IB90122
Automobile and Light Truck Fuel Economy: The CAFE Standards
April 29, 2005

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National Council for Science and the Environment

Summary:

The House passed H.R. 6, the Energy Policy Act of 2005, on April 21, 2005 (249183). It includes provisions strongly similar to language that appeared in the omnibus energy legislation reported from conference during the 108th Congress. The new legislation would authorize $2 million annually during FY2006-FY2010 for the National Highway Traffic and Safety Administration (NHTSA) to carry out fuel economy rulemakings. It also would expand the criteria that the agency takes into account in setting maximum feasible fuel economy for cars and light trucks. One issue over the years has been the test procedures that measure vehicle fuel economy. Consumers have noted that in-use fuel economy rarely meets rated fuel economy. One bill introduced in the 109th Congress, the Fuel Efficiency Truth in Advertising Act of 2005 (H.R. 1103) would direct the Environmental Protection Agency (EPA) to revise its test procedures, taking into account a number of changes in vehicle characteristics and use since the procedures were last changed. During House debate on H.R. 6, an amendment that would require the fuel economy stickers on new cars to better reflect in-use fuel economy was passed (259-172), while an amendment to raise the Corporate Average Fuel Economy (CAFE) standard to 33 miles per gallon by model year (MY) 2015 was rejected (177-254). On April 27, 2005, Senator Domenici, Chairman of the Senate Committee on Energy and Natural Resources, indicated that discussions about Senate legislation had been initiated and were continuing. The Energy Policy and Conservation Act of 1975 (P.L. 94-163, EPCA) established new car fuel economy standards for passenger automobiles and light-duty trucks. The current corporate average fuel economy standard (CAFE) is 27.5 miles per gallon (mpg) for passenger automobiles. 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 set 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. The light-duty truck category includes sport utility vehicles (SUVs). The standards are determined by NHTSA, an agency within the the Department of Transportation. A National Academy of Sciences (NAS) 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. Interest has continued in studying whether the CAFE standards and program should be restructured. Among the issues 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. Basing CAFE on vehicle attributes was 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. One bill introduced in the House (H.R. 70) would require that standards gradually apply to vehicles of up to 10,000 pounds gross vehicle weight (GVR).