WASHINGTON - When irresistible market forces run headlong into immutable federal rules, something has to give.
That something may be the auto industry's credibility as it struggles to comply with the two-decade-old energy-conservation law known as CAFE, which stands for corporate average fuel economy.
As Americans increasingly spurn fuel-efficient vehicles for bigger, thirstier trucks, automakers are turning into contortionists in their attempts to find ever more creative ways to comply - at least technically - with the law's fuel economy standards.
Automakers face costly fines if their vehicles' average fuel economy does not average 27.5 mpg for cars and 20.7 mpg for light trucks.
The fines, $5.50 for every tenth of a mile that the company is out of compliance, can quickly run into the tens of millions of dollars when multiplied by total sales.
ALL MISSED IN '97
In 1997, each of the Big 3 missed the light-truck standard, while Ford also fell short on cars. But because of the complexities - some say absurdities - of CAFE accounting, automakers can easily sidestep any penalties they face.
Consider Chrysler Corp. In 1997, its light trucks failed to meet CAFE for the fourth year in a row, federal records show. But the company expects to avoid fines because it has begun to sell 1998 minivans that burn either gasoline or ethanol. Under the law, it can apply ethanol-fuel credits retroactively - not only for 1997, but also for 1996 and 1995.
The CAFE law allows companies to juggle credits backward as many as three years and forward as many as three years.
Chrysler gets the credits even though ethanol fuel is not widely available.
In a more blatant dodge, General Motors simply ended the 1998 model year for its biggest sport-utilities - the Chevrolet/GMC Suburban, the Chevrolet Tahoe and GMC Yukon - after only four months. The automaker began the 1999 model year for the trucks on Feb. 1 after it became apparent it could not meet CAFE for the 1998 model year.
The move artificially inflates GM's truck CAFE for the 1998 model year to 21.2 mpg. This allows it to take a credit for beating the 1998 standard and apply it retroactively to the 1995 model year, when GM trucks fell short.
The maneuver ensures GM's 1999 truck CAFE will plummet, creating a new gap to fill. But under the law, GM will have until the 2002 model year to try to make that up.
Sam Leonard, GM's director of mobile emissions and fuel economy, rejected a suggestion that the model-year shift was a desperate move. But, he acknowledged, 'It's a very tough row we're hoeing right now.'
He said GM will take all necessary steps to avoid CAFE fines, in part because of the potential for stockholder suits if the company were knowingly to violate a federal law.
Despite the charade, appeals by environmental groups to raise CAFE or tighten enforcement encounter deaf ears in the administration and on Capitol Hill. The Department of Energy on April 8 issued a new 'Comprehensive National Energy Strategy' that makes no reference to CAFE.
Margo Oge, the EPA's chief regulator of motor vehicles, says any fix should come through new technology, not rules.
Dan Becker, the Sierra Club's outspoken CAFE advocate, said public pressure for action will grow when Americans learn more about the global warming threat and come to understand that better fuel economy is good for the environment.
'Ultimately we are going to win,' he said. 'I just can't tell you if it is going to be this year or next year or the year after.'
But Lincoln Merrihew, director of product advance for J.D. Power and Associates, says CAFE is not likely to be raised anytime soon.
'The Big 3 and federal government may be adversaries in terms of EPA and CAFE, but they are on the same page in terms of jobs,' he said.
'The government is very cognizant of the number of Big 3 jobs, the large number of trucks those workers build, and that gas prices are dropping. Those are major reasons not to change CAFE before the next election.'
Staff Reporter Mark Rechtin in Los Angeles contributed to this report