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Automobile and Light Truck Fuel Economy: The CAFE Standards (CRS Report for Congress)

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Release Date Revised Jan. 20, 2006
Report Number IB90122
Authors Robert L. Bamberger, Environment and Natural Resources Policy Division
Source Agency Congressional Research Service
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Summary:

The Energy Policy Act of 2005 (P.L. 109-58), enacted on August 8, 2005, (1)authorizes $3.5 million annually during FY2006-FY2010 for the National Highway TrafficSafety Administration (NHTSA) to carry out fuel economy rulemakings; (2) requires a studyto explore the feasibility and effects of a significant reduction in fuel consumption by 2014;and (3) requires NHTSA to adjust its test procedure for measuring fuel economy to take intoaccount differences in vehicles and driving habits since the test was designed.The rise in gasoline prices following Hurricane Katrina has renewed the interest of somepolicymakers in boosting CAFÉ. Senator Obama, in a speech on September 15, 2005,proposed that automakers agree to boost fuel economy in return for the federal government'sabsorbing a portion of the industry's retiree health costs during 2006-2010. The industrywould agree, in turn, to invest 50% of the subsidy in support of increased hybrid vehicleproduction. The program, which would raise passenger car CAFÉ to 40.4 mpg and lighttrucks to 32.6 mpg by the end of 2020, would cost an estimated $760 million. In the House,Representative Sherwood Boehlert has introduced legislation (H.R. 3762) that wouldestablish a CAFÉ requirement on passenger automobiles of 33 mpg by MY2015 (Model Year 2015). It wouldalso establish a fuel economy credit trading program. Co-sponsors of the bill come from bothparties.On August 23, 2005, NHTSA released a notice of proposed rulemaking for light dutytrucks beginning with MY2008. The agency proposes a restructuring of the CAFÉ programfor sport utility vehicles that would establish higher standards based upon vehicle size. Theagency proposes two different tracks that manufacturers can follow for model years2008-2010 - meeting an "Unreformed" or "Reformed" CAFÉ standard. In MY2011, allmanufacturers would be required to meet the reformed standard.
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