Congress enacted the 1975 Energy Policy and Conservation Act (the Energy Act) during the aftermath of the energy crisis created by the Arab oil embargo of 1973 and 1974 to reduce oil consumption by the transportation sector in the United States. The act established what is commonly known as the CAFE program, which requires that manufacturers meet separate fuel economy standards for passenger cars and light trucks. To reduce oil consumption, the program uses fuel consumption standards—measured in mpg—that cars and light trucks must meet. In addition to decreasing oil consumption by increasing the mileage driven on a gallon of gas, an increase in the standards also decreases tailpipe emissions, including greenhouse gases. A manufacturer’s compliance is based on a comparison of a manufacturer’s fleet-wide fuel economy average against the appropriate CAFE standard. The Energy Act grants NHTSA the authority to calculate a car and light truck figure for each manufacturer, measuring compliance of domestically produced and imported cars, separately. The law considers a vehicle domestic if at least 75 percent of the cost of the vehicle to the manufacturer is attributable to value added in the United States, Mexico, or Canada. Congress set a standard for passenger cars (currently 27.5 mpg) but did not establish specific CAFE standards for light trucks in the Energy Act. Instead, the Energy Act grants NHTSA authority to establish both the structure of the CAFE program and the fuel economy standards for different classes of light trucks. Rather than Congress specifying a mpg target for light trucks as it did for passenger cars, NHTSA is required to set standards at the maximum feasible level using the same criteria and lead- time requirements used in setting standards for passenger cars. However, appropriations acts restricted NHTSA from increasing or otherwise changing CAFE standards from fiscal year 1996 through 2001. For fiscal year 2002, Congress did not renew the multiyear freeze on NHTSA’s CAFE rule-making responsibilities and the agency resumed efforts for future rule makings to raise CAFE standards for light trucks. The CAFE program is generally considered to have contributed to increasing the nation’s fuel economy. For example, a 2002 NAS report found that the CAFE program has been particularly helpful in keeping fuel economy above levels to which it might have fallen due to the low and declining real price of gas. The NAS study estimated that if fuel economy had not improved, gas consumption and oil imports would have been about 14 percent higher than they were in 2002. To help meet CAFE standards, manufacturers may earn credits that can be used to help them meet fuel economy standards. For instance, if a manufacturer exceeds the required fuel economy in a certain year, it earns credits that can be applied to past or future model-year fuel economy numbers. Credits, however, cannot be passed between manufacturers or among fleets. In addition, the Alternative Motor Fuels Act of 1988 encourages the use of alternative fuels by giving credits to manufacturers toward meeting CAFE standards for producing cars that can run on alternative fuels in addition to gas. Under the resulting “Dual Fuel” program, manufacturers may earn up to a 1.2 mpg credit for producing vehicles through model year 2010 that are capable of using both regular gasoline and an alternative fuel. If a manufacturer does not meet the standards and has no credits to apply, it must pay a civil penalty. In addition to CAFE standards administered by NHTSA, Congress and other federal agencies have established programs to reduce oil consumption in the transportation sector. These programs include (1) vehicle acquisition requirements at federal agencies to purchase alternative fuel vehicles, (2) research and development of alternative fuels and new vehicle technologies, and (3) tax incentives for consumers purchasing fuel efficient vehicles like hybrids. In addition to NHTSA, other federal entities contribute to the nation’s efforts to reduce oil consumption. For example, DOE coordinates federal research on strategies for reducing oil consumption; developing advanced technologies such as fuel cells; producing and using alternative fuels and more fuel efficient vehicle technology, as well as providing grants for research into such areas as plug-in hybrid technology and ways to expand the production and use of ethanol. In addition, the National Economic Council assists the administration in developing its energy initiatives. NHTSA has recently raised the light truck CAFE standard and reformed the program using a method that categorizes light trucks based on their size, doing so in part to address potential safety concerns. CAFE standards for cars have not changed since 1990. This is due, in part, to past congressional prohibitions against NHTSA using any of its appropriation to raise fuel economy standards and, more recently, NHTSA’s preference to tie raising the car standard to restructuring the program. Recently, the administration has submitted a proposal to restructure and increase passenger car CAFE standards. Members of Congress also have submitted proposals to change the CAFE standards. In April 2003, NHTSA released a final rule increasing light truck CAFE standards from 20.7 mpg in 2004 to 22.2 mpg in 2007. As part of this rule making, NHTSA explained the importance of increasing the CAFE standards for light trucks because of the growing market share of these vehicles. The impact of the light truck market on overall oil consumption in the United States had grown since the beginning of the CAFE program as market share for these vehicles has increased. Specifically, in 1980, shortly after the program began, light trucks composed about 20 percent of the new passenger vehicle market in the United States. By 2005, light trucks, including minivans, pickup trucks, and sport utility vehicles, accounted for about 50 percent of the new passenger vehicle market in the United States. The overall fuel economy of the U.S. vehicle fleet declined in the 1990s, in part due to the increased market share of light trucks. (See fig. 1 showing share of fleet composed by light trucks). While NHTSA took these steps to raise CAFE standards for light trucks, the agency also began investigating reforming the light truck CAFE program in part to address safety concerns. A 2002 National Academy of Sciences (NAS) report on the impact of CAFE standards stated that because the easiest way for an automobile manufacturer to increase vehicle fuel economy is to decrease vehicle weight, increases to CAFE standards were likely to have a negative impact on safety and result in more highway fatalities. The report recommended that NHTSA investigate implementing a CAFE system based on the attributes of a vehicle, such as size and/or weight, where there would be separate standards for vehicles with similar attributes. In response, NHTSA released a rule in April 2006 that reforms the structure of the CAFE program for light trucks and continues to increase light truck CAFE standards for model years 2008 to 2011. Under the new rule, fuel economy standards are established based upon truck size instead of having one average standard for all light trucks. Each truck is assigned a fuel economy “target” based on a measure of vehicle size called “footprint,” the product of multiplying a vehicle’s wheelbase (the distance from front to the rear axles) by its track width (the horizontal distance between the tires). (See fig. 2 for a display of how the standard applies to trucks of different sizes). According to NHTSA officials, the reformed CAFE approach may enable the country to achieve larger reductions in oil consumption, while enhancing safety and preventing adverse economic consequences. Under the current standard, manufacturers of smaller light trucks may already exceed the fleet CAFE standard and, therefore, have little incentive to increase fuel economy. However, under the reformed standards, the required overall fuel economy of the light truck fleet will rise over time. In addition, the reformed standards include larger vehicles such as sport utility vehicles, but not pickup trucks, weighing between 8,500 and 10,000 pounds that previously were exempt from the CAFE program. NHTSA estimates that including these vehicles in the CAFE program will save 7.8 billion gallons of fuel over the life of the vehicles sold between 2008 and 2011. In addition to these expected fuel savings, the reformed CAFE standards offer enhanced safety by discouraging downsizing of vehicles since, as vehicles become smaller, the applicable fuel economy target becomes more stringent. In addition, according to NHTSA, the reformed CAFE standards spread the regulatory cost burden for fuel economy improvements more broadly across the industry instead of concentrating it more exclusively on the manufacturers who may produce heavier, less fuel efficient vehicles. The 1975 Energy Act established CAFE standards for passenger cars for model years 1978 to 1980 and 1985 and thereafter. The standards called for manufacturers to produce vehicles averaging 18 mpg in 1978, rising to 27.5 mpg by 1985. In the 1980s, NHTSA reduced the CAFE standard for cars, and the agency did so for model years 1986 to 1989. NHTSA raised the car CAFE standard back to 27.5 mpg for the 1990 model year and has made no changes to the standard since then. See table 1 showing CAFE standards over time. NHTSA officials cited several reasons for not raising the CAFE standard over 27.5 mpg. First, for several years, Congress specifically prevented NHTSA from making any adjustments to CAFE. Beginning in fiscal year 1996 and lasting through fiscal year 2001, Congress included language in DOT’s appropriations acts preventing NHTSA from expending any appropriated funds for rule makings to adjust CAFE standards, for either cars or trucks. Second, although NHTSA officials state that the agency has the legislative authority to raise CAFE standards for cars above 27.5 mpg, as specified by the Energy Act, these officials stated the Energy Act prevents NHTSA from restructuring the program, for example, by developing a size-based standard as it recently did for light trucks. NHTSA is reluctant to raise the car standards without restructuring the program as it is concerned about the effect on safety, competition between auto manufacturers, and other issues.