Order Code IB90122
CRS Issue Brief for Congress
Received through the CRS Web
Automobile and Light Truck Fuel Economy:
Is CAFE Up to Standards?
Updated April 26, 2002
Robert Bamberger
Resources, Science, and Industry Division
Congressional Research Service ˜ The Library of Congress

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CONTENTS
SUMMARY
MOST RECENT DEVELOPMENTS
BACKGROUND AND ANALYSIS
Refocusing On Fuel Economy: SUVs, OPEC and Kyoto
CAFE in Congress (1994-2000): Freezing the Standard
The Freeze Is Thawed: CAFE in the 107th Congress
Past Role of CAFE Standards
Growth of Light-Duty Trucks and SUVs
Improving Fuel Economy: Other Policy Options
Freedom CAR and the Partnership for a New Generation of Vehicles
(PNGV)(1993-2002)
Price of Gasoline
CAFE and Reduction of Carbon Dioxide Emissions
Historical Note on the CAFE Debate in the 102nd Congress
LEGISLATION
CONGRESSIONAL HEARINGS, REPORTS, AND DOCUMENTS

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Automobile and Light Truck Fuel Economy:
Is CAFE Up to Standards?
SUMMARY
One of the least controversial provisions
by the National Academy of Science (NAS).
of the Energy Policy and Conservation Act of
That study, released on July 30, 2001, con-
1975 (P.L. 94-163) established corporate
cluded that it was possible to achieve a more
average fuel economy (CAFE) standards for
than 40% improvement in light truck and SUV
new passenger cars. As oil prices rose, there
fuel economy over a 10-15 year period at costs
was little expectation that manufacturers
that would be recoverable over the lifetime of
would have any difficulty complying with the
ownership.
standards. However, oil prices softened and
the demand for small cars diminished. In
On May 1, 2001, Senator Diane
response to petitions from manufacturers
Feinstein, joined by three co-sponsors, intro-
facing stiff civil penalties for noncompliance,
duced legislation (S. 804) that would raise the
the National Highway Traffic Safety Adminis-
CAFE standard for light duty trucks and SUVs
tration (NHTSA) relaxed the standard for
to 27.5 mpg – the same standard as for pas-
model years 1986-1989.
senger automobiles – by MY (model year)
2007. On July 12, 2001, the House Subcom-
The current standard is 27.5 mpg for
mittee on Energy and Air Quality adopted an
passenger automobiles and 20.7 mpg for light
amendment in markup to H.R. 2587 that called
trucks, a classification that also includes sports
for a reduction of 5 billion gallons in light-duty
utility vehicles (SUVs). An attempt in the
truck fuel consumption over the period of
102nd Congress to raise CAFE proved too
MYs 2004-2010. This proposal came to the
controversial and was dropped from omnibus
House floor on August 1, 2001, as part of
energy policy legislation before it could pass
H.R. 4, the Securing America’s Future Energy
(Energy Policy Act of 1992, P.L. 102-486).
Act. An amendment to establish a combined
The Clinton Administration supported greater
passenger car and truck CAFE of 27.5 mpg by
fuel efficiency, but indicated in 1993 that an
MY2007 was defeated 160-269. The NAS
increase in the CAFE standards was not the
study, released two days earlier, figured prom-
option likeliest to be embraced first.
inently in the debate.
In 1994, the National Highway Traffic
The Senate began debate on comprehen-
Safety Administration (NHTSA) issued a
sive energy legislation at the end of February
notice of proposed rulemaking to explore
2002. Senators Kerry and McCain reached a
raising the CAFE standard for light-duty
compromise to propose a combined fleetwide
trucks. Congress included language in the
average of 36 mpg by MY2015. However, on
FY1996-FY2001 DOT Authorizations (P.L.
March 13, 2002, the Senate voted (62-38) for
104-50, P.L. 104-205, P.L. 105-66, P.L. 106-
an amendment to charge NHTSA with devel-
69, and P.L. 106-346) prohibiting the use of
opment of new CAFE standards. The Senate
appropriated funds for any rulemaking on
then approved an amendment (56-44) to freeze
CAFE, effectively freezing the standards.
“pickup trucks” at the current light truck
However, the Senate conferees to the FY2001
standard of 20.7 mpg. The Senate passed its
appropriations insisted upon a study of CAFE
energy bill April 25 (88-11).
Congressional Research Service ˜ The Library of Congress

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MOST RECENT DEVELOPMENTS
On August 1, 2001, the House passed H.R. 4 , the Securing America’s Future Energy
Act, which included a provision calling for a reduction of 5 billion gallons in light-duty
truck fuel consumption over the period of model years (MYs)2004-2010. The provision
would also require NHTSA to develop a weight-based system for establishing fuel-efficiency
standards. The Senate began debate on comprehensive energy legislation at the end of
February 2002. Senators Kerry and McCain reached a compromise to propose a combined
fleetwide average of 36 mpg by MY2015. However, on March 13, 2002, the Senate voted
(62-38) for an amendment offered by Senators Levin and Bond to charge NHTSA with
development of new CAFE standards. The Senate went on to approve an amendment (56-44)
from Senator Miller to freeze “pickup trucks” (to be defined by the Secretary of
Transportation) at the current light truck standard of 20.7 mpg. This language was in the
final version of the Senate energy bill when it passed April 25, 2002 (88-11).
Cited by both sides in the debate was a study by the National Academy of Science
(NAS), required by the FY2001 Department of Transportation Appropriations Act (P.L. 106-
346) and released on July 30, 2001. It concluded that it is 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 vehicle ownership. The NAS study also
recommended dropping the separate CAFE calculations made for both domestic and
imported vehicles, and also recommended elimination of the CAFE credits that accrue to
manufacturers of dual-fueled vehicles. Senators also cited passages raising safety concerns
if higher CAFE were achieved through vehicle weight reduction.
On January 9, 2002, the Bush Administration announced that it was ending the
Partnership for a New Generation of Vehicles (PNGV) in favor of a new government-
industry partnership for development of automobiles powered by fuel cells.
BACKGROUND AND ANALYSIS
The Arab embargo of 1973-1974 and the tripling in the price of crude oil brought into
sharp focus the fuel inefficiency of U.S. automobiles. New car fleet fuel economy had
declined from 14.8 miles per gallon (mpg) in model year 1967 to 12.9 mpg in 1974. In the
search for ways to reduce dependence on imported oil, automobiles were an obvious target.
The Energy Policy and Conservation Act (P.L. 94-163) established corporate average fuel
economy (CAFE) standards for passenger cars for model years 1978-1980 and 1985 and
thereafter. The CAFE standards called for essentially a doubling in new car fleet fuel
economy, establishing a standard of 18 mpg in model year (MY) 1978 and rising to 27.5 by
MY1985. (Interim standards for model years 1981-1984 were announced by the Secretary
of Transportation in June of 1977.) EPCA also established fuel economy standards for light
duty trucks, beginning at 17.2 mpg in MY1979, and currently 20.7 mpg. (The CAFE
standards are summarized in Table 1.)
Compliance with the standards is measured by calculating a sales-weighted mean of the
fuel economies of a given manufacturer’s product line, with domestically produced and
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imported vehicles measured separately. As originally enacted, the penalty for non-compliance
was $5 for every 0.1 mpg below the standard, multiplied by the number of cars in the
manufacturer’s new car fleet for that year. Civil penalties collected from 1983-1998 totaled
roughly $475 million.
Table 1. Fuel Economy Standards for Passenger Cars and Light
Trucks: Model Years 1978 Through 2002
(in MPG)
Light trucks1
Passenger
Model year
cars
Two-wheel
Four-wheel
Combined2,3
drive
drive
1978
418.0
—
—
—
1979
419.0
17.2
15.8
—
1980
420.0
16.0
14.0
(5)
1981
2.0
616.7
15.0
(5)
1982
24.0
18.0
16.0
17.5
1983
26.0
19.5
17.5
19.0
1984
27.0
20.3
18.5
20.0
1985
427.5
719.7
718.9
719.5
1986
826.0
20.5
19.5
20.0
1987
926.0
21.5
19.5
20.5
1988
26.0
21.0
19.5
20.5
1989
1026.5
21.5
19.0
20.0
1990
427.5
20.5
19.0
20.2
1991
427.5
20.7
19.1
20.2
1992
427.5
—
—
20.2
1993
427.5
—
—
20.4
1994
427.5
—
—
20.5
1995
427.5
—
—
20.6
1996
427.5
—
—
20.7
1997
427.5
—
—
20.7
1998
427.5
—
—
20.7
1999
427.5
—
—
20.7
2000
427.5
—
—
20.7
2001
427.5
—
—
20.7
2002
427.5
—
—
20.7
1Standards for MY 1979 light trucks were established for vehicles with a gross vehicle weight rating (GVWR)
of 6,000 pounds or less. Standards for MY 1980 and beyond are for light trucks with a GVWR of 8,500
pounds or less.
2For MY 1979, light trucks manufacturers could comply separately with standards for four-wheel drive,
general utility vehicles and all other light trucks, or combine their trucks into a single fleet and comply
with the standard of 17.2 mpg.
3For MYs 1982-1991, manufacturers could comply with the two-wheel and four-wheel drive standards or
could combine all light trucks and comply with the combined standard.
4Established by Congress in Title V of the Act.
5A manufacturer whose light truck fleet was powered exclusively by basic engines which were not also used
in passenger cars could meet standards of 14 mpg and 14.5 mpg in MYs 1980 and 1981, respectively.
6Revised in June 1979 from 18.0 mpg.
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7Revised in October 1984 from 21.6 mpg for two-wheel drive, 19.0 mpg for four-wheel drive, and 21.0 mpg
for combined.
8Revised in October 1985 from 27.5 mpg.
9Revised in October 1986 from 27.5 mpg.
10Revised in September 1988 from 27.5 mpg.
Source: Automotive Fuel Economy Program, Annual Update, Calendar Year 2000, appearing in full at:
[http://www.nhtsa.dot.gov/cars/problems/studies/fuelecon/index.html#TOC]
When oil prices rose sharply in the early 1980s, smaller cars were selling well, and it was
expected that manufacturers would have no difficulty complying with the standards.
However, oil prices had declined by 1985. Sales of smaller cars tapered as consumers began
to place less value on fuel economy and gasoline cost as an input in the overall costs of
vehicle ownership. 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, but it was restored to 27.5 in MY1991. The Persian
Gulf War in 1990 caused a brief spike in oil prices, but it also demonstrated that it was
unlikely that the United States or many of the producing nations would tolerate a prolonged
disruption in international petroleum commerce. As a consequence, U.S. dependence upon
imported petroleum, from a policy perspective, was considered less of a vulnerability.
It was also becoming apparent that reducing U.S. dependence on imported oil would be
extremely difficult without imposing a large price increase on gasoline, or restricting
consumer choice in passenger vehicles. Many argued that the impacts of such actions upon
the economy or the automotive industry would be unacceptable. Meanwhile, gasoline
consumption, which fell to 6.5 million barrels per day (mbd) in 1982, averaged nearly 8.4 mbd
in 1999, and were peaking at 8.6-8.8 during the summer of 2000 despite the surge in prices.
There were highly controversial attempts to significantly raise the CAFE standards on
passenger cars in the early 1990s. One proposal included in omnibus energy legislation was
so controversial that it contributed to the Senate’s inability in 1991 to bring the bill up for
debate on the floor.
NHTSA typically established truck CAFE standards 18 months prior to the beginning
of each model year, as EPA allows. However, such a narrow window permitted NHTSA to
little more than ratify manufacturers’ projections for the model year in question. In April
1994, the agency proposed to abandon this practice and issued an Advance Notice of
Proposed Rulemaking inviting comment on what level that standards might be established for
trucks for MY1998-MY2006. The following year, however, after a change in congressional
leadership, Congress included language in the FY1996 Department of Transportation
Appropriations to prohibit expenditures for any rulemaking that would make any adjustment
to the CAFE standards. Identical language was included in the appropriations and spending
bills for FY1997-FY2000. It was also in the FY2001 DOT Appropriations (H.R. 4475)
approved by the House Committee on Appropriations, May 16, 2000, and approved by the
House, May 19, 2000. There had been some expectation that there would be some challenge
on the House floor to the rider, but none was proposed when it became apparent that support
for such an initiative had waned. A previous effort to pass a sense of the Senate amendment
that conferees on the FY2000 DOT Appropriations should not agree to the House-passed
rider for FY2000 was defeated in the Senate on September 15, 1999 (55-40). Senator Slade
Gorton (R-Wash.) and Senator Dianne Feinstein (D-Calif.) were the sponsors.
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Refocusing On Fuel Economy: SUVs, OPEC and Kyoto
Recent developments have focused fresh attention on the CAFE standards and fuel
economy in general. The sharp increase in crude oil and gasoline prices that began in 1999
has brought into higher relief the continuing loss of market share of passenger cars continued
to lose market share to the larger, multi-purpose sport utility vehicles (SUVs) that are subject
to the less stringent light-truck fuel economy standard. A 1996 study conducted for the
Department of Transportation found that consumers valued the larger vehicles for their
versatility and roominess, and the availability of four-wheel drive. The increasing market
share of these vehicles, combined with their lower average fuel economy, has contributed to
a lowering in overall average fuel economy since the mid-1980s.
Table 2. Domestic and Import Passenger Car and Light Truck Fuel
Economy Averages for Model Years 1978-2000
(in MPG)
Domestic
Import
Model
All
All light
Total
Year
Light
Com-
Light1
Com-
cars
trucks
fleet
Car
Car
Truck
bined
truck
bined
1978
18.7
—
—
27.3
—
—
19.9
—
—
1979
19.3
17.7
19.1
26.1
20.8
25.5
20.3
18.2
20.1
1980
22.6
16.8
21.4
29.6
24.3
28.6
24.3
18.5
23.1
1981
24.2
18.3
22.9
31.5
27.4
30.7
25.9
20.1
24.6
1982
25.0
19.2
23.5
31.1
27.0
30.4
26.6
20.5
25.1
1983
24.4
19.6
23.0
32.4
27.1
31.5
26.4
20.7
24.8
1984
25.5
19.3
23.6
32.0
26.7
30.6
26.9
20.6
25.0
1985
26.3
19.6
24.0
31.5
26.5
30.3
27.6
20.7
25.4
1986
26.9
20.0
24.4
31.6
25.9
29.8
28.2
21.5
25.9
1987
27.0
20.5
24.6
31.2
25.2
29.6
28.5
21.7
26.2
1988
27.4
20.6
24.5
31.5
24.6
30.0
28.8
21.3
26.0
1989
27.2
20.4
24.2
30.8
23.5
29.2
28.4
20.9
25.6
1990
26.9
20.3
23.9
29.9
23.0
28.5
28.0
20.8
25.4
1991
27.3
20.9
24.4
30.1
23.0
28.4
28.4
21.3
25.6
1992
27.0
20.5
23.8
29.2
22.7
27.9
27.9
20.8
25.1
1993
27.8
20.7
24.2
29.6
22.8
28.1
28.4
21.0
25.2
1994
27.5
20.5
23.5
29.6
22.0
27.8
28.3
20.7
24.7
1995
27.7
20.3
23.8
30.3
21.5
27.9
28.6
20.5
24.9
1996
28.1
20.5
24.1
29.6
22.2
27.7
28.5
20.8
24.9
1997
27.8
20.2
23.3
30.1
22.1
27.5
28.7
20.6
24.6
1998
28.6
20.5
23.3
29.2
22.9
27.6
28.8
21.1
24.7
1999
28.0
---
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29.0
---
---
28.3
20.9
24.5
2000
28.5
---
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28.3
---
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28.5
21.2
24.7
1Light trucks from foreign-based manufacturers.
NOTE: Beginning with MY1999, the agency ceased categorizing the total light truck fleet by either domestic
or import fleets.
Other pressures have had less to do with energy security and more to do with
environmental objectives. The Kyoto Agreement would have required the United States to
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achieve a 7% reduction in 1990 levels of carbon dioxide emissions, which implied a significant
reduction in gasoline consumption, among other elements. Preferring to forestall any state
or federal regulation, General Motors, Ford, Chrysler and Toyota announced on February 4,
1998 that they would produce cars in MY1999 with engine and catalytic converter
technologies that would achieve lower emissions. In early November 1998, the California Air
Resources Board (CARB) voted to reclassify SUVs as passenger cars and hold those vehicles
to California emission standards. Ford Motor announced in late July 2000 that it would
improve the fuel economy of its SUV model line by 25% over a five-year period. Other
manufacturers echoed similar intentions.
During the Clinton Administration, the Congress was chary of committing the United
States to the Kyoto Agreement, pending further decisions about the participation of
developing nations, and how the agreement would be enforced. However, on March 27,
2001, Environmental Protection Agency Administrator Christine Todd Whitman indicated
that the Bush Administration had “no interest” in any further negotiations on implementing
the Kyoto Protocol. On February 14, 2002, the President proposed his own plan to reduce
the growth in emissions.
CAFE in Congress (1994-2000): Freezing the Standard

Months prior to the midterm elections in 1994, NHTSA published a notice of possible
adjustment to the fuel economy standards for trucks before the end of the decade. The
following year, however, the House-passed version of H.R. 2002, the FY1996 Department
of Transportation Appropriation, prohibited the use of authorized funds to promulgate any
CAFE rules; the Senate version did not include the language, but it was restored in
conference. The House and Senate approved the conference report, and the bill became law
(P.L. 104-50) on Nov. 15, 1995. Much the same scenario occurred in the second session of
the 104th and the first session of the 105th: A similar rider was passed by the House and not
by the Senate, but included by the conferees and enacted. This scenario occurred again in the
second session. The prohibition was included in the version of the FY1999 appropriations
passed by the House (H.R. 4328) in July 1998, but not in the Senate version (S. 2307); it was
finally included in the omnibus spending bill at the end of the 105th Congress (P.L. 105-277).
The prohibition was reported from the House Appropriations Committee in the FY2000 DOT
Appropriations (H.R. 2084) and passed by the House on June 23, 1999. However, the
growth in gasoline consumption and the size of the light-duty truck fleet were concerns cited
behind introduction in the Senate of an amendment to the bill expressing the sense of the
Senate that the conferees should not agree to the House-passed rider for FY2000. The
amendment, sponsored by Senator Slade Gorton (R-Wash.) and Senator Dianne Feinstein (D-
Calif.), was defeated in the Senate on September 15, 1999 (55-40) and the prohibition was
once again enacted into law (P.L. 106-69).
On May 16, 2000, the House Committee on Appropriations voted to include the rider
in the FY2001 DOT Appropriations (H.R. 4475). An effort to strip the language was
expected when the bill reached the House floor; however, there was none, and the bill, with
the rider, passed the House on May 19, 2000 (395-13). Following its passage in the Senate,
Senator Gorton introduced a motion to instruct the Senate conferees to not accept the House
rider. After debate, the motion was altered to instruct the conferees to accept the House rider
in return for agreement to authorize a study by the National Academy of Science (NAS), in
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conjunction with DOT, “to recommend, but not to promulgate without approval by a Joint
Resolution of Congress, appropriate corporate average fuel efficiency standards.” In addition
to the factors required by statute to be weighed in determining maximum feasible CAFE
levels, the motion would require the study to consider the impacts of any proposed CAFE on
vehicle safety and on effects on employment in the automotive sector and to analyze
potentially disparate effects of revised standards across the sector. The motion was agreed
to, followed by clarification that the motion applies only to the FY2001 appropriation. The
conferees were successful, and the language was included in the appropriations bill signed into
law on October 23, 2000 (P.L. 106-346).
Legislation was introduced in the 104th Congress (H.R. 2200), the 105th Congress (S.
286, H.R. 880), and the 106th Congress (S. 147) that would freeze the current CAFE
standards. Unlike the annual prohibition on rulemaking that has been included in the FY1996-
FY2001 appropriations, these bills would have maintained the CAFE standards at the level
in force at the time of enactment unless superseded by a subsequent act of Congress.
The Freeze Is Thawed: CAFE in the 107th Congress
A second summer of high gasoline prices, coupled with a heightened awareness that the
nation is experiencing problems with many fuels and on many fronts, has built support for
reconsideration of the CAFE standards in the 107th Congress. For the first time since FY1996,
the House DOT appropriations bill did not include a rider prohibiting expenditures on CAFE
rules, and legislation (H.R. 2587) was reported out of committee that would require the
automotive industry and NHTSA to achieve fuel savings.
Past Role of CAFE Standards. The effectiveness of the CAFE standards themselves
has been controversial. Since 1974, domestic new car fuel economy has roughly doubled; the
fuel economy of imports has increased by roughly one-third. Some argue that these
improvements would have happened as a consequence of rising oil prices during the 1970s
and 1980s. Some studies suggest that the majority of the gains in passenger car fuel
economy during the 1970s and 1980s were technical achievements, rather than the
consequence of consumers’ favoring smaller cars. Between 1976 and 1989, roughly 70% of
the improvement in fuel economy was the result of weight reduction, improvements in
transmissions and aerodynamics, wider use of front-wheel drive, and use of fuel-injection.
The fact that overall passenger car fleet fuel economy remained comparatively flat during a
period of declining real prices for gasoline also suggested that the CAFE regulations have
contributed to placing some sort of floor under new-car fuel economy.
General criticisms of raising the CAFE standards have been that, owing to the significant
lead times manufacturers need to change model lines and because of the time needed for the
vehicle fleet to turn over, increasing CAFE is a slow and inefficient means of achieving
reductions in fuel consumption. Further, it is argued that the standards risk interfering with
consumer choice and jeopardizing the health of a recovered domestic automotive industry.
Opponents of raising CAFE usually cite fears that higher efficiency will likely be obtained by
downsizing vehicle size and weight, raising concerns about safety.
Proponents of a CAFE increase have argued that boosting the standards might bring
about the introduction of technological improvements that do not compromise features that
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consumers value, but which would otherwise not be added because these improvements do
add to the cost of a new vehicle.
Growth of Light-Duty Trucks and SUVs. What has spurred a new focus on CAFE
in the 107th Congress is the growing percentage of the fleet made up of light-duty trucks and
SUVs, which are subject to a less stringent CAFE standard than are passenger automobiles.
In 1988, light trucks constituted roughly 30% of the vehicle fleet. By 1994, this figure had
grown to slightly more than 40% and reached an estimated 45% by 2000. The change is
attributable to the burgeoning popularity of mini-vans and sport utility vehicles (SUVs). As
a percentage of overall fuel consumption in the transportation sector, gasoline consumption
by light trucks grew at an annual rate of 4.5% from 1985 to 1995 while automobile fuel
consumption fell fractionally during the same period. As a consequence, attention has
increasingly focused upon the contribution of this portion of the fleet to growing gasoline
consumption. (See also CRS Report RS20298, Sport Utility Vehicles, Mini-Vans and Light
Trucks: An Overview of Fuel Economy and Emissions Standards.)
On May 1, 2001, Senator Feinstein, joined by three co-sponsors, introduced S. 804. The
legislation would raise the CAFE standard for light duty trucks and SUVs to 27.5 mpg – the
same standard as for passenger automobiles – by MY2007. Applicability of the standards
would also be raised from 8,500 pounds gross vehicle weight (GVW) to include vehicles up
to 10,000 GVW. The legislation would also require that the fuel economy of new vehicles
acquired by the federal government exceed the baseline for a particular vehicle class by 3 mpg
at the end of FY2003, and 6 mpg by the end of FY2005.
Once fully implemented and depending upon the growth in the size of the light truck
fleet, it is possible that requiring these vehicles to meet the higher standard could save roughly
1.0 million barrels of oil daily. However, these savings could take nearly 20 years to fully
capture; once the 27.5 standard were in effect for MY2007, it would still take an additional
10 years or more before the fleet of older, less efficient trucks and SUVs would be retired.
On July 12, 2001, the House Subcommittee on Energy and Air Quality adopted an
amendment in markup on an energy conservation bill that calls for a reduction of 5 billion
gallons in light-duty truck fuel consumption over the period of MYs 2004-2010. The
provision would also require NHTSA to develop a weight-based system for establishing fuel-
efficiency standards. The amendment, introduced by Chairman Joe Barton (R-Texas) and
Representative Richard Burr (R-N.C.), passed by a vote of 29-3. An amendment by
Representative Edward Markey (D-Mass) that would have established a CAFE of 37.5 for
passenger cars and 29.0 mpg for light-duty trucks by MY2011 was withdrawn.
Some members of the subcommittee criticized the provision that was adopted as saving
very little fuel; however, Rep. John Dingell (D-Mich) suggested that it was as stringent as he
could support, and Chairman Barton emphasized the importance of achieving consensus
within the committee on the language. The Chairman referred to the amendment as an
“excellent first step.”
Critics of the proposal suggested it would require a relatively insignificant improvement
in fuel efficiency to achieve these savings, with estimates ranging between 1-3 mpg over the
period. Additional criticism was expressed after the appearance, on July 17, 2001, of a report
in the New York Times that a draft summary of the much-anticipated NAS study would
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conclude that a very significant increase in CAFE was feasible in 6-10 years. (A subsequent
Times story on July 27, 2001, suggested that the conclusions had since been softened, as
proved to be the case.)
The fuel economy provisions of H.R. 2587 were included in H.R. 4, debated by the
House on August 1, 2001. An amendment to establish a combined CAFE fleet standard of
27.5 mpg by MY2007 was defeated, 160-269.
The NAS study, released on July 30, 2001, was cited by opponents as well as supporters
of the House proposal. The study concludes that it is 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. The study does suggest that there may
be safety consequences if manufacturers opt to meet higher standards by reduced vehicle
weight. However, this position is disputed by some, who argue that heavier vehicles may be
safer for their occupants, but may be responsible for fatalities when they strike lighter
vehicles; that a lightening of vehicles could reduce fatalities in certain incidents. The study
also recommends that any redesign of the CAFE program include a program for trading fuel
economy credits among manufacturers, and that CAFE standards should be based on vehicle
“attributes,” such as weight, rather than basing CAFE standards on whether a vehicle is a car
or a truck.
The NAS study also recommends eliminating the CAFE credits that accrue to
manufacturers of dual-fueled vehicles. These vehicles are rarely operated on anything but
conventional gasoline, but allow their manufacturers to sell less efficient vehicles overall while
still remaining in compliance with the CAFE requirements. Some estimate that the dual-fueled
vehicle credit has resulted in an overall reduction of five-tenths to nine-tenths of a gallon in
the average efficiency of vehicles sold. H.R. 4, as passed by the House, would extend the
credit through MY2008. The bill also includes provisions requiring federal purchase of
alternative-fueled vehicles and hybrids, and would require an additional study by the NAS on
the “feasibility and effects” of reducing “by a significant percentage” fuel use by automobiles
by MY2010. (The current NAS study may be read online at
[http://books.nap.edu/html/cafe/].)
In the wake of the terrorist attacks on September 11, 2001, Senate Republicans
pressured the Democratic leadership to bring a Senate version of omnibus energy legislation
to the floor as soon as possible, arguing for the soonest possible action on legislation that will
enhance U.S. energy security. The Democratic leadership promised consideration of
comprehensive energy legislation during February 2002. Debate on a revised version of a bill
originally introduced by Senator Bingaman, S. 517, began in late February 2002.
An amendment to that bill proposed to include the language of legislation introduced on
February 8, 2002, by Senator Kerry, the chair of the Senate Commerce Committee, the
National Fuel Savings and Security Act of 2002 (S. 1926). Major provisions of this
legislation relating to CAFE include:
! The Secretary of Transportation, in consultation with the Administrator of
EPA, is to “prescribe” standards beginning MY2005 that would achieve a
combined CAFE for passenger automobiles and light duty trucks of 35 mpg
for MY2013.
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! An interim standard would be established of 33.2 mpg for cars and 26.3 for
light trucks, by MY2010. After MY2010, the Secretary would have the
discretion to set a combined standard for cars and trucks.
! If standards are not established 18 months after passage, a series of default
standards take effect, raising automobile CAFE to 38.3 mpg in MY2013 and
light trucks to 32 mpg; there would be no combined standard.
! DOT would be required to review the difference between rated CAFE and
in-use CAFE under “average driving conditions,” with the objective of
narrowing any differences to no more than 5% by MY2015.
! A system where manufacturers could trade credits for exceeding the
standards between cars and trucks, domestics and imports would be
established.
! A special identifying label (Green Label Program) would be created for
vehicles that both meet or exceed the CAFE standard and are also certified
to have the lowest greenhouse gas emissions for vehicles in its class. A
system of green stars would also be established to denote cars that exceeds
the standards, and a special gold star for cars exceeding 50 mph and light
trucks exceeding 37 mpg. DOT would study “social marketing strategies”
to acquaint the public of the meaning of these logos.
! Grants and awards would be provided for various competitions for technical
demonstrations and innovation.
A somewhat similar bill (S. 1923), introduced by Senator McCain, would delay the
establishment of higher standards until MY2007, but would require a combined CAFE of 36
mpg by MY2016. It would introduce combined standards for cars and trucks in MY2007 and
limit the credits that could be traded or purchased. This legislation would also eliminate the
credit for dual-fueled vehicles. As debate on the Daschle amendment to S. 517 commenced
in late February, it was reported that Senators McCain and Kerry had reached agreement to
seek a combined CAFE of 36 mpg by MY2015. However, on March 13, 2002, the Senate
voted (62-38) for an amendment offered by Senators Levin and Bond to charge NHTSA with
development of new CAFE standards. The Senate went on to approve an amendment (56-44)
from Senator Miller to freeze “pickup trucks”– to be defined by the Secretary of
Transportation – at the current light truck standard of 20.7 mpg. Proponents of the
amendment argued that subjecting pickup trucks to higher CAFE standards would render
these vehicles inadequately powered for farmers and laborers who use these vehicles to haul
loads and perform work. Critics of the amendment pointed to the inconsistency of the
Senate’s maintaining, on the one hand, that the body lacked the expertise to set CAFE
standards, but then turning around to freeze pickup trucks at 20.7 mpg.
Reaction in the hours after these votes focused upon the Levin amendment as a defeat
for pro-CAFE forces – which it was, in a sense, although the resumption of a role for NHTSA
in establishing fuel economy targets could be significant. However, the ramifications of the
Miller amendment may prove a potent offset, depending upon how much of the light truck
fleet comes to be exempted from higher CAFE requirements. The Senate passed S. 517 (88-
11) on April 25, 2002. Shortly before the final vote, it voted 57-42 to table an amendment
offered by Senators Carper and Specter to require a reduction of 1 million b/d in
transportation sector fuel consumption. The amendment and its proposed reduction in fuel
use was perceived by some as an arbitrary target and an indirect way of securing a significant
increase in CAFE. Opponents argued that the Senate had already voted for NHTSA to
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conduct a rulemaking, and that the Senate had, in the Levin amendment, rejected setting
specific targets, whether it be CAFE standards or specific reductions in fuel consumption.
How the House and Senate positions will be reconciled in conference is unclear.
Improving Fuel Economy: Other Policy Options
As a practical matter, reducing gasoline consumption can be achieved by raising the price
of gasoline through taxation or other means to a level that induces some conservation, as well
as by increasing the efficiency of the automobile fleet in use. Of course, a combination of
these two broad approaches can be used as well.
Freedom CAR and the Partnership for a New Generation of Vehicles
(PNGV)(1993-2002). In late September 1993, President Clinton announced establishment
of a government and industry research program, the Partnership for a New Generation of
Vehicles (PNGV), that had among its goals development of an environmentally friendly
“Supercar” that would achieve 80 mpg without sacrificing performance, affordability, and
safety. The PNGV was an effort to combine the resources and expertise of federal agencies
and laboratories with the private sector to reduce U.S. dependence on oil and maintain
competitiveness without intervening to alter the market price of fuel. Research and
development was to be focused on hybrid electric vehicle drive, direct-injection engines, fuel
cells, and greater use of lightweight materials. Production prototypes of the Supercar were
projected to be ready by 2004, a deadline that was appearing unlikely to be met.
On January 9, 2002, the Administration indicated that it would abandon the PNGV in
favor of a new initiative to push for development of fuel cells. Research on fuel cells has
been a focus of PNGV; of the $127 million provided to the program in FY2002, roughly $40
million was provided for fuel cell research and an additional $20 for hydrogen R&D.
Although the Administration promises that the new initiative, called Freedom CAR, will be
more aggressive, others expect it may largely operate along the lines of PNGV. However,
where PNGV was directed by the Commerce Department, Freedom CAR will be administered
by DOE.
Price of Gasoline. Owing to higher taxation of gasoline in other nations, Americans
enjoy one of the lowest prices for gasoline. As a consequence, the higher prices since 1999
– especially during the summer driving seasons – are experienced in the United States as a
much greater increase, in percentage terms, than elsewhere.
Past proposals to raise the price of gasoline to leverage consumers into more efficient
vehicles have garnered little support. Owing to the relative price inelasticity of gasoline
demand, many believe that the size of the price increase it would take to curb gasoline
consumption to any degree would have a damaging effect on the economy of several times
greater magnitude. Indeed, analysis of recent research (Plotkin, Greene, 1997, cited in
References) suggested that an increase in gasoline taxes would be one-third as effective in
achieving a reduction in demand as studies of the 1980s once projected. This is a significant
reflection of the place that personal transportation and inexpensive gasoline has assumed in
our economy and value system.
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Price, however, could be used to at least keep some floor under the cost of gasoline to
motorists. For example, some argued during past episodes of high prices that, when prices
softened again, the federal government should step in and capture the difference as a tax, and
possibly devote the proceeds to developing public transportation infrastructure and incentives.
This tax could be adjusted periodically to see that gasoline would not become less expensive
than a certain level in real (inflation adjusted) dollars.
Owing to the unpopularity of raising gasoline prices, raising the CAFE standard is more
comfortable for some; however, it is a long-term response. Depending upon the magnitude
of an increase in gasoline prices, no matter what the cause, a price-induced conservation
response is nearly immediate and may grow as consumers initially drive less, and eventually
seek out more efficient vehicles.

CAFE and Reduction of Carbon Dioxide Emissions. Vehicles account for one-
fifth of U.S. production of CO emissions.
Some argue that raising the CAFE standards
2
would be an ineffective or marginal way to reduce emissions of carbon dioxide. On one
hand, improvements in fuel economy should enable the same vehicle to burn less fuel to travel
a given distance. However, to the extent that technologies to improve fuel economy add cost
to new vehicles, it has been argued that consumers will tend to retain older, less efficient cars
longer. It has also been suggested that there is a correlation between improved fuel economy
and an increase in miles driven and vehicle emissions. However, vehicle miles traveled have
continued to increase in recent years when fuel economy improved only slightly, suggesting
that the broader factor is the overall cost of driving, which is tied as well to the price of
gasoline. The relationship between where people live and where they work is also a factor.
The Clinton Administration proposed a five-year, $6.3 billion package of tax credits, and
reliance on voluntary efforts by individuals and industry, to meet the proposed targets of the
Kyoto agreement. Many believed that the Administration plan would fall well short, largely
because carbon emissions are forecast by the Department of Energy to be 34% above 1990
levels by the year 2010. Some urged that Congress disapprove the treaty and sought
renegotiation of the targets, arguing that meeting the proposed targets would require possibly
crippling taxes and regulations. Others suggested that a significant increase in CAFE
requirements would help meet the Kyoto targets and that an increase in CAFE should not
wait final dispensation of the agreement. However, as noted earlier, the Bush Administration
has removed the U.S. from the Kyoto process in favor of, for example, voluntary
commitments on the part of industry.
Historical Note on the CAFE Debate in the 102nd Congress. As an historical
note, legislation to boost the CAFE standards last received major attention in the 102nd
Congress. One proposal (S. 279) would have abandoned uniform standards but otherwise
left the historic infrastructure of the CAFE standards intact. Under S. 279, each manufacturer
would have been required to achieve a 20% improvement in passenger car fuel economy by
1996 and 40% by 2001 over its 1988 baseline. The same standard of improvement would
have been required of light trucks.
In that same Congress, legislation was being developed to open up the Arctic National
Wildlife Refuge (ANWR) for exploration. Proponents of higher CAFE standards predicted
that there would be no support for exploration of ANWR without some increase in CAFE.
S. 341, omnibus energy legislation reported from the Senate Committee on Energy and
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Natural Resources in May 1991, would have extended discretion to the Department of
Transportation (DOT) to set “maximum feasible” CAFE targets for each manufacturer for
MY1996 and MY2002. The DOT would have taken into account application of known fuel-
saving technologies, MY1990 as a baseline for performance, sales mix, vehicle interior size,
and safety standards. Credits earned could have been traded or held by the manufacturer.
When it appeared that the ANWR provisions would almost certainly not survive unless the
CAFE provisions were strengthened, Senator Johnston proposed an amendment in markup
that would have had the effect of embracing the goals of S. 279, but over a longer time frame.
The amendment was defeated in markup, as was an attempt to append to the omnibus bill the
specific targets in S. 279.
The proposal appeared to fail at the combined hands of those who either thought they
went too far or not far enough. But the omnibus bill failed to reach the floor; a cloture vote
on whether to proceed with it (it became S. 1220) was defeated Nov. 1, 1991. Both CAFE
and ANWR provisions were stripped from modified legislation introduced in the second
session of the 102nd Congress, and there have not been any further attempts to raise the CAFE
standards.
LEGISLATION
H.R. 4 (Tauzin)
Securing America’s Future Energy Act. Includes fuel economy provisions summarized
in H.R. 2587 below. Introduced July 27, 2001. Approved by the House, August 1, 2001
(240-189).
H.R. 2587 (Tauzin)
Enhances energy conservation, provide for security and diversity in the energy supply
for the American people, and for other purposes. Requires the Secretary of Transportation
to prescribe fuel economy standards that would require the light-duty truck portion of the
new vehicle fleet to achieve an aggregate savings of 5 billion gallons during the period of
MYs2004-2010 from the base level of consumption were the standards left unchanged.
Introduced July 23, 2001. Reported (Amended) by the Committee on Energy and Commerce.
H.Rept. 107-162, Part I.
S. 517 (Bingaman)
Energy Policy Act of 2002. As introduced, would, among other provisions, require the
Secretary of Transportation, in consultation with the Administrator of EPA, to “prescribe”
standards beginning MY2005 that would achieve a combined CAFE 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 for light trucks, by MY2010. After MY2010, the
Secretary would have the discretion to set a combined standard for cars and trucks.
Amended March 13 to require that the Secretary of Transportation issue not later than 15
months after enactment “new regulations setting forth increased fuel economy standards”
reflecting “maximum feasible fuel economy levels” consistent with factors set out in the
original CAFE legislation (P.L. 94-163): requires release of an environmental assessment of
the effects of the standards, Authorizes $2 million to carry out this section. Further amended
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to freeze “pickup truck” CAFE to 20.7 mpg. Introduced March 12, 2001, but in the process
of substantial amendment on the Senate floor.
S. 804 (Feinstein, et al.)
Amends title 49, United States Code, to require phased increases in the fuel efficiency
standards applicable to light trucks; to require fuel economy standards for automobiles up to
10,000 pounds gross vehicle weight; to raise the fuel economy of the federal fleet of vehicles,
and for other purposes. Introduced May 1, 2001; referred to the Committee on Commerce,
Science, and Transportation.
S. 1766 (Daschle)
National Energy Policy Act of 2002. Expected to be the Senate vehicle for a debate on
comprehensive energy policy. Fuel economy provisions are being developed by the Senate
Commerce Committee. Introduced December 5, 2001. Placed on Senate Legislative Calendar
under General Orders. Calendar No. 259.
S. 1923 (McCain)
Fuel Economy and Security Act of 2002. Would require the establishment of higher
CAFE standards beginning in MY2007 and a combined CAFE of 36 mpg by MY2016. It
would introduce combined standards for cars and trucks in MY2007 and would establish a
system where manufacturers 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.
Would also eliminate the credit for dual-fueled vehicles. Introduced February 7, 2002;
referred to Committee on Commerce, Science and Transportation.
S. 1926 (Kerry)
National Fuel Savings and Security Act of 2002. Would require the Secretary of
Transportation, in consultation with the Administrator of EPA, to “prescribe” standards
beginning MY2005 that would achieve a combined CAFE for passenger automobiles and light
duty trucks of 35 mpg for MY2013. If standards are not established 18 months after
passage, a series of default standards take effect, raising automobile CAFE to 38.3 mpg in
MY2013 and light trucks to 32 mpg. Would establish a system where manufacturers could
trade credits for exceeding the standards between cars and trucks, domestics and imports.
Introduced February 8, 2002; referred to Committee on Commerce, Science and
Transportation.
CONGRESSIONAL HEARINGS, REPORTS, AND DOCUMENTS
National Research Council. Committee on Fuel Economy of Automobiles and Light Trucks.
Automotive Fuel Economy: How Far Should We Go? Washington, D.C.: National
Academy Press, 1992. 254 p.
Plotkin, Steve. Greene, David. “Prospects for Improving the Fuel Economy of Light Duty
Vehicles.” Energy Policy, vol. 25, no. 14-15. December 1997. P. 1179-1188.
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U.S. Congress. House. Committee on Energy and Commerce. Subcommittee on Energy
and Power. Automotive Fuel Efficiency. Hearing, 101st Congress, 1st session. July 13,
1989. Washington, U.S. Govt. Print. Off., 1989. 73 p.
Serial No. 101-73. 73 p.
U.S. Congress. Office of Technology Assessment. Improving Automobile Fuel Economy:
New Standards, New Approaches. Summary. October 1991. OTA-E-508. 15 p.
U.S. Congress. Senate. Committee on Commerce, Science and Transportation. Motor
Vehicle Fuel Efficiency Act. Hearing on S. 279. February 21, 1991. Washington, U.S.
Govt., Print. Off., 1991. 175 p. S.Hrng. 102-19
—— Motor Vehicle Fuel Efficiency Act; Report to Accompany S. 279. (102nd Congress,
1st session. S.Rept. 102-48: 39 p.)
——Motor Vehicle Fuel Efficiency Act of 1990; Report on S. 1224. June 11, 1990.
Washington, U.S. Govt. Print. Off., 1990. 29 p. (101st Congress, 2nd session. S.Rept.
101-329.)
U.S. Congress. Senate. Committee on Commerce, Science and Transportation.
Subcommittee on the Consumer. Motor Vehicle Fuel Efficiency Act of 1989. Hearing
on S. 1224. 101st Congress, 1st session. September 7, 1989. Washington, U.S. Govt.
Print. Off., 1989. 341 p. S.Hrng. 101-347
U.S. Congress. Senate. Committee on Energy and Natural Resources. Subcommittee on
Energy Regulation and Conservation. Automobile Fuel Efficiency Standards. Hearing,
101st Congress, 1st session. Apr. 4, 1989. Washington, U.S. Govt. Print. Off., 1989.
352 p. S.Hrng. 101-44
U.S. Department of Transportation. National Highway Traffic Safety Administration.
Annual Update, Calendar Year 2000, appearing in full at:
[http://www.nhtsa.dot.gov/cars/problems/studies/fuelecon/index.html#TOC].
U.S. Federal Register. Department of Transportation., National Highway Traffic Safety
Administration. Light Truck Average Fuel Economy Standards; Model Years 1996-
1997. Vol. 59, No. 66. Wednesday, April 6, 1994, p. 16312.
——Light Truck Fuel Economy Standards, Model Years 1998-2006. Advance Notice of
Proposed Rulemaking (ANPRM). Vol. 59, No. 66. Wednesday, Apr. 6, 1994, p.
16324-16332.
——Light Truck Fuel Economy Standards, Model Year 2002. Final rule. Vol. 65, No. 66.
April 5, 2000, p. 17776-17778.
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