US House agrees measure to hike funds for fuel economy agency

Washington (Platts)--14Jun2006

The US House of Representatives late Tuesday agreed on an amendment to
the fiscal 2007 Transportation-Treasury funding bill that would significantly
boost funding for the branch of the Transportation Department responsible for
setting fuel economy standards for motor vehicles.

A vote on the full bill could come as early as Friday.

Thirty-nine Republicans joined nearly all House Democrats to support the
amendment, offered by Representative Melissa Bean, an Illinois Democrat, to
provide an additional $6.7 million to the National Highway Traffic Safety
Administration.

The extra funds would be used to create non-mandatory strategies to boost
fuel efficiency, which most Democrats see as the key to reduce US reliance on
foreign oil.

The amendment would hike NHTSA's operations and research budget from $1.3
million to roughly $8 million. The measure does not direct the agency to
increase Corporate Average Fuel Economy standards but simply directs the funds
towards research into possible incentives for the auto industry to increase
its fuel efficiency.

Representative John Olver, a Massachusetts Democrat, said the funds could
potentially go towards quick implementation of a new fuel economy standard
once Congress approves legislation giving the Bush administration authority to
reform the program for passenger cars.

Bush and his Transportation Secretary Norman Mineta earlier this year
asked Congress to allow changes to the passenger car fuel economy program
similar to changes made previously to the light truck program. The reformed
light truck standard sets mileage standards based on vehicle size, rather than
a simple fleet average.

Current corporate average fuel economy, or CAFE, standards require
passenger cars to average 27.5 mpg and light trucks, including SUVs, to
average 21.6 mpg, with the light truck average to be raised to 24 mpg by 2011.

--Cathy Landry, cathy_landry@platts.com

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