The first Congressional Research Service (CRS) Report, Automobile and Light Truck Fuel Economy: Is CAFE Up to Standards? (September 15, 1998) looks at the issues surrounding federal standards for the average fuel economy of new passenger automobiles (currently 27.5 mpg) and light trucks (including sports utility vehicles -- currently 20.7 mpg).

The second CRS report, Transportation Equity Act for the 21st Century (P.L. 105-178): An Overview of Environmental Protection Provisions (July 31, 1998) summarizes the environmental aspects of the law passed in June authorizing a total of $218 billion for federal highway and mass transit programs from fiscal year 1998 to fiscal year 2003. This law includes approximately $12.4 billion for environmental programs.

The third CRS report, Amtrak and the 105th Congress (September 2, 1998) looks at federal support for the largest passenger rail service in the U.S.

© Copyright 1998, All Rights Reserved, CSA

CRS Reports

Automobile and Light Truck Fuel Economy: Is CAFE Up to Standards?

Summary

One of the least controversial provisions of the Energy Policy and Conservation Act of 1975 (P.L. 94-163) established corporate average fuel economy (CAFE) standards for new passenger cars. As oil prices rose in the early 1980s, there was little expectation that manufacturers would have any difficulty complying with the standards. However, oil prices softened and the demand for small cars diminished. In response to petitions from manufacturers facing stiff civil penalties for noncompliance, the National Highway Traffic Safety Administration (NHTSA) relaxed the standard for model years 1986-1989. The current standard is 27.5 mpg for passenger automobiles and 20.7 mpg for light trucks, a classification that also includes sports utility vehicles (SUVs).

Amidst the renewed sense of urgency about growing U.S. dependence upon imported oil, proposals to boost CAFE received close attention in the early nineties. An Administration study, released in the spring of 1992, concluded that substantial improvements in fuel economy were still possible, but probably could not be achieved as quickly as some would like without imposing unacceptable impacts.

An attempt to raise CAFE proved too controversial in the 102nd Congress to enact. CAFE provisions in omnibus energy legislation proposed in the Senate (that were less aggressive than other proposals) would have extended discretion to the Department of Transportation to set "maximum feasible" targets for each manufacturer to meet in model year (MY) 1996 and MY2002. The inclusion of CAFE provisions was cited as one of the reasons for failure of a cloture motion on the legislation in early November 1991. The subsequently enacted Energy Policy Act of 1992 (P.L. 102-486) did not include any CAFE provisions.

The Clinton Administration supported greater fuel efficiency, but indicated during 1993 that an increase in the CAFE standards was not the option likeliest to be embraced first. In late September 1993, the Administration announced the Partnership for a New Generation of Vehicles (PNGV), an alliance between federal labs and agencies, and the domestic automotive industry to develop a new generation of vehicles that, among other goals, would seek to triple fuel efficiency.

In 1994, the National Highway Traffic Safety Administration (NHTSA) issued a notice of proposed rulemaking to explore raising the CAFE standard for light-duty trucks. However, Congress included provisions in the FY1996 Department of Transportation Authorization (P.L. 104-50, H.R. 2002) prohibiting the use of authorized funds to promulgate any CAFE rules. The prohibition was also included in the FY1997 (P.L. 104-205) and FY1998 DOT Appropriations (P.L. 105-66), and is included in the House version of the FY1999 DOT appropriations (H.R. 4328). Legislation has also been reintroduced in the 105th Congress (S. 286, H.R. 880) that would freeze the standards, subject to change only by legislative enactment.

It is not clear whether renewed concerns about motor vehicle fuel consumption and/or the prospect of complying with international agreements for the reduction of greenhouse gas emissions will lead to reconsideration of the CAFE freeze. At issue may be whether an increase in CAFE standards would be effective and preferable to other policy options.

Summary

On June 9, 1998, President Clinton signed into law the Transportation Equity Act for the 21st Century (TEA 21, P.L. 105-178). The law authorizes a total of $218 billion for federal highway and mass transit programs from FY1998 to FY2003 and sets aside roughly $12.4 billion for several environmental programs. It authorizes a total of $8.1 billion from FY1998 to FY2003 for the Congestion Mitigation and Air Quality Program to assist states in complying with federal air quality standards and a total of $3.3 billion over the next 6 years for transportation enhancements that are environmentally related. TEA 21 also authorizes funding for three new environmental programs, including a total of $750 million from FY1999 to FY2003 for the Clean Fuels Formula Grant Program to assist transit systems in purchasing low-emission buses, a total of $250 million from FY1999 to FY2003 for the Advanced Vehicle Technologies Program under which environmental technologies are eligible for funding, and an unspecified amount from FY1998 to FY2003 for the Surface Transportation-Environment Cooperative Research Program. Three other environmental provisions address the operation of low-emission vehicles in high occupancy vehicle lanes, the environmental review process for transportation projects, and the extension of tax benefits for alcohol-based fuels. During floor debate, the Senate also added two unrelated provisions that codify the Administration's schedule for implementing the new air quality standards for ozone and fine particulates and authorize a total of $50 million from FY1999 to FY2003 under the Clean Vessel Act for a competitive grant program to prevent vessel sewage discharges. This report will not be updated.

Summary

The Taxpayer Relief Act of 1997 (P.L. 105-34) provides Amtrak $2.2 billion over 2 years for capital improvements (but not for capital maintenance in the way federal transit grants can be used). It provides no funds for operating losses. (Table 3, below) In addition, the Amtrak Reform and Accountability Act of 1997 (Act) (P.L. 105-134) authorizes $5.163 billion for Amtrak for FY1998 through FY2002, including $1.058 billion for FY1999. These funds are for operating expenses, capital expenditures, and payments into a federally mandated and federally operated railroad retirement program for benefits to freight rail retirees (about $142 million a year).

The Act also made operating reforms, including authority (in Section 101) to shed unprofitable routes without preserving a national system. GAO, in March, May and June 1998, stated that the Federal Railroad Administration and Amtrak think the reforms provided by the Act will have little, if any, immediate effect, and their long-term benefits are unclear. Amtrak's March 1998 strategic business plan shows that Amtrak will continue to require federal operating support in FY2003; Amtrak does not expect to meet its goal of eliminating such aid by the end of FY2002. GAO stated that Amtrak will remain heavily dependent on federal funding to pay its operating and capital expenses for the foreseeable future.

Every Amtrak route loses money (GAO/RCED-98-151), while the Metroliner Service between Washington, DC, and New York City makes a profit of $5 per passenger. If Amtrak shed all its unprofitable routes, it would keep only its Metroliner service. GAO does not think that Amtrak's freight express service, or its higher speed rail service that could begin in late 1999, will cause Amtrak to be profitable.

Amtrak's auditors reported that Amtrak lost over $760 million in FY1996 and again in FY1997 (Amtrak 1997 Annual Report), and carried current borrowing of $99 million and long-term borrowing of $425 million on September 30, 1997.

On July 24, 1998, the Senate passed S. 2307 appropriating $555 million to Amtrak for FY1999, and on July 30, 1998, the House passed H.R. 4328 appropriating $609.2 million to Amtrak for FY1999. Both bills prohibit the Amtrak Reform Council (Council) from using federal funds for outside consulting services.

The Council, created pursuant to the Act, is required by the Act to submit an annual report to Congress on Amtrak's progress toward financial self-sufficiency by the end of FY2002. The Act provides for an Amtrak restructuring or liquidation review process by the Council, Amtrak, and Congress if the Council finds, after December 2, 1999, that Amtrak will require federal funds to cover operating losses after FY2002.

In the absence of Amtrak, others might provide rail passenger service several times a day between Washington, DC, and New York City, without federal operating assistance, just as buses and airlines do now. Similarly, rail land cruise service might become available on that route and others. The financial climate for such services, and for Amtrak profitability, probably would be improved if the services could be provided under laws as favorable as those for bus lines and most other non-rail companies.