Abstract:
On March 1, 1985, the National Highway Traffic Safety Administration (NHTSA) received separate petitions from GM and Ford, asking the agency to reduce corporate average fuel economy (CAFE) standards from 27.5 mpg to 26 mpg, beginning with the 1986 model year. In their petitions to NHTSA, the automakers stated that they might have to take drastic measures--sacrificing jobs, profits and market share--to meet the standard. The petitions placed NHTSA administrator Diane Steed in a difficult position. With the nation's two largest automakers arrayed on one side of the issue, and Chrysler, consumer and environmental groups and some members of Congress on the other, NHTSA's decision would be closely watched. And while the automakers' arguments fit well with the Reagan administration's deregulation philosophy, NHTSA had been badly burned earlier when its hurried attempt to relax automobile passive restraint standards was overturned by the US Supreme Court. From NHTSA's perspective, relaxation of the standards was clearly desirable. The challenge was to manage the legal, administrative, and political process to achieve that end. The case gives students an opportunity to grapple with the challenge of deregulation. This case is a companion to General Motors and the Corporate Average Fuel Economy Standards (C15-86-671.0), as well as to an earlier case, Corporate Average Fuel Economy Standards (C16-86-670.0).
