IB90122
Automobile and Light Truck Fuel Economy: The CAFE Standards
July 22, 2004

Download Locations:

National Council for Science and the Environment

Summary:

Omnibus energy legislation (H.R. 6) would authorize $2 million annually during FY2004-FY2008 for the National Highway Traffic Safety Administration (NHTSA) to carry out fuel economy rulemakings. It also expanded the criteria that the agency would be required to take into account in setting maximum feasible fuel economy for cars and light trucks. The current corporate average fuel economy standard (CAFE) is 27.5 miles per gallon (mpg) for passenger automobiles and 20.7 mpg for light trucks (scheduled to increase to 22.2 mpg in model year [MY] 2007), a classification that also includes sport utility vehicles (SUVs).

On November 18, 2003, the House approved the conference report (246-180) on H.R. 6, the omnibus energy bill. On November 21, 2003, a cloture motion to limit debate in the Senate on omnibus energy legislation (H.R. 6) failed (57-40). Attempts to fashion a compromise stalled, and concern grew over the cost of the billŐs provisions. On February 12, 2004, following agreement between the Senate Majority and Minority Leaders, Senator Domenici introduced S. 2095, a lower cost omnibus bill that includes the CAFE language that appeared in the conference version of H.R. 6. Prospects for the bill are unclear.

Congress had included language in the FY1996-FY2001 Transportation Appropriations 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 FY2001 appropriations required 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 10-15 year period at costs that would be recoverable over the lifetime of ownership.

On April 1, 2003, NHTSA issued a final rule to boost the CAFE of light-duty 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 was the first increase in CAFE since MY1996.

On December 22, 2003, NHTSA issued an Advance Notice of Proposed Rulemaking not on raising the CAFE standards but on the structure of the program. The agency noted several prominent criticisms of the program and invited comment on several issues. Among these are the definitions and regulations for passenger cars and light duty trucks. Critics argue that the current system encourages manufacturers to nudge larger passenger vehicles into the light truck category and penalizes manufacturers who serve the market for the heavier vehicles in the light truck category. Some critics also argue that the increase in light truck CAFE will be achieved, in part, by downsizing vehicles and compromising safety. A number of other factors also affect vehicle safety, but NHTSA has asked for comment on whether establishment of a different CAFE across multiple weight categories in the truck fleet might better achieve CAFE objectives. Basing CAFE on vehicle attributes is offered as another policy option.

NHTSA has the latitude to make changes in the CAFE program, but some alterations to the structure of the program might require congressional authorization.