Fuel economy regulations were first introduced in 1978, only for passenger vehicles. NHTSA kept CAFE standards for cars the same from 1985 to 2010, except for a slight decrease in required mpg from 1986 to 1989. For the 2014 model year, Mercedes SUVs followed by GM and Ford light trucks had the lowest fleet average while Tesla followed by Toyota and Mazda had the highest. would have had to comply with CAFE standards regardless of size, but
pickup trucks and cargo vans over 8500 pounds gross vehicle weight rating (GVWR) would have remained exempt. The
United States Court of Appeals for the Ninth Circuit agreed with NHTSA that economic benefit-cost analysis (maximizing net economic benefits to the Nation) is, under the
Energy Policy and Conservation Act (EPCA), an appropriate method to select the maximum feasible stringency of CAFE standards, but nonetheless found that NHTSA incorrectly set a value of zero dollars to the global warming damage caused by CO2 emissions; failed to set a "backstop" to prevent trucks from emitting more CO2 than in previous years; failed to set standards for vehicles in the 8,500 to range; and failed to prepare a full
Environmental Impact Statement (EIS) rather than a more abbreviated environmental impact assessment. The Court directed NHTSA to prepare a new standard as quickly as possible and to fully evaluate that new standard's impact on the environment. The requirement applies to all passenger automobiles, including "light trucks." President Bush faced serious pressure to reduce the Nation's dependency on oil and this was part of his initiative to do so.
New "footprint" model Under the new final light truck CAFE standard 2008–2011, fuel economy standards would have been restructured so that they are based on a measure of vehicle size called "footprint", the product of multiplying a vehicle's wheelbase by its track width. A target level of fuel economy would have been established for each increment in footprint using a continuous mathematical formula. Smaller footprint light trucks had higher fuel economy targets and larger trucks lower targets. Manufacturers who made more large trucks would have been allowed to meet a lower overall CAFE target, manufacturers who make more small trucks would have needed to meet a higher standard. Unlike previous CAFE standards there was no requirement for a manufacturer or the industry as a whole to meet any particular overall actual MPG target, since that will depend on the mix of sizes of trucks manufactured and ultimately purchased by consumers. Some critics pointed out that this might have had the
unintended consequence of pushing manufacturers to make ever-larger vehicles to avoid strict economy standards. However, the equation used to calculate the fuel economy target had a built in mechanism that provides an incentive to reduce vehicle size to about 52 square feet (the approximate midpoint of the current light truck fleet.)
Increases and light truck standard reform In 2006, the rule making for light trucks for model years 2008–2011 included a reform to the structure for CAFE standards for light trucks and gave manufacturers the option for model years 2008–2010 to comply with the reformed standard or to comply with the unreformed standard. The reformed standard was based on the vehicle footprint. The unreformed standard for MY 2008 was set to be 22.5mpg, 23.1mpg for MY 2009, and 23.5mpg for MY 2010. To achieve the target of 35mpg authorized under EISA for the combined fleet of passenger cars and light truck for MY2020, NHTSA is required to continue raising the CAFE standards. In determining a new CAFE standard, NHTSA must assess the environmental impacts of each new standard and the effect of this standard on employment. With the EISA, NHTSA needed to take new analysis including taking a fresh look at the potential impacts under the National Environmental Policy Act (NEPA) and assessing whether or not the impacts are significant within the meaning of NEPA. NHTSA has to issue its new standards eighteen months before the model year for fleet. According to NHTSA report, to achieve this industry wide combined fleet of at least 35mpg, NHTSA must set new standards well in advance of the model year so as to provide the automobile manufacturers with lead time enough to make extensive necessary changes in their automobiles. The EISA also called for a reform where the standards set by the Transportation Department would be are "attribute based" so as to ensure that the safety of vehicles is not compromised for higher standards.
CAFE credit trading provisions The 2007 Energy Independence and Security Act also instructed NHTSA to establish a credit trading and transferring scheme to allow manufacturers to transfer credits between categories, as well as sell them to other manufacturers or non-manufacturers. In addition, the period over which credits could be carried forward was extended from three years to five. Traded or transferred credits may not be used to meet the minimum standard in the domestic passenger car fleet, however they may be used to meet the "attribute standard". This latter allowance has drawn criticism from the UAW which fears it will lead manufacturers to increase the importation of small cars to offset shortfalls in the domestic market. These new flexibilities were implemented by regulation on March 23, 2009, in the Final Rule for 2011 Model Year Passenger Cars and Light Trucks. Calculations using official CAFE data, and the newly proposed credit trading flexibility contained in the September 28, 2009, Notice of Proposed Rulemaking show that ninety-eight percent of the benefit derived from just the cross fleet credit trading provision flows to Toyota. According to these calculations 75% of the benefit from the two new CAFE credit trading provisions, cross fleet trading and five-year carry-forward, falls to foreign manufacturers. Toyota can use the provision to avoid or reduce compliance on average by 0.69 mpg per year through 2020, • Hyundai (1.01 mpg), • Nissan (0.65), • Honda (0.83 mpg), • Mitsubishi (0.13 mpg), • Subaru (0.08), • Chrysler (0.14 mpg), • GM (0.09 mpg), and • Ford (0.18 mpg) also benefit. The estimated value of the CAFE exemption gained by Toyota is $2.5 billion; Honda's benefit is worth $800 million, and Nissan's benefit is valued at $900 million in reduced CAFE compliance costs. Foreign companies gained $5.5 billion in benefits compared with the $1.8 billion that went to the Detroit Three.
Out-year and alternative fuel standard changes In the years 2021 to 2030, the standards requires MPG to be the "maximum feasible" fuel economy. The law allows NHTSA to issue additional requirements for cars and trucks based on the footprint model or other mathematical standard. Additionally, each manufacturer must meet a minimum standard of the higher of either 27.5 mpg for passenger automobiles or 92% of the projected average for all manufacturers. National Highway Traffic Safety Administration (NHTSA) is directed based on
National Academy of Sciences studies to set medium and heavy-duty truck MPG standards to the "maximum feasible". Additionally, the law phases out the mpg credit previously granted to
E85 flexible-fuel vehicle manufacturers and adds in one for
biodiesel, and it adds a requirement that NHTSA publish replacement tire fuel efficiency ratings. The bill also adds support for initial state and local infrastructure for
plug-in electric vehicles.
Implementing regulations On April 22, 2008, NHTSA responded to the
Energy Independence and Security Act of 2007 with proposed new fuel economy standards for cars and trucks effective model year 2011. The new rules also introduce the "footprint" model for cars as well as trucks, where if a manufacturer makes more large cars and trucks they will be allowed to meet a lower standard for fuel economy. This means that an overall fuel efficiency for a particular manufacturer nor the fleet as a whole cannot be predicted with certainty since it will depend on the actual product mix manufactured. However, if the product mix is as NHTSA predicts, car fuel economy would increase from a current standard of to in 2011. The new regulations are designed to be "optimized" with respect to a certain set of assumptions which include: gas prices in 2016 will be $2.25 a U.S. gallon (59.4¢/L), all new car purchasers will pay 7% interest rates on their vehicles purchases, and only care about fuel costs for the first 5 years of a vehicle's life, and that the
social cost of carbon is $7 per tonne of CO2. This corresponds to a
global warming value of $4.31 savings a year per car under the new regulations. Further, the new regulations assume that no advanced
hybrids (
Toyota Prius),
plug-in hybrids and
extended range electric vehicles (
Chevrolet Volt),
electric cars (
Th!nk City), nor alternative fuel vehicles (
Honda Civic GX) will be used to achieve these fuel economies. The proposal again explained that U.S. law (49 U.S. Code § 32919) requires that "a State or a political subdivision of a State may not adopt or enforce a law or regulation related to fuel economy standards or average fuel economy standards", and explained that laws or regulations applicable to motor vehicle greenhouse gas emissions are related to fuel economy standards. In mid-October 2008, DOT completed and released a final
environmental impact statement in anticipation of issuing standards for model years 2011–2015. Based on its consideration of the public comments and other available information, including information on the financial condition of the automotive industry, the agency adjusted its analysis and the standards and prepared a final rule and Final Regulatory Impact Analysis (FRIA) for MYs 2011–2015. On November 14, 2008, the
Office of Management and Budget concluded review of the rule and FRIA. However, issuance of the final rule was held in abeyance. On January 7, 2009, the Department of Transportation announced that the final rule would not be issued, writing: "The Bush Administration will not finalize its rulemaking on Corporate Fuel Economy Standards. The recent financial difficulties of the automobile industry will require the next administration to conduct a thorough review of matters affecting the industry, including how to effectively implement the Energy Independence and Security Act of 2007 (EISA). The National Highway Traffic Safety Administration has done significant work that will position the next Transportation Secretary to finalize a rule before the April 1, 2009 deadline."
2009 Obama administration directive On January 27, 2009, President Barack Obama directed the Department of Transportation to review relevant legal, technological, and scientific considerations associated with establishing more stringent fuel economy standards, and to finalize the 2011 model year standard by the end of March. This single-model year standard was issued March 27, 2009, and is about one mpg lower than the fuel economy standards previously recommended under the Bush Administration. "These standards are important steps in the nation's quest to achieve energy independence and bring more fuel efficient vehicles to American families", said Secretary LaHood. The new standards will raise the industry-wide combined average to (a increase over the 2010 model year average), as estimated by the National Highway Traffic Safety Administration (NHTSA). It will save about of fuel and reduce carbon dioxide emissions by 8.3 million metric tons. This 2011 single-year standard will use an attribute-based system, which sets fuel economy standards for individual vehicle models, based on the footprint model. Secretary LaHood also noted that work on the multi-year fuel economy plan for model years after 2011 is already well underway. The review will include an evaluation of fuel-saving technologies, market conditions and future product plans from the manufacturers. The effort will be coordinated with interested stakeholders and other federal agencies, including the Environmental Protection Agency. The new rules were immediately challenged in court again by the Center for Biological Diversity as not addressing the inadequacies found by the previous court rulings.
Model year 2012–2016 Obama administration proposal On May 19, 2009, President
Barack Obama proposed a new national fuel economy program which adopts uniform federal standards to regulate both fuel economy and greenhouse gas emissions while preserving the legal authorities of DOT, EPA and California. The program covered model year 2012 to model year 2016 and ultimately required an average fuel economy standard of in 2016 (of 39 miles per gallon for cars and 30 mpg for trucks), a jump from the 2009 average for all vehicles of 25 miles per gallon. Obama said, "The status quo is no longer acceptable." The higher fuel economy was projected to reduce oil consumption by approximately over the life of the program and reduce
greenhouse gas emissions by approximately 900 million
metric tons; the expected consumer costs in terms of higher car prices was unknown. Ten car companies and the
UAW embraced the national program because it provided certainty and predictability to 2016 and included flexibilities that would significantly reduce the cost of compliance. Stated goals for the program included: saving consumers money over the long term in increased fuel efficiency, preserving
consumer choice (the new rules do not dictate the size of cars, trucks and SUVs that manufacturers can produce; rather it requires that all sizes of vehicles become more energy efficient), reduced air pollution in the form of greenhouse gas emissions and other conventional pollutants, one national policy for all automakers instead of three standards (a DOT standard, an EPA standard and a California standard that would apply to 13 other states), and industry desires: clarity, predictability and certainty concerning the rules while giving them flexibility on how to meet the expected outcomes and the lead time they need to innovate. The policy was expected to result in yearly 5% increases in efficiency from 2012 through 2016, of oil saved cumulatively over the lifetime of the program and significant reductions in greenhouse gas emissions equivalent to taking 177 million of today's cars off the road. By model year 2014, many of the program's goals were being met. The average new vehicle fuel economy was 30.7 mpg (35.6 mpg for cars and 25.5 mpg for trucks) and for the years 2012–2015, auto industry outperformed the GHG standard by a substantial margin. Consumers are expected to save an estimated 16.6 billion gallons of fuel over the lifetime of model year 2011 to 2014 vehicles due to the manufacturers exceeding the CAFE standards in those years.
2011 agreement for model years 2017–2025 On July 29, 2011, President Obama announced an agreement with thirteen large automakers to increase fuel economy to 54.5 miles per gallon for cars and light-duty trucks by model year 2025. He was joined by Ford, GM, Chrysler, BMW, Honda, Hyundai, Jaguar/Land Rover, Kia, Mazda, Mitsubishi, Nissan, Toyota, and Volvo—which together accounted for over 90% of all vehicles sold in the United States—as well as the United Auto Workers (UAW), and the State of California, who were all participants in the deal. The agreement resulted in new CAFE regulations for model year 2017–2025 vehicles, which were finalized on August 28, 2012. The major increases in stringency and the changes in the structure of CAFE create a need for research that incorporates the demand and supply sides of the new vehicle market in a more detailed manner than was needed with static fuel economy standards. Volkswagen responded to the July 29, 2011, agreement with the following statement: "Volkswagen does not endorse the proposal under discussion. It places an unfairly high burden on passenger cars, while allowing special compliance flexibility for heavier light trucks. Passenger cars would be required to achieve 5% annual improvements, and light trucks 3.5% annual improvements. The largest trucks carry almost no burden for the 2017–2020 timeframe, and are granted numerous ways to mathematically meet targets in the outlying years without significant real-world gains. The proposal encourages manufacturers and customers to shift toward larger, less efficient vehicles, defeating the goal of reduced greenhouse gas emissions." Additionally, Volkswagen has since approached U.S. lawmakers about lowering their proposal to double fuel efficiency for passenger cars by 2025. Volkswagen at the time claimed that the new plan was unfair, but the company was later revealed to have been
systematically cheating emissions tests. As a result, Volkswagen is one of the only major auto manufacturers to not sign the agreement that has led to the current proposal from the Obama administration. Daimler, producer of Mercedes-Benz brand automobiles, expressed similar views, saying it "clearly favors large SUVs and pickup trucks."
2016 mid-term review The 2011 agreement set up requirements for a mid-term review to look at how the industry was progressing with the new standards. On July 18, 2016, the
EPA, NHTSA and the California Air Resources Board (
CARB) released a technical paper assessing whether or not the auto industry would be able to reach the 2022 to 2025 mpg standards. The Draft Technical Assessment Report, as the paper is called, is the first step in the mid-term evaluation process. The government groups found that the auto industry had been successfully innovating and pushing towards lowering greenhouse gas emissions. The paper said that the technology was cheaper or about what was expected in terms of cost, and that automakers were adopting new technologies quicker than expected. Still, the paper said that the 54.5 mpg-equivalent projection is unrealistic. That goal was based on a market that was 67 percent cars and 33 percent trucks and SUVs and higher fuel prices, but American customers weren't buying that many cars, as the market was still about 50/50 and was likely to stay that way. The paper said more realistic projections are 50 mpg to 52.6 if the 2012 standards are maintained. Additionally, there were minimum standards since EISA for domestically produced passenger automobiles being the greater of 27.5 mpg or 92 percent of the CAFE projected by the secretary of transportation for the combined domestic and non-domestic passenger automobile fleets manufactured for that model year.
2020 rollback In early August 2018, the EPA and Department of Transportation, then operating under the
Presidency of Donald Trump, issued a proposed ruling that, if enacted, would roll back some of the goals set in 2012 under President Obama. It proposed freezing the fuel economy goals to the 2021 target of 37 mpg, would halt requirements on the production of hybrid and electric cars, and would eliminate the legal waiver that allows states like California to set more stringent standards. The EPA acting administrator
Andrew R. Wheeler and the transportation secretary
Elaine Chao issued a joint statement stating that the rule change was needed as the current rules "impose significant costs on American consumers and eliminate jobs", while the new rules "give consumers greater access to safer, more affordable vehicles, while continuing to protect the environment". The new ruling proposed by the EPA and NHTSA was named the
Safer Affordable Fuel-Efficient (SAFE) Vehicle Rules. It aimed to set new CAFE standards for MY 2022–2026 passenger car and light trucks and amend the 2021 MY CAFE standards because they are "no longer maximum feasible standards." The safety reason provided by the government was to shift people to buying new vehicles once the vehicles become more affordable under SAFE standards, with a government study conducted to show new model year vehicles were associated with lower fatality rates. After releasing the proposal on August 2, 2018, NHTSA and EPA held a comment hearing period for 60 days. The deadline was later extended to October 26, 2018, after requests from 32 US senators, 18 state attorneys general, and others for a 120-day or longer comment period were received. Researchers described in a December 2018 article in
Science fundamental flaws and inconsistencies in the analysis justifying the proposed rule including miscalculating changes in the size of the automobile fleet and ignoring international benefits of reduced greenhouse gas emissions, thereby discarding at least $112 billion in benefits, and also by overestimating compliance costs and characterized such changes in the Notice of Proposed Rulemaking as misleading. New CAFE targets went into effect in June 2020 beginning with the 2021 model year, increasing at a rate of 1.5 percent per year, far lower than the nearly 5 percent increase they replace. Additionally, the minimum standard for domestic passenger cars was lowered from the 2020 model year level until the 2023 MY.
Updates under Biden administration Upon taking office, the administration of President Biden stated an intention to set new fuel efficiency standards. In August 2021 NHTSA released its Notice of Proposed Rulemaking offering new standards for the 2024–2026 model years. The final rule covering the 2024–2026 model years was signed on March 31, 2022. Fuel economy targets for cars and light trucks each increase 8 percent for 2024 MY, 8 percent for 2025 MY, and 10 percent for 2026 MY. NHTSA projects that the updated targets lead to an industry-wide average of 49 MPG by the 2026 model year given a fleet mix of 48 percent passenger cars and 52 percent light trucks. Additionally, since by law, the minimum domestic passenger car standard (MDPCS) is "92 percent of the average fuel economy projected by the Secretary for the combined domestic and non-domestic passenger automobile fleets," they are also updated. However, NHTSA is retaining a "1.9 percent offset" to the MDPCS because of past undercompliance with the standard, keeping a roll back of the Trump administration. On July 28, 2023 NHTSA proposed new fuel economy targets for light-duty vehicles for the 2027—2031 model years, as well as heavy-duty trucks and vans for the 2030—2035 model years. The preferred alternative calls for 2 percent annual increases for cars, 4 percent for light trucks, and 10 percent for heavy-duty trucks and vans, among other regulatory changes.
Effective elimination in 2025 budget bill In the
One Big Beautiful Bill Act signed by President Trump on July 4, 2025, fines for missing CAFE standards were eliminated, effectively mooting the standards. == Active debate ==