Bush Passes Final CAFE Decision to Obama

The Bush Administration has decided not to establish the final rules on new stricter fuel economy standards set to take effect in 2011. Though an energy bill mandating an average fuel efficiency of 35 miles per gallon for cars and trucks by 2020 was signed by President Bush in late 2007, specific figures and dates were not determined for the phase-in period between 2011 and 2015. President Bush passed the responsibility of determining specific timelines and rules to President-elect Obama.

President Bush was initially expected to make a determination before the end of 2008, but that changed when the slumping economy threatened the survival of Detroit’s Big Three automakers. The US Department of Transportation issued a statement: “The recent financial difficulties of the automobile industry will require the next administration to conduct a thorough review of matters affecting the industry.”

The National Highway Traffic Safety Administration (NHTSA) had announced its formula to calculate fuel efficiency standards based on the footprint of vehicle lines—rather than a one-size-fits-all approach. But implementation of—and any changes to—those weight-based rules will now be left to Obama.

Obama’s administration will only have until April 1 to come up with the final rules and numbers, adding to the heavy load that is already on the new administration’s “to do” list. The April Fools Day deadline was established because the law stipulates that car manufacturers must receive at least 18 months notice before new standards take effect.

As reported by Automotive News, the Bush Administration issued a statement saying that it has “laid the groundwork for the next transportation department to come up with a ruling by the deadline.”

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  • Bryce

    Cars are designed years ahead of time making last minute changes like these hurts all the industries players. These rules should have been set last year.

    Now I fortell that they will sadly be pushed by the wayside in favor of maintaining industry strength. Like I said, shoulda gotten the rules down a year ago so that there was plenty of time to implement them properly…..now everyone will be caught off guard….even Toyota….lol. Looks to be suckin for everyone.

  • AP

    What Obama should do is replace CAFE (which hasn’t done what is intended) with a higher gasoline tax, phased in over, say, seven years. Divide up the revenue, and return it to all income tax filers as a tax credit. It’s revenue-neutral, so it doesn’t hurt the economy; it encourages the puchase of fuel-efficient vehicles; it encourages combining trips, and carpooling, etc.

    More than anything, with regards to this website, it would make hybrids make economic sense without subsidies (from governments or companies), since they would pay themselves back quicker.

    CAFE requires too many stipulations and arbitrary definitions (like what a car is vs. a truck), which will again cause unintended consequences, after which we will have to patch up more loopholes. We’ve seen this before; we’ll see it again. Obama could retain CAFE along with the higher gas tax, but it wouldn’t really do anything more.

  • AP

    After re-reading this, I noticed the section on “weight-based rules.” In other words, the more a vehicle weighs, the lower the mileage requirement. Talk about unintended consequences!

    I can see it now: A car is about to be released, but is just short of its CAFE requirement. If they add 30 pounds to it, it makes it into the next weight class. It will get less fuel economy, but enough to pass the less-stringent requirement. They go into a rush program to increase the thickness of sheet metal (in places that do no good for crashworthiness, since they don’t have time) and sound-reducing tar on the floorpan, but “manage” to meet the weight minimum.

    This is only what you can easily predict from such a stupid idea. It may take years to see the other ridiculous effects.

    Is this insane or what? If we don’t get real and address this with a (much simpler) higher gasoline tax, we are going to end up with the most screwed-up combination of overweight vehicles you can imagine!

  • Shines

    I agree with AP – CAFE is government meddling. In stead of creating a bureaucracy requiring complex rules and standards along with some type of enforcement task force, create a simpler process. The gas tax after being divided would benefit the taxpayers that drove the more efficient vehicles. I also like the idea of an excise tax based on vehicle weight. Sure hybrids would be taxed a bit more than non, but it would help out people who can’t afford the initial cost of a hybrid. They’d save money drifing their Aveos, smarts and other light cars.

  • Samie

    Maybe I need more understanding over the tax credit idea that Shines & AP support. The question I have is how do you divide up the tax credits? Do you go by income brackets, itemization, or distribute the tax credits evenly as one credit per household? It’s just as easy to claim gasoline tax distribution as government intrusion and in fact the notion of tax is used as propaganda to freak people out. Anyways agree with Bryce, its a tough spot either way Obama decides to go. But at some point there will need to be government action tax credit or better CAFE wc will eventually have some negative consequences by reducing competition or having mixed results in consumer decisions on purchasing more fuel efficient vehicles. The 25 billion Gov. loan to create fuel efficient vehicles needs to be backed up by something…. Tough decisions ahead for Obama so he may need to stock up on the Just for Men Hair dye 🙂

  • AP

    Samie, my opinion is that you’d split the tax credit up evenly, with no income minimum or maximum, or net income tax due. Then, the system has maximum transparency: tax credit = (# of gallons X $/gallon)/(# of tax filers). The governmanet can’t “hide” the money.

    Also, conservatives will have to give in on “not paying people who haven’t paid in” and liberals will give in on “giving ‘rich’people a tax credit who don’t really need it.” It’s also no longer a regressive tax that way.

    Both sides would have to give a bit, but the alternative is the status quo: mileage mandates that take many lawyers to decipher and other lawyers to get around, all the while creating unintended consequences (like SUV’s, urban sprawl, etc.). With CAFE only, we would see little improvement in national petroleum consumption. Pump price, as we saw last year, is the key.

  • Shines

    Samie, I’m no expert, but from my simple view:
    Since the purpose of the tax is to conserve and reduce fuel use, I would split the credits evenly per individual taxpayer. Those that do not drive but take public transportation get to use the credits to pay for their bus passes and transit tickets. Those that drive small or efficient cars can use some of the credit to offset the cost of ownership. Joe Average gets back what he spent in taxes. Joe hot dog driving his herkin’ SUV with the 22 inch chrome rims ends up subsidising other more efficient drivers and transit commuters.
    Businesses could get back some of the tax with an increased mileage credit for business used vehicles. Since gas stations already collect taxes the infrastructure is in place.
    It is far from perfect, but something needs to be done and this method does not seem to increase the size of government as much as creating an additional organization to determine fuel efficiency per vehicle size and class and to review automakers product lines to verify CAFE standards are being met.
    Higher fuel prices still leaves the individual free to make car buying and driving decisions. And automakers are free to build whatever they want (keeping in mind that more buyers will be looking for more efficiient vehicles.) Anyway – that’s the ideal as I see it…

  • Bryce

    Actually this would work out well for those of us who drive fuel efficient cars. We would get a higher credit per amount of fuel used relative to an individual driving a larger vehicle……doubling as a market signal and a little reward for trying to be green or what have you. Doesn’t sound half bad to me.

  • AP

    Shines and Bryce: You’ve got it.

  • Bryce

    : )

  • crookmatt

    What AP said.

    I agree completely.