Case Overview, CAFE Standards (107th Congress)

This document provides background information and summarizes the debate over corporate average fuel economy standards. The links to the left will lead you to public documents that we have found.

          In the wake of rising oil prices and mounting criticism of this country's dependence on foreign oil, Congress took action in 1975 to mandate minimum levels of fuel efficiency for new automobiles (foreign and domestic) sold in this country. The mechanism was not to place requirements on individual models but to place a broad standard applicable to a car manufacturer's entire fleet. Thus all cars sold by Ford in a single year must average the fuel efficiency number set by law. The company can sell any models it wants with any fuel efficiency for that model it wants, provided that all of its cars collectively met the standard. The miles per gallon figures came to be known as the Corporate Average Fuel Economy (or CAFÉ) standards.
           These standards are not popular with the automobile manufacturers as they limit their freedom to sell as many big cars as they can. Under the law selling large cars with poor mileage must be balanced by enough fuel efficient small cars to offset them. For years they've argued against raising the CAFÉ standards on grounds that it has an especially negative effect on American car companies since they tend to sell larger cars than foreign manufacturers. (Over time the distinction between foreign and American car companies has blurred considerably as individual car companies manufacture their parts and assemble their cars all over the world. Toyota, for example, builds some of its cars in Kentucky.)
           As SUV's and minivans have become more popular with the American public, the average fuel economy for all new vehicles has declined. SUV's and minivans are classified as light trucks and light trucks are subject to less restrictive CAFÉ standards than are conventional passenger cars. Environmental groups have repeatedly tried to raise the CAFÉ standards to reduce the consumption of oil. Despite the general success of environmental groups along a range of issues, the CAFÉ standards have been a disappointment for them. Said one environmental lobbyist interviewed in the summer of 2002, "there really haven't been any adjustments to the standards for about 15 years. And if fact. . . the overall actual performance, how many miles to the gallon they get, is at a 21 year low."
           The automobile companies have lobbied furiously to prevent the CAFÉ standards from being raised. They make two compelling arguments. First, as one industry lobbyist put it, "You have the potential of putting U.S. jobs at risk." More fuel efficient cars means smaller cars which means more of them made by foreign manufacturers. The fear of job losses has spurred the United Auto Workers (UAW) to work alongside the car companies against the CAFÉ standards. Second, smaller cars are not as safe. The same lobbyist explains, "physics tells you that a smaller lighter vehicle is not going to be as safe for the occupants of that vehicle as something heavier and larger." Environmental groups counter that new technologies can be put into effect to significantly raise miles per gallon without making cars much lighter. Further, in the wake of the terrorist attacks of 9/11 and the renewed concern over U.S. dependence on foreign oil, environmentalists also highlighted the additional benefit of reducing the nation's need for oil that would come about with higher CAFÉ standards.
           These familiar arguments came to the fore once again as the CAFÉ standards issue arose again in the 107th Congress. Bills that proposed raised the mileage levels failed to emerge from committees in both the House and the Senate. An amendment attached to the Securing America's Future Energy Act of 2001 that would have accomplished the same goal was stripped from that bill before it was enacted.