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[Congressional Bills 110th Congress]
[From the U.S. Government Publishing Office]
[S. 767 Introduced in Senate (IS)]

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.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Fuel Economy Reform Act''.

SEC. 2. FINDINGS.

    Congress makes the following findings:
            (1) United States dependence on oil imports imposes 
        tremendous burdens on the economy, foreign policy, and military 
        of the United States.
            (2) According to the Energy Information Administration, 60 
        percent of the crude oil and petroleum products consumed in the 
        United States between April 2005 and March 2006 (12,400,000 
        barrels per day) were imported. At a cost of $75 per barrel of 
        oil, people in the United States remit more than $600,000 per 
        minute to other countries for petroleum.
            (3) A significant percentage of these petroleum imports 
        originate in countries controlled by regimes that are unstable 
        or openly hostile to the interests of the United States. 
        Dependence on production from these countries contributes to 
        the volatility of domestic and global markets and the ``risk 
        premium'' paid by consumers in the United States.
            (4) The Energy Information Administration projects that the 
        total petroleum demand in the United States will increase by 23 
        percent between 2006 and 2026, while domestic crude production 
        is expected to decrease by 11 percent, resulting in an 
        anticipated 28 percent increase in petroleum imports. Absent 
        significant action, the United States will become more 
        vulnerable to oil price increases, more dependent upon foreign 
        oil, and less able to pursue national interests.
            (5) Two-thirds of all domestic oil use occurs in the 
        transportation sector, which is 97 percent reliant upon 
        petroleum-based fuels. Passenger vehicles, including light 
        trucks under 10,000 pounds gross vehicle weight, represent over 
        60 percent of the oil used in the transportation sector.
            (6) Corporate average fuel economy of all cars and trucks 
        improved by 70 percent between 1975 and 1987. Between 1987 and 
        2006, fuel economy improvements have stagnated and the fuel 
        economy of the United States is lower than many developed 
        countries and some developing countries.
            (7) Significant improvements in engine technology occurred 
        between 1986 and 2006. These advances have been used to make 
        vehicles larger and more powerful, and have not focused solely 
        on increasing fuel economy.
            (8) According to a 2002 fuel economy report by the National 
        Academy of Sciences, fuel economy can be increased without 
        negatively impacting the safety of cars and trucks in the 
        United States. Some new technologies can increase both safety 
        and fuel economy (such as high strength materials, unibody 
        design, lower bumpers). Design changes related to fuel economy 
        also present opportunities to reduce the incompatibility of 
        tall, stiff, heavy vehicles with the majority of vehicles on 
        the road.
            (9) Significant change must occur to strengthen the 
        economic competitiveness of the domestic auto industry. 
        According to a recent study by the University of Michigan, a 
        sustained gasoline price of $2.86 per gallon would lead 
        Detroit's Big 3 automakers' profits to shrink by $7,000,000,000 
        as they absorb 75 percent of the lost vehicle sales. This would 
        put nearly 300,000 people in the United States out of work.
            (10) Opportunities exist to strengthen the domestic vehicle 
        industry while improving fuel economy. A 2004 study performed 
        by the University of Michigan concludes that providing 
        $1,500,000,000 in tax incentives over a 10-year period to 
        encourage domestic manufacturers and parts facilities to 
        produce clean cars will lead to a gain of nearly 60,000 
        domestic jobs and pay for itself through the resulting increase 
        in domestic tax receipts.

SEC. 3. DEFINITION OF AUTOMOBILE AND PASSENGER AUTOMOBILE.

    (a) Definition of Automobile.--
            (1) In general.--Paragraph (3) of section 32901(a) of title 
        49, United States Code, is amended by striking ``rated at--'' 
        and all that follows through the period at the end and 
        inserting ``rated at not more than 10,000 pounds gross vehicle 
        weight.''.
            (2) Fuel economy information.--Section 32908(a) of such 
        title is amended, by striking ``section--'' and all that 
        follows through ``(2)'' and inserting ``section, the term''.
            (3) Effective date.--The amendments made by paragraphs (1) 
        and (2) shall apply to model year 2010 and each subsequent 
        model year.
    (b) Definition of Passenger Automobile.--
            (1) In general.--Paragraph (16) of section 32901(a) of such 
        title is amended by striking ``, but does not include'' and all 
        that follows through the end and inserting a period.
            (2) Effective date.--The amendment made by paragraph (1) 
        shall apply to model year 2012 and each subsequent model year.

SEC. 4. AVERAGE FUEL ECONOMY STANDARDS.

    (a) Standards.--Section 32902 of title 49, United States Code, is 
amended--
            (1) in subsection (a)--
                    (A) in the heading, by inserting ``Manufactured 
                Before Model Year 2013'' after ``Non-Passenger 
                Automobiles''; and
                    (B) by adding at the end the following: ``This 
                subsection shall not apply to automobiles manufactured 
                after model year 2012.'';
            (2) in subsection (b)--
                    (A) in the heading, by inserting ``Manufactured 
                Before Model Year 2013'' after ``Passenger 
                Automobiles'';
                    (B) by inserting ``and before model year 2010'' 
                after ``1984''; and
                    (C) by adding at the end the following: ``Such 
                standard shall be increased by 4 percent per year for 
                model years 2010 through 2012 (rounded to the nearest 
                1/10 mile per gallon)'';
            (3) by amending subsection (c) to read as follows:
    ``(c) Automobiles Manufactured After Model Year 2012.--(1)(A) Not 
later than 18 months before the beginning of each model year after 
model year 2012, the Secretary of Transportation shall prescribe, by 
regulation--
            ``(i) an average fuel economy standard for automobiles 
        manufactured by a manufacturer in that model year; or
            ``(ii) based on 1 or more vehicle attributes that relate to 
        fuel economy--
                    ``(I) separate average fuel economy standards for 
                different classes of automobiles; or
                    ``(II) average fuel economy standards expressed in 
                the form of a mathematical function.
    ``(B)(i) Except as provided under paragraphs (3) and (4) and 
subsection (d), average fuel economy standards under subparagraph (A) 
shall attain a projected aggregate level of average fuel economy of 
27.5 miles per gallon for all automobiles manufactured by all 
manufacturers for model year 2013.
    ``(ii) The projected aggregate level of average fuel economy for 
model year 2014 and each model year thereafter shall be increased by 4 
percent over the level of the prior model year (rounded to the nearest 
1/10 mile per gallon).
    ``(2) In addition to the average fuel economy standards under 
paragraph (1), each manufacturer of passenger automobiles shall be 
subject to an average fuel economy standard for passenger automobiles 
manufactured by a manufacturer in a model year that shall be equal to 
92 percent of the average fuel economy projected by the Secretary for 
all passenger automobiles manufactured by all manufacturers in that 
model year. An average fuel economy standard under this subparagraph 
for a model year shall be promulgated at the same time as the standard 
under paragraph (1) for such model year.
    ``(3) If the actual aggregate level of average fuel economy 
achieved by manufacturers for each of 3 consecutive model years is 5 
percent or more less than the projected aggregate level of average fuel 
economy for such model year, the Secretary may make appropriate 
adjustments to the standards prescribed under this subsection.
    ``(4)(A) Notwithstanding paragraphs (1) through (3) and subsection 
(b), the Secretary of Transportation may prescribe a lower average fuel 
economy standard for 1 or more model years if the Secretary of 
Transportation, in consultation with the Secretary of Energy, finds, by 
clear and convincing evidence, that the minimum standards prescribed 
under paragraph (1)(B) or (3) or subsection (b) for each model year--
            ``(i) are technologically not achievable;
            ``(ii) cannot be achieved without materially reducing the 
        overall safety of automobiles manufactured or sold in the 
        United States and no offsetting safety improvements can be 
        practicably implemented for that model year; or
            ``(iii) is shown not to be cost effective.
    ``(B) If a lower standard is prescribed for a model year under 
subparagraph (A), such standard shall be the maximum standard that--
            ``(i) is technologically achievable;
            ``(ii) can be achieved without materially reducing the 
        overall safety of automobiles manufactured or sold in the 
        United States; and
            ``(iii) is cost effective.
    ``(5) In determining cost effectiveness under paragraph 
(4)(A)(iii), the Secretary of Transportation shall take into account 
the total value to the United States of reduced petroleum use, 
including the value of reducing external costs of petroleum use, using 
a value for such costs equal to 50 percent of the value of a gallon of 
gasoline saved or the amount determined in an analysis of the external 
costs of petroleum use that considers--
            ``(A) value to consumers;
            ``(B) economic security;
            ``(C) national security;
            ``(D) foreign policy;
            ``(E) the impact of oil use--
                    ``(i) on sustained cartel rents paid to foreign 
                suppliers;
                    ``(ii) on long-run potential gross domestic product 
                due to higher normal-market oil price levels, including 
                inflationary impacts;
                    ``(iii) on import costs, wealth transfers, and 
                potential gross domestic product due to increased trade 
                imbalances;
                    ``(iv) on import costs and wealth transfers during 
                oil shocks;
                    ``(v) on macroeconomic dislocation and adjustment 
                costs during oil shocks;
                    ``(vi) on the cost of existing energy security 
                policies, including the management of the Strategic 
                Petroleum Reserve;
                    ``(vii) on the timing and severity of the oil 
                peaking problem;
                    ``(viii) on the risk, probability, size, and 
                duration of oil supply disruptions;
                    ``(ix) on OPEC strategic behavior and long-run oil 
                pricing;
                    ``(x) on the short term elasticity of energy demand 
                and the magnitude of price increases resulting from a 
                supply shock;
                    ``(xi) on oil imports, military costs, and related 
                security costs, including intelligence, homeland 
                security, sea lane security and infrastructure, and 
                other military activities;
                    ``(xii) on oil imports, diplomatic and foreign 
                policy flexibility, and connections to geopolitical 
                strife, terrorism, and international development 
                activities;
                    ``(xiii) on all relevant environmental hazards 
                under the jurisdiction of the Environmental Protection 
                Agency; and
                    ``(xiv) on well-to-wheels urban and local air 
                emissions of `pollutants' and their uninternalized 
                costs;
            ``(F) the impact of the oil or energy intensity of the 
        United States economy on the sensitivity of the economy to oil 
        price changes, including the magnitude of gross domestic 
        product losses in response to short term price shocks or long 
        term price increases;
            ``(G) the impact of United States payments for oil imports 
        on political, economic, and military developments in unstable 
        or unfriendly oil exporting countries;
            ``(H) the uninternalized costs of pipeline and storage oil 
        seepage, and for risk of oil spills from production, handling, 
        and transport, and related landscape damage; and
            ``(I) additional relevant factors, as determined by the 
        Secretary.
    ``(6) When considering the value to consumers of a gallon of 
gasoline saved, the Secretary of Transportation may not use a value 
that is less than the greatest of--
            ``(A) the average national cost of a gallon of gasoline 
        sold in the United States during the 12-month period ending on 
        the date on which the new fuel economy standard is proposed;
            ``(B) the most recent weekly estimate by the Energy 
        Information Administration of the Department of Energy of the 
        average national cost of a gallon of gasoline (all grades) sold 
        in the United States; or
            ``(C) the gasoline prices projected by the Energy 
        Information Administration for the 20-year period beginning in 
        the year following the year in which the standards are 
        established.
    ``(7) In prescribing standards under this subsection, the Secretary 
may prescribe standards for 1 or more model years.
    ``(8)(A) Not later than December 31, 2016, the Secretary of 
Transportation, the Secretary of Energy, and the Administrator of the 
Environmental Protection Agency shall submit a joint report to Congress 
on the state of global automotive efficiency technology development, 
and on the accuracy of tests used to measure fuel economy of 
automobiles under section 32904(c), utilizing the study and assessment 
of the National Academy of Sciences referred to in subparagraph (B).
    ``(B) The Secretary of Transportation shall enter into appropriate 
arrangements with the National Academy of Sciences to conduct a 
comprehensive study of the technological opportunities to enhance fuel 
economy and an analysis and assessment of the accuracy of fuel economy 
tests used by the Administrator of the Environmental Protection Agency 
to measure fuel economy for each model under section 32904(c). Such 
analysis and assessment shall identify any additional factors or 
methods that should be included in tests to measure fuel economy for 
each model to more accurately reflect actual fuel economy of 
automobiles. The Secretary of Transportation and the Administrator of 
the Environmental Protection Agency shall furnish, at the request of 
the Academy, any information that the Academy determines to be 
necessary to conduct the study, analysis, and assessment under this 
subparagraph.
    ``(C) The report submitted under subparagraph (A) shall include--
            ``(i) the study of the National Academy of Sciences 
        referred to in subparagraph (B); and
            ``(ii) an assessment by the Secretary of Transportation of 
        technological opportunities to enhance fuel economy and 
        opportunities to increase overall fleet safety.
    ``(D) The report submitted under subparagraph (A) shall identify 
and examine additional opportunities to reform the regulatory structure 
under this chapter, including approaches that seek to merge vehicle and 
fuel requirements into a single system that achieves equal or greater 
reduction in petroleum use and environmental benefits than the amount 
of petroleum use and environmental benefits that have been achieved as 
of the date of the enactment of this Act.
    ``(E) The report submitted under subparagraph (A) shall--
            ``(i) include conclusions reached by the Administrator of 
        the Environmental Protection Agency, as a result of detailed 
        analysis and public comment, on the accuracy of fuel economy 
        tests as in use during the period beginning on the date that is 
        5 years before the completion of the report and ends on the 
        date of such completion;
            ``(ii) identify any additional factors that the 
        Administrator determines should be included in tests to measure 
        fuel economy for each model to more accurately reflect actual 
        fuel economy of automobiles; and
            ``(iii) include a description of options, formulated by the 
        Secretary of Transportation and the Administrator, to 
        incorporate such additional factors in fuel economy tests in a 
        manner that will not effectively increase or decrease average 
        fuel economy for any automobile manufacturer.''; and
            (4) in subsection (g)(2), by striking ``(and submit the 
        amendment to Congress when required under subsection (c)(2) of 
        this section)''.
    (b) Conforming Amendments.--
            (1) In general.--Chapter 329 of title 49, United States 
        Code, is amended--
                    (A) in section 32903--
                            (i) by striking ``passenger'' each place it 
                        appears;
                            (ii) by striking ``section 32902(b)-(d) of 
                        this title'' each place it appears and 
                        inserting ``subsection (c) or (d) of section 
                        32902'';
                            (iii) by striking subsection (e); and
                            (iv) by redesignating subsection (f) as 
                        subsection (e); and
                    (B) in section 32904--
                            (i) in subsection (a)--
                                    (I) by striking ``passenger'' each 
                                place it appears; and
                                    (II) in paragraph (1), by striking 
                                ``subject to'' and all that follows 
                                through ``section 32902(b)-(d) of this 
                                title'' and inserting ``subject to 
                                subsection (c) or (d) of section 
                                32902''; and
                            (ii) in subsection (b)(1)(B), by striking 
                        ``under this chapter'' and inserting ``under 
                        section 32902(c)(2)''.
            (2) Effective date.--The amendments made by this section 
        shall apply to automobiles manufactured after model year 2012.

SEC. 5. CREDIT TRADING, COMPLIANCE, AND JUDICIAL REVIEW.

    (a) Credit Trading.--Section 32903(a) of title 49, United States 
Code, is amended--
            (1) by inserting ``Credits earned by a manufacturer under 
        this section may be sold to any other manufacturer and used as 
        if earned by that manufacturer, except that credits earned by a 
        manufacturer described in clause (i) of section 32904(b)(1)(A) 
        may only be sold to a manufacturer described such clause (i) 
        and credits earned by a manufacturer described in clause (ii) 
        of such section may only be sold to a manufacturer described in 
        such clause (ii).'' after ``earns credits.'';
            (2) by striking ``3 consecutive model years immediately'' 
        each place it appears and inserting ``model years''; and
            (3) effective for model years after 2012, the sentence 
        added by paragraph (1) of this subsection is amended by 
        inserting ``for purposes of compliance with section 
        32902(c)(2)'' after ``except that''.
    (b) Multi-Year Compliance Period.--Section 32904(c) of such title 
is amended--
            (1) by inserting ``(1)'' before ``The Administrator''; and
            (2) by adding at the end the following:
    ``(2) The Secretary, by rule, may allow a manufacturer to elect a 
multi-year compliance period of not more than 4 consecutive model years 
in lieu of the single model year compliance period otherwise applicable 
under this chapter.''.
    (c) Judicial Review of Regulations.--Section 32909(a)(1) of such 
title is amended by striking out ``adversely affected by'' and 
inserting ``aggrieved or adversely affected by, or suffering a legal 
wrong because of,''.
                                 <all>
```