II 

110TH CONGRESS 

1ST SESSION S. 767 

To increase fuel economy standards for automobiles and for other purposes. 

IN THE SENATE OF THE UNITED STATES 

MARCH 6, 2007 

Mr. OBAMA (for himself, Mr. LUGAR, Mr. BIDEN, Mr. SMITH, Mr. BINGAMAN, 

Mr. COLEMAN, and Mr. SPECTER) introduced the following bill; which 

was read twice and referred to the Committee on Commerce, Science, and 

Transportation 

A BILL 

To increase fuel economy standards for automobiles and for 

other purposes. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Fuel Economy Reform 

5 Act’’. 

6 SEC. 2. FINDINGS. 

7 Congress makes the following findings: 

8 (1) United States dependence on oil imports im9 poses tremendous burdens on the economy, foreign 

10 policy, and military of the United States. 


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1 (2) According to the Energy Information Ad2 ministration, 60 percent of the crude oil and petro3 leum products consumed in the United States be4 tween April 2005 and March 2006 (12,400,000 bar5 rels per day) were imported. At a cost of $75 per 

6 barrel of oil, people in the United States remit more 

7 than $600,000 per minute to other countries for pe8 troleum. 

9 (3) A significant percentage of these petroleum 

10 imports originate in countries controlled by regimes 

11 that are unstable or openly hostile to the interests 

12 of the United States. Dependence on production 

13 from these countries contributes to the volatility of 

14 domestic and global markets and the ‘‘risk pre15 mium’’ paid by consumers in the United States. 

16 (4) The Energy Information Administration 

17 projects that the total petroleum demand in the 

18 United States will increase by 23 percent between 

19 2006 and 2026, while domestic crude production is 

20 expected to decrease by 11 percent, resulting in an 

21 anticipated 28 percent increase in petroleum im22 ports. Absent significant action, the United States 

23 will become more vulnerable to oil price increases, 

24 more dependent upon foreign oil, and less able to 

25 pursue national interests. 


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1 (5) Two-thirds of all domestic oil use occurs in 

2 the transportation sector, which is 97 percent reliant 

3 upon petroleum-based fuels. Passenger vehicles, in4 cluding light trucks under 10,000 pounds gross vehi5 cle weight, represent over 60 percent of the oil used 

6 in the transportation sector. 

7 (6) Corporate average fuel economy of all cars 

8 and trucks improved by 70 percent between 1975 

9 and 1987. Between 1987 and 2006, fuel economy 

10 improvements have stagnated and the fuel economy 

11 of the United States is lower than many developed 

12 countries and some developing countries. 

13 (7) Significant improvements in engine tech14 nology occurred between 1986 and 2006. These ad15 vances have been used to make vehicles larger and 

16 more powerful, and have not focused solely on in17 creasing fuel economy. 

18 (8) According to a 2002 fuel economy report by 

19 the National Academy of Sciences, fuel economy can 

20 be increased without negatively impacting the safety 

21 of cars and trucks in the United States. Some new 

22 technologies can increase both safety and fuel econ23 omy (such as high strength materials, unibody de24 sign, lower bumpers). Design changes related to fuel 

25 economy also present opportunities to reduce the inVerDate Aug 31 2005 22:25 Mar 08, 2007 Jkt 059200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S767.IS S767

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1 compatibility of tall, stiff, heavy vehicles with the 

2 majority of vehicles on the road. 

3 (9) Significant change must occur to strengthen 

4 the economic competitiveness of the domestic auto 

5 industry. According to a recent study by the Univer6 sity of Michigan, a sustained gasoline price of $2.86 

7 per gallon would lead Detroit’s Big 3 automakers’ 

8 profits to shrink by $7,000,000,000 as they absorb 

9 75 percent of the lost vehicle sales. This would put 

10 nearly 300,000 people in the United States out of 

11 work. 

12 (10) Opportunities exist to strengthen the do13 mestic vehicle industry while improving fuel econ14 omy. A 2004 study performed by the University of 

15 Michigan concludes that providing $1,500,000,000 

16 in tax incentives over a 10-year period to encourage 

17 domestic manufacturers and parts facilities to 

18 produce clean cars will lead to a gain of nearly 

19 60,000 domestic jobs and pay for itself through the 

20 resulting increase in domestic tax receipts. 

21 SEC. 3. DEFINITION OF AUTOMOBILE AND PASSENGER 

22 AUTOMOBILE. 

23 (a) DEFINITION OF AUTOMOBILE.— 

24 (1) IN GENERAL.—Paragraph (3) of section 

25 32901(a) of title 49, United States Code, is amendVerDate Aug 31 2005 22:25 Mar 08, 2007 Jkt 059200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\S767.IS S767

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1 ed by striking ‘‘rated at—’’ and all that follows 

2 through the period at the end and inserting ‘‘rated 

3 at not more than 10,000 pounds gross vehicle 

4 weight.’’. 

5 (2) FUEL ECONOMY INFORMATION.—Section 

6 32908(a) of such title is amended, by striking ‘‘sec7 tion—’’ and all that follows through ‘‘(2)’’ and in8 serting ‘‘section, the term’’. 

9 (3) EFFECTIVE DATE.—The amendments made 

10 by paragraphs (1) and (2) shall apply to model year 

11 2010 and each subsequent model year. 

12 (b) DEFINITION OF PASSENGER AUTOMOBILE.— 

13 (1) IN GENERAL.—Paragraph (16) of section 

14 32901(a) of such title is amended by striking ‘‘, but 

15 does not include’’ and all that follows through the 

16 end and inserting a period. 

17 (2) EFFECTIVE DATE.—The amendment made 

18 by paragraph (1) shall apply to model year 2012 

19 and each subsequent model year. 

20 SEC. 4. AVERAGE FUEL ECONOMY STANDARDS. 

21 (a) STANDARDS.—Section 32902 of title 49, United 

22 States Code, is amended— 

23 (1) in subsection (a)— 


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1 (A) in the heading, by inserting ‘‘MANU2 FACTURED BEFORE MODEL YEAR 2013’’ after 

3 ‘‘NON-PASSENGER AUTOMOBILES’’; and 

4 (B) by adding at the end the following: 

5 ‘‘This subsection shall not apply to automobiles 

6 manufactured after model year 2012.’’; 

7 (2) in subsection (b)— 

8 (A) in the heading, by inserting ‘‘MANU9 FACTURED BEFORE MODEL YEAR 2013’’ after 

10 ‘‘PASSENGER AUTOMOBILES’’; 

11 (B) by inserting ‘‘and before model year 

12 2010’’ after ‘‘1984’’; and 

13 (C) by adding at the end the following: 

14 ‘‘Such standard shall be increased by 4 percent 

15 per year for model years 2010 through 2012 

16 (rounded to the nearest 1/10 mile per gallon)’’; 

17 (3) by amending subsection (c) to read as fol18 lows: 

19 ‘‘(c) AUTOMOBILES MANUFACTURED AFTER MODEL

20 YEAR 2012.—(1)(A) Not later than 18 months before the 

21 beginning of each model year after model year 2012, the 

22 Secretary of Transportation shall prescribe, by regula23 tion— 


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1 ‘‘(i) an average fuel economy standard for auto2 mobiles manufactured by a manufacturer in that 

3 model year; or 

4 ‘‘(ii) based on 1 or more vehicle attributes that 

5 relate to fuel economy— 

6 ‘‘(I) separate average fuel economy stand7 ards for different classes of automobiles; or 

8 ‘‘(II) average fuel economy standards ex9 pressed in the form of a mathematical function. 

10 ‘‘(B)(i) Except as provided under paragraphs (3) and 

11 (4) and subsection (d), average fuel economy standards 

12 under subparagraph (A) shall attain a projected aggregate 

13 level of average fuel economy of 27.5 miles per gallon for 

14 all automobiles manufactured by all manufacturers for 

15 model year 2013. 

16 ‘‘(ii) The projected aggregate level of average fuel 

17 economy for model year 2014 and each model year there18 after shall be increased by 4 percent over the level of the 

19 prior model year (rounded to the nearest 1/10 mile per 

20 gallon). 

21 ‘‘(2) In addition to the average fuel economy stand22 ards under paragraph (1), each manufacturer of pas23 senger automobiles shall be subject to an average fuel 

24 economy standard for passenger automobiles manufac25 tured by a manufacturer in a model year that shall be 


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1 equal to 92 percent of the average fuel economy projected 

2 by the Secretary for all passenger automobiles manufac3 tured by all manufacturers in that model year. An average 

4 fuel economy standard under this subparagraph for a 

5 model year shall be promulgated at the same time as the 

6 standard under paragraph (1) for such model year. 

7 ‘‘(3) If the actual aggregate level of average fuel 

8 economy achieved by manufacturers for each of 3 consecu9 tive model years is 5 percent or more less than the pro10 jected aggregate level of average fuel economy for such 

11 model year, the Secretary may make appropriate adjust12 ments to the standards prescribed under this subsection. 

13 ‘‘(4)(A) Notwithstanding paragraphs (1) through (3) 

14 and subsection (b), the Secretary of Transportation may 

15 prescribe a lower average fuel economy standard for 1 or 

16 more model years if the Secretary of Transportation, in 

17 consultation with the Secretary of Energy, finds, by clear 

18 and convincing evidence, that the minimum standards pre19 scribed under paragraph (1)(B) or (3) or subsection (b) 

20 for each model year— 

21 ‘‘(i) are technologically not achievable; 

22 ‘‘(ii) cannot be achieved without materially re23 ducing the overall safety of automobiles manufac24 tured or sold in the United States and no offsetting 


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1 safety improvements can be practicably implemented 

2 for that model year; or 

3 ‘‘(iii) is shown not to be cost effective. 

4 ‘‘(B) If a lower standard is prescribed for a model 

5 year under subparagraph (A), such standard shall be the 

6 maximum standard that— 

7 ‘‘(i) is technologically achievable; 

8 ‘‘(ii) can be achieved without materially reduc9 ing the overall safety of automobiles manufactured 

10 or sold in the United States; and 

11 ‘‘(iii) is cost effective. 

12 ‘‘(5) In determining cost effectiveness under para13 graph (4)(A)(iii), the Secretary of Transportation shall 

14 take into account the total value to the United States of 

15 reduced petroleum use, including the value of reducing ex16 ternal costs of petroleum use, using a value for such costs 

17 equal to 50 percent of the value of a gallon of gasoline 

18 saved or the amount determined in an analysis of the ex19 ternal costs of petroleum use that considers— 

20 ‘‘(A) value to consumers; 

21 ‘‘(B) economic security; 

22 ‘‘(C) national security; 

23 ‘‘(D) foreign policy; 

24 ‘‘(E) the impact of oil use— 


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1 ‘‘(i) on sustained cartel rents paid to for2 eign suppliers; 

3 ‘‘(ii) on long-run potential gross domestic 

4 product due to higher normal-market oil price 

5 levels, including inflationary impacts; 

6 ‘‘(iii) on import costs, wealth transfers, 

7 and potential gross domestic product due to in8 creased trade imbalances; 

9 ‘‘(iv) on import costs and wealth transfers 

10 during oil shocks; 

11 ‘‘(v) on macroeconomic dislocation and ad12 justment costs during oil shocks; 

13 ‘‘(vi) on the cost of existing energy security 

14 policies, including the management of the Stra15 tegic Petroleum Reserve; 

16 ‘‘(vii) on the timing and severity of the oil 

17 peaking problem; 

18 ‘‘(viii) on the risk, probability, size, and 

19 duration of oil supply disruptions; 

20 ‘‘(ix) on OPEC strategic behavior and 

21 long-run oil pricing; 

22 ‘‘(x) on the short term elasticity of energy 

23 demand and the magnitude of price increases 

24 resulting from a supply shock; 


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1 ‘‘(xi) on oil imports, military costs, and re2 lated security costs, including intelligence, 

3 homeland security, sea lane security and infra4 structure, and other military activities; 

5 ‘‘(xii) on oil imports, diplomatic and for6 eign policy flexibility, and connections to geo7 political strife, terrorism, and international de8 velopment activities; 

9 ‘‘(xiii) on all relevant environmental haz10 ards under the jurisdiction of the Environ11 mental Protection Agency; and 

12 ‘‘(xiv) on well-to-wheels urban and local air 

13 emissions of ‘pollutants’ and their 

14 uninternalized costs; 

15 ‘‘(F) the impact of the oil or energy intensity 

16 of the United States economy on the sensitivity of 

17 the economy to oil price changes, including the mag18 nitude of gross domestic product losses in response 

19 to short term price shocks or long term price in20 creases; 

21 ‘‘(G) the impact of United States payments for 

22 oil imports on political, economic, and military devel23 opments in unstable or unfriendly oil exporting 

24 countries; 


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1 ‘‘(H) the uninternalized costs of pipeline and 

2 storage oil seepage, and for risk of oil spills from 

3 production, handling, and transport, and related 

4 landscape damage; and 

5 ‘‘(I) additional relevant factors, as determined 

6 by the Secretary. 

7 ‘‘(6) When considering the value to consumers of a 

8 gallon of gasoline saved, the Secretary of Transportation 

9 may not use a value that is less than the greatest of— 

10 ‘‘(A) the average national cost of a gallon of 

11 gasoline sold in the United States during the 12- 

12 month period ending on the date on which the new 

13 fuel economy standard is proposed; 

14 ‘‘(B) the most recent weekly estimate by the 

15 Energy Information Administration of the Depart16 ment of Energy of the average national cost of a 

17 gallon of gasoline (all grades) sold in the United 

18 States; or 

19 ‘‘(C) the gasoline prices projected by the En20 ergy Information Administration for the 20-year pe21 riod beginning in the year following the year in 

22 which the standards are established. 

23 ‘‘(7) In prescribing standards under this subsection, 

24 the Secretary may prescribe standards for 1 or more 

25 model years. 


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1 ‘‘(8)(A) Not later than December 31, 2016, the Sec2 retary of Transportation, the Secretary of Energy, and the 

3 Administrator of the Environmental Protection Agency 

4 shall submit a joint report to Congress on the state of 

5 global automotive efficiency technology development, and 

6 on the accuracy of tests used to measure fuel economy 

7 of automobiles under section 32904(c), utilizing the study 

8 and assessment of the National Academy of Sciences re9 ferred to in subparagraph (B). 

10 ‘‘(B) The Secretary of Transportation shall enter into 

11 appropriate arrangements with the National Academy of 

12 Sciences to conduct a comprehensive study of the techno13 logical opportunities to enhance fuel economy and an anal14 ysis and assessment of the accuracy of fuel economy tests 

15 used by the Administrator of the Environmental Protec16 tion Agency to measure fuel economy for each model 

17 under section 32904(c). Such analysis and assessment 

18 shall identify any additional factors or methods that 

19 should be included in tests to measure fuel economy for 

20 each model to more accurately reflect actual fuel economy 

21 of automobiles. The Secretary of Transportation and the 

22 Administrator of the Environmental Protection Agency 

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1 duct the study, analysis, and assessment under this sub2 paragraph. 

3 ‘‘(C) The report submitted under subparagraph (A) 

4 shall include— 

5 ‘‘(i) the study of the National Academy of 

6 Sciences referred to in subparagraph (B); and 

7 ‘‘(ii) an assessment by the Secretary of Trans8 portation of technological opportunities to enhance 

9 fuel economy and opportunities to increase overall 

10 fleet safety. 

11 ‘‘(D) The report submitted under subparagraph (A) 

12 shall identify and examine additional opportunities to re13 form the regulatory structure under this chapter, includ14 ing approaches that seek to merge vehicle and fuel require15 ments into a single system that achieves equal or greater 

16 reduction in petroleum use and environmental benefits 

17 than the amount of petroleum use and environmental ben18 efits that have been achieved as of the date of the enact19 ment of this Act. 

20 ‘‘(E) The report submitted under subparagraph (A) 

21 shall— 

22 ‘‘(i) include conclusions reached by the Admin23 istrator of the Environmental Protection Agency, as 

24 a result of detailed analysis and public comment, on 

25 the accuracy of fuel economy tests as in use during 


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1 the period beginning on the date that is 5 years be2 fore the completion of the report and ends on the 

3 date of such completion; 

4 ‘‘(ii) identify any additional factors that the Ad5 ministrator determines should be included in tests to 

6 measure fuel economy for each model to more accu7 rately reflect actual fuel economy of automobiles; 

8 and 

9 ‘‘(iii) include a description of options, formu10 lated by the Secretary of Transportation and the 

11 Administrator, to incorporate such additional factors 

12 in fuel economy tests in a manner that will not ef13 fectively increase or decrease average fuel economy 

14 for any automobile manufacturer.’’; and 

15 (4) in subsection (g)(2), by striking ‘‘(and sub16 mit the amendment to Congress when required 

17 under subsection (c)(2) of this section)’’. 

18 (b) CONFORMING AMENDMENTS.— 

19 (1) IN GENERAL.—Chapter 329 of title 49, 

20 United States Code, is amended— 

21 (A) in section 32903— 

22 (i) by striking ‘‘passenger’’ each place 

23 it appears; 

24 (ii) by striking ‘‘section 32902(b)–(d) 

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1 serting ‘‘subsection (c) or (d) of section 

2 32902’’; 

3 (iii) by striking subsection (e); and 

4 (iv) by redesignating subsection (f) as 

5 subsection (e); and 

6 (B) in section 32904— 

7 (i) in subsection (a)— 

8 (I) by striking ‘‘passenger’’ each 

9 place it appears; and 

10 (II) in paragraph (1), by striking 

11 ‘‘subject to’’ and all that follows 

12 through ‘‘section 32902(b)–(d) of this 

13 title’’ and inserting ‘‘subject to sub14 section (c) or (d) of section 32902’’; 

15 and 

16 (ii) in subsection (b)(1)(B), by strik17 ing ‘‘under this chapter’’ and inserting 

18 ‘‘under section 32902(c)(2)’’. 

19 (2) EFFECTIVE DATE.—The amendments made 

20 by this section shall apply to automobiles manufac21 tured after model year 2012. 

22 SEC. 5. CREDIT TRADING, COMPLIANCE, AND JUDICIAL RE23 VIEW. 

24 (a) CREDIT TRADING.—Section 32903(a) of title 49, 

25 United States Code, is amended— 


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1 (1) by inserting ‘‘Credits earned by a manufac2 turer under this section may be sold to any other 

3 manufacturer and used as if earned by that manu4 facturer, except that credits earned by a manufac5 turer described in clause (i) of section 

6 32904(b)(1)(A) may only be sold to a manufacturer 

7 described such clause (i) and credits earned by a 

8 manufacturer described in clause (ii) of such section 

9 may only be sold to a manufacturer described in 

10 such clause (ii).’’ after ‘‘earns credits.’’; 

11 (2) by striking ‘‘3 consecutive model years im12 mediately’’ each place it appears and inserting 

13 ‘‘model years’’; and 

14 (3) effective for model years after 2012, the 

15 sentence added by paragraph (1) of this subsection 

16 is amended by inserting ‘‘for purposes of compliance 

17 with section 32902(c)(2)’’ after ‘‘except that’’. 

18 (b) MULTI-YEAR COMPLIANCE PERIOD.—Section 

19 32904(c) of such title is amended— 

20 (1) by inserting ‘‘(1)’’ before ‘‘The Adminis21 trator’’; and 

22 (2) by adding at the end the following: 

23 ‘‘(2) The Secretary, by rule, may allow a manufac24 turer to elect a multi-year compliance period of not more 

25 than 4 consecutive model years in lieu of the single model 


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1 year compliance period otherwise applicable under this 

2 chapter.’’. 

3 (c) JUDICIAL REVIEW OF REGULATIONS.—Section 

4 32909(a)(1) of such title is amended by striking out ‘‘ad5 versely affected by’’ and inserting ‘‘aggrieved or adversely 

6 affected by, or suffering a legal wrong because of,’’. 

Æ 


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