Obama administration ready to combine Calif. and U.S. vehicle fuel rules

The Obama administration is poised to unveil on Tuesday a new auto fuel-efficiency policy that would resolve a major dispute between California and the U.S. government over emissions, according to a report in today's Wall Street Journal (subscription required).

The proposal to run from 2012-2016 would maintain a single national standard for fuel economy and give automakers flexibility for meeting it, the Journal reported.

The effort would harmonize California's drive to curb greenhouse gasses by reducing tailpipe emissions with the federal approach for determining miles-per-gallon targets based on vehicle size and other attributes, the sources said.

The Journal, citing people familiar with the plan, said the strategy calls for raising the overall fuel economy of cars and trucks to 35 miles per gallon by 2016, four years faster than the current schedule.

In March, the government said fuel-economy standards for all U.S. light vehicles will rise 8 percent to an average of 27.3 mpg for the 2011 model year and will cost the industry $1.46 billion to make the change.

Under that timetable, cars will be required to travel an industry average of 30.2 miles on each gallon of fuel, up from 27.5 mpg, and light-truck standards will increase by 1 mpg, to 24.1 mpg, the National Highway Traffic Safety Administration (NHTSA) said. The combined fleet average will rise by 2 mpg.

Those rules were the first fuel-economy mandates set by the Obama administration. They were to use a new system that sets standards for individual models based on their size.

They stem from the December 2007 U.S. energy law that had been scheduled to lift standards 40 percent by 2020, to a fleetwide average of at least 35 mpg.

In January, President Bush decided not to establish the first phase of that increase because of the industry's financial straits and passed the decision to Obama. Because of those financial pressures, the administration postponed making any reqirements beyond the 2011 model year, Charles Territo, a spokesman for the Alliance of Automobile Manufacturers, said in March.

Federal law requires NHTSA to give automakers at least 18 months lead time before imposing higher standards under the corporate average fuel economy program.