text: SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
  
      (a) Short Title.--This Act may be cited as the ``Improved Passenger 
  Automobile Fuel Economy Act of 2007''.
      (b) Table of Contents.--The table of contents for this Act is as 
  follows:
  
  Sec. 1. Short title; table of contents.
                      TITLE I--40 MPG STANDARD BY 2017
  
  Sec. 101. Cafe standards for passenger automobiles.
  Sec. 102. Fuel economy standard credits.
  Sec. 103. Authorization of appropriations.
  Sec. 104. Effective date.
      TITLE II--MARKET-BASED INITIATIVES FOR GREENHOUSE GAS REDUCTION
  
  Sec. 201. Market-based initiatives. 
  Sec. 202. Implementing panel.
  Sec. 203. Definitions.
  
                      TITLE I--40 MPG STANDARD BY 2017
  
  SEC. 101. CAFE STANDARDS FOR PASSENGER AUTOMOBILES.
  
      (a) Average Fuel Economy Standards for Automobiles.--Section 32902 
  of title 49, United States Code, is amended--
              (1) by striking subsections (b) and (c) and inserting the 
          following:
      ``(b) Passenger Automobiles.--
              ``(1) In general.--At least 18 months before the beginning 
          of each model year, the Secretary of Transportation shall 
          prescribe by regulation average fuel economy standards for 
          passenger automobiles manufactured by a manufacturer in that 
          model year. Each standard shall be the maximum feasible average 
          fuel economy level that the Secretary decides the manufacturers 
          can achieve in that model year. The Secretary may prescribe 
          separate standards for different classes of passenger 
          automobiles.
              ``(2) Minimum standard.--Except as provided in paragraph 
          (3), in prescribing a standard under paragraph (1), the 
          Secretary shall ensure that no manufacturer's standard for a 
          particular model year is less than the greater of--
                      ``(A) the standard in effect on the date of 
                  enactment of the Improved Passenger Automobile Fuel 
                  Economy Act of 2007; or
                      ``(B) a standard established in accordance with the 
                  requirement of section 104(c)(2) of that Act.
              ``(3) 40 miles per gallon standard for model year 2017.--
          The Secretary shall prescribe an average fuel economy standard 
          for passenger automobiles manufactured by a manufacturer in 
          model year 2017 of 40 miles per gallon. If the Secretary 
          determines that more than 1 manufacturer is not reasonably 
          expected to achieve that standard, the Secretary shall notify 
          the Senate Committee on Commerce, Science, and Transportation 
          and the House of Representatives Committee on Energy and 
          Commerce of that determination.
      ``(c) Flexibility of Authority.--
              ``(1) In general.--The authority of the Secretary to 
          prescribe by regulation average fuel economy standards for 
          automobiles under this section includes the authority to 
          prescribe standards based on one or more vehicle attributes 
          that relate to fuel economy, and to express the standards in 
          the form of a mathematical function. The Secretary may issue a 
          regulation prescribing standards for one or more model years.
              ``(2) Required lead-time.--When the Secretary prescribes an 
          amendment to a standard under this section that makes an 
          average fuel economy standard more stringent, the Secretary 
          shall prescribe the amendment at least 18 months before the 
          beginning of the model year to which the amendment applies.
              ``(3) No across-the-board increases.--When the Secretary 
          prescribes a standard, or prescribes an amendment under this 
          section that changes a standard, the standard may not be 
          expressed as a uniform percentage increase from the fuel-
          economy performance of automobile classes or categories already 
          achieved in a model year by a manufacturer.'';
              (2) by inserting ``motor vehicle safety, emissions,'' in 
          subsection (f) after ``economy,'';
              (3) by striking ``energy.'' in subsection (f) and inserting 
          ``energy and reduce its dependence on oil for 
          transportation.'';
              (4) by striking subsection (j) and inserting the following:
      ``(j) Notice of Final Rule.--Before taking final action on a 
  standard or an exemption from a standard under this section, the 
  Secretary of Transportation shall notify the Secretary of Energy and 
  the Administrator of the Environmental Protection Agency and provide 
  them a reasonable time to comment on the standard or exemption.''; and
              (5) by adding at the end thereof the following:
      ``(k) Costs-Benefits.--The Secretary of Transportation may not 
  prescribe an average fuel economy standard under this section that 
  imposes marginal costs that exceed marginal benefits, as determined at 
  the time any change in the standard is promulgated.''.
      (b) Exemption Criteria.--The first sentence of section 
  32904(b)(6)(B) of title 49, United States Code, is amended--
              (1) by striking ``exemption would result in reduced'' and 
          inserting ``manufacturer requesting the exemption will 
          transfer'';
              (2) by striking ``in the United States'' and inserting 
          ``from the United States''; and
              (3) by inserting ``because of the grant of the exemption'' 
          after ``manufacturing''.
      (c) Conforming Amendments.--
              (1) Section 32902 of title 49, United States Code, is 
          amended--
                      (A) by striking ``or (c)'' in subsection (d)(1);
                      (B) by striking ``(c),'' in subsection (e)(2);
                      (C) by striking ``subsection (a) or (d)'' each 
                  place it appears in subsection (g)(1) and inserting 
                  ``subsection (a), (b), or (d)'';
                      (D) by striking ``(1) The'' in subsection (g)(1) 
                  and inserting ``The'';
                      (E) by striking subsection (g)(2); and
                      (F) by striking ``(c),'' in subsection (h) and 
                  inserting ``(b),''.
              (2) Section 32903 of such title is amended by striking 
          ``section 32902(b)-(d)'' each place it appears and inserting 
          ``subsection (b) or (d) of section 32902''.
              (3) Section 32904(a)(1)(B) of such title is amended by 
          striking ``section 32902(b)-(d)'' and inserting ``subsection 
          (b) or (d) of section 32902''.
              (4) The first sentence of section 32909(b) of such title is 
          amended to read ``The petition must be filed not later than 59 
          days after the regulation is prescribed.''.
              (5) Section 32917(b)(1)(B) of such title is amended by 
          striking ``or (c)''.
  
  SEC. 102. FUEL ECONOMY STANDARD CREDITS.
  
      (a) In General.--Section 32903 of title 49, United States Code, is 
  amended by striking the second sentence of subsection (a) and inserting 
  ``The credits--
              ``(1) may be applied to any of the 3 model years 
          immediately following the model year for which the credits are 
          earned; or
              ``(2) transferred to the registry established under section 
          201 of the Improved Passenger Automobile Fuel Economy Act of 
          2007.''.
      (b) Greenhouse Gas Credits Applied to CAFE Standards.--Section 
  32903 of title 49, United States Code, is amended by adding at the end 
  the following:
      ``(g) Greenhouse Gas Credits.--
              ``(1) In general.--A manufacturer may apply credits 
          purchased through the registry established by section 201 of 
          the Improved Passenger Automobile Fuel Economy Act of 2007 
          toward any model year after model year 2010 under subsection 
          (d), subsection (e), or both.
              ``(2) Limitation.--A manufacturer may not use credits 
          purchased through the registry to offset more than 10 percent 
          of the fuel economy standard applicable to any model year.''.
  
  SEC. 103. AUTHORIZATION OF APPROPRIATIONS.
  
      There are authorized to be appropriated to the Secretary of 
  Transportation such sums as may be necessary to carry out this title 
  and chapter 329 of title 49, United States Code, as amended by this 
  title.
  
  SEC. 104. EFFECTIVE DATE.
  
      (a) In General.--Except as provided in subsection (b), this title, 
  and the amendments made by this title, take effect on the date of 
  enactment of this Act.
      (b) Transition for Passenger Automobile Standard.--Notwithstanding 
  subsection (a), and except as provided in subsection (c)(2), until the 
  effective date of a standard for passenger automobiles that is issued 
  under the authority of section 32902(b) of title 49, United States 
  Code, as amended by this Act, the standard or standards in place for 
  passenger automobiles under the authority of section 32902 of that 
  title, as that section was in effect on the day before the date of 
  enactment of this Act, shall remain in effect.
      (c) Rulemaking.--
              (1) Initiation of rulemaking under amended law.--Within 60 
          days after the date of enactment of this Act, the Secretary of 
          Transportation shall initiate a rulemaking for passenger 
          automobiles under section 32902(b) of title 49, United States 
          Code, as amended by this Act.
              (2) Amendment of existing standard.--Until the Secretary 
          issues a final rule pursuant to the rulemaking initiated in 
          accordance with paragraph (1), the Secretary shall amend the 
          average fuel economy standard prescribed pursuant to section 
          32092(b) of title 49, United States Code, with respect to 
          passenger automobiles in model years to which the standard 
          adopted by such final rule does not apply.
  
      TITLE II--MARKET-BASED INITIATIVES FOR GREENHOUSE GAS REDUCTION
  
  SEC. 201. MARKET-BASED INITIATIVES.
  
      (a) Establishment of Registry for Voluntary Trading Systems.--The 
  Secretary of Commerce shall establish a national registry system for 
  greenhouse gas trading among industry under which emission reductions 
  from the applicable baseline are assigned unique identifying numerical 
  codes by the registry. Participation in the registry is voluntary. Any 
  entity conducting business in the United States may register its 
  emission results, including emissions generated outside of the United 
  States, on an entity-wide basis with the registry, and may utilize the 
  services of the registry.
      (b) Purposes.--The purposes of the national registry are--
              (1) to encourage voluntary actions to reduce greenhouse gas 
          emissions and increase energy efficiency, including increasing 
          the fuel economy of passenger automobiles and light trucks and 
          reducing the reliance by United States markets on petroleum 
          produced outside the United States used to provide vehicular 
          fuel;
              (2) to enable participating entities to record voluntary 
          greenhouse gas emissions reductions; in a consistent format 
          that is supported by third party verification;
              (3) to encourage participants involved in existing 
          partnerships to be able to trade emissions reductions among 
          partnerships;
              (4) to further recognize, publicize, and promote 
          registrants making voluntary and mandatory reductions;
              (5) to recruit more participants in the program; and
              (6) to help various entities in the nation establish 
          emissions baselines.
      (c) Functions.--The national registry shall carry out the following 
  functions:
              (1) Referrals.--Provide referrals to approved providers for 
          advice on--
                      (A) designing programs to establish emissions 
                  baselines and to monitor and track greenhouse gas 
                  emissions; and
                      (B) establishing emissions reduction goals based on 
                  international best practices for specific industries 
                  and economic sectors.
              (2) Uniform reporting format.--Adopt a uniform format for 
          reporting emissions baselines and reductions established 
          through--
                      (A) the Director of the National Institute of 
                  Standards and Technology for greenhouse gas baselines 
                  and reductions generally; and
                      (B) the Secretary of Transportation for credits 
                  under section 32903 of title 49, United States Code.
              (3) Record maintenance.--Maintain a record of all emission 
          baselines and reductions verified by qualified independent 
          auditors.
              (4) Encourage participation.--Encourage organizations from 
          various sectors to monitor emissions, establish baselines and 
          reduction targets, and implement efficiency improvement and 
          renewable energy programs to achieve those targets.
              (5) Public awareness.--Recognize, publicize, and promote 
          participants that--
                      (A) commit to monitor their emissions and set 
                  reduction targets;
                      (B) establish emission baselines; and
                      (C) report on the amount of progress made on their 
                  annual emissions.
      (d) Transfer of Reductions.--The registry shall--
              (1) allow for the transfer of ownership of any reductions 
          realized in accordance with the program; and
              (2) require that the registry be notified of any such 
          transfer within 30 days after the transfer is effected.
      (e) Future Considerations.--Any reductions achieved under this 
  program shall be credited against any future mandatory greenhouse gas 
  reductions required by the government. Final approval of the amount and 
  value of credits shall be determined by the agency responsible for the 
  implementation of the mandatory greenhouse gas emission reduction 
  program, except that credits under section 32903 of title 49, United 
  States Code, shall be determined by the Secretary of Transportation. 
  The Secretary of Commerce shall by rule establish an appeals process, 
  that may incorporate an arbitration option, for resolving any dispute 
  arising out of such a determination made by that agency.
      (f) CAFE Standards Credits.--The Secretary of Transportation shall 
  work with the Secretary of Commerce and the implementing panel 
  established by section 202 to determine the equivalency of credits 
  earned under section 32903 of title 49, United States Code, for 
  inclusion in the registry. The Secretary shall by rule establish an 
  appeals process, that may incorporate an arbitration option, for 
  resolving any dispute arising out of such a determination.
  
  SEC. 202. IMPLEMENTING PANEL.
  
      (a) Establishment.--There is established within the Department of 
  Commerce an implementing panel.
      (b) Composition.--The panel shall consist of--
              (1) the Secretary of Commerce or the Secretary's designee, 
          who shall serve as Chairperson;
              (2) the Secretary of Transportation or the Secretary's 
          designee; and
              (3) 1 expert in the field of greenhouse gas emissions 
          reduction, certification, or trading from each of the following 
          agencies--
                      (A) the Department of Energy;
                      (B) the Environmental Protection Agency;
                      (C) the Department of Agriculture;
                      (D) the National Aeronautics and Space 
                  Administration;
                      (E) the Department of Commerce; and
                      (F) the Department of Transportation.
      (c) Experts and Consultants.--Any member of the panel may secure 
  the services of experts and consultants in accordance with the 
  provisions of section 3109 of title 5, United States Code, for 
  greenhouse gas reduction, certification, and trading experts in the 
  private and non-profit sectors and may also utilize any grant, 
  contract, cooperative agreement, or other arrangement authorized by law 
  to carry out its activities under this subsection.
      (d) Duties.--The panel shall--
              (1) implement and oversee the implementation of this 
          section;
              (2) promulgate--
                      (A) standards for certification of registries and 
                  operation of certified registries; and
                      (B) standards for measurement, verification, and 
                  recording of greenhouse gas emissions and greenhouse 
                  gas emission reductions by certified registries;
              (3) maintain, and make available to the public, a list of 
          certified registries; and
              (4) issue rulemakings on standards for measuring, 
          verifying, and recording greenhouse gas emissions and 
          greenhouse gas emission reductions proposed to the panel by 
          certified registries, through a standard process of issuing a 
          proposed rule, taking public comment for no less than 30 days, 
          then finalizing regulations to implement this act, which will 
          provide for recognizing new forms of acceptable greenhouse gas 
          reduction certification procedures.
      (e) Certification and Operation Standards.--The standards 
  promulgated by the panel shall include--
              (1) standards for ensuring that certified registries do not 
          have any conflicts of interest, including standards that 
          prohibit a certified registry from--
                      (A) owning greenhouse gas emission reductions 
                  recorded in any certified registry; or
                      (B) receiving compensation in the form of a 
                  commission where sources receive money for the total 
                  number of tons certified;
              (2) standards for authorizing certified registries to enter 
          into agreements with for-profit persons engaged in trading of 
          greenhouse gas emission reductions, subject to paragraph (1); 
          and
              (3) such other standards for certification of registries 
          and operation of certified registries as the panel determines 
          to be appropriate.
      (f) Measurement, Verification, and Recording Standards.--The 
  standards promulgated by the panel shall provide for, in the case of 
  certified registries--
              (1) ensuring that certified registries accurately measure, 
          verify, and record
target: Improved Passenger Automobile Fuel Economy Act of 2007 - Revises minimum corporate average fuel economy (CAFE) standards for passenger automobiles to direct the Secretary of Transportation, for each model year, to prescribe minimum CAFE standards for passenger automobiles, with the minimum standard being the current standard of 27.5 miles per gallon. Requires a CAFE standard of 40 miles per gallon for passenger automobiles manufactured in model year 2017.
  
  Authorizes credits earned by a manufacturer when the average fuel economy of passenger automobiles manufactured by a manufacturer in a particular model year exceeds an applicable established average fuel economy standard to be applied to any of the three model years immediately following (currently, before) the model year in which such credits are earned, or transferred to a national registry system for greenhouse gases. Authorizes a manufacturer to apply credits purchased through the registry (greenhouse gas credits) toward applicable CAFE standards for passenger or non-passenger automobiles after model year 2010.
  
  Establishes a national greenhouse registry to encourage voluntary actions to monitor and reduce greenhouse gas emissions and increase energy efficiency.
  
  Establishes within the Department of Commerce an implementing panel to, among other things promulgate standards for: (1) certification of registries and operation of certified registries; and (2) measurement, verification, and recording of greenhouse gas emissions and greenhouse gas emission reductions by certified registries.
feat_title: A bill to require the establishment of a corporate average fuel economy standard for passenger automobiles of 40 miles per gallon by 2017, and for other purposes.