[Senate Report 110-278]
[From the U.S. Government Publishing Office]
110th Congress Report
SENATE
2d Session 110-278
_______________________________________________________________________
Calendar No. 630
TEN-IN-TEN FUEL ECONOMY ACT
__________
R E P O R T
OF THE
COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION
on
S. 357
April 7, 2008.--Ordered to be printed
SENATE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION
one hundred tenth congress
second session
DANIEL K. INOUYE, Hawaii, Chairman
TED STEVENS, Alaska, Vice-Chairman
JOHN D. ROCKEFELLER IV, West JOHN McCAIN, Arizona
Virginia KAY BAILEY HUTCHISON, Texas
JOHN F. KERRY, Massachusetts OLYMPIA J. SNOWE, Maine
BYRON L. DORGAN, North Dakota GORDON H. SMITH, Oregon
BARBARA BOXER, California JOHN ENSIGN, Nevada
BILL NELSON, Florida JOHN E. SUNUNU, New Hampshire
MARIA CANTWELL, Washington JIM DeMINT, South Carolina
FRANK R. LAUTENBERG, New Jersey DAVID VITTER, Louisiana
MARK PRYOR, Arkansas JOHN THUNE, South Dakota
THOMAS CARPER, Delaware ROGER F. WICKER, Mississippi
CLAIRE McCASKILL, Missouri
AMY KLOBUCHAR, Minnesota
Margaret Cummisky, Staff Director and Chief Counsel
Lila Helms, Deputy Staff Director and Policy Director
Jean Toal Eisen, Senior Advisor and Deputy Policy Director
Christine Kurth, Republican Staff Director and General Counsel
Paul J. Nagle, Republican Chief Counsel
Mimi Braniff, Republican Deputy Chief Counsel
Calendar No. 630
110th Congress Report
SENATE
2d Session 110-278
======================================================================
TEN-IN-TEN FUEL ECONOMY ACT
_______
April 7, 2008.--Ordered to be printed
_______
Mr. Inouye, from the Committee on Commerce, Science, and
Transportation, submitted the following
REPORT
[To accompany S. 357]
The Committee on Commerce, Science, and Transportation, to
which was referred the bill (S. 357) to improve passenger
automobile fuel economy and safety, reduce greenhouse gas
emissions, reduce dependence on foreign oil, and for other
purposes, having considered the same, reports favorably thereon
with an amendment (in the nature of a substitute) and
recommends that the bill (as amended) do pass.
Purpose of the Bill
S. 357, as amended, would increase fuel economy for passenger
cars and light, medium, and heavy duty trucks. It also would
provide civil and criminal penalties for gasoline price gouging
during an energy emergency period declared by the President.
Title I of S. 357 would reform and increase fuel economy
standards for automobiles (passenger cars and light trucks)
under 10,000 pounds gross vehicle weight ratio (gvwr). The bill
would change the current Corporate Average Fuel Economy (CAFE)
program to allow the fuel economy standards of all automobile
classes (passenger cars and light trucks) covered by S. 357 to
be combined into one overall national average. The bill also
would create fuel economy standards for medium duty trucks
(10,000 pounds through 26,000 pounds gvwr) and heavy duty
trucks (over 26,000 pounds gvwr) for the first time. Starting
in model year (MY) 2011, automobiles must ratably achieve an
overall national fuel economy standard of 35 miles per gallon
(mpg) by MY 2020. After MY 2020, automobile fuel economy must
increase by 4 percent over the previous model year until 2030.
Medium duty and heavy duty (MHD) trucks, after the promulgation
of the first fuel economy standards for these vehicles, must
also achieve a 4 percent per annum improvement in fuel economy
until 2030. The Secretary of Transportation (Secretary) would
have the discretion to lower the fuel economy standards in any
given year if certain conditions are met.
Title II of S. 357 would make it illegal to sell oil,
gasoline, or petroleum distillates at ``unconscionably
excessive'' prices when the President declares an energy
emergency. The bill would prohibit anyone from reporting false
information to the government about the wholesale prices of
these products, and the legislation would make the manipulation
of petroleum markets in violation of Federal Trade Commission
(FTC) rules illegal.
Background and Needs
HISTORY OF CAFE
CAFE refers to the Federal policy that requires automobile
manufacturers to meet an average fleet-wide fuel economy
standard on an annual basis. The purpose of the law is to
reduce fuel consumption, which in turn benefits the United
States by: (1) protecting the Nation's national security by
reducing its dependence on foreign oil; (2) reducing gasoline
costs for consumers; and (3) protecting the environment by
reducing toxic air emissions and carbon dioxide emissions,
which contribute to problems such as global warming.
CAFE standards were first enacted in 1975 as part of the
Energy Policy and Conservation Act (P.L. 94-163). One of the
first CAFE bills to be introduced was S. 633 in the 94th
Congress, which was referred to the Senate Committee on
Commerce, Science, and Transportation. The provisions of that
bill were incorporated into a larger conservation bill (S. 622)
considered by the Interior Committee, which became the measure
that was enacted into law. The CAFE measure arose out of
concern for the Nation's energy security following the oil
crisis of the early 1970s, which was precipitated by the Arab
oil embargo of 1973-1974. The crisis exposed the economic
vulnerability of the United States and its heavy dependence on
foreign oil. As a result, policymakers decided to take action
to reduce this dependence. Given the large degree of petroleum
dedicated to transportation fuel use, particularly in passenger
automobiles, it was determined that priority should be given to
reducing transportation fuel consumption. Congress was advised
that by decreasing the amount of fuel use over vehicular miles
driven, the Nation could achieve substantial savings in oil
use.
STRUCTURE AND REQUIREMENTS OF CAFE
The Department of Transportation (DOT) via the National
Highway Traffic Safety Administration (NHTSA) administers the
CAFE program. The CAFE law required automobile manufacturers,
with respect to passenger cars and light trucks, for the first
time, to meet specific fuel economy standards. Passenger cars
were required to meet specific numerical levels incrementally
as provided for in the statute. However, the standards for
light trucks were left to the discretion of the NHTSA. This
differentiation was due to the fact that light trucks were
rarely used as passenger vehicles at the time. To illustrate,
in 1975, light trucks accounted for approximately 15 percent of
the U.S. automobile market.
Adherence to CAFE standards is determined by averaging
separately the fuel economy of a manufacturer's entire car and
light truck fleets. The passenger car fleet is further
subdivided into a domestic car and a foreign car fleet. A
domestic car is one in which 75 percent of its content value is
from the United States, Canada, or Mexico. If the value of the
domestic components is less than 75 percent, a car is
considered a foreign car. The domestic and foreign car fleets
must independently meet the passenger car CAFE standard. As it
stands today, the CAFE fleet-wide requirement for passenger
cars is 27.5 mpg, and 22.2 mpg for light trucks. Manufacturers
that fail to meet these requirements are subject to civil
penalties of $5.50 per car in their fleet for every 0.1 mpg
below the standard. Makers of expensive car lines, such as BMW
and Porsche, often fail to comply. From 1983 through 1995, more
than $400 million in fines were collected due to CAFE
noncompliance.
CURRENT PASSENGER CAR STANDARDS
The 1975 law was directed at passenger cars. Under the
statute, passenger vehicles were required to meet higher fuel
economy standards incrementally over a seven year period (1978-
1985). When the law was enacted in 1975, the average mpg for
passenger cars was between 13 and 14 mpg. It was recognized,
however, that consumers were demanding smaller and more fuel
efficient cars in response to gas shortages and high prices and
that the technologies existed to achieve fuel economy
improvements over time. With a three year lead time provided
before the first requirements went into effect, automobile
manufacturers were required to ensure their passenger car
fleets complied with the following schedule:
1978--18.0
1979--19.0
1980--20.0
1981--22.0
1982--24.0
1983--26.0
1984--27.0
1985--27.5
Since leveling off in 1985, however, CAFE standards for
passenger cars have not improved. In fact, during the Reagan
and first Bush Administrations, the passenger car standards
were actually decreased by the NHTSA to 26.0 mpg for years
1986-1988, and slightly increased to 26.5 for 1989. The
standard returned to 27.5 in 1990 and has remained there to
present day.
CURRENT LIGHT TRUCK STANDARDS
The CAFE standard for light trucks was 20.7 mpg from 1996
until 2003. In 2003, the NHTSA issued a final rule which raised
the CAFE standard for light trucks. The rule set standards at
21.0 mpg for MY 2005, 21.6 mpg for MY 2006, and 22.2 for MY
2007.
2006 light truck standard reform
A new light truck standard was put into place by the NHTSA
on March 29, 2006. The new standard is based on the
``footprint'' of the light truck. The footprint is the average
track width (the distance between the centerline of the tires)
and wheelbase (the distance between the centers of the axles).
Each footprint value has a different target, and footprint
value is the same for all manufacturers, regardless of
differences in their overall fleet mixes. A target level of
fuel economy is established for each one-tenth of a square foot
increment in a vehicle's footprint. This results in what is
known as the ``continuous curve.'' Each vehicle model will
essentially have its own CAFE standard. As long as all models
in a manufacturer's fleet meet the harmonically averaged CAFE
standard, it will be compliant with the law.
Manufacturers may comply with CAFE standards established
under the reformed structure or with standards established by
the current CAFE rule during the transition period (MYs 2008-
2010). In MY 2011, all manufacturers will be required to comply
with the reformed CAFE standard.
If manufacturers choose to follow the current CAFE regime,
the average light truck fleet standards are as follows:
MY 2008: 22.5 mpg
MY 2009: 23.1 mpg
MY 2010: 23.5 mpg
The NHTSA estimates that average CAFE levels required for
all manufacturers will be 24 mpg in MY 2011. The NHTSA claims
the new fuel economy standards for light trucks will save 10.7
billion gallons of fuel over the next two decades.
Several experts noted that the rule does not include trucks
that weigh between 8,500-10,000 lbs, such as the Hummer H2,
until 2011. The rule has been criticized for potentially low
fuel savings. According to the Union of Concerned Scientists,
the new light truck standard will save less than two weeks of
gasoline each year over the next two decades.
CAFE SUCCESSES
Between 1975 and 1985, the CAFE program achieved the goals
for which it was intended. In 1974, the average car sold in
America achieved 13 mpg. By 1988, fuel economy climbed to a
peak of almost 29 mpg, a 120 percent increase in fuel economy
over 14 years. Light truck standards (including SUVs and
minivans) led to a fuel economy increase of 50 percent, from
13.7 mpg in 1975 to 20.7 mpg in 1987. Improvements in vehicle
design between 1975 and 1985 improved fuel economy by an
average of 62 percent for all vehicles. The National Research
Council of the National Academy of Sciences (NRC) in its 2002
report on CAFE estimated that absent fuel economy improvements
created by the CAFE program, U.S. gasoline use would be 2.8
million barrels per day (or 43 billion gallons per year) higher
than it is today. As a result, fuel use by cars and light
trucks today is roughly one-third lower than it would otherwise
be and overall oil consumption is 5 percent lower. In addition,
carbon dioxide emissions would be more than 100 million metric
tons higher each year than they are now without the CAFE
program. Because of CAFE, carbon dioxide emissions have been
cut by seven percent.
EROSION OF THE CAFE STANDARD AND FUEL ECONOMY PERFORMANCE
The NRC found that the CAFE program contributed to the
increased fuel economy of the fleet and has been particularly
effective in keeping fuel economy above the levels to which it
might have fallen during times of low real gasoline prices,
thus shielding consumers from the volatility of oil prices. But
after doubling fuel economy in the first 15 years of the
program, the fuel economy of passenger cars has stagnated at
27.5 mpg. Light truck fuel economy was frozen from 1995 until
2003 at 20.7 mpg, before a new rule increasing the standards
began in 2003. In 1987, the combined fuel economy average for
passenger cars and light trucks was 26.2 mpg. Currently, the
average is 24.6 mpg. In 1975, light trucks were 15 percent of
the fleet; today they are over 50 percent of the fleet. In
addition to the fleet composition, several experts point to the
diversion of fuel economy technologies to improve comfort and
power as the key to the eroding fuel economy of the fleet.
Advanced technologies that could have been used to continue to
increase fuel economy were used for other attributes instead.
Thus, fuel economy essentially was held steady after 1985, but
efficiency technology was used to increase vehicle weight by 20
percent and make 0-60 acceleration times, on average, 25
percent faster.
CURRENT LEVELS OF OIL DEPENDENCY
The transportation sector consumes 67 percent of all oil in
the United States. Automobiles alone account for approximately
30 percent of U.S. petroleum consumption. Imports of foreign
oil accounted for over 65 percent of U.S. consumption. In 1975,
when Congress passed CAFE out of concern about the use of oil
as a ``political weapon,'' imports accounted for about one-
third of U.S. oil consumption. The growing unrest in regions of
the world upon which we rely for our oil imports increases the
risk of future oil shocks that will have substantial adverse
impacts on the U.S. economy as well as on consumers.
STATUS OF THE CAFE PROGRAM
The CAFE program has faced many political and structural
hurdles since its creation in 1975, but the last 10 years have
been especially detrimental to its ability to encourage fuel
economy in the passenger fleet. The CAFE program was not funded
from fiscal year (FY) 1996 to FY 2001 because of riders
included in appropriations bills. CAFE standards for passenger
cars have stayed the same for more than 20 years. CAFE
standards for light trucks were not addressed from 1996 to
2002, and many Members of Congress have strongly criticized the
increases for light trucks that began in 2003, noting that the
standards were set too low and did not reflect the technologies
available for improving fuel economy.
President George W. Bush requested the authority from
Congress to reform passenger car CAFE in his 2007 State of the
Union Address. He also stated that he would make it a goal to
have CAFE standards increase by four percent annually, but he
would not mandate the NHTSA to create a standard of that
magnitude.
Members are concerned that the President's request to
reform passenger car CAFE without Congressional guidance would
lead to an unsatisfactory passenger car CAFE standard, akin to
the light truck standard. The NHTSA undertook reforms of the
light truck CAFE program, which are now a part of the light
truck standard for MY 2008-2011. The NHTSA stated that the
reformed standard would save 10.7 billion gallons of fuel over
the useful life of the MY 2008-2011 light trucks. Numerous
experts have denounced the rule, noting that the standards
would save less than two weeks of current gasoline consumption
each year over the next two decades.
GASOLINE PRICE GOUGING
Immediately following Hurricane Katrina in 2005, gas prices
in some areas reached over $6 per gallon without any perceived
connections to actual commodity prices at that time. Spurred by
consumer complaints in the affected markets, State officials
began to investigate suspicions of gas pump profiteering. These
State officials used State price gouging laws as the foundation
for these inquiries and investigations. Most of these laws are
enforced after the declaration of an emergency, but some are
enforced at other times. Some States also used their consumer
protection laws to prosecute price gouging as an unfair and
deceptive trade practice. Generally, most price gouging laws
make it illegal to sell goods and services in a designated
emergency area at prices that exceed the normal prices for
comparable goods and services in the same area immediately
before the declaration of an emergency. There are several
standards of proof States have used to evaluate whether gouging
has occurred. States have set the burden at a ``gross
disparity'' between the prices of the good or service before
the emergency and after the emergency that cannot be accounted
for in the wholesale price, transportation cost, or other
externality that a retailer did not control. Some States have
set a percentage increase as the trigger for an investigation.
Alabama, for example, set its trigger at an increase of greater
than 25 percent of the pre-emergency price.
The FTC currently does not have specific authority to
prosecute gasoline price gouging. However, the FTC does have
authority to police the oil and gas industry for anti-
competitive behavior via merger reviews and activities that
violate the Sherman and Clayton Acts. Many observers have
raised concerns that oil and gas industry activities have
artificially increased prices without violating the Sherman and
the Clayton Acts.
The FTC undertook a congressionally-mandated examination of
the post Katrina gasoline markets to find if gasoline price
gouging had occurred. Senate Amendment 1703 to H.R. 2862, the
Science, State, Justice, Commerce, and Related Agencies
Appropriations Act of 2006 required the FTC to conduct an
immediate investigation into nationwide gasoline prices in the
aftermath of Hurricane Katrina. The FTC was required to issue
its investigative report to the Senate Committee on Commerce,
Science, and Transportation, the House Committee on Energy and
Commerce, and the House and Senate Appropriations Committees
within 180 days of enactment. The amendment was accepted by
unanimous consent, and H.R. 2862 was signed into law by
President Bush on November 22, 2005 (P.L. 109-108). The report
was delivered on May 22, 2006.
In its report, the FTC found no evidence that the oil
industry manipulated gasoline prices in the wake of hurricanes
Katrina and Rita and that the 15 instances that fit the
definition of price gouging created by Congress could be
explained by market conditions. But in a concurrence by FTC
Commissioner Jon Liebowitz, he noted that a handful of refiners
studied by the Commission for the report had ``more than
doubled their operating margins in ways not attributable to
increased costs;'' that other refiners' wide margins were
``equally troubling;'' and that ``the behavior of many market
participants, on balance, leaves much to be desired.''
Summary of Provisions
S. 357, the Ten-in-Ten Fuel Economy Act of 2007, would
reform and increase fuel economy standards for automobiles
(passenger cars and light trucks) under 10,000 pounds gvwr. The
bill would change the current CAFE program to allow the fuel
economy standards for all automobile classes covered by S. 357
to be combined into one overall national average. Beginning in
MY 2011, the overall automobile fuel economy average would be
ratably increased in order to achieve a fuel economy standard
of at least 35 mpg by MY 2020. After MY 2020, the fuel economy
average would be increased at four percent more than the
previous model year. This level of increase would continue
until MY 2030. The Secretary would have the discretion to lower
the rate of change for automobile fuel economy standards if the
Secretary finds certain conditions that justify the usage of
that discretion. From MY 2011 to MY 2020, the Secretary could
lower the rate of increase for a fuel economy standard for a
particular year if the maximum feasible fuel economy level is
lower than the ratable level of change to achieve the 35 mpg
standard in MY 2020. From MY 2021 to MY 2030, the Secretary
could lower the rate of increase if it is found that the four
percent increase is not cost effective for that model year.
S. 357 also would create and increase fuel economy
standards for medium duty and heavy duty trucks. After the
initial baseline fuel economy standard is promulgated for
medium duty and heavy duty trucks, the fuel economy for these
trucks shall increase by four percent over the previous model
year until MY 2030. The Secretary may lower the rate of
increase if it is found that the 4 percent increase is not cost
effective for that model year.
The bill would require the Secretary to initiate a
rulemaking in 2010 to issue standards to mitigate the
difference in weight and size between the largest and smallest
vehicles, and to improve bumper height compatibility between
vehicles. The final rule must be issued in 2012.
The Secretary may establish, by regulation, a fuel economy
credit trading program to allow manufacturers whose automobiles
exceed the average fuel economy standards to earn credits to be
sold to manufacturers whose automobiles fail to achieve the
prescribed standards. Automakers may carry forward or back
earned fuel economy credits for five years as opposed to the
three years as currently permitted.
S. 357 would create two labeling programs to aid consumer
choice in purchasing vehicles with better fuel economy and
greenhouse gas emissions. The green label for vehicles are for
those that meet or exceed the applicable fuel economy standard
or have the lowest greenhouse gas emissions over the useful
life of the vehicle. The gold star label would be for
automobiles that achieve a fuel economy of 50 mpg.
S. 357 would make it illegal to sell oil, gasoline, or
petroleum distillates at ``unconscionably excessive'' prices
when the President declares an energy emergency. Additionally,
S. 357 would prohibit anyone from reporting false information
to the government about the wholesale prices of these products
and would make it illegal to manipulate petroleum markets in
violation of FTC rules. Those found to have committed market
manipulation would be subject to civil fines of up to $1
million, and those who are found to have committed price
gouging during an energy emergency would be liable for civil
and criminal penalties up to $5 million and five years
imprisonment.
Legislative History
On January 22, 2007, Senators Dianne Feinstein and Olympia
Snowe introduced S. 357, which was referred to the Committee on
Commerce, Science, and Transportation. Several members of the
Committee cosponsored the measure, including Chairman Inouye
and Senators Kerry, Boxer, Bill Nelson, Cantwell, and
Lautenberg. Vice Chairman Stevens cosponsored S. 357, as
reported.
On March 6, 2007, and May 3, 2007, the Committee held
hearings chaired by Consumer Affairs Subcommittee Chairman
Pryor and Chairman Inouye, respectively, that examined
increasing CAFE standards and evaluated pending CAFE
legislation. Among those that testified before the Committee
were individual automobile manufacturers and their trade
associations, environmental groups, vehicle technology experts,
the United Auto Workers, the NHTSA, and national defense and
energy experts.
On May 8, 2007, the Committee met in open executive session
to consider an amendment in the nature of a substitute to S.
357 offered by Chairman Inouye and Vice Chairman Stevens that
made several substantive changes to the bill as introduced. In
addition to the substitute, the Chairman and the Vice Chairman
offered a package of technical amendments to clarify and
correct portions of the substitute. Senator Boxer offered an
amendment to improve the fuel efficiency of the Federal fleet.
Senators Cantwell, Dorgan, Klobuchar, and Kerry offered an
amendment to increase the number of flexible fuel vehicles that
automobile manufacturers produce. Senator Cantwell offered an
amendment to have the Environmental Protection Agency (EPA)
review the accuracy of fuel economy labels every 5 years.
Senator Cantwell offered an amendment to create a national tire
fuel efficiency program and a tire fuel efficiency rating
system. Senator Carper offered an amendment to create an
Advanced Battery Initiative to support and improve battery
technology. Senator Carper also offered an amendment to create
national biodiesel fuel standards. Senator Dorgan offered a
process to promulgate the initial medium duty and heavy duty
truck fuel economy standards. Senator Dorgan also offered an
amendment to end the fuel economy program under S. 357 at MY
2030 for automobiles and medium and heavy duty trucks. Senator
Lautenberg offered an amendment to mandate that the Secretary
report to Congress when fuel economy standards are lowered and
to outline the steps needed to avoid future decreases. Senators
Pryor and Thune offered an amendment to use collected CAFE
fines for vehicle fuel efficiency research and to increase
alternative fuel infrastructure. All of these amendments to the
Inouye-Stevens substitute amendment were accepted en bloc.
Senator Cantwell offered the language of S. 1263, the Petroleum
Consumer Price Gouging Protection Act, as amendment outside of
the en bloc amendment package. Senator Cantwell's amendment was
accepted by voice vote. The Committee adopted the Inouye-
Stevens substitute amendment to the bill by voice vote and
ordered the bill reported favorably, as amended.
Estimated Costs
In accordance with paragraph 11(a) of rule XXVI of the
Standing Rules of the Senate and section 403 of the
Congressional Budget Act of 1974, the Committee provides the
following cost estimate, prepared by the Congressional Budget
Office:
S. 357--Ten-in-Ten Fuel Economy Act
Summary: S. 357 would increase fuel economy standards for
passenger automobiles and light, medium, and heavy trucks
starting in 2011, and would require the Department of
Transportation (DOT) and the Environmental Protection Agency
(EPA) to promulgate rules and regulations to implement the
increased standards. The bill also would require those agencies
to submit several reports to the Congress concerning fuel
economy. Further, the legislation would authorize
appropriations for the Department of Energy (DOE) to provide
grants for the installation of equipment to deliver alternative
fuels to consumers and would authorize programs to research
technologies to conserve motor fuel and to increase consumer
awareness of fuel economy. Based on information from the
affected agencies and assuming appropriation of the necessary
amounts, CBO estimates that implementing S. 357 would cost $11
million in 2008 and $149 million over the 2008-2012 period.
CBO estimates that enacting S. 357 would lead to reduced
use of motor fuels starting in 2011, thereby reducing revenues
from the federal excise taxes on motor fuels. CBO estimates
that revenues would decline under the bill by $72 million over
the 2011-2012 period and by about $3.1 billion over the 2011-
2017 period. Enacting S. 357 would not have a significant
impact on direct spending.
Pursuant to section 203 of S. Con. Res. 21, the Concurrent
Resolution on the Budget for Fiscal Year 2008, CBO estimates,
that under S. 357, revenues would be reduced by at least $5
billion-and as a result, deficits would be increased by at
least $5 billion-in at least one of the four 10-year periods
beginning in 2018 through 2057.
S. 357 would preempt state and local authority to implement
their own consumer information laws or regulations on the fuel
efficiency impact of vehicle tires; that preemption constitutes
an intergovernmental mandate as defined in the Unfunded
Mandates Reform Act (UMRA). CBO estimates, however, that the
preemption would impose insignificant additional costs on
state, local, or tribal governments that would be well below
the threshold established in UMRA ($66 million in 2007,
adjusted annually for inflation).
S. 357 would impose several private-sector mandates as
defined in UMRA, on vehicle and tire manufacturers, as well as
suppliers of crude oil, gas, or petroleum distillates. The bill
would set new corporate average fuel economy standards for
automobiles and certain trucks and impose new safety standards
and labeling requirements on manufacturers of those vehicles.
The bill also would impose new requirements related to consumer
information on manufacturers and retailers of motor vehicle
tires. In addition, the bill would prohibit certain pricing
practices during a declared energy emergency. The aggregate
costs of the mandates in the bill is uncertain because such
costs would depend on regulations to be developed under the
bill. However, because the cost of the fuel economy standards
could be large, CBO expects that the aggregate cost of mandates
would likely exceed the annual threshold established by UMRA
for private-sector mandates ($131 million in 2007, adjusted
annually for inflation) in at least one of the first five years
the mandates are in effect.
Estimated cost to the Federal Government; The estimated
budgetary impact of S. 357 is summarized in Table 1. The costs
of this legislation fall within budget functions 270 (energy),
300 (natural resources and environment), 400 (transportation),
and 800 (general government).
Basis of estimate: For this estimate, CBO assumes that S.
357 will be enacted by the end of fiscal year 2007 and that the
necessary amounts will be appropriated each year. Estimates of
spending are based on historical spending patterns of similar
and ongoing programs.
S. 357 would increase fuel economy standards for passenger
automobiles and light, medium, and heavy trucks starting in
2011, and would require DOT, DOE, and EPA to promulgate rules,
regulations, and standards and to submit several reports to the
Congress concerning fuel economy standards and implementation
of the fuel-efficiency requirements of the bill. The bill also
would authorize additional programs to increase the
availability and consumer awareness of vehicles that operate on
alternative fuels and of such fuels.
TABLE 1.--CHANGES IN REVENUES AND SPENDING SUBJECT TO APPROPRIATION UNDER S. 357
----------------------------------------------------------------------------------------------------------------
By fiscal year, in millions of dollars--
--------------------------------------------
2008 2009 2010 2011 2012
----------------------------------------------------------------------------------------------------------------
Changes In Revenues\1\
Estimated Revenues................................................. 0 0 0 -17 -55
CHANGES IN SPENDING SUBJECT TO APPROPRIATION
Implement CAFE Standards:
Authorization Level............................................ 0 25 25 25 25
Estimated Outlays.............................................. 0 15 21 24 25
Energy Security Fund:
Estimated Authorization Level.................................. 8 6 7 7 2
Estimated Outlays.............................................. 6 6 7 7 3
Public Awareness Programs:
Estimated Authorization Level.................................. 5 5 5 5 5
Estimated Outlays.............................................. 3 5 5 5 5
Grants for Advanced Battery Research:
Estimated Authorization Level.................................. 1 1 1 1 `
Estimated Outlays.............................................. 1 1 1 1 1
Other Programs:
Authorization Level............................................ 2 1 1 1 1
Estimated Outlays.............................................. 1 2 1 1 1
Total Changes:
Estimated Authorization Level.............................. 16 38 39 39 34
Estimated Outlays.......................................... 11 29 35 39 35
----------------------------------------------------------------------------------------------------------------
NOTE: CAFE = corporate average fuel economy.
\1\Changes in revenues through 2017 are shown in Table 2.
Revenues
The Secretary of Transportation is currently authorized to
set corporate average fuel economy (CAFE) standards for
passenger automobiles and light trucks sold in the United
States. S. 357 would amend those standards in a number of ways
designed to increase fuel economy. The Secretary of
Transportation would set standards for passenger automobiles
and light trucks beginning in 2011 to achieve a combined fuel
economy by 2020 of at least 35 miles per gallon, unless it was
determined that a higher standard was not cost-effective.
Separate treatment of passenger automobiles and light trucks
would end, although a system of different standards for
vehicles with different attributes could be established, such
as is currently being implemented for light trucks. S. 357
would include under the new standards those types of light
trucks currently exempt from CAFE standards. In addition, a
fuel economy standard would apply to medium- and heavy-duty
trucks for the first time and would be separate from that
covering passenger automobiles and light trucks. Among other
provisions, S. 357 would authorize the Secretary of
Transportation to establish a program for trading credits
between firms.
The estimated changes in revenues under S. 357 are shown in
Table 2. Combining the effects of the reduced motor fuel
excises and penalties, CBO expects that total revenues would be
reduced by $72 million over the period from 2011 to 2012 and by
about $3.1 billion from 2011 through 2017, net of income and
payroll tax effects.
TABLE 2.--CHANGES IN REVENUES OVER THE 2008-2017 PERIOD UNDER S. 357
--------------------------------------------------------------------------------------------------------------------------------------------------------
By fiscal year, in millions of dollars--
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2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2008-2012 2008-2017
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CHANGES IN REVENUES
Estimated Revenues....................... 0 0 0 -17 -55 -150 -309 -536 -835 -1,214 -72 -3,116
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Fuel Economy Standards. Based on information provided by
the National Highway Traffic Safety Administration (NHTSA)
within the Department of Transportation, CBO assumes that new,
higher standards would be put in place starting in 2011 without
a determination that they fail a cost-effectiveness test. S.357
specifies that the composite standard for passenger automobiles
and light trucks be adjusted starting in 2011 to the maximum
feasible level to achieve a fuel economy for the U.S. fleet of
at least 35 miles per gallon in 2020. To reach 35 miles per
gallon by 2020, CBO expects that, beginning in 2011, the
standards would be increased gradually from their levels under
current law for 2010, which are 27.5 miles per gallon for
passenger automobiles and about 23.5 miles per gallon for light
trucks, or a composite of more than 25 miles per gallon. As a
result, CBO estimates that the composite fuel economy standard
for passenger automobiles and light trucks would rise by more
than 3 percent per year and, by 2017, would reach about 32
miles per gallon--between 6 and 7 miles per gallon higher than
the composite standard in 2017 expected under current law. (By
2020, the composite fuel economy standard would be almost 10
miles per gallon higher.)
CBO also assumes that new standards for medium- and heavy-
duty trucks would begin in 2013, following a required study and
an implementation period set by the bill. Those standards would
increase by 4 percent per year under S. 357. In addition, CBO
expects that a system of trading of credits would be
established, allowing fines whose fleets are above the standard
to sell credits they earn to firms whose fleets are below the
standard and would otherwise be subject to monetary penalties.
(Under current law, such credits can only be used by a
manufacturer to offset its own potential penalties in other
years.) Considerable uncertainty exists, however, about how
such a system would be structured and how the market would
function.
In estimating the effects of S. 357, CBO assumes that the
baseline against which the policy is measured does not
incorporate any future changes to the program by the Secretary
of Transportation. Potential changes to the system that can be
accomplished without legislative action--such as are currently
being studied as a part of an Executive Order to study ways to
reduce greenhouse gas emissions from motor vehicles--are too
indefinite to incorporate into the baseline.
CBO expects that the new CAFE standards brought about by S.
357 would reduce use of motor fuels, which in turn would reduce
revenues from excise taxes on motor fuels. Under current law,
gasoline is taxed by the federal government at a rate of 18.4
cents per gallon and diesel fuel is taxed at a rate of 24.4
cents per gallon. Blends of gasoline and ethanol effectively
are taxed at lower rates through 2010. CBO estimates that
enacting S. 357 would cause excise tax revenues to decline by
$17 million in 2011, about $46 million in 2012, and by amounts
increasing to about $1.2 billion by 2017, net of income and
payroll tax effects. In 2017, CBO expects savings in motor fuel
use of roughly 8 billion gallons--or between 3.5 percent and 4
percent of total motor fuel use expected under the current-law
baseline.
The estimated revenue losses would rise rapidly between
2011 and 2017 for several reasons. First, the new standards
would be continually increased over a period of time, starting
in 2011 for passenger automobiles and light trucks and later
for medium- and heavy-duty trucks. Second, the vehicle fleet is
replaced over a period of years as individuals gradually retire
old vehicles and purchase new ones. Over time, an increasing
share of the vehicle stock would be produced under the new
standards, and motor fuel savings would accumulate. Third, some
firms would not find the higher standards to be binding
immediately because their fleets would already exceed those
standards under current law. Some firms already produce fleets
with fuel economy several miles per gallon above the current
standards. Because of recent price increases for motor fuels,
other firms that until recently produced vehicles with fuel
economy at or just above the standards are expected under
current law to produce vehicles with higher fuel economy. As
the standards steadily rise under S. 357, an increasing share
of manufacturers would find the standards to be binding.
Finally, firms with fleet fuel economy above the new standard
would initially earn credits that they could sell to firms with
higher costs of complying with the new standard, which would
hold down increases in fuel economy by those who purchase the
credits. However, fewer firms would generate credits over time
as the standard increases.
Credit Trading Program and CAFE Penalties. CBO also expects
that the establishment of a credit trading program would reduce
penalties currently collected for violations of the CAFE
standards. CBO expects that penalties under current law would
be between $10 million and $20 million per year through 2017.
With a credit trading program projected to start around 2011,
CBO expects that enough credits would be generated and sold to
noncompliant firms such that penalties would be reduced
substantially in 2012 and become negligible from 2013 through
2017. As a result, revenues from penalties would decline by $9
million in 2012 and $73 million over the 2012-2017 period, net
of income and payroll tax effects, CBO estimates.
Civil and Criminal Penalties. S. 357 would expand the scope
of the FTC's enforcement authorities by treating price gouging
for petroleum products as a violation of rules regarding unfair
or deceptive acts or practices. The FTC would be authorized to
enforce new standards that would be subject to both criminal
and civil penalties for any violations. Collections of criminal
penalties are recorded in the budget as revenues, deposited in
the Crime Victims Fund, and later spent. CBO estimates that any
additional revenues and direct spending that would result from
enacting the bill would not be significant because of the
relatively small number of cases likely to be involved.
Further, the bill would establish new civil penalties for
tire manufacturers that do not comply with certain regulations
established by DOT. Thus, the federal government might collect
additional fines if the bill is enacted. Collections of civil
fines are recorded as revenues and deposited in the Treasury;
however, CBO expects that any increase in revenues related to
those penalties would not be significant.
Spending subject to appropriation
CBO estimates that implementing S. 357 would cost $149
million over the 2008-2012 period, subject to appropriation of
the necessary amounts.
Implementation of CAFE Standards. S. 357 would expand the
authority of DOT to set CAFE standards starting in 2011. The
bill would authorize the appropriation of $25 million annually,
starting in 2009, to implement fuel economy standards. The
authorization of appropriations includes funds to expand the
CAFE program to medium- and heavy-duty trucks, to issue rules
and regulations regarding the expanded program, to institute a
program that would allow companies to obtain credits for
exceeding CAFE standards, and to trade such credits with other
companies that do not meet the annual standards. The
authorization also would allow DOT to complete studies required
by the bill relating to fuel economy standards.
Based on information from DOT and assuming appropriation of
the specified amounts, CBO estimates that implementing those
provisions would cost $15 million in 2009 and $85 million over
the 2009-2012 period.
Energy Security Fund. Under S. 357, one-half of the
penalties collected each year for automakers' violations of
CAFE standards would be authorized to be appropriated to DOE
for a grant program to support the installation of equipment at
gas stations to deliver alternative motor fuels. Based on
historical spending patterns for similar grant programs
administered by DOE, CBO estimates that this provision would
cost $6 million in 2008 and $29 million over the 2008-2012
period. Those estimates are based on CBO's projections of CAFE
penalties that would result under S. 357. After 2012, CBO
estimates such penalties would not be significant because of
the opportunity that firms would have under the bill to
purchase CAFE credits and avoid paying federal penalties.
Public Awareness Programs. Based on rules promulgated by
DOT, the bill would require manufacturers of automobiles and
tires to provide consumers with information about the fuel
efficiency of their products and, in the case of automobile
manufacturers, to provide information about the use of
alternative fuels in their vehicles. The bill also would
require NHTSA to create a fuel-efficiency rating system for
tires and set uniform testing procedures for tire manufacturers
to rate the fuel efficiency of their products. Further, through
a labeling and consumer education program, the bill would
require DOT and EPA to increase the public's awareness of the
fuel efficiency and the greenhouse gas emissions of individual
vehicles. Based on information from those agencies and assuming
appropriation of the necessary amounts, CBO estimates that
these activities would cost $3 million in 2008 and $23 million
over the 2008-2012 period.
Grants for Advanced Battery Research. The bill would
require DOT to administer a grant program to support research,
development, demonstration, and commercial application of
electric battery technologies and to establish a council of
industry advisors. Under current law, DOE administers a similar
program that costs about $10 million annually. CBO expects that
the grants authorized in the bill would likely augment the
program as administered by DOE. Assuming appropriation of the
necessary amounts, CBO estimates that the grant program would
cost $1 million annually.
Other Provisions. The bill would require DOT to establish
rules mandating that at least 50 percent of vehicles sold in
2012 and 80 percent sold in 2015 be able to operate on both
gasoline and another fuel, such as diesel. The bill also would
require the General Services Administration (GSA) to submit a
report to the Congress about the fuel efficiency of automobiles
purchased by federal agencies and would require the executive
branch to establish and enforce standards for biodiesel fuel
sold in the United States. Title II would require the FTC to
develop and enforce rules that would prohibit suppliers from
selling oil, gas, or other petroleum distillates at excessively
high prices during certain emergencies declared by the
President. Based on information from the agencies involved, CBO
estimates that those provisions would cost $1 million in 2008
and $6 million over the 2008-2012 period.
Mileage Improvement for the Federal Vehicle Fleet. The
General Services Administration purchases around 60,000 new
vehicles annually for most government agencies for the federal
government's use. By increasing CAFE standards starting in
2011, the federal government could realize some cost savings
under the bill from reducing gasoline purchases if the vehicles
it purchases achieve greater gasoline mileage. Vehicles with
improved fuel efficiency are likely to be more expensive to
purchase. Consequently, CBO expects that any net savings or
costs in vehicle acquisition and operating costs would not be
significant over the next five years.
Estimated impact on state, local, and tribal governments:
S. 357 would preempt state and local authority to implement
their own consumer information laws or regulations on the fuel
efficiency of tires; that preemption constitutes an
intergovernmental mandate as defined in UMRA. CBO estimates,
however, that the preemption would impose insignificant
additional costs on state, local, or tribal governments that
would be well below the threshold established in UMRA ($66
million in 2007, adjusted annually for inflation). The bill
could also benefit public institutions of higher education
through a grant program for research on the commercial
application of batteries. States also would be authorized to
take civil action based on a provision of the bill that
prohibits price gouging during an energy emergency. Any costs
public entities might incur as a result of those provisions
would be incurred voluntarily.
Estimated impact on the private sector: S. 357 contains
several private-sector mandates as defined in UMRA on vehicle
and tire manufacturers, as well as suppliers of crude oil, gas,
or petroleum distillates. The bill would set new corporate
average fuel economy standards for automobiles and certain
trucks and impose new safety standards and labeling
requirements on manufacturers of those vehicles; impose new
requirements related to consumer information on manufacturers
and retailers of motor vehicle tires; and prohibit certain
pricing practices during a declared energy emergency. The
aggregate cost of the mandates in the bill is uncertain because
that cost would depend on regulations to be developed under the
bill. However, because the cost of new fuel economy standards
could be large, CBO expects that the aggregate cost would
likely exceed the annual threshold established by UMRA for
private-sector mandates ($131 million in 2007, adjusted
annually for inflation) in at least one of the first five years
the mandates are in effect.
Fuel economy standards
Section 102 would require the Secretary of Transportation
to prescribe average fuel economy standards for automobiles,
medium-duty and heavy-duty trucks beginning with model year
2011. CBO cannot estimate the cost of the mandates in this
section of the bill because the scope and timing of the
requirements would depend on regulations to be developed by
DOT. However, the cost of the mandate on car manufacturers
would only have to average around $12 per vehicle for it to
exceed UMRA's annual threshold. According to studies by the
National Research Council and the Department of Energy on
various policies that would increase the CAFE standards, the
average cost per vehicle would likely be greater than that
amount. Consequently, the cost of these mandates would likely
exceed the threshold in at least one of the first five years
that the mandates are in effect.
Additional requirements on manufacturers of motor vehicles
The bill would impose numerous mandates on automobile
manufacturers addressing motor vehicle safety, fuel-use
capabilities, and labeling. The costs of most of those mandates
cannot be determined because they would depend on future
rulemaking. The bill would:
Direct the Secretary of Transportation to
issue a motor vehicle safety standard to reduce vehicle
incompatibility and aggressivity between passenger
vehicles and nonpassenger vehicles;
Require each automobile manufacturer to
produce a certain number of flexible fuel vehicles each
year;
Require that the fuel economy label attached
to passenger automobiles also include information about
the environmental consequences of greenhouse gas and
other emissions; and
Direct the Secretary of Transportation to
prescribe regulations that would require automobile
manufacturers to provide certain information about
their vehicles' capability of operating on alternative
fuel and to display a permanent badge or emblem on the
tailgate of each vehicle that indicates that the
vehicle is capable of operating on alternative fuel.
Consumer information on tire fuel efficiency
The bill would require the Secretary of Transportation to
develop rules establishing a national program for consumer
information on the effect of tires on the fuel efficiency of
motor vehicles. Some of the rules would include requirements
for providing information to customers at the point of sale and
on the internet and specifications for test methods for
manufacturers to use in assessing and rating tires. Based on
information from industry sources, the cost of this mandate
would not be substantial relative to the UMRA's annual
threshold for private-sector mandates.
Additional requirements on certain oil and gas suppliers
The bill would prohibit certain oil and gas suppliers from
selling or offering to sell crude oil, gasoline, or other fuel
derived from petroleum for an excessive price (as defined in
the bill) in a geographic location where the President has
declared an energy emergency. CBO cannot estimate the cost of
this mandate for several reasons. First, there is uncertainty
about the conditions under which the President would declare an
energy emergency. Second, there are uncertainties about how the
FTC and a state attorney general would interpret the bill's
definition of an excessive price. Finally, it is not clear to
what extent suppliers would forgo business opportunities under
the bill or what the value of those lost opportunities would
be.
Estimate prepared by: Federal spending: Sarah Puro (for
DOT), Megan Carroll (for DOE), Susan Willie (for FTC), and
Matthew Pickford (for government-owned vehicles); Federal
revenues: Mark Booth and Emily Schlect; Impact on state, local,
and tribal governments: Elizabeth Cove; Impact on the private
sector: Fatimot Ladipo.
Estimate approved by: G. Thomas Woodward, Assistant
Director for Tax Analysis; Peter H. Fontaine, Deputy Assistant
Director for Budget Analysis.
Regulatory Impact Statement
In accordance with paragraph 11(b) of rule XXVI of the
Standing Rules of the Senate, the Committee provides the
following evaluation of the regulatory impact of the
legislation, as reported:
NUMBER OF PERSONS COVERED
The fuel economy standards in title I of the legislation
would apply to each automobile and medium and heavy duty truck
manufacturer that sells automobiles and trucks in the United
States. The Price Gouging Protection Act in title II would
apply to every person engaged in the trade or business of
distributing, selling, or reselling, at the retail or wholesale
level, crude oil, gasoline, or petroleum distillates within FTC
enforcement jurisdiction.
ECONOMIC IMPACT
Title I of S. 357 would require covered manufacturers to
improve fuel economy to the prescribed levels or incur CAFE
fines. To improve fuel economy, it would be expected that the
manufacturers would have to integrate new fuel economy
technologies and in some instances redesign product lines to
assure compliance. Title II would deter suppliers from charging
unconscionably excessive prices during declared energy
emergencies, but normal levels of profit taking, in line with
the delineated costs to the suppliers, would not be impacted.
PRIVACY
S. 357 would have no anticipated impact on the privacy of
individuals.
PAPERWORK
The legislation would increase paperwork requirements for
the impacted private industries that have to work with the
Secretary to prove compliance with title I. In general, there
will not be an increase in paperwork for suppliers impacted by
title II. The FTC or a State Attorney General may require
increased paperwork as a result of an enforcement action.
Section-by-Section Analysis
TITLE I--CORPORATE AVERAGE FUEL ECONOMY STANDARDS
Section 101. Short title; Table of contents
This section would provide the title. Title I may be cited
as the ``Ten-in-Ten Fuel Economy Act.''
Section 102. Average fuel economy standards for automobiles, medium
duty trucks, and heavy duty trucks
This section would set forth the process to increase fuel
economy standards for passenger cars and light trucks up to
10,000 pounds gvwr (defined together as automobiles), along
with medium duty and heavy duty (MHD) trucks. Medium duty
trucks would be trucks between 10,000 pounds and 26,000 pounds
gvwr, and heavy duty trucks would be over 26,000 pounds gvwr.
In addition, the section would prescribe the fuel economy
targets and the span of years the standards would encompass.
Two distinct periods of time would be delineated during which
the Secretary would promulgate standards for automobiles. The
first 10-year period would begin in MY 2011 and end in MY 2020.
The second 10-year period would begin in MY 2021 and end in MY
2030. MHD trucks would follow a separate and distinct path from
the automobiles due to the need to create an entirely new fuel
economy program for these types of vehicles and the expectation
that entirely new vehicle attributes would have to be
identified to promulgate standards.
Baseline Average Fuel Economy Standards for Medium and
Heavy Duty Trucks.--The Committee recognizes the need for peer
reviewed scientific and engineering analysis to aid in the
creation of the MHD truck fuel economy program. The bill, as
reported, would mandate the Secretary to commission a National
Academy of Sciences (NAS) study to review automobile and MHD
truck fuel economy technologies. The MHD truck fuel economy
program would not be initiated until the initial NAS report is
completed. The Committee expects that the NAS study would
provide the initial research foundation for DOT and EPA. The
EPA has the responsibility to test automobile fuel economy for
DOT. Currently, the EPA does not have a test cycle for MHD
trucks and would need to create one in order to provide DOT the
data needed to enforce the standards. Therefore, the creation
of initial baseline standards would not occur until 2 model
years after the NAS report would be issued.
Medium and Heavy Duty Truck Fuel Economy Average After
Baseline Model Year.--In the two-year period preceeding
baseline standards, the Committee intends that DOT and EPA
would work collaboratively to establish the test cycle and the
vehicle attributes to establish standards for the MHD truck
fuel economy program. After that two-year period has run and
the agencies have created a MHD truck fuel economy program, the
Committee expects that the first baseline standard would be
based on the MHD truck model year in which the NAS report was
issued. In the succeeding years after the initial baseline
standard, the average fuel economy for the MHD truck fleet
would increase by four percent over the previous model year,
unless the Secretary amends the standard based on conditions
set forth in Section 103. The four percent annual rate of
increase would remain in force for 20 years after the initial
baseline standard was issued.
Baseline Fuel Economy Standards for Automobiles.--The fuel
economy program for automobiles begins with the 10-year period
beginning with MY 2011 and ending in MY 2020. As opposed to a
corporate fuel economy average where each individual
manufacturer would have to meet a prescribed mpg target, the
fuel economy target is a national average that measures the
entire U.S. fleet. The Committee chose a national average in
order to protect manufacturers with widely variant fleet
configurations from having to immediately alter their fleet mix
because of the new regulations. The Committee would expect the
NHTSA to assign fuel economy targets to each manufacturer that
would reach the overall national fuel economy target for that
model year. The Committee would expect that the NHTSA will
assign the fuel economy responsibilities in an equitable manner
which will allow each manufacturer the flexibility to follow
its individual product plans while improving fuel economy
throughout its fleet. The Committee also would expect that the
NHTSA would increase fuel economy standards each year within
the first 10-year period in a ratable fashion so as to best
position the manufacturers to meet the overall goal of 35 mpg
by MY 2020.
The Committee notes in its decision to prescribe the
average fuel economy of 35 mpg by MY 2020 that the rate of
change is consistent with the recommendations from the NRC's
2002 study, Effectiveness and Impact of Corporate Average Fuel
Economy (CAFE) Standards, as a level that is achievable by the
automobile industry and would garner fuel savings over the life
of the vehicle that would pay for the fuel saving technologies.
The Committee on Commerce, Science, and Transportation also
recognizes the need of having the NHTSA provide its expertise
to ensure that the rate of change is balanced with other
important goals, including safety and the stability of the
automobile industry. During the first 10-year period, if the
NHTSA finds maximum feasible level for fuel economy for a
certain model year is less than the ratable fuel economy level
to achieve 35 mpg by MY 2020, the agency would be able to lower
the rate of change and prescribe the maximum feasible level
fuel economy as defined in Section 103. The Committee expects
that the Secretary would lower the standard in very limited
circumstances where there is clear and convincing evidence that
the result of increasing standards to the ratable level would
produce a significant outcome that would outweigh the benefits
of the mandated fuel economy level for that year.
Automobile Fuel Economy Average for Model Years 2021
through 2030.--The second 10-year period for the automobile
fuel economy program begins in MY 2021 and ends in MY 2030. In
this period, the average fuel economy for a model year would be
at least four percent greater than the previous model year. The
Committee recognizes that a mandated increase of fuel economy
this far into the future must take into account circumstances
that cannot be contemplated at the present time. Therefore, the
bill would provide discretion to the NHTSA to analyze the
technology and market conditions. If the NHTSA finds that a
four percent increase does not comport with current technology
or has unintended consequences, the agency could amend the
standards in accordance with Section 103 so as to achieve the
highest fuel economy levels balanced with the other values
delineated in that section.
Vehicle Attributes.--In oversight of the CAFE program and
in testimony received from the March 2007 and May 2007 hearings
on automobile fuel economy, all of the panelists commented on
the CAFE reforms undertaken by the NHTSA in promulgating light
truck fuel economy rules for MY 2008 through MY 2011. All
parties involved in the fuel economy debate that testified
spoke to the positive aspects to the vehicle attribute system
created by the NHTSA. The expert commentators noted that using
the vehicle attribute of footprint size expressed as a
continuous curve would have the effect of guaranteeing fuel
economy improvements throughout the light truck fleet by
integrating technologies as opposed to relying only on reducing
vehicle weight. In addition, the new system would assure
improvement by every manufacturer regardless of the mix of
types and sizes of light trucks manufactured.
In light of the testimony and the reformed CAFE program,
the Committee decided to provide the NHTSA the authority to
reform passenger car fuel economy standards. The Secretary
would have the authority to use vehicle attributes to prescribe
the standards in the form of a mathematical function, in a
similar fashion as was done under the reformed light truck
rule. The Committee understands that there may be different
attributes that could be used for passenger cars and for MHD
trucks than what was selected for light trucks. The Secretary
also could issue standards using this authority for a group of
years as well as on a single year basis. In using this
authority, the Secretary could not issue standards that are
expressed as a uniform percentage increase per manufacturer.
The Committee understands that a uniform percentage increase
would unfairly increase the burden on automakers that have made
the largest investments in improving fuel economy. Therefore,
the usage of such a system is prohibited.
Section 103. Amending fuel economy standards
Prior to the reporting of S. 357, passenger fuel economy
standards have not been addressed in over 20 years. Light truck
fuel economy did not increase from 1996 to 2003. MHD truck fuel
economy had never been addressed in the history of the fuel
economy program. Because of the difficulty of addressing fuel
economy standards consistently, the Committee felt that the
next fuel economy program should be in place over a significant
period to avoid potential stagnation of the standards which
have led to lost oil savings and increased the dependence on
imported oil. S. 357, as reported, would create a 20-year fuel
economy program for automobiles and light trucks. While a 20-
year program guarantees consistent progress over a long period
of time, it is impossible to foresee every contingency that
could affect decisions related to increasing fuel economy.
Therefore, the Committee felt that the NHTSA should be
positioned to exercise its discretion if situations arose where
the prescribed standards would be unattainable and a lower fuel
economy level would be the prudent path. Section 103 would
provide the guidelines to allow the Secretary to lower the
standard.
The Committee's intent is that the discretion provided to
the Secretary should be used in the most limited circumstances
when the evidence warrants amending the standard. The
prescribed fuel economy levels are not goals that can be
avoided without consequence and should be interpreted as the
fuel economy level for that model year unless the Secretary's
careful analysis based on all the requisite factors proves
otherwise.
The Secretary would have the discretion to increase the
standard to a level that is more than required for a particular
model year, as well as the discretion to lower the standard. If
the Secretary finds that the maximum feasible level fuel
economy is lower than the prescribed fuel economy for a
particular model year, the Secretary could lower the standard.
In order to lower the standard, the Secretary would have to
prove by clear and convincing evidence that the fuel economy
standard for a particular model year is not cost effective.
Requirements for Lower Standard.--If the Secretary decides to
lower the standard, a notice of proposed rulemaking would be
issued at least 30 months before the model year in which the
prescribed standard would apply. This requirement would not
apply to MY 2011 because it is expected that there will be less
than 30 months before the 2011 model year during which the Act
would be in force. The notice would include a detailed analysis
that was the foundation for the determination to lower the
standard. The Secretary would issue the final rule at least 18
months before the model year in which the fuel economy standard
would apply. In addition, the Secretary must submit a report to
Congress that would outline the steps to be taken to avoid
further reductions in average fuel economy standards.
Maximum Feasible Standard and Decisions on Maximum Feasible
Fuel Economy.--In deciding the average fuel standard prescribed
for automobiles and MHD trucks if the Secretary decides that
the fleet cannot achieve the standard prescribed by the Act,
the Secretary would set the fuel economy standard at the
maximum feasible level. There are 2 sets of determinations that
would be required in setting the maximum feasible level. In
order for the Secretary to decide the maximum feasible average
fuel economy, the Secretary would consider the economic
practicability, the effect of other motor vehicle standards of
the Government on fuel economy, environmental impacts, and the
need of the United States to conserve energy. After undertaking
the evaluation of these criteria, the Secretary would ensure
that the fuel economy standard is the highest standard that is
technologically achievable; can be achieved without materially
reducing the overall safety of automobiles and MHD trucks; is
not less than the standard for the applicable types of vehicles
from any prior year; and is cost effective.
Defining and Determining Cost Effectiveness.--A fuel economy
standard would be considered cost effective when the total
value of reduced fuel use from a proposed fuel economy standard
is greater than or equal to the total cost of such a standard.
The total value would include the monetary value of fuel use
over the life of the vehicle. In making the total cost
determination, the Secretary would not include the cost of fuel
economy technologies whose cost is substantially more than the
value of the reduction of fuel attributable to that technology.
In a total cost analysis, the Committee intends that the cost
of fuel economy technologies only should be included if they
can be justified in the cost of the fuel savings. There are
operative technologies, such as hydrogen fuel cells, which will
have significant fuel savings, but are too expensive to be
reasonably used as a means to improve fuel economy. The
Committee does not intend for these types of technologies to be
included in the total cost analysis.
As part of the total value/total cost analysis to determine
cost effectiveness, the Secretary would consider the following
additional factors in the calculation:
Economic security;
The impact of oil or energy intensity of the
U.S. economy on the sensitivity of the economy to oil
and other fuel price changes, including the magnitude
of gross domestic product losses in response to short
term price shocks or long term price increases;
National security, including the impact of
U.S. payments for oil and other fuel imports on
political, economic, and military developments in
unstable or unfriendly oil-exporting countries;
The uninternalized costs of pipeline and
storage oil seepage, and the risk of oil spills from
production, handling, and transport, along with related
landscape damage;
The emissions of pollutants including
greenhouse gases over the lifecycle of the fuel and the
resulting costs to human health, the economy, and the
environment; and
Such additional factors as the Secretary
deems relevant.
The Committee understands that the NHTSA, in undertaking
economic analyses to increase fuel economy standards, relies on
peer reviewed literature to help quantify such factors. The
Committee encourages that the NHTSA not deviate from that
practice and encourages the agency to quantify the terms in a
fashion consistent with cost benefit practices. However, the
Committee strongly encourages the NHTSA to quantify terms at a
value greater than zero if there is significant deviation in
the professional literature. If NHTSA finds that there is no
pertinent peer reviewed professional literature to guide the
agency in assigning a value, the Committee encourages the
Secretary to commission peer reviewed literature from an entity
such as the NAS to aid in the proper valuation of the factors.
Minimum Valuation.--The Secretary, in considering the value
of a gallon of gasoline to be saved by a proposed fuel economy
standard, would use the gasoline prices projected by the Energy
Information Administration (EIA) for the period covered by the
standard. The Committee understands that the EIA promulgates
20-year projections for gasoline prices. The Committee intends
that the Secretary would use the span of years and gasoline
prices that covers the proposed fuel economy standards from the
20-year projection.
Consultation Requirement.--Before the Secretary would issue
a notice to prescribe or amend a proposed average fuel economy
standard, the Secretary would provide the Secretary of Energy
and the Administrator of the EPA at least 10 days after
receiving the notice so as to allow them to comment if they
find the proposed standard would adversely affect the
conservation goals of either agency. To the extent the
Secretary of Transportation does not revise the proposed
standard to take into account the comments from the Energy
Department or the EPA on any adverse impact of the standard,
the Secretary of Transportation would include those comments in
the notice.
Section 104. Definitions
This section would define 3 major terms used throughout the
bill which have specific contextual meaning in the statutory
regime created by S. 357. The terms would be:
Automobile: As defined the term would mean a 4-wheeled
vehicle that is propelled by fuel, or by alternative fuel,
manufactured primarily for use on public streets, roads, and
highways (except a vehicle operated only on a rail line), and
rated at not more than 10,000 pounds gvwr. ``Automobile'' as
operative in the bill would include passenger cars and light
trucks (such as SUVs and minivans). The definition captures
light trucks that weigh between 8,500 pounds gvwr and 10,000
pounds gvwr, which were previously exempt from CAFE.
Medium Duty Truck: As defined, the term would mean a truck
as defined in 49 U.S.C. 30127 with a gvwr between 10,000 pounds
and 26,000 pounds.
Heavy Duty Truck: As defined, the term would mean a truck
as defined in 49 U.S.C. 30127 with a gvwr in excess of 26,000
pounds.
Deadline for Regulations: The regulations to implement the
fuel economy program created in S. 357 would have to be
proposed no later than one year after the date of enactment of
this Act, and final regulations would have to be issued no
later than 18 months after the date of enactment.
Section 105. Ensuring safety of automobiles
An ongoing issue that is impacting the safety of the
automobile fleet is the interaction of passenger cars and light
trucks. The significant differences in size and weight between
cars and light trucks have placed the drivers of passenger cars
at a safety disadvantage in light truck/passenger car
collisions. These types of collisions have increased due to the
increase of light trucks being used in passenger duty. To
address this ongoing safety concern, the Act would require the
NHTSA to initiate a rulemaking in 2010 to issue standards to
mitigate the difference in weight and size between the largest
and smallest vehicles, and to improve bumper height
compatibility between vehicles. The final rule would have to be
issued before 2013.
Section 106. Credit trading program
The Committee recognizes the need to create flexibility for
automobile manufacturers in creating a new regulatory regime to
improve fuel economy. To aid manufacturers that may need more
transition assistance to meet the new standards, the Secretary
would be permitted to establish, by regulation, a fuel economy
credit trading program to allow manufacturers whose automobiles
exceed the average fuel economy standards to earn credits to be
sold to manufacturers whose automobiles fail to achieve the
prescribed standards. Automakers may carry forward and carry
back earned fuel economy credits for five years as opposed to
the three years as currently permitted.
Section 107. Labels for fuel economy and greenhouse gas emissions
To aid in consumer education and awareness of the best
performing automobiles with respect to fuel economy and
greenhouse gas emissions, S. 357 would create a labeling
program to help consumers identify vehicles that significantly
exceed the standards created by the average fuel economy
program. The labeling regime would only apply to automobiles,
not to MHD trucks. S. 357 would create 2 labeling programs--the
green label for vehicles that meet or exceed the applicable
fuel economy standard or have the lowest greenhouse gas
emissions over the useful life of the vehicle, and the gold
star label for automobiles that achieve a fuel economy of at
least 50 mpg.
Section 108. Continued applicability of existing standards
There is a period during which the new national average
fuel economy program will be implemented, and there will be no
standards applied because of the repeal of the current
operative sections of 49 U.S.C. 32902. In order to maintain
fuel economy standards in this period, nothing in S. 357 would
be construed to affect the application of the current CAFE
statutes until 2011.
Section 109. National Academy of Sciences studies
The NHTSA and several experts on automobile fuel economy
noted that the work done by the NRC in its 2002 CAFE study was
essential in providing explanations and guidance for
identifying and integrating potential fuel economy technologies
to use in proposed fuel economy standards. The NHTSA and those
experts also stated that the study is now 5 years old, and it
would be of great utility to have it updated. After receiving
this testimony, the Committee decided the Secretary should
commission a NAS study to update the NRC fuel economy
technology study from 2002 and to evaluate how the technologies
could be integrated to meet the reformed fuel economy attribute
system. The study would be be commissioned as soon as
practicable after the date of enactment, and the NAS would
report its findings within 18 months of the study being
commissioned. The study would be updated every 5 years.
Section 110. Standards for executive agency automobiles
To ensure the Federal executive agency fleet improves its
fuel economy, Federal agencies would have to ensure that new
automobile purchases are as fuel efficient as practicable.
Combat related vehicles, law enforcement vehicles, and
emergency rescue vehicles would be excluded from this section.
The General Services Administration would submit a report to
Congress on the first year's progress.
Section 111. Ensuring availability of flexible fuel automobiles
This section would mandate an increase in the number of
flexible fuel vehicles as part of the new automobile fleet. The
percentage of flexible fuel vehicles compared to all
automobiles manufactured would comply with the following
schedule:
by 2012 .....................................
50 percent
by 2013 .....................................
60 percent
by 2014 .....................................
70 percent
by 2015 .....................................
80 percent.
An economic hardship exemption could be granted for those
manufacturers that cannot comply with the manufacturing
schedule.
Section 112. Increasing consumer awareness of flexible fuel automobiles
In order to improve consumer awareness about the
availability and utility of flexible fuel automobiles, the
Secretary would implement a program to have automobile
manufacturers prominently display a permanent badge or emblem
on the quarter panel or tailgate of each flexible fuel
automobile. Each flexible fuel automobile would also have a
fuel tank cap that is labeled to indicate that the automobile
can be operated using flexible fuel. In addition, the
manufacturer would include information in the owner's manual of
each flexible fuel automobile that describes the capability of
the automobile to operate using alternative fuel and the
benefits of using alternative fuel, including its renewable
nature and environmental benefits.
Section 113. Periodic review of accuracy of fuel economy labeling
procedures
The EPA reformed the test procedures to improve the
accuracy of fuel economy labels that are placed on new
automobiles and issued the final rule on December 27, 2006. To
ensure that the labels better reflect the actual mileage being
achieved by automobiles, the EPA would review labeling
procedures and report to Congress on whether the procedures
warrant revision beginning in 2009.
Section 114. Tire fuel efficiency consumer information
One component that would improve the fuel economy of
automobiles is the rolling resistance of replacement tires. To
improve consumer awareness and to aid consumers in making
choices to improve automobile fuel economy, the Secretary would
be mandated to issue a rule to create a national tire fuel
efficiency information program efficiency rating system.
Section 115. Advanced battery initiative
Electric hybrid engines and plug-in hybrids are limited by
current battery technologies. Automakers are researching the
capability of lithium ion battery technology, which could
provide more energy storage and ultimately significant
reductions in fuel usage. To support this endeavor, in
conjunction with ongoing work at the Department of Energy, the
Secretary would establish an initiative to support research,
development, demonstration, and the commercial application of
batteries. The initiative would support all types of battery
research, not just for automotive applications.
Section 116. Biodiesel standards
With the increasing number of sources of biodiesel fuel
providing product to the marketplace, there are concerns from
consumers that varying purity and composition may damage
engines. To address these concerns, the Secretary, in
consultation with the EPA and the Department of Energy would
promulgate standards for biodiesel blends.
Section 117. Use of civil penalties for research and development
The Department of Transportation collects fines from
manufacturers that are not in compliance with the CAFE
standards and remits the funds collected to the Department of
the Treasury. This section would allow the Secretary to keep 50
percent of the fines collected to be used to develop a research
program to improve fuel economy performance and technologies
and aid in rulemaking activities in relation to fuel economy,
including the commissioning of peer reviewed research to assist
in cost benefit analysis.
Section 118. Energy security fund and alternative fuel grant program
Under this section, the Secretary would allocate 50 percent
of the fines collected from manufacturers that are not in
compliance with fuel economy standards to a fund managed by the
Secretary of Energy through the Clean Cities Program. The Fund
would provide grants of up to $30,000 to gasoline retailers to
install alternative fuel dispensing infrastructure. No one gas
station could receive more than $90,000 in one fiscal year.
TITLE II--PRICE GOUGING
Section 201. Short title
This section would provide that this title may be cited as
the ``Petroleum Consumer Price Gouging Protection Act.''
Section 202. Definitions
Section 202 would provide for a number of notable
definitions, as follows:
Affected Area: An area covered by a Presidential
declaration of energy emergency.
Supplier: Any person engaged in the trade or business of
selling or reselling, or distributing crude oil, gasoline, or
petroleum distillates.
Price Gouging: The charging of an unconscionably excessive
price by a supplier in an affected area.
Unconscionably Excessive Price: A price changed in an
affected area for crude, gasoline, or petroleum distillates
that (i) constitutes a gross disparity between the average
price 30 days prior to an energy emergency is declared by the
President, (ii) grossly exceeds the price for the same or
similar commodity that is obtainable by purchasers from other
suppliers in the same relevant geographic market within the
affected area, or (iii) represents an exercise of unfair
leverage or unconscionable means by a supplier during an energy
emergency, unless such price is attributable to increased
wholesale or operational costs, including replacement costs,
outside the control of the supplier and is not attributable to
local, regional, national, or international market conditions.
Section 203. Prohibition on price gouging during energy emergencies
Section 203 would make it unlawful for any supplier to sell
crude oil, gasoline, or petroleum distillates at an
unconscionably excessive price in an area subject to an energy
emergency declared by the President. In determining whether an
unlawful act occurred under this section, the price which would
otherwise exist in a competitive and freely functioning market
shall be considered, among other factors.
Section 204. Prohibition on market manipulation
Section 204 would make it unlawful for any person to use a
manipulative or deceptive device of contrivance in connection
with the purchase or sale of crude oil, gasoline, or petroleum
distillates at wholesale. The FTC may prescribe rules and
regulations as necessary.
Section 205. Prohibition on false information
Section 205 would make it unlawful for any person to report
required information to any federal agency related to the
wholesale price of crude oil, gasoline, or petroleum
distillates that the person knows, or reasonably should have
known, is false or misleading and the person intended the
information to affect data compiled by the federal government
for statistical or analytical purposes.
Section 206. Presidential declaration of energy emergency
Section 206 would authorize the President to declare that a
Federal energy emergency exists, if the President finds that
the health, safety, welfare, or economic well-being of the
citizens of the United States is at risk because of a shortage
or imminent shortage of adequate supplies of crude oil,
gasoline, or petroleum distillates due to a disruption caused
by a major disaster or significant pricing anomalies in the
national energy market.
The energy emergency declaration would specify the period,
not to exceed 30 days, for which the declaration applies, the
circumstances necessitating the declaration, and the area to
which it applies. The President could extend a declaration
multiple times but not more than 30 days at one time, and
discontinue a declaration before its expiration.
Section 207. Enforcement by the Federal Trade Commission
Section 207 would authorize the FTC to enforce the Act and
would direct the Commission to prioritize enforcement
concerning companies with sales of crude oil, gasoline, and
petroleum distillates in excess of $500,000,000. Violations of
any provision of the Act would be treated as an unfair or
deceptive act or practice under a rule issued under section
18(a)(1)(B) of the Federal Trade Commission Act (15 USC
57a(a)(1)(b)).
The section would require the FTC, following the
declaration of an energy emergency, to establish within the
Commission a toll-free consumer hotline and a program to
develop and distribute public information to assist residents
in an affected area. The FTC further would be required to
consult with the attorney general and United States Attorney
for the districts affected by the declaration as well as State
and local law enforcement to determine whether any supplier is
charging or has charged an unconscionably excessive price and
conduct an investigation to determine whether any supplier has
violated section 203 of the title.
Section 208. Enforcement by state attorney general
Section 208 would authorize a State to bring a civil action
in an appropriate district court of the United States to
enforce section 203 of this title whenever the attorney general
has reason to believe that residents of the State have been
harmed by a violation of Section 203.
The section further would require the State to provide
written notice to the FTC of any civil action brought pursuant
to this title and authorize the FTC to intervene in such civil
action. If the FTC institutes an action for a violation of this
title, no State attorney general, or official or agency of the
State, would be permitted to bring an action during the
pendency of that action against any defendant named in the
complaint. Nothing in this section would prevent the attorney
general of a State from exercising the powers conferred on the
attorney general by the laws of such State with respect to the
conducting of investigations, compelling of witnesses, and
production of evidence.
This section would not prohibit an authorized State
official from enforcing a civil or criminal statute of that
State.
Section 209. Penalties
Section 209 would create a civil penalty of not more than
$1,000,000 for violations of section 204 or 205 of this title
and a civil penalty of not more than $500,000 for independent
small business marketers and $5,000,000 in the case of any
other suppliers for violations of section 203, in addition to
any other penalty available under the Federal Trade Commission
Act (15 USC 41 et seq.). In assessing penalties, each day of a
continuing violation would be considered a separate violation,
and the FTC should consider the seriousness of the violation
and any remedial efforts of the violator.
The section further would make a violation of Section 203 a
crime punishable by a fine of not more than $5,000,000,
imprisonment for not more than 5 years, or both.
Section 210. Effect on other laws
Section 210 would establish that nothing in this title
shall be construed to limit or affect in any way the FTC's
authority under the Federal Trade Commission Act (15 USC 41 et
seq.) or any other provision of law. This title would not
preempt any State law.
Changes in Existing Law
In compliance with paragraph 12 of rule XXVI of the Standing
Rules of the Senate, changes in existing law made by the bill,
as reported, are shown as follows (existing law proposed to be
omitted is enclosed in black brackets, new material is printed
in italic, existing law in which no change is proposed is shown
in roman):
TITLE 49. TRANSPORTATION
SUBTITLE VI. MOTOR VEHICLE AND DRIVER PROGRAMS
PART A. GENERAL
CHAPTER 301. MOTOR VEHICLE SAFETY
SUBCHAPTER II. INFORMATION, STANDARDS, AND REQUIREMENTS
Sec. 30123A. Tire fuel efficiency consumer information
(a) Rulemaking.--
(1) In general.--Not later than 18 months after the
date of enactment of the Ten-in-Ten Fuel Economy Act,
the Secretary of Transportation shall, after notice and
opportunity for comment, promulgate rules establishing
a national tire fuel efficiency consumer information
program for tires designed for use on motor vehicles to
educate consumers about the effect of tires on
automobile fuel efficiency.
(2) Items included in rule.--The rulemaking shall
include--
(A) a national tire fuel efficiency rating
system for motor vehicle tires to assist
consumers in making more educated tire
purchasing decisions;
(B) requirements for providing information to
consumers, including information at the point
of sale and other potential information
dissemination methods, including the Internet;
(C) specifications for test methods for
manufacturers to use in assessing and rating
tires to avoid variation among test equipment
and manufacturers; and
(D) a national tire maintenance consumer
education program including, information on
tire inflation pressure, alignment, rotation,
and tread wear to maximize fuel efficiency.
(3) Applicability.--This section shall not apply to
tires excluded from coverage under section
575.104(c)(2) of title 49, Code of Federal Regulations,
as in effect on date of enactment of the Ten-in-Ten
Fuel Economy Act.
(b) Consultation.--The Secretary shall consult with the
Secretary of Energy and the Administrator of the Environmental
Protection Agency on the means of conveying tire fuel
efficiency consumer information.
(c) Report to Congress.--The Secretary shall conduct periodic
assessments of the rules promulgated under this section to
determine the utility of such rules to consumers, the level of
cooperation by industry, and the contribution to national goals
pertaining to energy consumption. The Secretary shall transmit
periodic reports detailing the findings of such assessments to
the Senate Committee on Commerce, Science, and Transportation
and the House of Representatives Committee on Energy and
Commerce.
(d) Tire Marking.--The Secretary shall not require permanent
labeling of any kind on a tire for the purpose of tire fuel
efficiency information.
(e) Preemption.--When a requirement under this section is in
effect, a State or political subdivision of a State may adopt
or enforce a law or regulation on tire fuel efficiency consumer
information only if the law or regulation is identical to that
requirement. Nothing in this section shall be construed to
preempt a State or political subdivision of a State from
regulating the fuel efficiency of tires not otherwise preempted
under this chapter.
* * * * * * *
Sec. 30129. Vehicle compatibility and aggressivity reduction standard
(a) Standards.--The Secretary of Transportation shall issue a
motor vehicle safety standard to reduce automobile
incompatibility and aggressivity. The standard shall address
characteristics necessary to ensure better management of crash
forces in multiple vehicle frontal and side impact crashes
between different types, sizes, and weights of automobiles with
a gross vehicle weight of 10,000 pounds or less in order to
decrease occupant deaths and injuries.
(b) Consumer Information.--The Secretary shall develop and
implement a public information side and frontal compatibility
crash test program with vehicle ratings based on risks to
occupants, risks to other motorists, and combined risks by
vehicle make and model.
* * * * * * *
SUBCHAPTER IV. ENFORCEMENT AND ADMINISTRATIVE
Sec. 30165. Civil penalty
(a) Civil Penalties.--
(1) In general.--A person that violates any of
section 30112, 30115, 30117 through 30122, 30123(d),
30125(c), 30127, or 30141 through 30147, or a
regulation prescribed thereunder, is liable to the
United States Government for a civil penalty of not
more than $5,000 for each violation. A separate
violation occurs for each motor vehicle or item of
motor vehicle equipment and for each failure or refusal
to allow or perform an act required by any of those
sections. The maximum penalty under this subsection for
a related series of violations is $15,000,000.
(2) School buses.--
(A) In general.--Notwithstanding paragraph
(1), the maximum amount of a civil penalty
under this paragraph shall be $10,000 in the
case of--
(i) the manufacture, sale, offer for
sale, introduction or delivery for
introduction into interstate commerce,
or importation of a school bus or
school bus equipment (as those terms
are defined in section 30125(a) of this
title) in violation of section
30112(a)(1) of this title; or
(ii) a violation of section
30112(a)(2) of this title.
(B) Related series of violations.--A separate
violation occurs for each motor vehicle or item
of motor vehicle equipment and for each failure
or refusal to allow or perform an act required
by that section. The maximum penalty under this
paragraph for a related series of violations is
$15,000,000.
(3) Section 30166.--A person who violates section
30166 or a regulation prescribed under that section is
liable to the United States Government for a civil
penalty for failing or refusing to allow or perform an
act required under that section or regulation. The
maximum penalty under this paragraph is $5,000 per
violation per day. The maximum penalty under this
paragraph for a related series of daily violations is
$15,000,000.
(4) Section 30123a.--Any person who fails to comply
with the national tire fuel efficiency consumer
information program under section 30123A is liable to
the United States Government for a civil penalty of not
more than $50,000 for each violation.
(b) Compromise and Setoff.--
(1) The Secretary of Transportation may compromise
the amount of a civil penalty imposed under this
section.
(2) The Government may deduct the amount of a civil
penalty imposed or compromised under this section from
amounts it owes the person liable for the penalty.
(c) Considerations.--In determining the amount of a civil
penalty or compromise, the appropriateness of the penalty or
compromise to the size of the business of the person charged
and the gravity of the violation shall be considered.
(d) Subpenas for Witnesses.--In a civil action brought under
this section, a subpena for a witness may be served in any
judicial district.
* * * * * * *
PART C. INFORMATION, STANDARDS, AND REQUIREMENTS
CHAPTER 329. AUTOMOBILE FUEL ECONOMY
Sec. 32901. Definitions
(a) General.--In this chapter--
(1) ``alternative fuel'' means--
(A) methanol;
(B) denatured ethanol;
(C) other alcohols;
(D) except as provided in subsection (b) of
this section, a mixture containing at least 85
percent of methanol, denatured ethanol, and
other alcohols by volume with gasoline or other
fuels;
(E) natural gas;
(F) liquefied petroleum gas;
(G) hydrogen;
(H) coal derived liquid fuels;
(I) fuels (except alcohol) derived from
biological materials;
(J) electricity (including electricity from
solar energy); and
(K) any other fuel the Secretary of
Transportation prescribes by regulation that is
not substantially petroleum and that would
yield substantial energy security and
environmental benefits.
(2) ``alternative fueled automobile'' means an
automobile that is a--
(A) dedicated automobile; or
(B) dual fueled automobile.
[(3) except as provided in section 32908 of this
title, ``automobile'' means a 4-wheeled vehicle that is
propelled by fuel, or by alternative fuel, manufactured
primarily for use on public streets, roads, and
highways (except a vehicle operated only on a rail
line), and rated at--
[(A) not more than 6,000 pounds gross vehicle
weight; or
[(B) more than 6,000, but less than 10,000,
pounds gross vehicle weight, if the Secretary
decides by regulation that--
[(i) an average fuel economy standard
under this chapter for the vehicle is
feasible; and
[(ii) an average fuel economy
standard under this chapter for the
vehicle will result in significant
energy conservation or the vehicle is
substantially used for the same
purposes as a vehicle rated at not more
than 6,000 pounds gross vehicle
weight.]
(3) except as provided in section 32908 of this
title, ``automobile'' means a 4-wheeled vehicle that is
propelled by fuel, or by alternative fuel, manufactured
primarily for use on public streets, roads, and
highways (except a vehicle operated only on a rail
line), and rated at not more than 10,000 pounds gross
vehicle weight.
(4) ``automobile manufactured by a manufacturer''
includes every automobile manufactured by a person that
controls, is controlled by, or is under common control
with the manufacturer, but does not include an
automobile manufactured by the person that is exported
not later than 30 days after the end of the model year
in which the automobile is manufactured.
(5) ``average fuel economy'' means average fuel
economy determined under section 32904 of this title.
(6) ``average fuel economy standard'' means a
performance standard specifying a minimum level of
average fuel economy applicable to a manufacturer in a
model year.
(7) ``dedicated automobile'' means an automobile that
operates only on alternative fuel.
(8) ``dual fueled automobile'' means an automobile
that--
(A) is capable of operating on alternative
fuel and on gasoline or diesel fuel;
(B) provides equal or superior energy
efficiency, as calculated for the applicable
model year during fuel economy testing for the
United States Government, when operating on
alternative fuel as when operating on gasoline
or diesel fuel;
(C) for model years 1993-1995 for an
automobile capable of operating on a mixture of
an alternative fuel and gasoline or diesel fuel
and if the Administrator of the Environmental
Protection Agency decides to extend the
application of this subclause, for an
additional period ending not later than the end
of the last model year to which section
32905(b) and (d) of this title applies,
provides equal or superior energy efficiency,
as calculated for the applicable model year
during fuel economy testing for the Government,
when operating on a mixture of alternative fuel
and gasoline or diesel fuel containing exactly
50 percent gasoline or diesel fuel as when
operating on gasoline or diesel fuel; and
(D) for a passenger automobile, meets or
exceeds the minimum driving range prescribed
under subsection (c) of this section.
(8A) ``flexible fuel automobile'' means an automobile
described in paragraph (8)(A).
(9) ``fuel'' means--
(A) gasoline;
(B) diesel oil; or
(C) other liquid or gaseous fuel that the
Secretary decides by regulation to include in
this definition as consistent with the need of
the United States to conserve energy.
(10) ``fuel economy'' means the average number of
miles traveled by an automobile for each gallon of
gasoline (or equivalent amount of other fuel) used, as
determined by the Administrator under section 32904(c)
of this title.
(10A) ``heavy-duty truck'' means a truck (as defined
in section 30127) with a gross vehicle weight in excess
of 26,000 pounds.
(11) ``import'' means to import into the customs
territory of the United States.
(12) ``manufacture'' (except under section 32902(d)
of this title) means to produce or assemble in the
customs territory of the United States or to import.
(13) ``manufacturer'' means--
(A) a person engaged in the business of
manufacturing automobiles, including a
predecessor or successor of the person to the
extent provided under regulations prescribed by
the Secretary; and
(B) if more than 1 person is the manufacturer
of an automobile, the person specified under
regulations prescribed by the Secretary.
(13A) ``medium-duty truck'' means a truck (as defined
in section 30127) with a gross vehicle weight of at
least 10,000 pounds but not more than 26,000 pounds.
(14) ``model'' means a class of automobiles as
decided by regulation by the Administrator after
consulting and coordinating with the Secretary.
(15) ``model year'', when referring to a specific
calendar year, means--
(A) the annual production period of a
manufacturer, as decided by the Administrator,
that includes January 1 of that calendar year;
or
(B) that calendar year if the manufacturer
does not have an annual production period.
[(16) ``passenger automobile'' means an automobile
that the Secretary decides by regulation is
manufactured primarily for transporting not more than
10 individuals, but does not include an automobile
capable of off-highway operation that the Secretary
decides by regulation--
[(A) has a significant feature (except 4-
wheel drive) designed for off-highway
operation; and
[(B) is a 4-wheel drive automobile or is
rated at more than 6,000 pounds gross vehicle
weight.]
(b) Authority To Change Percentage.--The Secretary may
prescribe regulations changing the percentage referred to in
subsection (a)(1)(D) of this section to not less than 70
percent because of requirements relating to cold start, safety,
or vehicle functions.
(c) Minimum Driving Ranges for Dual Fueled Passenger
Automobiles.--(1) The Secretary shall prescribe by regulation
the minimum driving range that dual fueled automobiles that are
passenger automobiles must meet when operating on alternative
fuel to be dual fueled automobiles under sections 32905 and
32906 of this title. A determination whether a dual fueled
automobile meets the minimum driving range requirement under
this paragraph shall be based on the combined Agency city/
highway fuel economy as determined for average fuel economy
purposes for those automobiles.
(2)(A) The Secretary may prescribe a lower range for a
specific model than that prescribed under paragraph (1) of this
subsection. A manufacturer may petition for a lower range than
that prescribed under paragraph (1) for a specific model.
(B) The minimum driving range prescribed for dual fueled
automobiles (except electric automobiles) under subparagraph
(A) of this paragraph or paragraph (1) of this subsection must
be at least 200 miles.
(C) If the Secretary prescribes a minimum driving range of
200 miles for dual fueled automobiles (except electric
automobiles) under paragraph (1) of this subsection,
subparagraph (A) of this paragraph does not apply to dual
fueled automobiles (except electric automobiles).
(3) In prescribing a minimum driving range under paragraph
(1) of this subsection and in taking an action under paragraph
(2) of this subsection, the Secretary shall consider the
purpose set forth in section 3 of the Alternative Motor Fuels
Act of 1988 (Public Law 100-494, 102 Stat. 2442), consumer
acceptability, economic practicability, technology,
environmental impact, safety, drivability, performance, and
other factors the Secretary considers relevant.
Sec. 32902. Average fuel economy standards
(a) [Non-passenger Automobiles.--] Prescription of Standards
by Regulation.--At least 18 months before the beginning of each
model year, the Secretary of Transportation shall prescribe by
regulation average fuel economy standards for [automobiles
(except passenger automobiles)] automobiles, medium-duty
trucks, and heavy-duty trucks 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
automobiles.
[(b) Passenger Automobiles.--Except as provided in this
section, the average fuel economy standard for passenger
automobiles manufactured by a manufacturer in a model year
after model year 1984 shall be 27.5 miles a gallon.]
(b) Standards for Automobiles, Medium-duty Trucks, and Heavy-
duty Trucks.--
(1) In general.--The Secretary of Transportation,
after consultation with the Administrator of the
Environmental Protection Agency, shall prescribe
average fuel economy standards for automobiles, medium-
duty trucks, and heavy-duty trucks manufactured by a
manufacturer in each model year beginning with model
year 2011 in accordance with subsection (c).
(2) Annual increases in fuel economy standards.--
(A) Baseline average fuel economy standards
for medium- and heavy-duty trucks.--For the
first 2 model years beginning after the
submission to Congress of the initial report by
the National Academy of Sciences required by
section 10 of the Ten-in-Ten Act, the average
fuel economy required to be attained for each
attribute class of medium-duty trucks and
heavy-duty trucks shall be the average combined
highway and city miles-per-gallon performance
of all vehicles within that class in the model
year immediately preceding the first of those 2
model years (rounded to the nearest \1/10\ mile
per gallon).
(B) Medium- and heavy-duty truck fuel economy
average after baseline model year.--For each
model year beginning after the 2 model years
specified in subparagraph (A), the average fuel
economy required to be attained by the fleet of
medium-duty trucks and heavy-duty trucks
manufactured in the United States shall be at
least 4 percent greater than the average fuel
economy required to be attained for the fleet
in the previous model year (rounded to the
nearest \1/10\ mile per gallon). Standards
shall be issued for medium-duty trucks and
heavy-duty trucks for 20 model years.
(3) Fuel economy target for automobiles.--
(A) Baseline average fuel economy standards
for automobiles.--The Secretary shall prescribe
average fuel economy standards for automobiles
in each model year beginning with model year
2011 to achieve a combined fuel economy
standard for model year 2020 of at least 35
miles per gallon for the fleet of automobiles
manufactured or sold in the United States. The
average fuel economy standards prescribed by
the Secretary shall be the maximum feasible
average fuel economy standards for model years
2011 through 2019.
(B) Automobile fuel economy average for model
years 2021 through 2030.--For model years 2021
through 2030, the average fuel economy required
to be attained by the fleet of automobiles
manufactured or sold in the United States shall
be at least 4 percent greater than the average
fuel economy standard required to be attained
for the fleet in the previous model year
(rounded to the nearest \1/10\ mile per
gallon).
[(c) Amending Passenger Automobile Standards.--(1) Subject to
paragraph (2) of this subsection, the Secretary of
Transportation may prescribe regulations amending the standard
under subsection (b) of this section for a model year to a
level that the Secretary decides is the maximum feasible
average fuel economy level for that model year. Section 553 of
title 5 applies to a proceeding to amend the standard. However,
any interested person may make an oral presentation and a
transcript shall be taken of that presentation.
[(2) If an amendment increases the standard above 27.5 miles
a gallon or decreases the standard below 26.0 miles a gallon,
the Secretary of Transportation shall submit the amendment to
Congress. The procedures of section 551 of the Energy Policy
and Conservation Act (42 U.S.C. 6421) apply to an amendment,
except that the 15 calendar days referred to in section 551(c)
and (d) of the Act (42 U.S.C. 6421(c), (d)) are deemed to be 60
calendar days, and the 5 calendar days referred to in section
551(f)(4)(A) of the Act (42 U.S.C. 6421(f)(4)(A)) are deemed to
be 20 calendar days. If either House of Congress disapproves
the amendment under those procedures, the amendment does not
take effect.]
(c) Amending Fuel Economy Standards.--
(1) In general.--Notwithstanding subsections (a) and
(b), the Secretary of Transportation--
(A) may prescribe a standard higher than that
required under subsection (b); or
(B) may prescribe an average fuel economy
standard for a class of automobiles, medium-
duty trucks, or heavy-duty trucks that is the
maximum feasible level for the model year,
despite being lower than the standard required
under subsection (b), if the Secretary, based
on clear and convincing evidence, that the
average fuel economy standard prescribed in
accordance with subsections (a) and (b) for
that class of vehicles in that model year is
shown not to be cost-effective.
(2) Requirements for lower standard.--Before adopting
an average fuel economy standard for a class of
automobiles, medium-duty trucks, or heavy-duty trucks
in a model year under paragraph (1)(B), the Secretary
of Transportation shall do the following:
(A) Notice of proposed rule.--Except for
standards to be promulgated by 2011, at least
30 months before the model year for which the
standard is to apply, the Secretary shall post
a notice of proposed rulemaking for the
proposed standard. The notice shall include a
detailed analysis of the basis for the
Secretary's determination under paragraph
(1)(B).
(B) Final rule.--At least 18 months before
the model year for which the standard is to
apply, the Secretary shall promulgate a final
rule establishing the standard.
(C) Report.--The Secretary shall submit a
report to Congress that outlines the steps that
need to be taken to avoid further reductions in
average fuel economy standards.
(3) Maximum feasible standard.--An average fuel
economy standard prescribed for a class of automobiles,
medium-duty trucks, or heavy-duty trucks in a model
year under paragraph (1) shall be the maximum feasible
standard.
(d) Exemptions.--(1) Except as provided in paragraph (3) of
this subsection, on application of a manufacturer that
manufactured (whether in the United States or not) fewer than
10,000 [passenger] automobiles in the model year 2 years before
the model year for which the application is made, the Secretary
of Transportation may exempt by regulation the manufacturer
from a standard under subsection (b) or (c) of this section. An
exemption for a model year applies only if the manufacturer
manufactures (whether in the United States or not) fewer than
10,000 [passenger] automobiles in the model year. The Secretary
may exempt a manufacturer only if the Secretary--
(A) finds that the applicable standard under those
subsections is more stringent than the maximum feasible
average fuel economy level that the manufacturer can
achieve; and
(B) prescribes by regulation an alternative average
fuel economy standard for the [passenger] automobiles
manufactured by the exempted manufacturer that the
Secretary decides is the maximum feasible average fuel
economy level for the manufacturers to which the
alternative standard applies.
(2) An alternative average fuel economy standard the
Secretary of Transportation prescribes under paragraph (1)(B)
of this subsection may apply to an individually exempted
manufacturer, to all automobiles to which this subsection
applies, or to classes of [passenger] automobiles, as defined
under regulations of the Secretary, manufactured by exempted
manufacturers.
(3) Notwithstanding paragraph (1) of this subsection, an
importer registered under section 30141(c) of this title may
not be exempted as a manufacturer under paragraph (1) for a
motor vehicle that the importer--
(A) imports; or
(B) brings into compliance with applicable motor
vehicle safety standards prescribed under chapter 301
of this title for an individual under section 30142 of
this title 30142.
(4) The Secretary of Transportation may prescribe the
contents of an application for an exemption.
(e) Emergency Vehicles.--(1) In this subsection, ``emergency
vehicle'' means an automobile manufactured primarily for use--
(A) as an ambulance or combination ambulance-hearse;
(B) by the United States Government or a State or
local government for law enforcement; or
(C) for other emergency uses prescribed by regulation
by the Secretary of Transportation.
(2) A manufacturer may elect to have the fuel economy of an
emergency vehicle excluded in applying a fuel economy standard
under subsection (a), (b), (c), or (d) of this section. The
election is made by providing written notice to the Secretary
of Transportation and to the Administrator of the Environmental
Protection Agency.
[(f) Considerations on Decisions on Maximum Feasible Average
Fuel Economy.--When deciding maximum feasible average fuel
economy under this section, the Secretary of Transportation
shall consider technological feasibility, economic
practicability, the effect of other motor vehicle standards of
the Government on fuel economy, and the need of the United
States to conserve energy.]
(f) Decisions on Maximum Feasible Average Fuel Economy.--
(1) In general.--When deciding maximum feasible
average fuel economy under this section, the Secretary
shall consider--
(A) economic practicability;
(B) the effect of other motor vehicle
standards of the Government on fuel economy;
(C) environmental impacts; and
(D) the need of the United States to conserve
energy.
(2) Limitations.--In setting any standard under
subsection (b), (c), or (d), the Secretary shall ensure
that each standard is the highest standard that--
(A) is technologically achievable;
(B) can be achieved without materially
reducing the overall safety of automobiles,
medium-duty trucks, and heavy-duty trucks
manufactured or sold in the United States;
(C) is not less than the standard for that
class of vehicles from any prior year; and
(D) is cost-effective.
(3) Determining cost-effectiveness.--
(A) In general.--In determining cost
effectiveness under paragraph (2)(D), the
Secretary shall take into account the total
value to the United States of reduced fuel use,
including the monetary value of the reduced
fuel use over the life of the vehicle.
(B) Additional factors for consideration by
secretary.--The Secretary shall consider in the
analysis the following factors:
(i) Economic security.
(ii) The impact of the oil or energy
intensity of the United States economy
on the sensitivity of the economy to
oil and other fuel price changes,
including the magnitude of gross
domestic product losses in response to
short term price shocks or long term
price increases.
(iii) National security, including
the impact of United States payments
for oil and other fuel imports on
political, economic, and military
developments in unstable or unfriendly
oil-exporting countries.
(iv) The uninternalized costs of
pipeline and storage oil seepage, and
for risk of oil spills from production,
handling, and transport, and related
landscape damage.
(v) The emissions of pollutants
including greenhouse gases over the
lifecycle of the fuel and the resulting
costs to human health, the economy, and
the environment.
(vi) Such additional factors as the
Secretary deems relevant.
(4) Minimum valuation.--When considering the value to
consumers of a gallon of gasoline saved, the Secretary
of Transportation shall use as a minimum value the
value of the gasoline prices projected by the Energy
Information Administration for the period covered by
the standard beginning in the year following the year
in which the standards are established.
(5) Cost-effective defined.--In this subsection, the
term ``cost-effective'' means that the total value to
the United States of reduced fuel use from a proposed
fuel economy standard is greater than or equal to the
total cost to the United States of such standard.
Notwithstanding this definition, the Secretary shall
not base the level of any standard on any technology
whose cost to the United States is substantially more
than the value to the United States of the reduction in
fuel use attributable to that technology.
(g) Requirements for Other Amendments.--(1) The Secretary of
Transportation may prescribe regulations amending an average
fuel economy standard prescribed under [subsection (a) or (d)]
subsection (b), (c), or (d) of this section if the amended
standard meets the requirements of subsection [(a) or (d),]
subsection (b), (c), or (d), as appropriate.
(2) When the Secretary of Transportation prescribes an
amendment under this section that makes an average fuel economy
standard more stringent, the Secretary shall prescribe the
amendment [(and submit the amendment to Congress when required
under subsection (c)(2) of this section)] at least 18 months
before the beginning of the model year to which the amendment
applies.
(h) Limitations.--In carrying out subsections (c), (f), and
(g) of this section, the Secretary of Transportation--
(1) may not consider the fuel economy of dedicated
automobiles; and
(2) shall consider dual fueled automobiles to be
operated only on gasoline or diesel fuel.
(i) Consultation.--The Secretary of Transportation shall
consult with the Secretary of Energy and the Administrator of
the Environmental Protection Agency in carrying out this
section and section 32903 of this title.
(j) Secretary of Energy Comments.--[(1) Before issuing a
notice proposing to prescribe or amend an average fuel economy
standard under subsection (a), (c), or (g) of this section, the
Secretary of Transportation shall give the Secretary of Energy
at least 10 days from the receipt of the notice during which
the Secretary of Energy may, if the Secretary of Energy
concludes that the proposed standard would adversely affect the
conservation goals of the Secretary of Energy, provide written
comments to the Secretary of Transportation about the impact of
the standard on those goals. To the extent the Secretary of
Transportation does not revise a proposed standard to take into
account comments of the Secretary of Energy on any adverse
impact of the standard, the Secretary of Transportation shall
include those comments in the notice.] (1) Before issuing a
notice proposing to prescribe or amend an average fuel economy
standard under subsection (b), (c), or (g) of this section, the
Secretary of Transportation shall give the Secretary of Energy
and Administrator of the Environmental Protection Agency at
least 10 days after the receipt of the notice during which the
Secretary of Energy and Administrator may, if the Secretary of
Energy or Administrator concludes that the proposed standard
would adversely affect the conservation goals of the Secretary
of Energy or environmental protection goals of the
Administrator, provide written comments to the Secretary of
Transportation about the impact of the standard on those goals.
To the extent the Secretary of Transportation does not revise a
proposed standard to take into account comments of the
Secretary of Energy or Administrator on any adverse impact of
the standard, the Secretary of Transportation shall include
those comments in the notice.
(2) 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 and provide the Secretary of Energy and the
Administrator a reasonable time to comment.
(k) Authority of the Secretary.--
(1) Vehicle attributes.--The authority of the
Secretary to prescribe by regulation average fuel
economy standards for automobiles, medium-duty trucks,
and heavy-duty trucks under this section includes the
authority--
(A) to prescribe standards based on vehicle
attributes and to express the standards in the
form of a mathematical function; and
(B) to issue regulations under this title
prescribing average fuel economy standards for
1 or more model years.
(2) Prohibition of uniform percentage increase.--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 attribute classes or categories already achieved in
a model year by a manufacturer.
Sec. 32902A. Requirement to manufacture flexible fuel automobiles
(a) In General.--For each model year, each manufacturer of
new automobiles described in subsection (b) shall ensure that
the percentage of such automobiles manufactured in a particular
model year that are flexible fuel vehicles shall be not less
than the percentage set forth for that model year in the
following table:
``If the model year is: The percentage of flexible fuel automobiles shall be:
``2012.......................................... 50 percent
``2013.......................................... 60 percent
``2014.......................................... 70 percent
``2015.......................................... 80 percent''
(b) Automobiles to Which Section Applies..--An automobile is
described in this subsection if it--
(1) is capable of operating on gasoline or diesel
fuel;
(2) is distributed in interstate commerce for sale in
the United States; and
(3) does not contain certain engines that the
Secretary of Transportation, in consultation with the
Administrator of the Environmental Protection Agency
and the Secretary of Energy, may temporarily exclude
from the definition because it is technologically
infeasible for the engines to have flexible fuel
capability at any time during a period that the
Secretaries and the Administrator are engaged in an
active research program with the vehicle manufacturers
to develop that capability for the engines.
Sec. 32903. Credits for exceeding average fuel economy standards
(a) Earning and Period for Applying Credits.--When the
average fuel economy of [passenger] automobiles manufactured by
a manufacturer in a particular model year exceeds an applicable
average fuel economy standard under [section 32902(b)-(d) of
this title] subsection (a), (c), or (d) of section 32902
(determined by the Secretary of Transportation without regard
to credits under this section), the manufacturer earns credits.
The credits may be applied to--
(1) any of the [3 consecutive model years] 5
consecutive model years immediately before the model
year for which the credits are earned; and
(2) to the extent not used under [clause (1) of this
subsection,] paragraph (1), any of the [3 consecutive
model years] 5 consecutive model years immediately
after the model year for which the credits are earned.
(b) Period of Availability and Plan for Future Credits.--(1)
Except as provided in paragraph (2) of this subsection, credits
under this section are available to a manufacturer at the end
of the model year in which earned.
(2)(A) Before the end of a model year, if a manufacturer has
reason to believe that its average fuel economy for [passenger]
automobiles will be less than the applicable standard for that
model year, the manufacturer may submit a plan to the Secretary
of Transportation demonstrating that the manufacturer will earn
sufficient credits under this section within the next 3 model
years to allow the manufacturer to meet that standard for the
model year involved. Unless the Secretary finds that the
manufacturer is unlikely to earn sufficient credits under the
plan, the Secretary shall approve the plan. Those credits are
available for the model year involved if--
(i) the Secretary approves the plan; and
(ii) the manufacturer earns those credits as provided
by the plan.
(B) If the average fuel economy of a manufacturer is less
than the applicable standard under [section 32902(b)-(d) of
this title] subsection (a), (c), or (d) of section 32902 after
applying credits under subsection (a)(1) of this section, the
Secretary of Transportation shall notify the manufacturer and
give the manufacturer a reasonable time (of at least 60 days)
to submit a plan.
(c) Determining number of credits. The number of credits a
manufacturer earns under this section equals the product of--
(1) the number of tenths of a mile a gallon by which
the average fuel economy of the [passenger] automobiles
manufactured by the manufacturer in the model year in
which the credits are earned exceeds the applicable
average fuel economy standard under [section 32902(b)-
(d) of this title] subsection (a), (c), or (d) of
section 32902; times
(2) the number of [passenger] automobiles
manufactured by the manufacturer during that model
year.
(d) Applying Credits for [Passenger] Automobiles.--The
Secretary of Transportation shall apply credits to a model year
on the basis of the number of tenths of a mile a gallon by
which the manufacturer involved was below the applicable
average fuel economy standard for that model year and the
number of [passenger] automobiles manufactured that model year
by the manufacturer. Credits applied to a model year are no
longer available for another model year. Before applying
credits, the Secretary shall give the manufacturer written
notice and reasonable opportunity to comment.
[(e) Applying Credits for Non-passenger Automobiles.--Credits
for a manufacturer of automobiles that are not passenger
automobiles are earned and applied to a model year in which the
average fuel economy of that class of automobiles is below the
applicable average fuel economy standard under section 32902(a)
of this title, to the same extent and in the same way as
provided in this section for passenger automobiles.]
(e) Credit Trading Among Manufacturers.--The Secretary of
Transportation may establish, by regulation, a corporate
average fuel economy credit trading program to allow
manufacturers whose automobiles exceed the average fuel economy
standards prescribed under section 32902 to earn credits to be
sold to manufacturers whose automobiles fail to achieve the
prescribed standards.
(f) Refund of Collected Penalty.--When a civil penalty has
been collected under this chapter from a manufacturer that has
earned credits under this section, the Secretary of the
Treasury shall refund to the manufacturer the amount of the
penalty to the extent the penalty is attributable to credits
available under this section.
* * * * * * *
Sec. 32908. Fuel economy information
(a) Definitions.--In this section--
(1) ``automobile'' includes an automobile rated at
not more than 8,500 pounds gross vehicle weight
regardless of whether the Secretary of Transportation
has applied this chapter to the automobile under
section 32901(a)(3)(B) of this title.
(2) ``dealer'' means a person residing or located in
a State, the District of Columbia, or a territory or
possession of the United States, and engaged in the
sale or distribution of new automobiles to the first
person (except a dealer buying as a dealer) that buys
the automobile in good faith other than for resale.
(b) Labeling Requirements and Contents.--(1) Under
regulations of the Administrator of the Environmental
Protection Agency, a manufacturer of automobiles shall attach a
label to a prominent place on each automobile manufactured in a
model year. The dealer shall maintain the label on the
automobile. The label shall contain the following information:
(A) the fuel economy of the automobile.
(B) the estimated annual fuel cost of operating the
automobile.
(C) the range of fuel economy of comparable
automobiles of all manufacturers.
(D) a statement that a booklet is available from the
dealer to assist in making a comparison of fuel economy
of other automobiles manufactured by all manufacturers
in that model year.
(E) the amount of the automobile fuel efficiency tax
imposed on the sale of the automobile under section
4064 of the Internal Revenue Code of 1986 (26 U.S.C.
4064).
(F) a label (or a logo imprinted on a label required
by this paragraph) that--
(i) reflects an automobile's performance on
the basis of criteria developed by the
Administrator to reflect the fuel economy and
greenhouse gas and other emissions consequences
of operating the automobile over its likely
useful life;
(ii) permits consumers to compare performance
results under clause (i) among all automobiles;
and
(iii) is designed to encourage the
manufacture and sale of automobiles that meet
or exceed applicable fuel economy standards
under section 32902.
(G) a fuelstar under paragraph (5).
[(F)] (H) other information required or authorized by
the Administrator that is related to the information
required by clauses (A)-(D) of this paragraph.
(2) The Administrator may allow a manufacturer to comply with
this subsection by--
(A) disclosing the information on the label required
under section 3 of the Automobile Information
Disclosure Act (15 U.S.C. 1232); and
(B) including the statement required by paragraph
(1)(E) of this subsection at a time and in a way that
takes into account special circumstances or
characteristics.
(3) For dedicated automobiles manufactured after model year
1992, the fuel economy of those automobiles under paragraph
(1)(A) of this subsection is the fuel economy for those
automobiles when operated on alternative fuel, measured under
section 32905(a) or (c) of this title, multiplied by .15. Each
label required under paragraph (1) of this subsection for dual
fueled automobiles shall--
(A) indicate the fuel economy of the automobile when
operated on gasoline or diesel fuel;
(B) clearly identify the automobile as a dual fueled
automobile;
(C) clearly identify the fuels on which the
automobile may be operated; and
(D) contain a statement informing the consumer that
the additional information required by subsection
(c)(2) of this section is published and distributed by
the Secretary of Energy.
(4) Green label program.--
(A) Marketing analysis.--Not later than 2 years after
the date of the enactment of the Ten-in-Ten Fuel
Economy Act, the Administrator shall implement a
consumer education program and execute marketing
strategies to improve consumer understanding of
automobile performance described in paragraph (1)(F).
(B) Eligibility.--Not later than 3 years after the
date described in subparagraph (A), the Administrator
shall issue requirements for the label or logo required
under paragraph (1)(F) to ensure that an automobile is
not eligible for the label or logo unless it--
(i) meets or exceeds the applicable fuel
economy standard; or
(ii) will have the lowest greenhouse gas
emissions over the useful life of the vehicle
of all vehicles in the vehicle attribute class
to which it belongs in that model year.
(5) Fuelstar program.--
(A) In general.--The Secretary shall establish a
program, to be known as the ``Fuelstar Program'', under
which stars shall be imprinted on or attached to the
label required by paragraph (1).
(B) Green stars.--Under the Fuelstar Program, a
manufacturer may include on the label maintained on an
automobile under paragraph (1)--
(i) 1 green star for any automobile that
meets the average fuel economy standard for the
model year under section 32902; and
(ii) 1 additional green star for each 2 miles
per gallon by which the automobile exceeds such
standard.
(C) Gold stars.--Under the Fuelstar Program, a
manufacturer may include a gold star on the label
maintained on an automobile under paragraph (1) if the
automobile attains a fuel economy of at least 50 miles
per gallon.
(c) Fuel Economy Information Booklet.--(1) The Administrator
shall prepare the booklet referred to in subsection (b)(1)(D)
of this section. The booklet--
(A) shall be simple and readily understandable;
(B) shall contain information on fuel economy and
estimated annual fuel costs of operating automobiles
manufactured in each model year; and
(C) may contain information on geographical or other
differences in estimated annual fuel costs.
(2)(A) For dual fueled automobiles manufactured after model
year 1992, the booklet published under paragraph (1) shall
contain additional information on--
(i) the energy efficiency and cost of operation of
those automobiles when operated on gasoline or diesel
fuel as compared to those automobiles when operated on
alternative fuel; and
(ii) the driving range of those automobiles when
operated on gasoline or diesel fuel as compared to
those automobiles when operated on alternative fuel.
(B) For dual fueled automobiles, the booklet published under
paragraph (1) also shall contain--
(i) information on the miles a gallon achieved by the
automobiles when operated on alternative fuel; and
(ii) a statement explaining how the information made
available under this paragraph can be expected to
change when the automobile is operated on mixtures of
alternative fuel and gasoline or diesel fuel.
(3) The Secretary of Energy shall publish and distribute the
booklet. The Administrator shall prescribe regulations
requiring dealers to make the booklet available to prospective
buyers.
(d) Disclosure.--A disclosure about fuel economy or estimated
annual fuel costs under this section does not establish a
warranty under a law of the United States or a State.
(e) Violations.--A violation of subsection (b) of this
section is--
(1) a violation of section 3 of the Automobile
Information Disclosure Act (15 U.S.C. 1232); and
(2) an unfair or deceptive act or practice in or
affecting commerce under the Federal Trade Commission
Act (15 U.S.C. 41 et seq.), except sections 5(m) and 18
(15 U.S.C. 45(m), 57a).
(f) Consultation.--The Administrator shall consult with the
Federal Trade Commission and the Secretaries of Transportation
and Energy in carrying out this section.
(g) Increasing Consumer Awareness of Flexible Fuel
Automobiles.--(1) The Secretary of Transportation shall
prescribe regulations that require the manufacturer of
automobiles distributed in interstate commerce for sale in the
United States--
(A) to prominently display a permanent badge or
emblem on the quarter panel or tailgate of each such
automobile that indicates such vehicle is capable of
operating on alternative fuel; and
(B) to include information in the owner's manual of
each such automobile information that describes--
(i) the capability of the automobile to
operate using alternative fuel;
(ii) the benefits of using alternative fuel,
including the renewable nature, and the
environmental benefits of using alternative
fuel; and
(C) to contain a fuel tank cap that is clearly
labeled to inform consumers that the automobile is
capable of operating on alternative fuel.
(2) The Secretary of Transportation shall collaborate with
autombile retailers to develop voluntary methods for providing
prospective purchasers of automobiles with information
regarding the benefits of using alternative fuel in
automobiles, including--
(A) the renewable nature of alternative fuel; and
(B) the environmental benefits of using alternative
fuel.
* * * * * * *
Sec. 32912. Civil penalties
(a) General Penalty.--A person that violates section 32911(a)
of this title is liable to the United States Government for a
civil penalty of not more than $ 10,000 for each violation. A
separate violation occurs for each day the violation continues.
(b) Penalty for Manufacturer Violations of Fuel Economy
Standards.--Except as provided in subsection (c) of this
section, a manufacturer that violates a standard prescribed for
a model year under section 32902 of this title is liable to the
Government for a civil penalty of $5 multiplied by each .1 of a
mile a gallon by which the applicable average fuel economy
standard under that section exceeds the average fuel economy--
(1) calculated under section 32904(a)(1)(A) or (B) of
this title for automobiles to which the standard
applies manufactured by the manufacturer during the
model year;
(2) multiplied by the number of those automobiles;
and
(3) reduced by the credits available to the
manufacturer under section 32903 of this title for the
model year.
(c) Higher Penalty Amounts.--(1)(A) The Secretary of
Transportation shall prescribe by regulation a higher amount
for each .1 of a mile a gallon to be used in calculating a
civil penalty under subsection (b) of this section, if the
Secretary decides that the increase in the penalty--
(i) will result in, or substantially further,
substantial energy conservation for automobiles in
model years in which the increased penalty may be
imposed; and
(ii) will not have a substantial deleterious impact
on the economy of the United States, a State, or a
region of a State.
(B) The amount prescribed under subparagraph (A) of this
paragraph may not be more than $ 10 for each .1 of a mile a
gallon.
(C) The Secretary may make a decision under subparagraph
(A)(ii) of this paragraph only when the Secretary decides that
it is likely that the increase in the penalty will not--
(i) cause a significant increase in unemployment in a
State or a region of a State;
(ii) adversely affect competition; or
(iii) cause a significant increase in automobile
imports.
(D) A higher amount prescribed under subparagraph (A) of this
paragraph is effective for the model year beginning at least 18
months after the regulation stating the higher amount becomes
final.
(2) The Secretary shall publish in the Federal Register a
proposed regulation under this subsection and a statement of
the basis for the regulation and provide each manufacturer of
automobiles a copy of the proposed regulation and the
statement. The Secretary shall provide a period of at least 45
days for written public comments on the proposed regulation.
The Secretary shall submit a copy of the proposed regulation to
the Federal Trade Commission and request the Commission to
comment on the proposed regulation within that period. After
that period, the Secretary shall give interested persons and
the Commission an opportunity at a public hearing to present
oral information, views, and arguments and to direct questions
about disputed issues of material fact to--
(A) other interested persons making oral
presentations;
(B) employees and contractors of the Government that
made written comments or an oral presentation or
participated in the development or consideration of the
proposed regulation; and
(C) experts and consultants that provided information
to a person that the person includes, or refers to, in
an oral presentation.
(3) The Secretary may restrict the questions of an interested
person and the Commission when the Secretary decides that the
questions are duplicative or not likely to result in a timely
and effective resolution of the issues. A transcript shall be
kept of a public hearing under this subsection. A copy of the
transcript and written comments shall be available to the
public at the cost of reproduction.
(4) The Secretary shall publish a regulation prescribed under
this subsection in the Federal Register with the decisions
required under paragraph (1) of this subsection.
(5) An officer or employee of a department, agency, or
instrumentality of the Government violates section 1905 of
title 18 by disclosing, except in an in camera proceeding by
the Secretary or a court, information--
(A) provided to the Secretary or the court during
consideration or review of a regulation prescribed
under this subsection; and
(B) decided by the Secretary to be confidential under
section 11(d) of the Energy Supply and Environmental
Coordination Act of 1974 (15 U.S.C. 796(d)).
(d) Written Notice Requirement.--The Secretary shall impose a
penalty under this section by written notice.
(e) Use of Civil Penalties.--For fiscal year 2008 and each
fiscal year thereafter, from the total amount deposited in the
general fund of the Treasury during the preceding fiscal year
from fines, penalties, and other funds obtained through
enforcement actions conducted pursuant to this section
(including funds obtained under consent decrees), the Secretary
of the Treasury, subject to the availability of appropriations,
shall--
(1) transfer 50 percent of such total amount to the
account providing appropriations to the Secretary of
Transportation for the administration of this chapter,
which shall be used by the Secretary to carry out a
program of research and development into fuel saving
automotive technologies and to support rulemaking under
this chapter; and
(2) transfer 50 percent of such total amount to the
Energy Security Fund established by section 118(a) of
the Ten-in-Ten Fuel Economy Act.
* * * * * * *
[Sec. 32917. Standards for executive agency automobiles
[(a) Definition.--In this section, ``executive agency'' has
the same meaning given that term in section 105 of title 5.
[(b) Fleet Average Fuel Economy.--(1) The President shall
prescribe regulations that require passenger automobiles leased
for at least 60 consecutive days or bought by executive
agencies in a fiscal year to achieve a fleet average fuel
economy (determined under paragraph (2) of this subsection) for
that year of at least the greater of--
[(A) 18 miles a gallon; or
[(B) the applicable average fuel economy standard
under section 32902(b) or (c) of this title for the
model year that includes January 1 of that fiscal year.
[(2) Fleet average fuel economy is--
[(A) the total number of passenger automobiles leased
for at least 60 consecutive days or bought by executive
agencies in a fiscal year (except automobiles designed
for combat-related missions, law enforcement work, or
emergency rescue work); divided by
[(B) the sum of the fractions obtained by dividing
the number of automobiles of each model leased or
bought by the fuel economy of that model.]
Sec. 32917. Standards for executive agency automobiles
(a) Fuel Efficiency.--The head of an Executive agency shall
ensure that each new automobile procured by the Executive
agency is as fuel efficient as practicable.
(b) Definitions.--In this section:
(1) Executive agency.--The term ``Executive agency''
has the meaning given that term in section 105 of title
5.
(2) New automobile.--The term ``new automobile'',
with respect to the fleet of automobiles of an
executive agency, means an automobile that is leased
for at least 60 consecutive days or bought, by or for
the Executive agency, after September 30, 2008. The
term does not include any vehicle designed for combat-
related missions, law enforcement work, or emergency
rescue work.