WASHINGTON, D.C. - Senator John F. Kerry (D-MA) today announced that he and Sen. John McCain (R-AZ) have agreed to a bipartisan proposal to increase fuel efficiency and help reduce reliance on foreign oil while cutting pollution. The agreement and a statement from Sen. Kerry follows below.

"This bipartisan agreement to raise fuel efficiency standards reflects the urgency of offering more than rhetoric to reduce our dependence on foreign oil, and ultimately to reduce pollution. September 11th made clear why we can't afford an energy debate let alone an energy plan that fails to understand the need to break free of foreign oil and the ways to do it," said Senator Kerry. "There's plenty of money being spent in Washington, D.C. to stop us from passing real energy security for America - this agreement is another step towards overcoming the power of big money and achieving real progress. It may not stop the auto industry from using the same alarmist tactics they recycle every time Congress tries to be responsible about fuel efficiency, but it does reflect the commitment of Democrats and Republicans to deliver an energy policy which - without risking job loss or compromising safety -- will reduce our dependency on foreign oil -- improving efficiency while providing new regulatory flexibility for manufacturers."

Corporate Average Fuel Economy (CAFE) Summary of Bipartisan Agreement March 6, 2002

TITLE I. IMPROVED FUEL ECONOMY FOR VEHICLES

Fuel Economy - This section combines passenger car and light truck fleets into one category for the purpose of calculating the corporate average fuel economy (CAFE) of a manufacturer's domestic fleet. The Secretary is required to conduct a rulemaking to prescribe fuel economy standards for these vehicles beginning in model year 2007 in order to achieve a combined average fuel economy standard of 36 mpg by model year 2015. The Secretary is required to promulgate standards within 24 months of enactment of this Act. Failure to set standards within this period would result in establishment of a default standard.

Elimination of 2-Fleet Rule - This section eliminates the statutory distinction between a manufacturer's foreign and domestic fleets for the purpose of calculating fuel economy. This change affects vehicles in model year 2007 and after. This rule was included in the original CAFE legislation to protect domestic employment. There was concern that U.S. manufacturers might opt to import small cars to meet CAFE standards. Many foreign manufacturers are producing cars in the U.S., and NAFTA will soon allow vehicles made in Canada and Mexico to be counted by manufacturers as part of their domestic fleets. The National Academy of Sciences (NAS) recommended elimination of this distinction and found no evidence that the distinction had a perceptible effect on total employment in the U.S. auto industry.

Elimination of Dual Fuel Credit - This section eliminates the dual fuel credits system, which allows manufacturers to earn credits for manufacturing vehicles that burn gasoline and other alternative fuels such as ethanol. Due to a lack of infrastructure (i.e., the general unavailability of ethanol at fueling stations), this provision has not had its intended effect. The NAS recommended its elimination.

Low Production Volume - This section allows the Secretary of Transportation to set CAFE standards for manufacturers that produce less than one half of 1 percent (0.5%) of the total U.S. fleet (which is approximately 75,000 vehicles or less). This protects small manufacturers and allows for market penetration by start-up manufacturers.

High Occupancy Vehicle (HOV) Exception - This section permits states to allow hybrid vehicles (with fewer than 2 occupants), or other alternative-fueled vehicles certified by the Secretary of Transportation, to travel in high-occupancy vehicle lanes. "Truth in Testing" Study - There is a widely acknowledged discrepancy between on-road fuel economy performance and EPA-tested fuel economy. This section requires the Administrator of EPA to conduct a study of the testing methods used to establish the fuel economy of passenger cars and light trucks. The results of those tests are to be compared with the actual on-road performance of those vehicles, and the Administrator is to report to Congress on the results of that study.

Fuel Economy Labeling - This section directs Administrator of EPA to establish a label (to be posted on the window sticker) for new car models that meet certain environmental criteria. The purpose of these labels is to provide information to consumers on the fuel economy and other environmental benefits of a particular vehicle, and allow useful comparisons among models. In addition to fuel economy, the Administrator is required to consider greenhouse gas and other emissions expected over the life of the vehicle. The bill would direct the Secretary of Transportation to establish a "FuelStar" rating system designed to encourage the manufacture and sale of high fuel economy vehicles.

DOT Certification - This section requires the Secretary of Transportation, in consultation with the Administrator of the EPA, to annually certify and report to Congress the annual reduction in U.S. consumption of petroleum used for vehicle fuel, and the annual reduction in greenhouse gas emissions attributable to the implementation of the average fuel economy standards, imposed under the act.

DOT Engineering Award Program - This section establishes engineering prizes for the company that is first to produce vehicles with dramatically improved fuel economy. The qualifying vehicle must be part of a manufacturer's domestic fleet and must meet all applicable environmental and safety standards. In addition, the first automobile manufacturer whose domestic fleet is certified by the Secretary of Transportation to have achieved a fuel economy average of 36 mpg shall receive a manufacturer's award in recognition of its commitment to meeting the goals of reducing U.S. dependence on imported oil, cutting greenhouse gases, and other harmful emissions.

TITLE II. MARKET-BASED INITIATIVES FOR GREENHOUSE GAS REDUCTION

Credit Registration and Trading - This section establishes a national registry at the Department of Commerce. The registry would allow for all industries (including auto manufacturers) to register and trade credits earned from the reduction of emissions (e.g., carbon dioxide and other greenhouse gases).

The registry would provide a verification process to ensure the legitimacy of the credits. Each credit would be serialized to allow for tracking. The registry would serve as an essential element in any national emissions trading system. Companies participating in the buying and selling of credits would be required to notify the registry of new ownership.

The bill would authorize DOT to allow transfer of CAFE credits into the registry and also allow auto manufacturers to purchase verified greenhouse gas credits from the registry to offset up to 10 percent of the applicable CAFE requirement (phased in at 2% per year -- over the first 5 years). Equivalency of greenhouse gas and CAFE credits will be determined by the Secretary of Transportation, in consultation with the Secretary of Commerce and an interagency implementing panel established under the bill.

TITLE III. VEHICLE SAFETY

Safety of Passenger Cars and Light Trucks -- This section directs NHTSA to issue rulemakings on safety standards for rollover crashes (including roof crush resistance, improved seat structure, and safety belts) and aggressivity (i.e., compatibility of vehicles with other vehicles in collisions).

Safety Rating Labels - This section requires the Secretary to establish test criteria for use by manufacturers in determining crashworthiness and overall safety of vehicles. The Secretary is required to prescribe a system that is easily understandable by the public. This section also requires manufacturers to post this safety rating information on the window of every new vehicle.

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