CAFE Standards Issue Resurfaces on Capitol Hill

Published June 1, 1997

In a bid to preempt regulatory action on the part of the U.S. Department of Transportation (DOT), a bipartisan group of senators has introduced legislation that would freeze the corporate average fuel economy (CAFE) standards at current levels unless changed by Congress.

Enacted in 1975, CAFE established federal requirements regulating the average fleet fuel economy of new passenger cars and light trucks. At the time CAFE standards were introduced, the conventional wisdom held that the world was in the midst of an oil crisis that demanded a concerted effort to regulate U.S. oil consumption and reduce America’s dependence on foreign oil.

The CAFE regulatory scheme has been in effect for over two decades, but the results bear little resemblance to the program’s original goals. CAFE standards have failed to reduce U.S. dependence on foreign oil: In 1974, the United States imported 35 percent of its oil; today that figure is between 45 and 50 percent. During the same time period, domestically manufactured cars and light trucks improved their fuel economies by 108 percent and 60 percent, respectively.

CAFE Standards and “Global Warming”

No longer able to use the oil-dependency argument, proponents of CAFE standards at the DOT and among environmental groups, notably the Sierra Club, now say that the program needs to be strengthened to counter the threat of global warming. By further reducing the emissions of cars and light trucks, the DOT argued in 1994, CAFE standards can cut into the amount of man-made greenhouse gas emissions said to be responsible for a computer-projected warming of the planet during the next century. However, in establishing CAFE standards, Congress specifically stated the conditions under which they could be raised. Global warming was not among them, a point DOT officials were forced to concede during a Capitol Hill hearing in 1994.

In introducing the “Corporate Average Fuel Economy Standards Act of 1997” (S. 286), Senator Spencer Abraham (R-Michigan) pointed out that a report issued by the (now defunct) Congressional Office of Technology Assessment (OTA) found that cars and light trucks subject to CAFE standards account for only 1.0 and 1.5 percent of global man-made greenhouse gases, respectively.

“Increasing CAFE standards to 40 miles per gallon, as some have discussed,” Abraham told his Senate colleagues on February 6, “would result in minuscule reductions in emissions–less than one half of one percent.”

The effect of cars and light trucks on total greenhouse gas emissions is, in fact, even less than Senator Abraham indicated. Ninety-eight percent of total global greenhouse gas emissions are natural (mostly water vapor); only 2 percent are from man-made sources. The cars and light trucks targeted by DOT for their alleged effect on greenhouse gas emissions constitute just .003 percent of the world’s greenhouse gas emissions.

Senator Abraham also noted that CAFE standards have put U.S. automakers at a competitive disadvantage, a sensitive issue in his native state of Michigan, home of the Big Three. CAFE standards, he pointed out, apply to the average fuel consumption rate for a company’s entire fleet of cars–“that is, the fuel economy for all cars sold in one model year is averaged together to determine the fleet average.”

Due to the high price of gasoline in Japan, Abraham explained, Japanese automakers have traditionally engineered smaller cars. Consequently, their automobile fleets come in below the CAFE standards, allowing them to manufacture some larger, less fuel-efficient cars and still fall well within CAFE limits for their fleet. Abraham cited a study by the National Academy of Sciences (NAS), which found that, “the CAFE system operated to the benefit of Japanese manufacturers, and at the expense of domestic manufacturers.”

Link Between Size and Safety

In proposing to freeze CAFE standards at their current levels, Senator Abraham made the case that such a step would also save lives. Higher CAFE standards will force automakers to downsize cars and trucks, “and small vehicles are more dangerous,” he said. Automobile experts estimate that 50 percent of the fuel economy gains made since the mid-1970s are attributable to reductions in vehicle size and weight. This argument is supported by a 1991 National Highway Safety Administration report that concluded that downsizing was responsible for an additional 2,000 deaths and 20,000 serious injuries on America’s highways each year.

The NAS came to a similar conclusion in a recent study, which noted that “safety and fuel economy are linked because one of the most direct methods of increasing gas mileage is reducing size and weight.” Indeed, in light of the many shortcomings of CAFE, the NAS concluded, “the CAFE approach to achieving automotive fuel economy has defects that are sufficiently grievous to warrant careful reconsideration.”

This is exactly what the Abraham bill would do. It would permit Congress to consider and debate any increases in CAFE standards, rather than allow the administration to change the standards at any time and for any reason without Congressional approval, as is currently the case.

Specifically, S. 286 would freeze CAFE standards at 27.5 miles per gallon for passenger cars and 20.7 miles per gallon for light trucks. In response to the DOT’s 1994 proposal to raise the CAFE standards for light trucks, Congress froze CAFE standards for one year in 1995 and again in 1996; the Abraham bill would make that freeze permanent unless changed by Congress.

In addition to Senator Abraham, other senators cosponsoring the CAFE legislation are Carl Levin (D-Michigan), John Ashcroft (R-Missouri), Mike DeWine (R-Ohio), Jon Kyl (R-Arizona), Kitt Bond (R-Missouri), Bill Frist (R-Tennessee), Don Nickles (R-Oklahoma), Barbara Mikulski (D-Maryland), Richard Shelby (R-Alabama), Dan Coats (R-Indiana), Rick Santorum (R-Pennsylvania), and James Inhofe (R-Oklahoma).