The U.S. Secretary of Transportation, Mary E. Peters, announced April 22 a proposed new rule to raise fuel efficiency standards for cars and light trucks. In December 2007, Congress passed the Energy Independence and Security Act, which required revisions to the Corporate Average Fuel Economy (CAFE) standards. The new rule, if implemented, would be the first significant improvement in fuel efficiency standards since the CAFE program's inception in 1975.
The CAFE program sets a mandatory fuel efficiency rate (measured in miles per gallon) and fines manufacturers who are not in compliance. Manufacturers are evaluated based upon the fuel economy of their entire fleet as opposed to individual vehicles. CAFE standards were widely credited with improving automotive fuel economy in the years immediately following enactment, but progress has since leveled off.
The Energy Independence and Security Act of 2007 required the Transportation Secretary to issue regulations to achieve a 40 percent improvement in the fuel standard by 2020. According to Peters' speech, the proposal achieves a 25 percent improvement by 2015, or a 4.5 percent annual improvement, which exceeds the pace established in the law. The proposed standard, written by the National Highway Traffic Safety Administration (NHTSA), sets an industry average of 35.7 miles per gallon (mpg) for passenger cars and 28.6 mpg for light trucks by 2015. Peters said the proposal also "would reduce carbon dioxide emissions by an estimated 521 million metric tons, and is an important part of this Administration's commitment to reduce greenhouse gas emissions."
The Alliance of Automobile Manufacturers (the Alliance), an important trade association for carmakers, praised the proposal, saying it "represents an important mile marker" on the way to meeting the law's requirements. "While these increases will present a challenge, it is critical that automakers and consumers have the certainty that this nationwide, 50-state fuel economy rule provides." This is a reference to the Alliance's and the Bush administration's desire to have one national standard instead of letting states like California determine fuel efficiency through vehicle emissions standards as part of their programs to reduce greenhouse gases.
While the new proposal would result in a significant improvement in fuel efficiency, the proposal needs to be seen in light of the administration's recent denial of California's clean air waiver. In December 2007, the administrator of the U.S. Environmental Protection Agency (EPA), Stephen L. Johnson, denied California a waiver under the Clean Air Act (CAA) to establish a state vehicle emissions standard. The CAA specifically allows California to receive EPA waivers to set standards more stringent than the national standard. Other states are then free to adopt the California standard. Part of Johnson's rationale was that a patchwork of state standards would be confusing to automakers.
Avoiding a patchwork of regulations at the state level was indeed the rationale for establishing federal environmental protection laws in the 1960s and 1970s. Creating one national standard to avoid the patchwork that Johnson referred to in the California waiver decision, and that the Alliance noted in its response to the new CAFE standards, is misleading. Granting California a waiver would mean that there would only be two standards, a national standard and California's standard, even if it was adopted widely by other states.
More likely, what the Bush administration and the Alliance are trying to achieve is one national standard because California's vehicle emissions program might result in a stricter fuel efficiency standard. Evidence of this is contained in the CAFE standards proposal. Near the end of the 400-plus-page proposed rule, NHTSA writes, "Given that a State regulation for tailpipe emissions of CO2 is the functional equivalent of a CAFE standard, there is no way that NHTSA can tailor a fuel economy standard so as to avoid preemption." (California's approach focused on tailpipe emissions.) NHTSA writes, "We respectfully disagree" with two district court rulings in Vermont and California that greenhouse gas vehicle emission standards adopted by those states are not preempted by the law that created the CAFE program. The agency also proposes to preempt state standards in the new rule.
The responses to the new proposed rule from public interest groups acknowledge the improvement in fuel efficiency that should be achieved. However, Public Citizen's Joan Claybrook, who was NHTSA administrator from 1977 to 1981, issued a press release in which she takes both NHTSA and Congress to task for their failure to establish stricter standards. "Other countries already have set targets that exceed the U.S. 2020 goal — Japan requires more than 35 mpg by 2010; the European Union is ramping up to as much as 52 mpg by 2012; and even China will require 38 mpg for 2008."
The Environmental Defense Fund (EDF) said the proposal represents "only one step toward a national policy to protect the climate and ensure lasting energy security." According to John DeCicco, an EDF senior fellow, "What's missing is a comprehensive solution that will unleash innovation and require other parties — such as the petroleum industry — to contribute a fair share of emissions reductions, both in the transportation sector and across the economy."