CAFE Standards - corporate average fuel economy

Corporate Average Fuel Economy

Issue Description
Definitions
NCSL Position
NCSL Related Information
Other Related Resources

The 107th Congress
(updated 12/30/2002)

Administration (2002)
(updated 12/30/2002)

Issue Description

Congress set out to improve fuel efficiencies of U.S. automobiles and to reduce U.S. dependence on foreign energy sources after the Arab oil embargo of 1973-1974 contributed to a surge in oil prices. The Corporate Average Fuel Economy (CAFE) program was initiated in 1975 by the Energy Policy and Conservation Act (EPCA).

Definitions

Corporate Average Fuel Economy (CAFE) Standards - A program initiated by EPCA, sets standards for vehicle fuel efficiency measured by miles traveled per gallon of burned fuel. The current CAFE standards require passenger automobiles to travel at least 27.5 miles per gallon (mpg) of fuel burned and 20.7 mpg for light-duty trucks (classification includes sport utility vehicles (SUVs)). The passenger car standard of 27.5 mpg has been the standard since 1990. The light trucks standard of 20.7 mpg has been the standard since 1996. The standards were enacted in an effort to reduce U.S. energy consumption and dependence on foreign oil. Supporters of the program also hoped it would improve air quality.

Energy Policy and Conservation Act (P.L. 94-163) (EPCA)- The 1975 Act that required passenger car and light truck manufacturers to meet CAFE standards.

Light-duty trucks - A category of vehicles with a gross vehicle weight rating of 8,500 pounds or less. The category includes pickups, minivans and sport utility vehicles (SUV).

National Highway Traffic Safety Administration (NHTSA) - The sub-department within the Department of Transportation (DOT) was designated to monitor and adjust the CAFE standard when needed. In 1994 NHTSA issued a notice of proposed rulemaking to raise the CAFE standard on light-duty trucks. Congress included language in the FY1996-FY2001 DOT Appropriations bill that prohibited use of appropriated funds for rulemaking on CAFE standards, thereby freezing the standard. Congress then appropriated funds in FY2001 to the National Academy of Sciences (NAS) to conduct a study on CAFE standards. The NAS study, released in 2001, found that automakers could achieve higher fuel economy at relatively low cost by designing more energy efficient and aerodynamic vehicles. As current law stands, NHTSA is required to consider energy conservation, passenger safety, job protection and environmental quality when studying the possibility of raising the standards.

The 107th Congress (2001-2002)

As of November 25, 2002, H.R. 4, comprehensive energy legislation, was in conference negotiations, but conferees were unable to produce a conference report before they adjourned for the year. The uncompleted conference report did contain a fuel economy standard proposal. The fuel economy standard provision directed NHTSA to conserve 5 billion gallons of oil by 2014. Opponents of the provision argued the language would not go far enough. The new standard would increase the current fuel economy by less than 1 mile per gallon. Energy Conference Chairman Billy Tauzin (R-Louisiana) praised the provision, claiming it is the first time Congress has increased fuel economy standards for sport utility vehicles. Transportation Secretary Norman Mineta sent a letter in September to the energy conferees expressing disappointment that the compromise did not include language that would require NHTSA to consider the element of safety when revising CAFE standards in the future. CAFE standards negotiations will begin fresh when the 108^th Congress starts work on a comprehensive energy package.

On February 15, 2002, the Senate started floor debate on the Democrat compiled energy package, Energy Policy Act of 2002 (S. 517). The legislation would require the Secretary of Transportation, in consultation with the Administrator of the EPA, to prescribe standards beginning in MY2005 that would achieve a combined CAFE standards for passenger automobiles and light duty trucks of 35 mpg for MY 2013. An interim standard would be established of 33.2 mpg for cars and 26.3 mpg for light trucks by MY2010. After MY2010, the Secretary would have the discretion to set a combined standard for cars and trucks. Sen. Carl Levin (D-Mich.) spearheaded the effort to kill a provision in the original underlying bill that would have increased CAFE standards roughly 50 percent. On April 13, 2002, the Senate voted 62-38 to replace the CAFE mandate with more industry-friendly language proposed by Levin and Sen. Kit Bond (R-Mo.). The language directed NHTSA to increase CAFE standards within 15 months after enacting "new regulations setting forth increased fuel economy standards" reflecting "maximum feasible fuel economy levels" consistent with factors set out in the original CAFE legislation (EPCA); requires release of an environmental assessment of the effects of the standards, authorizes $2 million to carry out the provision. The provision was further amended to freeze light truck CAFE standards to 20.7. The Senate incoporated the measure as an amendment and passed S. 517 on April 25, 2002.

On February 8, 2002, Sen. John Kerry (D-Mass.) introduced the National Fuel Savings and Security Act of 2002 (S. 1926). The legislation requires the Secretary of Transportation, in consultation with the Administrator of the U.S. Environmental Protection Agency (EPA), to prescribe standards beginning in MY2005 that would achieve a combined CAFE for passenger automobiles and light duty trucks of 35 mpg by MY 2013. If standards are not established 18 months after passage, a series of default standards would take effect, raising CAFE standards for automobiles and light trucks to 38.3 mpg and 32 mpg respectively by MY 2012. The bill also proposes to establish a system where manufacturers could trade credits for exceeding the standards between cars and trucks, domestics and imports. The bill was referred to the Committee on Commerce, Science and Transportation. After the Senate agreed on a CAFE standard provision to be included in S. 517, individual legislation was no longer considered.

On February 7, 2002, Sen. John McCain (R-Ariz.) introduced the Fuel Economy and Security Act of 2002 (S. 1923). The bill requires the establishment of higher CAFE standards beginning in MY2007 and a combined CAFE of 36 mpg by MY 2016. It would introduce combined standards for cars and trucks in MY2007 and would establish a system where manufactures could trade credits for exceeding the standards between cars and trucks, domestics and imports, but would limit the credits that could be traded or purchased. After the Senate agreed on a CAFE provision to be included in S. 517, individual legislation was no longer considered.

On August 1, 2001, the House approved Securing America's Future Energy Act (H.R. 4). The legislation includes fuel economy provisions contained in H.R. 2587, introduced by Rep. Billy Tauzin (R-La.). H.R. 2587 requires the Secretary of Transportation to prescribe fuel economy standards that would require that the light-duty truck portion of the new vehicle fleet to achieve an aggregate savings of 5 billion gallons during the period of MYs 2004-2010 from the base level of consumption were the standards left unchanged.

On May 1, 2001, Sen. Dianne Feinstein (D-Calif.) introduced S. 804 to amend title 49 U.S.C., to phase in higher CAFE standards applicable to light trucks - automobiles up to 10,000 pounds gross vehicle weight and the federal fleet of vehicles. The bill was referred to the Committee on Commerce, Science and Transportation. After the Senate agreed on a CAFE provision to be included in S. 517, individual legislation was no longer considered.

Administration (2002)

On November 12, 2002, the U.S. Department of Transportation's NHTSA issued a draft notice of a proposed rulemaking to the Office of Management and Budget (OMB). NHTSA will propose to raise the corporate average fuel economy for SUVs, light trucks, and minivans for model years (MY) 2005-2007. Unofficial reports speculate the standards will be raised roughly half a mile per gallon each year in the MYs 2005-2007, totaling 1.5 mpg by MY 2007. The OMB and the U.S. Department of Energy are required by law to review the proposal before the notice of a proposed rulemaking is published.

NCSL Position

Increased energy efficiency can decrease U.S. reliance on imported oil, reduce the environmental impacts of fossil fuels, reduce the long-term operating costs of U.S. industries thus improving their competitiveness, slow the depletion of our finite fossil fuels and extend the time we have to make the transition to new and innovative energy technologies.

NCSL supports a national energy policy that promotes energy efficiency in a variety of ways including both setting and strengthening policies as technologies improve while recognizing the significance of economic costs on various segments of the population including rural areas. NCSL supports Corporate Average Fuel Economy Standards for automobiles and light duty trucks, including sport utility vehicles and minivans.

NCSL Related Information

Environment Update

Vol. II., No. 10;
July 23, 2001

Vol. III., No.1;
January 28, 2002

Vol. III., No. 3;
March 20, 2002

Vol. III., No. 7;
October 31, 2002

Other Related Resources

American Council for an Energy-Efficient Economy
www.aceee.org

U.S. Department of Transportation
www.dot.gov

U.S. International Trade Administration
www.ita.doc.gov

NCSL Staff Contacts

Molly Stauffer, Director, Environment and Natural Resources Committee
Laurie Holmes, Committee Assistant, Environment and Natural Resources Committee

Corporate Average Fuel Economy

The 107th Congress (updated 12/30/2002)

Administration (2002) (updated 12/30/2002)

The 107th Congress
(updated 12/30/2002)

Administration (2002)
(updated 12/30/2002)