That’s quite enough, really

The U.S. Senate toyed with forcing truck makers to sell you more fuel-efficient equipment. Fortunately, lawmakers came to their senses.

Legislation approved by the Senate Commerce Committee in May called for 4 percent annual increases in fuel economy for medium- and heavy-duty trucks, beginning in 2011. After weeks of political wrangling over the committee’s proposed corporate fuel economy, or CAFE, standards, mostly regarding automobiles, the Senate adopted a compromise version last month as part of its broader energy bill (H.R. 6).

The new version still requires the Department of Transportation to issue rules regarding commercial truck fuel economy, but gone are the specific annual mandates. Instead, the rules should be designed “to achieve the maximum feasible improvement.” Another provision requires DOT to provide at least four model years of “regulatory lead-time” and at least three model years of “regulatory stability.” In other words, truck makers must have at least four years notice of a fuel economy mandate, and they need to be able to depend on that mandate remaining unchanged for at least three years.

On one level, government intervention regarding large truck fuel economy seems to make even more sense than it does regarding automobiles. If an automobile buyer doesn’t want a gas guzzler, he can steer clear of a huge SUV, for example, and instead buy a tiny hybrid sedan. Fleet owners don’t have such flexibility. You can’t just switch to a smaller truck to do the same job; you are captive to the fuel efficiency of a particular class of vehicle.

Arguments for a federal mandate basically end there, however. The compromise legislation itself recognizes something that the trucking community – fleet owners and suppliers alike – have learned all too well this decade: Mandatory technology changes are highly disruptive.

In some cases, regulation clearly is the only effective option. Complain all you want about the Environmental Protection Agency’s truck engine emissions rules, but those cuts in pollutants would not have happened otherwise. There is no true market-based incentive to cut pollution. Favorable public relations don’t stack up against the enormous costs involved.

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Fuel economy is quite different because the benefits flow directly to the truck buyer. Assuming diesel prices don’t plummet and stay low, the market inevitably will push truck and engine makers to improve fuel economy. Suppliers already are making great strides because customers are demanding them.

But legislation – especially the annual mpg increases the original CAFE bill sought – likely would hinder the cause. Truck engi-neering departments would have had to focus their efforts on yearly incremental changes, perhaps diverting attention and resources from technological leaps that could coincide with other major changes, such as future rounds of emissions cuts or new products. By understanding their customers’ needs and tolerance for increases in prices for trucks as well as fuel, truck makers can deliver an overall better value to fleet owners than Congress can.

Legislation also can stifle innovations that solve problems in ways that don’t help the regulated party achieve its mandates. Because government regulation by its nature holds specific parties accountable, it can undermine collaboration among suppliers of different types of equipment. Trailer and tractor manufacturers, for example, are starting to work together to tweak their products aerodynamically to optimize the fuel economy of the overall combination. But truck makers probably won’t be as interested in these kinds of measures if regulators judge them solely on the fuel economy of their own products.

The truck fuel economy legislation in H.R. 6 as passed by the Senate is acceptable if probably unnecessary. But what’s truly encouraging is the Senate bill’s recognition that the trucking community needs regulatory stability. Let’s hope Congress inserts similar language in the future when it decides it must stick its nose into your business.