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Automobile and Light Truck Fuel Economy: The CAFE Standards

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Publication Date: January 2009

Publisher(s): Library of Congress. Congressional Research Service

Series: RL33413

Topic: Energy (Fuels)
Transportation (Motor vehicles)

Abstract:

On April 6, 2006, the National Highway Traffic Safety Administration (NHTSA) released a final rulemaking for sport utility vehicles (SUVs) and light duty trucks beginning with model year (MY) 2008. The rule restructures the Corporate Average Fuel Economy (CAFE) program for light trucks to establish standards based upon vehicle size, as opposed to the current program with one average standard for all light trucks. It marks a significant change to the CAFE program for trucks. The sharp rise in gasoline prices during spring 2006 focused attention on the CAFE standards for passenger cars, and the fact that NHTSA does not have the same latitude to make changes to passenger car CAFE or the passenger car CAFE program.

For trucks, the agency established two different tracks that manufacturers can follow for model years 2008-2010 -- meeting an "unreformed" or "reformed" CAFE standard. In MY2011, all manufacturers will have to meet the reformed standard. The unreformed light-duty truck standards are a fleetwide average of 22.5, 23.1, and 23.5 mpg for model years 2008, 2009, and 2010, respectively. Manufacturers opting for the reformed standard will be required to meet a range of standards depending upon vehicle size. Starting in MY2011, the reformed light truck CAFE standards, with a range of 21.8 to 30.4 mpg, will apply to all manufacturers. NHTSA estimates that under the reformed system, light trucks will average 24.0 mpg in MY2011.

On April 27, 2006, President Bush requested that Congress grant him authority to increase passenger car CAFE standards and to establish an attribute-based system for passenger cars. However, the 109th Congress did not grant this authority. The Energy Policy and Conservation Act (EPCA) of 1975 grants NHTSA the authority to alter the light truck program's structure, but the passenger car program is set by EPCA. To increase passenger car CAFE above the current 27.5 mpg, the President must submit the proposal to Congress, which can then act to disapprove; otherwise, the proposal goes into effect. Further, under EPCA, NHTSA lacks the authority to alter the structure of the passenger car program. As part of the Administration proposal, the President also requested the authority to allow credit trading between different manufacturers: currently, manufacturers may bank credits for future years but may not trade them to other manufacturers.

Others proposals within and outside Congress include simply raising fuel economy standards for passenger cars and light trucks, eliminating the distinction between the two fleets, and establishing a system to trade CAFE credits among manufacturers. As noted above, the original authorities for the CAFE program were enacted as part of the Energy Policy and Conservation Act of 1975 (P.L. 94-163, EPCA), passed in 1975 as a response to the Arab oil embargo. The Energy Policy Act of 2005 (P.L. 109-58), passed on August 8, 2005, authorizes $3.5 million annually for five years for NHTSA to carry out fuel economy rulemakings, requires a study to explore the feasibility of a significant reduction in fuel consumption by 2014, and requires that the adjustment factor applied to estimate consumer in-use fuel economy be revised. This CRS report replaces CRS Issue Brief IB90122, Automobile and Light Truck Fuel Economy: The CAFE Standards.

This report supersedes CRS Report RL33413, Automobile and Light Truck Fuel Economy: The
CAFE Standards, by Brent D. Yacobucci and Robert Bamberger.

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