every car: the White House has no interest in tracking your every movement. But until such time as a politician finds the cojones to address the highway fund’s shortfall by raising the gas tax, expect pay-per-mile to pop up again and again.

One of President Obama’s signature achievements, passage of $812 billion in stimulus funds at the height of the recession, was labeled a failure by the chairman of the US House Transportation Committee, which had jurisdiction over about eight percent of the projects funded. In a hearing yesterday, Representative John Mica (R-Florida) explained that the money did not end up going to needed infrastructure projects.

“This will go down in history as one of the greatest failures of a government program to stimulate the economy that mankind has ever created,” Mica said. “This is a trillion-dollar lesson.”

Initially, the idea behind the stimulus was to create a $250 billion package with the most of the funding going toward infrastructure projects. The total amount of the package more than tripled, but the funds for infrastructure dwindled to just $64.1 billion. Of that amount, only $27.1 billion went to highways and bridges.

“I could not be more frustrated by the results that I see,” Mica said. “The total stimulus package was $787 billion and that’s been re-evaluated to over $800 billion, and still we have a stagnating economy…. Many of the jobs created were very temporary jobs.”

Committee Democrats defended the stimulus, suggesting the economy would have been in far worse shape had the money not been spent. Mica cited administrative problems with the spending. The Government Accountability Office (GAO) audited how effectively the Department of Transportation (DOT) disbursed grants, particularly for the high-speed rail and “TIGER” grants. Over $9.5 billion was handed out based on vague criteria.

“DOT cannot definitively demonstrate the basis for its award selections, particularly the reasons why recommended projects were selected for half the awards over highly recommended ones,” Phillip R. Herr, director of physical infrastructure for GAO, testified. “Developing internal documentation is a key part of accountability for decisions, and DOT guidance states that officials should explain how discretionary grant projects were selected when projects with the highest priority in a technical review were not funded. The absence of documentation can give rise to challenges to the integrity of the decisions made, and DOT is vulnerable to criticism that projects were selected for reasons other than merit.”

GAO also noted DOT’s failure to measure the potential for long-term benefits when selecting projects.

[Courtesy:Thenewspaper.com]

Editor’s Note: The text of the “Transportation Opportunity Act” with section-by-section analysis can be downloaded in PDF format here [courtesy: bna.com]

The White House last week began circulating its legislative proposal for transportation reauthorization that included provisions to add toll booths to existing freeways and impose a tax for every mile driven. The “Transportation Opportunities Act” for the first time gave the Obama administration’s full approval to the concept of an added charge on drivers for the use of roads throughout the country, including on existing, untolled freeways in major metropolitan areas.

“This section [2217] amends existing law to include two new options that provide more flexibility to finance new construction or capacity, and manage congestion, through the imposition of tolls,” states the proposal’s official summary. “The first option focuses on metropolitan congestion reduction and permits state and local governments to impose tolls on existing interstate and non-interstate facilities for the purposes of improving or reducing congestion in metropolitan areas with populations over one million people. Under this option, tolls may be imposed on specific lanes, whole facilities, or a network of facilities within the metropolitan area.”

The plan would require that commuters be charged higher rates during peak morning and evening periods and that the revenue generated be used for capital improvement projects near the toll facility. A second “interstate system improvement” plan would allow tolling in smaller areas so long as the project included new capacity. Electronic transponders would be required for toll collection on the new lanes.

The changes are significant, as existing federal law limits tolling of interstates to a specific number of pilot projects. The proposal is also a reversal of sorts for an administration that early on backed away from the concept of a nationwide per-mile toll floated in February 2009 by Transportation Secretary Ray LaHood.

“I can weigh in on it and say that it is not and will not be the policy of the Obama administration,” then-Press Secretary Robert Gibbs said at the time.

That would change as the White House plan would set up a six-year project to address the technological challenges to establishing a system to track drivers for the purpose of imposing a tax for each mile driven.

“This section [2218] would establish a Surface Transportation Revenue Alternatives Office within the Federal Highway Administration,” the section-by-section analysis states. “The office would analyze the feasibility of implementing a national mileage-based user fee system that would convey prices to users to reflect system use and other travel externalities and serve as a funding source for surface transportation programs.”

The purported reason for including the per-mile taxing system is the potential for increased use of electric vehicles. The administration has poured billions in gas tax dollars to subsidize the companies that manufacture these electric vehicles as well as the end users who buy them. A “public awareness communications plan” would be implemented to sell the plan, which may be difficult. In the UK, an official petition against the idea of a per-mile tax gathered 1.8 million signatures on the prime minister’s website.

[Courtesy:Thenewspaper.com]

President Obama’s goal of putting one million plug-in vehicles on the road by 2015 has faced serious challenges from day one, with several studies pointing out that the goal probably isn’t achievable without more government action.But up till now, President Obama has forwarded only one actual policy change aimed at achieving his goal, namely turning an existing $7,500 federal plug-in tax credit into a rebate, redeemable at the point of purchase (an idea first forwarded by Michigan Democrat Debbie Stabenow). This plan should help drive a Cash-for-Clunker-style EV buying frenzy, as the rebate would not be dependent on the buyer’s tax burden. But Automotive News [sub] reports that Senate Finance Committee Chairman Max Baucus (D-MT)

is very concerned [about the credit-to-rebate scheme] from an effectiveness standpoint.

Baucus doesn’t make a regular habit of opposing the President, but apparently his concerns about the Obama/Stabenow credit-to-rebate plan are serious enough for him to put politics aside.

The AN report is based on information from one of the Senate Finance Committee’s lawyers, Ryan Abraham, who works with Baucus on the tax policy panel. According to Abraham, the basic problem is one of complexity, and the Finance Committee’s desire to simplify the tax code.

Abraham said a tax credit is clear-cut and provides a defined incentive for consumers to purchase EVs.

However, if dealers were to give customers a $7,500 rebate at the point of purchase, Baucus is worried that the incentive could become muddled because dealers also have the discretion to lower the price of the car, Abraham said.

Dealers might mix the rebate with a price reduction, confusing the customer as to how much of each he received, the Senate aide said.

Both the consumer and the dealer could conceivably claim a credit on their tax returns, he said. The IRS would have to address this potential complication

Though the White House hasn’t released details of its credit-to-rebate policy, the fact that it appears to use a dealer reimbursement system like Cash-For-Clunkers, the waste, complexity and confusion that occurred in that program should be instructive. And because this common-sense opposition comes from within President Obama’s own party, it’s hard to see it being rammed through. Which means the President is about to find himself out of policies to support his widely-criticized EV goal.