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Summary:
One of the least controversial provisions of the Energy Policy and Conservation Act of 1975 (P.L. 94-163) established corporate average fuel economy (CAFE) standards for new passenger cars. As oil prices rose, there was little expectation that manufacturers would have any difficulty complying with the standards. However, oil prices softened and the demand for small cars diminished. In response to petitions from manufacturers facing stiff civil penalties for noncompliance, the National Highway Traffic Safety Administration (NHTSA) relaxed the standard for model years 1986-1989. The current standard is 27.5 miles per gallon (mpg) for passenger automobiles and 20.7 mpg for light trucks, a classification that also includes sport utility vehicles (SUVs). However, on April 1, 2003, NHTSA issued a final rule to boost the CAFE of lightduty trucks by 1.5 mpg by 2007. The rule sets the interim standards at 21.0 mpg for model year (MY)2005, 21.6 mpg for MY2006, and 22.2 for MY2007. It is the first increase in CAFE since MY1996. CAFE has proven to be controversial. An attempt in the 102nd Congress to raise CAFE proved too controversial and was dropped from omnibus energy policy legislation before it could pass (Energy Policy Act of 1992, P.L. 102-486). In 1994, the National Highway Traffic Safety Administration (NHTSA) issued a notice of proposed rulemaking to explore raising the CAFE standard for light-duty trucks. Congress included language in the FY1996-FY2001 DOT Appropriations (P.L. 104-50, P.L. 104-205, P.L. 105-66, P.L. 10669, and P.L. 106-346) prohibiting the use of appropriated funds for any rulemaking on CAFE, effectively freezing the standards. However, facing growing concern over the higher penetration of SUV sales as part of the national fleet, the Senate conferees to the FY2001 appropriations insisted upon a study of CAFE by the National Academy of Sciences (NAS). That study, released on July 30, 2001, concluded that it was possible to achieve a more than 40% improvement in light truck and SUV fuel economy over a 1015 year period at costs that would be recoverable over the lifetime of ownership. There were sharp differences in the House and Senate CAFE proposals included in omnibus energy legislation debated in the 107th Congress. House legislation called for a reduction of 5 billion gallons in light-duty truck fuel consumption over the period of MYs 2004-2010. Senate legislation called for NHTSA to develop new CAFE standards. The Senate bill also included language to freeze "pickup trucks" at the current light truck standard of 20.7 mpg. On September 19, 2002, the conferees agreed to the Housepassed goal of saving 5 billion gallons, but shifted the window to MY2006-MY2012. The 107th Congress adjourned without taking final action on the bill. In the 108th Congress, Senator Feinstein has introduced legislation (S. 225) that, among other provisions, would expand the applicability of fuel economy standards to vehicles up to 10,000 pounds gross vehicle weight (GVW). While NHTSA has issued a rule boosting light truck CAFE, some policymakers believe an increase in passenger automobile CAFE is also in order. Others argue that the automotive industry should not be further burdened at this time by higher CAFE requirements.
