For Immediate Release
Office of the Press Secretary
April 28, 2006

Fact Sheet: CAFE Reform for Passenger Cars

"Congress is debating some other ideas.  And one idea is to give me a capacity to raise CAFE standards on automobiles.  I encourage them to give me that authority.  It's authority that I use for light trucks.  And I intend to use it wisely if Congress would give me that authority."

–President George W. Bush
April 27, 2006

What Is Corporate Average Fuel Economy (CAFE)?

"Corporate Average Fuel Economy Is The Average Fuel Economy, Expressed In Miles Per Gallon, Of A Manufacturer's Fleet Of Passenger Cars Or Light Trucks Made In America.  The 'Energy Policy Conservation Act,' enacted into law by Congress in 1975 and creating CAFE, was passed in response to the 1973-74 Arab oil embargo."  ("Arab Oil Crisis Created CAFE," The [Memphis, TN] Commercial Appeal, 3/30/06)

More Information On CAFE Is Available At: http://www.nhtsa.dot.gov/cars/rules/cafe/overview.htm

President Bush's CAFE Reform Proposal For Passenger Cars

1.  The U.S. Department Of Transportation (DOT) Should Have The Authority To Reform The CAFE System.  Sound science and economics should determine fuel economy standards through an open regulatory process.  Under the current system, passenger car fuel standards are set in law at 27.5 miles per gallon (MPG).  Arbitrary statutory increases do not take careful account of economic impact, job loss, or technological advance.  The National Academy of Science believes that substantial increases under the current system could lead to additional highway fatalities.  Reform of the CAFE System by DOT can improve fuel efficiency while taking into account safety standards and economic efficiency.

2.  A Size-Based Standard Should Be Instituted.  Automakers now face a uniform standard for their entire car fleet, regardless of the composition of that fleet.  A standard based on vehicle dimensions will improve safety by eliminating the incentive for manufacturers to down-size vehicles and by increasing incentives for technological improvements that will lower MPG and will make passenger cars safer.  It would also level the playing field for U.S. manufacturers, who are competing with foreign manufacturers that sell many more mini and subcompact cars than U.S. manufacturers. 

3.  CAFE Credits Should Be Tradable.  Manufacturers should be able to trade fuel economy credits to ensure fuel savings are achieved at the lowest possible cost to consumers and automakers.  If a manufacturer surpasses its CAFE standard, that company should receive credits they can sell to other manufacturers that find it more expensive to meet the standards.  A similar market-based system works effectively for power plants and many other regulated industries.

The Current CAFE Program For Passenger Cars Is Unsafe And Unfair

The National Academy Of Science Has Said The Current CAFE System Has Led To Vehicle Downsizing, Potentially Reducing Safety.  We should not trade safety for fuel efficiency.  

Simply Raising Standards Under The Current CAFE Program For Cars Disproportionately Hurts U.S. Manufacturers.  Just raising the current CAFE number for cars would force U.S. manufacturers to invest significant amounts in new technologies, while foreign manufacturers would not be required to do anything.

DOT Used Innovative Reforms To Address These Problems In Its Recent Light Truck Rule, But Does Not Have The Legal Authority To Apply Those Reforms To Passenger Cars.  The President's light truck rule will save lives, require the largest SUVs to meet fuel economy standards for the first time ever, and save 11 billion gallons of gas.   

The President Has Asked Congress For The Authority To Reform Car CAFE Standards Consistent With The Approach Taken With The Light Truck Rule Issued March 29.

• The Light Truck Rule Includes New Fuel Economy Standards Covering 2008 Through 2011. "The new rules would save 10.7 billion gallons of fuel over the lifetime of the vehicles sold and go further than an administration proposal issued last summer. Under the CAFE system, automakers now must meet an average of 21.6 mpg for their 2006 model year light trucks. That average will rise to 22.2 mpg in 2007. Under the new rules, the fleet-wide average would reach 24 mpg by 2011, when the largest SUVs will be included in the calculation."  ("Arab Oil Crisis Created CAFE," The [Memphis, TN] Commercial Appeal, 3/30/06)

• This Proposal Does Not Specify A Fuel Savings Target Or A New Miles-Per-Gallon Standard.  Those will be left to a subsequent DOT rulemaking that takes into account stakeholder comments as well as considerations such as technological feasibility and economic practicality and the costs and benefits of new mileage requirements. 

• The President Will Oppose Any Effort To Make Arbitrary Changes To The CAFE Standard.  The President will work with Congress to ensure a measured approach to new CAFE standards.

IN CASE YOU MISSED IT: Letter On CAFE Reform From Transportation Secretary Norman Mineta To Congressional Leaders

Sec. Mineta Asks Congress To Authorize The Transportation Department To Reform Fuel Economy Standards For Passenger Automobiles.  SEC. MINETA: "Our National Highway Traffic Safety Administration (NHTSA) has the technical expertise to regulate fuel economy in a manner that is cost effective, based on sound science and safeguards vehicle occupants. Substantial increases in CAFE standards under the current single standard approach would increase fatalities on America’s highways, raise healthcare costs and reduce employment. As a result, the Administration would oppose any increase in passenger car CAFE standards without corresponding reform."  (Sec. Norman Mineta, Letter To Sen. Bill Frist (R-TN), Sen. Harry Reid (D-NV), Rep. Dennis Hastert (R-IL), and Rep. Nancy Pelosi (D-CA), 4/27/06)

• Sec. Mineta: CAFE Standards Should "Be Set Through An Administrative Process Based On Sound Science And Data."  SEC. MINETA: "The administrative process provides safety and other public interest groups, the auto industry and the general public an opportunity to develop and provide NHTSA with policy suggestions and detailed technical, economic, and other relevant data necessary for reforming the passenger car CAFE system and setting new CAFE standards."  (Sec. Norman Mineta, Letter To Sen. Bill Frist (R-TN), Sen. Harry Reid (D-NV), Rep. Dennis Hastert (R-IL), and Rep. Nancy Pelosi (D-CA), 4/27/06)

WHAT THEY'RE SAYING: Editorials On Light-Truck CAFE Standards

The Santa Fe New Mexican: "It's An Important Step."  "But it's an important step – and not just on behalf of consumers' wallets: According to a group known as Environmental Defense, these higher SUV standards could, by 2025, save us as much oil every year as we're importing from Saudi Arabia. … So our senators and representatives should approve of Secretary Mineta's step in the right direction. Let's hear it for more such measures."  (Editorial, "SUVs, At Last, Given Mileage Goals," The [Santa Fe, NM] New Mexican, 3/31/06)

The [Raleigh, NC] News & Observer: New Light Truck CAFE Standards Are "Welcome."  "In any case, U.S. Transportation Secretary Norman Mineta recently has rolled out new, tougher mileage requirements, and they are welcome. ... Mineta's rules are a good start, and it's likely that continued efficiencies can be teased out of big vehicles in coming years. Technology may be able to do the same for smaller-sized vehicles, and federal officials shouldn't hesitate to require more from the auto industry, if it means cleaner air over American cities and less dependence on foreign suppliers."  (Editorial, "Diet For Gas Guzzlers," The News & Observer [Raleigh, NC], 4/11/06)

Newsday: "It's Time Automakers Devoted A Larger Slice Of Better Technology To Fuel Economy."  "In his State of the Union speech this year, President George W. Bush acknowledged what we all know: America is addicted to oil. And he set a goal of reducing Mideast oil imports 75 percent by 2025. One of his agencies could do a lot toward meeting that goal, simply by asking for slightly better fuel efficiency from light trucks - and it should. … The industry has been producing a fairly constant rate of technological improvement for years, but channeling most of it into horsepower, size and luxury. It's time automakers devoted a larger slice of better technology to fuel economy. If we are to kick the foreign oil habit, these are steps we must take, starting right now."  (Editorial, "CAFE Express," Newsday, 3/24/06)

Automotive News: Studying Of CAFE Standards Is "Welcome News."  "So it is welcome news that the Bush administration is at least studying again whether to make big passenger vans and SUVs subject to CAFE standards as soon as 2011. … Automakers should avoid the kicking and screaming they have resorted to in the past to oppose CAFE increases. The public won't buy it, and making big trucks meet fuel economy standards is in the public interest."  (Editorial, "It's Time CAFE Applied To Big SUVs And Pickups," Automotive News, 3/27/06)

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