January 10, 2003   

Docket Management Section
US Department ofTransportation
Room PL-401
400 Seventh Street, S.W.
Washington, DC 20590

The Center for Regulatory Effectiveness (CRE) is pleased to provide the following comments to the National Highway Traffic Safety Administration (NHTSA) on the agency’s proposed rule to establish corporate average fuel economy (CAFE) standards for light trucks.

CAFE and www.FuelEconomyIn.US

In establishing a light truck CAFE standard, NHTSA will also be establishing priorities among a complex matrix of policy issues and objectives including safety, consumer lifestyle choices, economics, fuel economy and other environmental policies. Addressing this array of issues and objectives, many of which are in conflict, is a very difficult job. NHTSA’s decisions will affect many stakeholders beyond consumers of light trucks including persons who regularly or occasionally travel in light trucks and owners and employees of business which use, manufacturer, sell, and service light trucks and/or parts and accessories. It is essential that the agency be cognizant of the ramifications of their policy decisions and to take these ramifications into account in their decision-making process. Providing NHTSA and other federal agencies with the views of a wide range of stakeholders is the reason that CRE has established www.FuelEconomyIn.US.

CRE: A Regulatory Catalyst

CRE’s FuelEconomyIn.US website provides NHTSA and other agencies with a diverse repository of information, views and analyses as they work towards the goals of the Energy Policy and Conservation Act. To this end, CRE will be contacting a wide range of stakeholders to encourage them to participate in the rulemaking. In contacting these stakeholders, CRE will capitalize on the very substantial readership enjoyed by its anchor website, www.TheCRE.com.

The Need for NHTSA to Develop a Long-Term CAFE Plan Prior to Implementing Short-Term Changes

In addition to its role as a regulatory catalyst with affected stakeholders, CRE will offer its own views for consideration by NHTSA. CRE is of the position that, prior to initiating a new round of CAFE standards, NHTSA should first step back and take a broad look at the future direction of the program. Such an overarching examination is important not only due to the scope of impact of any CAFE decisions but also because of the duration of their impact; CAFE is an issue which is going to be around for quite some time. In undertaking an overview of CAFE, NHTSA should be guided the related twin guideposts of:

1. The Levin-Bond Amendment; and

2. The National Research Council study of the effectiveness and impact of CAFE standards.

The Levin-Bond Amendment

The Senate overwhelmingly passed the Levin-Bond amendment to the Senate energy bill in 2002. This amendment directed NHTSA to consider 13 factors when determining maximum feasible average fuel economy including:

1. Technological feasibility;

2. Economic feasibility;

3. Effect of other federal motor vehicle standards on fuel economy;

4. Need for energy conservation;

5. Desirability to reduce US dependence on foreign oil;

6. Effect of the CAFE standards on motor vehicle and passenger safety;

7. Effect of increased fuel economy on air quality;

8. Adverse effects of the standards on the relative competitiveness of manufacturers;

9. Effects on employment of standards compliance;

10. Cost and lead time necessary for the introduction of the necessary new technologies;

11. Potential for advanced technologies (hybrid vehicles, etc.) to contribute to significant reductions in fuel consumption;

12. The extent to which near-term costs associated with CAFÉ compliance would harm manufacturer ability to fund advanced technologies; and

13. The 2002 National Research Council study, “Effectiveness and Impact of Corporate Average Fuel Economy Standards.”

The National Research Council Study

The National Research Council study, undertaken at the request of Congress, recommends substantial modification of the CAFE program. The study found that CAFE has had unintended consequences and recommended five steps to correct the structural flaws in the CAFE program:

1. Adopt tradeable fuel economy credits. Current CAFE rules allow manufacturers to accumulate credits if its fleet exceeds standards but not to buy or sell such credits.

2. Consider switching to attribute-based standards. Use of vehicle attributes, such as size, could encourage vehicle downsizing.

3. Eliminate the two-fleet which required separate calculations for domestic and imported vehicles, a distinction no longer significant in the global marketplace.

4. Eliminate duel-fuel vehicle credits which provided credit for ethanol-capable vehicles.

5. Pursue government-industry research and development, funded by the government, of advanced technologies.

The study also recommended that NHTSA conduct additional research on the relation between CAFE and safety.

Establishment of the CRE Interactive Public Docket

To assist NHTSA in conducting the needed overview of the CAFE program, CRE is establishing an Interactive Public Docket (IPD) on each of the above items on our website. The IPD will make available to the agency and the public all comments received on the issues raised by the NRC study. CRE will conduct periodic analyses of the material submitted by stakeholders and will provide such analyses to NHTSA, other federal agencies and the general public.

CRE Recommendations

1. NHTSA should develop a long-term CAFE strategy based on the 13 factors cited in the Levin-Bond amendment, and the six factors and research needs identified by the National Research Council study.

2. NHTSA should submit their long-term CAFE strategy to the public for comment.

3. NHTSA should defer action on its proposed CAFE rule until the long-term strategy has been finalized.