The CAFE program is generally considered to have contributed to  increasing the nation’s fuel economy. In addition to CAFE standards administered by NHTSA, Congress and  other federal agencies have established programs to reduce oil  consumption in the transportation sector. In addition to NHTSA, other federal entities contribute to the nation’s  efforts to reduce oil consumption. NHTSA Recently Raised and Restructured Light Truck CAFE Standards and Has Not Raised the Car CAFE Standard Since 1990, but Has Requested Authority to Make Changes

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. 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. In addition to this proposed legislation, several Members of Congress have  submitted bills that have some similarities to the Secretary’s proposal but,  if enacted, would set a specific fuel economy mpg standard for  manufacturers to meet, rather than allow NHTSA to determine the  maximum feasible level. A Majority of Industry Stakeholders and Experts Support NHTSA’s Recent CAFE Revisions, While Recommending Further Refinements to the CAFE Program and Ways for NHTSA to Improve Its Capability to Revise Standards

The majority of industry stakeholders and experts with whom we spoke  supported NHTSA’s revisions to the light truck standards, and many of  them specifically stated that NHTSA should consider further refinements  to the CAFE program, such as restructuring the car CAFE standards based  on the size of the vehicle. For example the model that NHTSA  uses to estimate the impact that changes in CAFE standards will have on  oil consumption does not currently place a dollar value on the reduction of  carbon emissions. Furthermore, many experts indicated that the agency would benefit from  some additional expertise, for example, on automotive engineering to,  among other duties, review product plans automakers submit in the CAFE  rule-making process. In addition to  increasing fuel efficiency standards to reduce oil consumption, further  refinements may help address safety concerns and improve the efficiency  of the CAFE program. Harmonizing light truck and passenger vehicle standards: Currently,  light truck and car standards are separate. Other Federal Programs Also Seek to Reduce Oil Consumption in the Transportation Sector

While the CAFE program is an important program in the nation’s efforts to  reduce oil consumption, other policies and programs currently exist to  help the nation reduce oil consumption in the transportation sector. We will be reporting in July 2007 on the  extent to which these programs complement or contradict the goals of the  CAFE program. We will also report on other proposals to reduce oil  consumption by cars and light trucks and their potential effects. However, many of the experts with whom we spoke have pointed out that  the program granting manufacturers a maximum of 1.2 mpg CAFE credit  toward meeting fuel economy standards for flex-fuel vehicles, currently  may be actually increasing oil consumption among passenger vehicles.
Why GAO Did This Study

Concerns over national security, environmental stresses, and economic pressures from increased fuel prices have led to the nation's interest in reducing oil consumption. Efforts to reduce oil consumption will need to include the transportation sector. For example, several Members of Congress have introduced bills proposing changes to the corporate average fuel economy (CAFE) program. This program includes mile per gallon standards for light trucks and cars that manufacturers must meet for vehicles sold in this country. This testimony is based on ongoing work for this committee. This testimony describes (1) recent and proposed changes to CAFE standards; (2) observations about the recent changes, the existing CAFE program, and NHTSA's (National Highway Traffic Safety Administration) capabilities to further restructure CAFE standards; and (3) initial observations about how the CAFE program fits in the context of other approaches to reduce oil consumption. To address these issues, we reviewed program legislation, rule makings, and operational documents. Also, we interviewed officials from NHTSA, the Department of Energy, Environmental Protection Agency, the auto industry, labor unions, and the insurance industry. Finally, we contacted several recognized experts in fuel economy and safety. Our report will be issued in July 2007.

What GAO Found

The National Highway Traffic Safety Administration (NHTSA), the agency responsible for setting CAFE standards for cars and light trucks--such as sport utility vehicles, minivans and pickup trucks--recently raised CAFE standards for light trucks to reduce oil use and restructured this part of the program to help address safety, among other issues. However, the CAFE standard for cars has changed little over the past 2 decades. In 1975, Congress established CAFE standards for cars rising to 27.5 miles per gallon (mpg) by 1985 but did not allow NHTSA to restructure how car standards are applied. As part of the administration's plan to meet the President's recently stated goal to reduce oil use by 20 percent over the administration's projected levels by 2017, the NHTSA Administrator submitted a plan to Congress that would allow NHTSA to reform the car CAFE program in a manner similar to NHTSA's recent changes to the light truck program. The majority of experts with whom we spoke stated that CAFE standards are an important approach to reducing oil consumption and NHTSA's recent reform of light truck standards addresses previous safety and competitive concerns, among others. However, they also identified some ways to further refine the CAFE program such as considering harmonizing light truck and car standards. Further, NHTSA officials identified ways to improve the agency's capabilities to administer the program. For example, the agency would benefit from some additional expertise on automotive engineering. Finally, several experts observed that the model that NHTSA uses to help set CAFE standards does not fully account for the impact of greenhouse gas emissions. While the CAFE program is an important program in the nation's efforts to reduce oil consumption, other policies and programs exist to help the nation reduce oil consumption in the transportation sector. We will report on how these programs align with the CAFE program in our report to be issued in July 2007. For example, according to experts with whom we spoke, CAFE's effectiveness in reducing oil consumption is hampered by a provision granting manufacturers a 1.2 mpg CAFE credit toward meeting its fuel economy standard for selling flexible fuel vehicles, even though these vehicles are not often run on fuel other than gas.