[Congressional Record Volume 152, Number 62 (Thursday, May 18, 2006)]
[Senate]
[Pages S4798-S4800]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. LOTT (for himself and Mr. Pryor):
  S. 2830. A bill to amend the automobile fuel economy provisions of 
title 49, United States Code, to reform the setting and calculation of 
fuel economy standards for passenger automobiles, and for other 
purposes; to the Committee on Commerce, Science, and Transportation.
  Mr. LOTT. Mr. President, I rise today to introduce The Corporate 
Average Fuel Economy, CAFE, Program Reform Act of 2006. I am pleased to 
be joined in this effort by Senator Pryor, who serves on the Commerce 
Committee with me.
  Since being introduced in the 1970s, CAFE standards have been 
controversial. The effectiveness of these standards is often debated as 
is their effect on safety, consumer choice, and the automobile 
industry.
  CAFE became so controversial that it essentially was frozen for many 
years.
  The stand-off over CAFE finally eased a little bit when a 
Congressionally commissioned National Academy of Sciences review of the 
CAFE program was released in 2002. Although that study found that CAFE 
had in fact reduced energy consumption, the Academy was critical of how 
the program was structured and found that there was a negative impact 
on safety.
  Just this spring, the Department of Transportation issued new 
reformed CAFE rules for pickup trucks, vans, and SUVs. This rule is a 
radical departure from prior CAFE rules in that it applies different 
standards to different sized vehicles rather than a uniform standard 
across the whole fleet. The Department's approach addresses many of the 
criticisms in the academy's study.
  The recent rule did not, however, include new standards for cars. 
Those standards have been the same since 1984 and there is considerable 
legal ambiguity about the secretary's ability to increase the existing 
standards. It is clear, however, that the law does not allow the 
secretary to ``reform'' CAFE standards for cars, since that part of the 
statute is written differently than for light trucks.
  As chairman of the Subcommittee on Surface Transportation and 
Merchant Marine, I held a hearing on reforming CAFE standards last 
week. We heard from Secretary Mineta, as well as the automobile 
industry, safety advocates, and fuel economy experts. After listening 
to what our witnesses had to say, I am convinced that ``reform'' is a 
necessary approach.
  After that hearing, Secretary Mineta transmitted legislation to 
Congress asking for the authority to reform CAFE standards.
  The bill we are introducing today is very straightforward. The main 
feature of the legislation is that it gives the Secretary of 
Transportation the authority to reform the CAFE program in a manner 
similar to the rule that he issued for light trucks. The bill puts the 
responsibility of setting CAFE standards where it belongs--and that is 
with the scientists and technical experts at the Department of 
Transportation.
  The reformed CAFE program authorized by this legislation will address 
many of the past criticisms. For example, the legislation specifies 
that the Secretary must take motor vehicle safety into consideration 
when developing new CAFE standards. The legislation also allows the 
trading of CAFE credits between a manufacturer's passenger car and 
light truck fleets. This gives manufacturers the flexibility to 
increase CAFE where it is most cost effective to do so.
  Let me briefly address one issue that is potentially controversial. 
That is the issue of what is being called ``backsliding.'' The concern 
is that under a reformed CAFE program, manufacturers could simply stop 
manufacturing some of their smaller cars since these cars are no longer 
needed to ``average out'' the larger, less fuel efficient models. The 
manufacturer's overall fuel economy average could then end up

[[Page S4799]]

being below where it is presently. Although this is very unlikely to 
happen and that isn't the intent of a ``reformed'' CAFE system, I 
understand the concern. Senator Pryor and I have included a provision 
in our legislation to address that problem. I know that there are many 
opinions on how to deal with this backsliding issue, and some people 
may not feel that our approach is strong enough. On the other hand, if 
the provision is too strict then the benefits of reform are potentially 
wiped out.
  In the past, many in Congress have played politics with CAFE--
offering bills that try to set unrealistically high or arbitrary CAFE 
standards. On the other side are those that have simply opposed doing 
anything. This has resulted in a stalemate and lots of finger pointing. 
I hope this doesn't happen again, because we really do need to get 
tougher standards in place as soon as we can.
  Senator Pryor and I are committed to improving the fuel economy of 
our vehicles without reducing safety and reliability or losing jobs. I 
urge my colleagues to support this legislation.
  I ask unanimous consent that the text of the bill be printed in the 
Record.
  There being no objection, the text of the bill was ordered to be 
printed in the Record, as follows:

                                S. 2830

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Corporate Average Fuel 
     Economy Reform Act of 2006''.

     SEC. 2. CAFE STANDARDS FOR PASSENGER AUTOMOBILES.

       (a) Average Fuel Economy Standards for Automobiles.--
     Section 32902 of title 49, United States Code, is amended--
       (1) by striking subsections (b) and (c) and inserting the 
     following:
       ``(b) Passenger Automobiles.--
       ``(1) In general.--At least 18 months before the beginning 
     of each model year, the Secretary of Transportation shall 
     prescribe by regulation average fuel economy standards for 
     passenger automobiles manufactured by a manufacturer in that 
     model year. Each standard shall be the maximum feasible 
     average fuel economy level that the Secretary decides the 
     manufacturers can achieve in that model year. The Secretary 
     may prescribe separate standards for different classes of 
     passenger automobiles.
       ``(2) Minimum standard.--In prescribing a standard under 
     paragraph (1), the Secretary shall ensure that no 
     manufacturer's standard for a particular model year is less 
     than the greater of--
       ``(A) the standard in effect on the date of enactment of 
     the Corporate Average Fuel Economy Reform Act of 2006; or
       ``(B) a standard established in accordance with the 
     requirement of section 5(c)(2) of that Act.
       ``(c) Flexibility of Authority.--
       ``(1) In general.--The authority of the Secretary to 
     prescribe by regulation average fuel economy standards for 
     automobiles under this section includes the authority to 
     prescribe standards based on one or more vehicle attributes 
     that relate to fuel economy, and to express the standards in 
     the form of a mathematical function. The Secretary may issue 
     a regulation prescribing standards for one or more model 
     years.
       ``(2) Required lead-time.--When the Secretary prescribes an 
     amendment to a standard under this section that makes an 
     average fuel economy standard more stringent, the Secretary 
     shall prescribe the amendment at least 18 months before the 
     beginning of the model year to which the amendment applies.
       ``(3) No across-the-board increases.--When the Secretary 
     prescribes a standard, or prescribes an amendment under this 
     section that changes a standard, the standard may not be 
     expressed as a uniform percentage increase from the fuel-
     economy performance of automobile classes or categories 
     already achieved in a model year by a manufacturer.'';
       (2) by inserting ``motor vehicle safety, emissions,'' in 
     subsection (f) after ``economy,'';
       (3) by striking ``energy.'' in subsection (f) and inserting 
     ``energy and reduce its dependence on oil for 
     transportation.'';
       (4) by striking subsection (j) and inserting the following:
       ``(j) Comments from DOE and EPA.--
       ``(1) Notice of proposed rulemaking.--Before issuing a 
     notice proposing to prescribe or amend an average fuel 
     economy standard under subsection (a), (b), or (g), the 
     Secretary of Transportation shall give the Secretary of 
     Energy and the Administrator of the Environmental Protection 
     Agency at least 10 days to comment on the proposed standard 
     or amendment. If the Secretary of Energy or the Administrator 
     concludes that the proposed standard or amendment would 
     adversely affect the conservation goals of the Department of 
     Energy or the environmental protection goals of the 
     Environmental Protection Agency, respectively, the Secretary 
     or the Administrator may provide written comments to the 
     Secretary of Transportation about the impact of the proposed 
     standard or amendment on those goals. To the extent that the 
     Secretary of Transportation does not revise a proposed 
     standard or amendment to take into account the comments, if 
     any, the Secretary shall include the comments in the notice.
       ``(2) Notice of final rule.--Before taking final action on 
     a standard or an exemption from a standard under this 
     section, the Secretary of Transportation shall notify the 
     Secretary of Energy and the Administrator of the 
     Environmental Protection Agency and provide them a reasonable 
     time to comment on the standard or exemption.''; and
       (5) by adding at the end thereof the following:
       ``(k) Costs-Benefits.--The Secretary of Transportation may 
     not prescribe an average fuel economy standard under this 
     section that imposes marginal costs that exceed marginal 
     benefits, as determined at the time any change in the 
     standard is promulgated.''.
       (b) Exemption Criteria.--The first sentence of section 
     32904(b)(6)(B) of title 49, United States Code, is amended--
       (1) by striking ``exemption would result in reduced'' and 
     inserting ``manufacturer requesting the exemption will 
     transfer'';
       (2) by striking ``in the United States'' and inserting 
     ``from the United States''; and
       (3) by inserting ``because of the grant of the exemption'' 
     after ``manufacturing''.
       (c) Conforming Amendments.--
       (1) Section 32902 of title 49, United States Code, is 
     amended--
       (A) by striking ``or (c)'' in subsection (d)(1);
       (B) by striking ``(c),'' in subsection (e)(2);
       (C) by striking ``subsection (a) or (d)'' each place it 
     appears in subsection (g)(1) and inserting ``subsection (a), 
     (b), or (d)'';
       (D) by striking ``(1) The'' in subsection (g)(1) and 
     inserting ``The'';
       (E) by striking subsection (g)(2); and
       (F) by striking ``(c),'' in subsection (h) and inserting 
     ``(b),''.
       (2) Section 32903 of such title is amended by striking 
     ``section 32902(b)-(d)'' each place it appears and inserting 
     ``subsection (b) or (d) of section 32902''.
       (3) Section 32904(a)(1)(B) of such title is amended by 
     striking ``section 32902(b)-(d)'' and inserting ``subsection 
     (b) or (d) of section 32902''.
       (4) The first sentence of section 32909(b) of such title is 
     amended to read ``The petition must be filed not later than 
     59 days after the regulation is prescribed.''.
       (5) Section 32917(b)(1)(B) of such title is amended by 
     striking ``or (c)''.

     SEC. 3. USE OF EARNED CREDITS.

       Section 32903 of title 49, United States Code, is amended--
       (1) by striking ``3 consecutive model years'' in subsection 
     (a)(1) and subsection (a)(2) and inserting ``5 consecutive 
     model years'';
       (2) by striking ``3 model years'' in subsection (b)(2) and 
     inserting ``5 model years'';
       (3) by redesignating subsection (f) as subsection (g); and
       (4) by inserting after subsection (e) the following:
       ``(f) Credit Transfers.--The Secretary of Transportation 
     may permit by regulation, on such terms and conditions as the 
     Secretary may specify, a manufacturer of automobiles that 
     earns credits to transfer such credits attributable to one of 
     the following production segments in a model year to apply 
     those credits in that model year to the other production 
     segment:
       ``(1) Passenger-automobile production.
       ``(2) Non-passenger-automobile production.

     In promulgating such a regulation, the Secretary shall take 
     into consideration the potential effect of such transfers on 
     creating incentives for manufacturers to produce more 
     efficient vehicles and domestic automotive employment.''.

     SEC. 4. USE OF CIVIL PENALTIES FOR RESEARCH AND DEVELOPMENT.

       Section 32912 of title 49, United States Code, is amended 
     by adding at the end thereof the following:
       ``(e) Research and Development and Use of Civil 
     Penalties.--
       ``(1) All civil penalties assessed by the Secretary or by a 
     Court shall be credited to an account at the Department of 
     Transportation and shall be available to the Secretary to 
     carry out the research program described in paragraph (2).
       ``(2) The Secretary shall carry out a program of research 
     and development into fuel saving automotive technologies and 
     to support rulemaking related to the corporate average fuel 
     economy program.''.

     SEC. 5. EFFECTIVE DATE.

       (a) In General.--Except as provided in subsection (b), this 
     Act, and the amendments made by this Act, take effect on the 
     date of enactment of this Act.
       (b) Transition for Passenger Automobile Standard.--
     Notwithstanding subsection (a), and except as provided in 
     subsection (c)(2), until the effective date of a standard for 
     passenger automobiles that is issued under the authority of 
     section 32902(b) of title 49, United States Code, as amended 
     by this Act, the standard or standards in place for passenger 
     automobiles under the authority of section 32902 of that 
     title, as that section was in effect on the day before the 
     date of enactment of this Act, shall remain in effect.
       (c) Rulemaking.--
       (1) Initiation of rulemaking under amended law.--Within 60 
     days after the date of enactment of this Act, the Secretary 
     of Transportation shall initiate a rulemaking for passenger 
     automobiles under section

[[Page S4800]]

     32902(b) of title 49, United States Code, as amended by this 
     Act.
       (2) Amendment of existing standard.--Until the Secretary 
     issues a final rule pursuant to the rulemaking initiated in 
     accordance with paragraph (1), the Secretary shall amend the 
     average fuel economy standard prescribed pursuant to section 
     32092(b) of title 49, United States Code, with respect to 
     passenger automobiles in model years to which the standard 
     adopted by such final rule does not apply.
  Mr. PRYOR. Mr. President, I rise today with my good friend and 
colleague from Mississippi, Senator Lott, to introduce legislation to 
reform and raise the corporate average fuel economy standard for the 
first time since its inception over 30 years ago.
  In 1975 this body passed, as a part of the Energy Policy and 
Conservation Act, the very first fuel economy standards for our 
passenger car fleet, setting a standard that all manufacturers must 
achieve 27.5 miles per gallon. This was done in response to the first 
oil embargo and the energy crisis of the early 1970s. Americans 
realized for the first time that we as a nation must set and achieve 
attainable goals for energy conservation, not only for our economic 
security but also for our national security.
  At that time, the fuel economy of passenger cars averaged around 14 
miles per gallon. Ten years after CAFE was enacted, the fuel economy of 
passenger cars had almost doubled, saving an estimated 2.8 million 
barrels of oil a day. There can be no doubts as to the benefits of the 
original CAFE standard. Still 20 years after reaching this peak around 
1985, the fuel economy of the Nation's passenger car fleet has 
stagnated. Some have even argued the fleet of vehicles entering the 
marketplace today gets less fuel economy than those models in 1985. 
While fuel efficient technology has improved over the years, the fuel 
economy of the Nation's passenger fleet has not. Also today, our 
dependence on oil is greater than ever before. This dependence has 
complicated decisions we make as a country, such as foreign policy 
decisions, and as individuals, such as whether or not to fill up your 
gas tank or buy groceries.
  I believe we must do better for families in Arkansas and around the 
Nation. We must protect our national security by reducing our 
dependence on foreign oil and uncomplicating our foreign policy 
decision-making in oil-rich regions. We must protect the environment by 
reducing greenhouse gas emissions. We must reduce the cost of 
transportation for consumers. We must begin implementing more stringent 
CAFE standards now before these problems worsen. Gasoline is over 70 
cents higher than this time last year, and the number of miles driven 
by every American over the age of 16 has risen over 60 percent since 
1970--and is continuing to climb at a rapid pace.
  This is why I have joined my colleague and worked in a bipartisan 
manner to introduce comprehensive CAFE reform. For over 30 years the 
original CAFE standard has remained in place while a rapidly advancing 
marketplace and rapidly advancing technology have left it behind. Each 
time fuel economy standards have been debated in this body, they have 
been mired in partisan politics resulting in nothing but stalemate.
  Senator Lott and I are choosing progress over politics with our 
common sense legislation, the Corporate Average Fuel Economy Reform Act 
of 2006. The bill will help accomplish our national security and energy 
conservation goals while preserving motor vehicle safety, American 
manufacturing jobs, and consumer choice for vehicles.
  Specifically, it will clarify the authority of the Secretary of 
Transportation to raise and reform CAFE standards. It requires the 
Secretary to begin the reform process within 60 days in addition to 
requiring the Secretary to complete an expedited rulemaking to 
immediately amend the current CAFE standard before a reformed standard 
takes effect.
  For the first time, it will require the Secretary to consider 
greenhouse gas emissions when promulgating a CAFE standard as well as 
require the Secretary to obtain comments from the Administrator of the 
Environmental Protection Agency on the impact of any new rule on the 
environment.
  Our legislation also gives automobile manufacturers more flexibility 
in the way they can apply CAFE credits in order to help them preserve 
American jobs. It preserves the 18-month lead time required before the 
Secretary can issue more stringent CAFE standards. It also allows the 
Secretary to use the fines collected for violations of the CAFE 
standard for research and development of fuel saving technologies and 
to conduct CAFE rulemakings. Finally, our bill provides a backstop fuel 
economy average which no manufacturer can go below, regardless of their 
fleet mix.
  There is no silver bullet in accomplishing our national security and 
energy goals, and we must seek short-term alternatives in addition to 
long-term solutions. CAFE reform is one part of a long-term solution to 
reduce our dependence on oil, but it is one that can have lasting 
impact. Still, I believe for the long-term security of our country, 
this is as good a place as any to start. We must start now.
  I thank my colleague from the Commerce Committee, Senator Lott, for 
his hard work on this bipartisan legislation. I look forward to working 
with him and the rest of my colleagues to ensure that this reform 
becomes law.
                                 ______