SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Fuel Efficiency Energy Act of 
2007''.

SEC. 2. DEFINITIONS.

    (a) Automobile.--Section 32901(a)(3) of title 49, United States 
Code, is amended--
            (1) by striking ``4-wheeled''; and
            (2) by striking ``, and rated at--'' and all that follows 
        and inserting a period.
    (b) Medium-Duty Truck.--Section 32901(a) of such title is amended--
            (1) by redesignating paragraphs (14), (15), and (16) as 
        paragraphs (15), (16), and (17), respectively; and
            (2) by inserting after paragraph (13) the following:
            ``(14) `medium-duty truck' means a truck (as defined in 
        section 30127) with a gross vehicle weight between 10,000 and 
        26,000 pounds.''.
    (c) Passenger Automobile.--Section 32901(a)(17) of such title, as 
redesignated by subsection (b)(1), is amended by striking ``decides by 
regulation--'' and all that follows through the period and inserting 
``determines by regulation, to have a significant feature (except 4-
wheel drive) designed for off-highway operation.''.
    (d) Fuel Economy Information.--Section 32908(a) of such title is 
amended--
            (1) in the subsection heading, by striking ``Definitions'' 
        and inserting ``Definition''; and
            (2) by striking ``section--'' and all that follows through 
        ``(2)'' and inserting ``section, the term''.

SEC. 3. ANNUAL INCREASE IN AVERAGE FUEL ECONOMY STANDARDS.

    (a) Fuel Efficiency Standards.--
            (1) In general.--Section 32902 of title 49, United States 
        Code, is amended by striking subsections (a) through (c) and 
        inserting the following:
    ``(a) In General.--Not later than 18 months before the beginning of 
each model year beginning with model year 2012, the Secretary of 
Transportation, shall prescribe, by regulation, average fuel economy 
standards for automobiles manufactured by a manufacturer for that model 
year in accordance with subsection (b). The Secretary of Transportation 
shall prescribe separate average fuel economy standards for different 
classes of automobiles. The Secretary shall establish average fuel 
economy standards for medium-duty trucks that are consistent with the 
projected benefits of hybridization.
    ``(b) Annual Increases in Fuel Economy Standards.--
            ``(1) For model year 2012.--For model year 2012, the 
        average fuel economy standard for each class of automobiles 
        shall be the average combined highway and city miles per gallon 
        performance of all automobiles within that class of automobiles 
        in 2011 (rounded to the nearest \1/10\ mile per gallon).
            ``(2) For model years after model year 2012.--For each 
        model year beginning with model year 2013 and ending with model 
        year 2030, the average fuel economy 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 for the fleet in the previous model year (rounded to 
        the nearest \1/10\ mile per gallon).
    ``(c) Amending Fuel Economy Standards.--
            ``(1) In general.--Notwithstanding subsections (a) and (b), 
        the Secretary of Transportation may prescribe an average fuel 
        economy standard for a class of automobiles in a model year 
        that is lower than the standard required under subsection (b) 
        if the Secretary of Transportation, in consultation with the 
        National Academy of Sciences, determines that the average fuel 
        economy standard prescribed in accordance with subsections (a) 
        and (b) for that class of automobiles in that model year--
                    ``(A) is not technologically achievable;
                    ``(B) 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
                    ``(C) is shown not to be cost effective.
            ``(2) Maximum standard.--Any average fuel economy standard 
        prescribed for a class of automobiles in a model year under 
        paragraph (1) shall be the maximum standard that--
                    ``(A) is technologically achievable;
                    ``(B) can be achieved without materially reducing 
                the overall safety of automobiles manufactured or sold 
                in the United States; and
                    ``(C) is cost effective.
            ``(3) Considerations in determination of cost 
        effectiveness.--In determining cost effectiveness under 
        paragraph (1)(C), 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 1 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 the strategic behavior of the 
                        Organization of the Petroleum Exporting 
                        Countries 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) 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.
            ``(4) Minimum valuation.--When considering the value to 
        consumers of a gallon of gasoline saved, the Secretary of 
        Transportation may not use a value 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; and
                    ``(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.''.
            (2) Conforming amendments.--Title 49, United States Code, 
        is amended--
                    (A) in section 32902--
                            (i) in subsection (d) by striking 
                        ``subsection (b) or (c) of this section'' and 
                        inserting ``subsection (a), (b), or (c)'';
                            (ii) by striking subsection (f);
                            (iii) in subsection (g)--
                                    (I) by striking ``subsection (a) or 
                                (d)'' and inserting ``this section''; 
                                and
                                    (II) by striking ``(and submit the 
                                amendment to Congress when required 
                                under subsection (c)(2) of this 
                                section)''; and
                            (iv) in subsection (h) by striking 
                        ``subsections (c), (f), and (g) of this 
                        section'' and inserting ``subsections (c) and 
                        (g)'';
                    (B) in section 32903--
                            (i) by striking ``section 32902(b)-(d) of 
                        this title'' each place it occurs and inserting 
                        ``subsections (a) through (d) of section 
                        32902''; and
                            (ii) in subsection (e), by striking 
                        ``section 32902(a) of this title'' and 
                        inserting ``subsections (a) through (d) of 
                        section 32902''; and
                    (C) in section 32904--
                            (i) in subsection (a)--
                                    (I) by striking ``subject to--'' 
                                and all that follows through ``(B) 
                                section 32902(a)-(d) of this title'' 
                                and inserting ``subject to subsections 
                                (a) through (d) of section 32902''; and
                                    (II) by redesignating clauses (i) 
                                and (ii) as subparagraphs (A) and (B), 
                                respectively.
    (b) Repeal of Credit for Dual Fueled Automobiles.--
            (1) In general.--Section 32905 of title 49, United States 
        Code, is amended--
                    (A) by amending subsection (b) to read as follows:
    ``(b) Dual Fueled Automobiles.--The Administrator of the 
Environmental Protection Agency shall measure the fuel economy for any 
model of dual fueled automobile manufactured in model year 2012 and any 
model year thereafter, in accordance with section 32904.''; and
                    (B) by amending subsection (d) to read as follows:
    ``(d) Gaseous Fuel Dual Fueled Automobiles.--The Administrator of 
the Environmental Protection Agency shall measure the fuel economy for 
any model of gaseous fuel dual fueled automobile manufactured in model 
year 2012 and any model year thereafter, in accordance with section 
32904.''.
            (2) Conforming amendments.--Section 32905 of such title is 
        further amended--
                    (A) by striking subsection (f); and
                    (B) redesignating subsections (g) and (h) as 
                subsections (f) and (g), respectively.

SEC. 4. REQUIREMENT TO INCREASE PERCENTAGE OF DUAL FUELED AUTOMOBILES.

    Section 32902 of title 49, United States Code, as amended by 
section 3, is further amended by inserting after subsection (e) the 
following:
    ``(f) Requirement for Annual Increase in Duel Fueled Automobiles.--
Each manufacturer shall ensure that the percentage of automobiles 
manufactured by such manufacturer in each of model years 2012 through 
2022 that are dual fueled automobiles is not less than 10 percent 
greater than the percentage of automobiles manufactured by such 
manufacturer in the previous model year that are dual fueled 
automobiles.''.

SEC. 5. EFFECTIVE DATE.

    The amendments made by this Act shall--
            (1) take effect on January 1, 2010; and
            (2) apply to automobiles manufactured for model year 2012 
        and for each subsequent model year.
Output: Fuel Efficiency Energy Act of 2007 - Amends corporate average fuel economy (CAFE) provisions to revise the definition of: (1) "automobile" to mean any vehicle that is propelled by fuel, or by alternative fuel, and is manufactured primarily for use on public streets, roads, and highways (currently, four-wheeled vehicles that are so propelled and manufactured for such use and that are up to 6,000 pounds and certain vehicles between 6,000 and 10,000 pounds); and (2) "passenger automobile" to eliminate the exception for 4-wheel drive automobiles and vehicles weighing more than 6,000 pounds. Defines "medium-duty truck" as a truck with a gross vehicle weight between 10,000 and 26,000 pounds.

Requires the Secretary of Transportation to: (1) prescribe separate increased minimum CAFE standards for different classes of automobiles manufactured beginning for model year 2012, but adds an increase of 4% per year in such standard for model years 2013 through 2030; and (2) establish CAFE standards for medium-duty trucks that are consistent with hybridization beginning for model year 2012.

Revises the calculation of fuel economy standards for dual fueled automobiles and gaseous fuel dual fueled automobiles manufactured in model year 2012 and beyond to require using the same calculation provisions as used for gas or diesel fueled vehicles. Repeals provisions allowing the Department of Transportation (DOT) to extend manufacturing credits for such automobiles.