Table 1. MY 2017-2025 Combined Average Passenger Car and Light Truck
CAFE and GHG Emission Standards

Source: CRS, from EPA and NHTSA, "2017 and Later Model Year Light-Duty Vehicle Greenhouse Gas Emissions and Corporate Average Fuel Economy Standards,"” 77 Federal Register 62624, October 15, 2012.

Notes: The values are based on projected sales of vehicles in different size classes. The standards are size-based, and the vehicle fleet encompasses large, medium, and small cars and light trucks. Thus if the sales mix is different from projections, the achieved CAFE and GHG levels would rise or fall. For example, CAFE numbers are based on NHTSA'’s projection using the MY 2008 fleet as the baseline. A different projection, based on the MY 2010 fleet, leads to somewhat lower numbers (roughly 0.3—-0.6 mpg lower for MYs 2017-2020 and roughly 0.7-1.0 mpg lower for MY 2021 onward). As discussed later, types of vehicles sold domestically has changed during the past decade.

GHG-Equivalent Fuel Economy (miles per gallon equivalent) is the value returned if all of the GHG reductions were made through fuel economy improvements. However, in practice, other strategies are used to reduce GHG emissions to the actual GHG standard (for example, improved vehicle air conditioners).

CAFE standards for MYs 2022-2025 are italicized because they are non-final (or "augural"were nonfinal (or “augural”). NHTSA has authority to set CAFE standards only in five-year increments. Thus, only rules through MY 2021 have been finalizedunder Phase 2, NHTSA finalized standards through MY 2021. To set standards for MY 2022 onward, NHTSA haswas required to issue a new rule. light trucks. NHTSA, “Average Fuel Economy Standards for Light Trucks; Model Years 2008-2011: Proposed Rule,” 70 Federal Register 51413, August 30, 2005. 49 The definitions of passenger car, light truck, and import can be found at 49 C.F.R. Part 523. 50 Light-weighting refers to using lighter weight structural materials to reduce the mass of the vehicle in order to increase fuel efficiency, and downsizing refers to designing smaller engines that run at higher loads in order to increase fuel efficiency. Congressional Research Service 10 link to page 31 link to page 31 Vehicle Fuel Economy and Greenhouse Gas Standards: Frequently Asked Questions What Does a “Standard of 54.5 MPG in MY 2025” Mean? The 54.5 number was not a requirement for every—or for any specific—vehicle or manufacturer; it was an estimate of what the agencies acting in 2012 to issue a new rule.

Table 2. MY 2017 Manufacturer Fuel Economy and GHG Values

Table 3. GHG Credit Balances after MY 2017

* Fiat Chrysler and Volkswagen are under ongoing investigations and/or corrective actions. Investigations and corrective actions may yield different final data.

Table 4. SAFE Vehicles Rule Regulatory Alternatives

Source: EPA and NHTSA, "The Safer Affordable Fuel-Efficient (SAFE) Vehicles Rule for Model Years 2021–2026 Passenger Cars and Light Trucks; Proposed Rule,"” 83 Federal Register 42986, August 24, 2018.

Notes: Per the proposed rule: "“Carbon dioxide equivalent of air conditioning refrigerant leakage, nitrous oxide and methane emissions are included for compliance with the EPA standards for all MYs under the baseline/no action alternative. Carbon dioxide equivalent is calculated using the Global Warming Potential (GWP) [see footnote 19]footnote 23] of each of the emissions. Beginning in MY 2021, the proposal provides that the GWP equivalents of air conditioning refrigerant leakage, nitrous oxide and methane emissions would no longer be able to be included with the tailpipe CO₂CO2 for compliance with tailpipe CO2 standards.” For more on the structure of the nitrous oxide and methane provisions, and the air conditioning and other off-cycle adjustments, see section “How Do Manufacturers Comply with the Standards?” Congressional Research Service 16 Vehicle Fuel Economy and Greenhouse Gas Standards: Frequently Asked Questions Upon the proposal’s release, then-DOT Secretary Elaine Chao said, “There are compelling reasons for a new rulemaking on fuel economy standards for 2021-2026. More realistic standards will promote a healthy economy by bringing newer, safer, cleaner and more fuel-efficient vehicles to U.S. roads.” Then-EPA Acting Administrator Andrew Wheeler stated, “We are delivering on President Trump’s promise to the American public that his administration would address and fix the current fuel economy and greenhouse gas emissions standards. Our proposal aims to strike the right regulatory balance based on the most recent information and create a 50-state solution that will enable more Americans to afford newer, safer vehicles that pollute less. More realistic standards can save lives while continuing to improve the environment.” The agencies contended that the proposal reflected the realities of the current marketplace, including substantially lower oil prices than in the original 2012 projection, significant increases in U.S. oil production, and growing consumer demand for larger vehicles.68 Comparing the costs and benefits reported under the proposed SAFE Vehicles Rule to those reported under the Phase 2 standards was not straightforward because each set of standards employed different compliance timelines, modeling, inputs, and underlying assumptions. For example, the primary focus of the analysis changed (i.e., from GHG emissions impacts under the Phase 2 standards to fuel use, vehicle miles traveled, and highway accidents under the proposal), and the primary computer model and the modeling agency changed (i.e., from the ALPHA and OMEGA models at EPA to the VOLPE model at NHTSA).69 Further, certain modeling assumptions were amended (e.g., the social cost of carbon, new technology costs) and others were added (e.g., a dynamic stock model to estimate the effects of new vehicle sales and existing vehicle scrappage). These changes and their impacts shaped the debate during the proposal’s comment period through finalization. The Final SAFE Vehicles Rule, Part One The agencies issued their revisions to the CAFE and GHG emissions standards in two parts. The first part addressed primarily legal issues related to preemption and state standards, while the second part amended the substantive fuel economy and GHG standards for MYs 2021 through 2026. On September 27, 2019, the agencies finalized the Safer, Affordable, Fuel-Efficient (SAFE) Vehicles Rule, Part One: One National Program,70 wherein NHTSA asserted its statutory authority to set nationally applicable fuel economy standards under EPCA, which, as interpreted by NHTSA at the time, preempts state and local CO2 standards because they are “related to” fuel 68 U.S. DOT, Press Release: “U.S. DOT and EPA Propose Fuel Economy Standards for MY 2021-2026 Vehicles,” August 2, 2018. 69 For a discussion of the agencies’ modeling systems, see EPA’s OMEGA model at https://www.epa.gov/regulations-emissions-vehicles-and-engines/optimization-model-reducing-emissions-greenhouse-gases and NHTSA’s VOLPE model at https://www.nhtsa.gov/corporate-average-fuel-economy/compliance-and-effects-modeling-system. 70 EPA and NHTSA, “The Safer, Affordable, Fuel-Efficient (SAFE) Vehicles Rule, Part One: One National Program,” 84 Federal Register 51310, September 27, 2019 [hereinafter SAFE Vehicles Rule, Part One]. Congressional Research Service 17 link to page 10 link to page 10 Vehicle Fuel Economy and Greenhouse Gas Standards: Frequently Asked Questions economy standards.71 Under the Supremacy Clause of the U.S. Constitution,72 state law that conflicts with federal law must yield to the exercise of Congress’s powers.73 Congress can preempt state laws or regulations in various ways or allow states to act under certain circumstances.74 This preemption principle led NHTSA to several conclusions in the Part One rule. In April 2021, NHTSA proposed to fully repeal and withdraw the Part One rule.75 EPA has also initiated reconsideration of its 2019 decision regarding preemption of California’s GHG emissions standards.76 The following sections discuss the 2019 Part One rule and the 2021 proposals. General Scope of EPCA Preemption EPCA’s preemption provisions state that when a federal fuel economy standard is in effect, a state “may not adopt or enforce a law or regulation related to fuel economy standards or average fuel economy standards for automobiles covered by an average fuel economy standard.”77 In 2019, NHTSA explained that “as a practical matter, regulating fuel economy controls the amount of tailpipe emissions of carbon dioxide, and regulating the tailpipe emissions of carbon dioxide controls fuel economy.”78 Thus, NHTSA concluded in the 2019 Part One rule that any state or local law that regulates or prohibits CO2 emissions from automobiles is related to fuel economy standards, and is therefore preempted under EPCA as invalid (i.e., void ab initio).79 NHTSA also determined that EPCA preempted state and local zero emission vehicle (ZEV) mandates because they have a direct or substantial effect of regulating or prohibiting CO2 tailpipe emissions from automobiles.80 For example, California’s ZEV program required that a certain percentage of a manufacturer’s fleet of passenger cars, light-duty trucks, and medium-duty vehicles sold in the state produce zero exhaust emissions of certain pollutants, including CO2.81 71 SAFE Vehicles Rule, Part One, 84 Federal Register at 51313. NHTSA concluded that any state or local law or regulation regulating or prohibiting CO2 tailpipe emissions from automobiles is expressly and impliedly preempted by EPCA. 84 Federal Register at 51356 (emphasis added). “Pre-emption may be either expressed or implied, and ‘is compelled whether Congress’ command is explicitly stated in the statute’s language or implicitly contained in its structure and purpose.’” Gade v. Nat’l Solid Wastes Mgmt. Ass’n, 505 U.S. 88, 98 (1992) (quoting Jones v. Rath Packing Co., 430 U.S. 519, 525 (1977)). For further background on federal preemption, see CRS Report R45825, Federal Preemption: A Legal Primer, by Jay B. Sykes and Nicole Vanatko. 72 U.S. CONST. art. VI, cl. 2. 73 Gade, 505 U.S. at 88. 74 Gade, 505 U.S. at 98. Congress can disavow an intent to preempt certain categories of state law by including a “savings clause” to that effect in federal statutes, see, e.g., 29 U.S.C. §1144(b), or by allowing federal administrative agencies to grant “preemption waivers” to states in certain circumstances, see 42 U.S.C. §7543(b). See supra “What Is California’s Authority to Regulate GHG Emissions from Motor Vehicles?” 75 NHTSA, “Corporate Average Fuel Economy (CAFE) Preemption; Notice of Proposed Rulemaking,” 86 Federal Register 25980, May 12, 2021. 76 EPA, “California State Motor Vehicle Pollution Control Standards; Advanced Clean Car Program; Reconsideration of a Previous Withdrawal of a Waiver of Preemption; Opportunity for Public Hearing and Public Comment,” 86 Federal Register 22421, April 28, 2021. 77 49 U.S.C. §32919(a) (emphasis added). 78 84 Federal Register at 51313 (codified at 49 C.F.R. Parts 531, app. B; 533, app. B). 79 SAFE Vehicles Rule, Part One, 84 Federal Register at 51324. Ab initio is defined as “[f]rom the beginning.” Ab Initio, BLACK’S LAW DICTIONARY (11th ed. 2019). 80 SAFE Vehicles Rule, Part One, 84 Federal Register at 51320. 81 CAL. CODE REGS. tit. 13, §1962.2. Congressional Research Service 18 Vehicle Fuel Economy and Greenhouse Gas Standards: Frequently Asked Questions NHTSA reasoned that such ZEV mandates affect the average fuel economy achieved by the manufacturer’s fleet.82 Thus, NHTSA concluded that EPCA preempts state ZEV mandates, such as California’s ZEV program, because they are related to average fuel economy standards.83 Because NHTSA’s revised CAFE standards for MYs 2021-2026 went into effect on June 29, 2020,84 EPCA preempts California GHG standards and ZEV mandates for those model years under the interpretation articulated in the Part One rule. NHTSA described certain state and local GHG requirements that EPCA would not preempt because they have “no bearing on fuel economy.”85 For example, NHSTA noted that leaking refrigerants from vehicle air conditioning units may emit GHGs when the unit is recharged or crushed at the end of the vehicle’s life.86 Because state or local laws specifically regulating or prohibiting vehicular refrigerant leakage are not related to a vehicle’s fuel economy or tailpipe CO2 emissions, NHTSA concluded that EPCA would not preempt such state or local laws if narrowly drafted or severable from preempted tailpipe CO2 emissions standards.87 NHTSA adopted regulatory text adding EPCA’s statutory preemption provisions and its interpretation in new appendixes to Parts 551 and 553 of Title 49 of the Code of Federal Regulations.88 In April 2021, NHTSA proposed to repeal the regulations codifying its 2019 interpretation of EPCA’s preemption provisions and repeal and withdraw its interpretative statements in the Part One rule.89 NHTSA argued that it lacks the authority to “conclusively determine the scope or meaning of the EPCA preemption clauses with the force and effect of law.”90 NHTSA asserted that “neither EPCA’s express preemption provision nor any other statutory source appears to permit NHTSA to adopt legislative rules implementing express preemption under EPCA.”91 Because Congress did not explicitly provide DOT authority to issue regulations defining the scope of the preemption in EPCA, NHTSA viewed EPCA’s preemption provisions as “self-executing.” As such, NHTSA stated that it “prefers for its codified regulations to return to a state of silence regarding EPCA preemption.”92 NHTSA also proposed to repeal and rescind its 2019 interpretative positions regarding EPCA preemption but would not revise or replace its 2019 interpretation in this rulemaking. According to the NHTSA, this repeal and rescission of its 2019 rule and interpretative views would establish a “clean slate” to allow the agency to more fully consider EPCA preemption and how state GHG 82 SAFE Rule Part One, 84 Federal Register at 51320. 83 SAFE Vehicles Rule, Part One, 84 Federal Register at 51320. 84 EPA and NHTSA, “The Safer Affordable Fuel-Efficient (SAFE) Vehicles Rule for Model Years 2021-2026 Passenger Cars and Light Trucks; Final Rule,” 85 Federal Register 24174, April 30, 2020. 85 SAFE Vehicles Rule, Part One, 84 Federal Register at 51314. 86 SAFE Vehicles Rule, Part One, 84 Federal Register at 51314; SAFE Rule Proposal, 84 Federal Register at 43235. 87 SAFE Vehicles Rule, Part One, 84 Federal Register at 51314. 88 SAFE Vehicles Rule, Part One, 84 Federal Register at 51324. 89 NHTSA, “Corporate Average Fuel Economy (CAFE) Preemption; Notice of Proposed Rulemaking,” 86 Federal Register 25980, May 12, 2021. 90 NHTSA, “Corporate Average Fuel Economy (CAFE) Preemption; Notice of Proposed Rulemaking,” 86 Federal Register 25982, May 12, 2021. 91 NHTSA, “Corporate Average Fuel Economy (CAFE) Preemption; Notice of Proposed Rulemaking,” 86 Federal Register 25982, May 12, 2021. 92 NHTSA, “Corporate Average Fuel Economy (CAFE) Preemption; Notice of Proposed Rulemaking,” 86 Federal Register 25982, May 12, 2021. Congressional Research Service 19 link to page 10 link to page 10 link to page 10 link to page 10 Vehicle Fuel Economy and Greenhouse Gas Standards: Frequently Asked Questions vehicle programs may “relate to” fuel economy.93 NHTSA noted that it may decide to issue interpretations or guidance at a later point, if warranted, after further consideration.94 The legal status of state and local GHG emissions standards and ZEV mandates, if NHTSA completes its proposed repeal and rescission of the 2019 Part One rule, is therefore unclear. Courts considering challenges to such state and local standards and mandates would likely have to consider the scope of EPCA preemption in the first instance, without the aid of a formal NHTSA interpretation. Preemption of California’s GHG Standards Under CAA Section 209(b) The 2019 Part One rule also addressed the CAA Section 209(b) preemption waiver that EPA had granted California in 2013. This waiver covered California’s GHG and ZEV standards for MY 2021-2025 passenger cars and light- and medium-duty trucks.95 As discussed above, CAA Section 209(a) generally preempts states from adopting their own emissions standards for new motor vehicles or engines, but it provides an exception for California.96 CAA Section 209(b) directs EPA to grant a preemption waiver if California “determines that the State standards will be, in the aggregate, at least as protective of public health and welfare as applicable Federal standards.”97 Despite this direction, EPA can deny the waiver request if it finds that (1) California’s determination is arbitrary and capricious, (2) California does not “need such standards to meet compelling and extraordinary conditions,” or (3) the standards and accompanying enforcement procedures are inconsistent with federal emissions standards issued under CAA Section 202(a).98 EPA concluded that the 2013 California preemption waiver was “invalid, null, and void” and withdrew it on two separate grounds. First, EPA recognized NHTSA’s determination that EPCA preempts and voids ab initio California CO2 tailpipe emissions standards and ZEV mandate.99 Second, EPA determined that California did not need its GHG or ZEV standards for MY 2021-2025 passenger cars, light-duty trucks, and medium-duty vehicles to meet “compelling and extraordinary conditions.”100 EPA’s decision to withdraw the waiver was based on an interpretation of CAA Section 209(b)(1)(B) that was different from its interpretation in the 2013 waiver decision. In 2013, EPA reviewed whether California “needed” its motor vehicle program as a whole to reduce air pollution, and not solely based on GHG standards addressed in the waiver request.101 Under that 93 NHTSA, “Corporate Average Fuel Economy (CAFE) Preemption; Notice of Proposed Rulemaking,” 86 Federal Register 25982, May 12, 2021. 94 NHTSA, “Corporate Average Fuel Economy (CAFE) Preemption; Notice of Proposed Rulemaking,” 86 Federal Register 25982, May 12, 2021. 95 EPA, “California State Motor Vehicle Pollution Control Standards; Notice of Decision Granting a Waiver of Clean Air Act Preemption for California’s Advanced Clean Car Program and a Within the Scope Confirmation for California’s Zero Emission Vehicle Amendments for 2017 and Earlier Model Years,” 78 Federal Register 2112, January 9, 2013. The California waivers are also discussed in “What Is California’s Authority to Regulate GHG Emissions from Motor Vehicles?” 96 42 U.S.C. §7543(a). See also S. REP. NO. 91-1196, at 32 (1970). The CAA Section 209 is also discussed in “What Is California’s Authority to Regulate GHG Emissions from Motor Vehicles?” 97 42 U.S.C. §7543(b). The waiver provision broadly allows “any State which has adopted standards… for the control of emissions from new motor vehicles or new motor vehicle engines prior to March 30, 1966” to apply for a preemption waiver. Id. However, California is the only state that adopted motor vehicle emissions standards “prior to March 30, 1966.” S.Rept. 90-403, at 33 (1990). 98 42 U.S.C. §7543(b)(1)(A)-(C). 99 SAFE Vehicles Rule, Part One, 84 Federal Register at 51338. 100 SAFE Vehicles Rule, Part One, 84 Federal Register at 51350. 101 EPA, “California State Motor Vehicle Pollution Control Standards; Notice of Decision Granting a Waiver of Clean Congressional Research Service 20 Vehicle Fuel Economy and Greenhouse Gas Standards: Frequently Asked Questions approach, EPA concluded that it would not deny the waiver request because California had “repeatedly” demonstrated the need for its motor vehicle program to address “compelling and extraordinary” local and regional air pollution problems.102 In its 2019 interpretation, EPA concluded that the text of Section 209(b)(1)(B) requires the agency to assess whether California needs the standards at issue in the waiver to address compelling and extraordinary conditions, not whether California generally needs a separate state vehicle program to address air pollution from vehicles.103 EPA reasoned that Congress intended “compelling and extraordinary conditions” to refer to state-specific pollution problems that have a “particular nexus” to vehicle emissions and the health effects from such pollution.104 Based on this interpretation of Section 209(b)(1)(B), EPA determined that global GHG emissions and their effects are outside the scope of local or regional air pollution and do not present ‘‘compelling and extraordinary conditions’’ specific to California.105 EPA explained that California does not “need” its own vehicle GHG standards because the standards will not “meaningfully” address global air pollution problems associated with GHG emissions.106 The withdrawal of the California waiver became effective on November 26, 2019.107 In April 2021, EPA initiated reconsideration of its actions in the 2019 Part One rule, announcing a virtual public hearing and an opportunity for public comment.108 In considering whether to rescind its 2019 action and reinstate California’s waiver, EPA seeks to determine whether it “properly evaluated and exercised its authority to reconsider a previous waiver granted to [California] and whether the withdrawal was a valid and appropriate exercise of authority and consistent with judicial precedent.”109 EPA stated that it would accept public comments until July 6, 2021.110 Preemption of Other State GHG Standards Under CAA Section 177 The waiver withdrawal also affects the states that have adopted the California motor vehicle GHG emissions standards. CAA Section 177 allows states, under certain conditions, “to adopt and enforce new motor vehicle emissions standards that are identical to the California standards for Air Act Preemption for California’s Advanced Clean Car Program and a Within the Scope Confirmation for California’s Zero Emission Vehicle Amendments for 2017 and Earlier Model Years,” 78 Federal Register 2112, January 9, 2013. 102 78 Federal Register at 2129. 103 SAFE Vehicles Rule, Part One, 84 Federal Register at 51344. 104 See SAFE Vehicles Rule, Part One, 84 Federal Register at 51340, 51350 (concluding that this interpretation of the “compelling and extraordinary” provision “is the best, if not the only, reading of that provision.”). EPA’s interpretation appears similar, but not identical, to its reasoning in a previous waiver denial in 2008. Ibid. at 51339-40. EPA noted that its 2019 interpretation of CAA §209(b)(1)(B) took a different approach from its 2008 waiver denial. Ibid. 105 SAFE Vehicles Rule, Part One, 84 Federal Register at 51349. 106 SAFE Vehicles Rule, Part One, 84 Federal Register at 51340-49. 107 SAFE Vehicles Rule, Part One, 84 Federal Register at 51310, 51350. 108 EPA, “California State Motor Vehicle Pollution Control Standards; Advanced Clean Car Program; Reconsideration of a Previous Withdrawal of a Waiver of Preemption; Opportunity for Public Hearing and Public Comment,” 86 Federal Register 22421, April 28, 2021. 109 EPA, “California State Motor Vehicle Pollution Control Standards; Advanced Clean Car Program; Reconsideration of a Previous Withdrawal of a Waiver of Preemption; Opportunity for Public Hearing and Public Comment,” 86 Federal Register 22423, April 28, 2021. 110 EPA, “California State Motor Vehicle Pollution Control Standards; Advanced Clean Car Program; Reconsideration of a Previous Withdrawal of a Waiver of Preemption; Opportunity for Public Hearing and Public Comment,” 86 Federal Register 22421-22, April 28, 2021. Congressional Research Service 21 link to page 12 Vehicle Fuel Economy and Greenhouse Gas Standards: Frequently Asked Questions which a waiver has been granted for [a given] model year.’’111 Section 177 requires that the state adopting the standards have an approved state implementation plan to meet or attain national ambient air quality standards (NAAQS) for certain specified pollutants (ozone, carbon monoxide, nitrogen dioxide, sulfur dioxide, lead, and particulate matter). Fourteen additional states and the District of Columbia have adopted California’s vehicle GHG standards, and 12 of those states have also adopted California’s ZEV mandates.112 Because EPA has withdrawn the California waiver, these states and the District of Columbia have no authority under CAA Section 177 to enforce these vehicle GHG standards in their states, and no other states may adopt California’s GHG standards. In the 2019 Part One rule, EPA also finalized a new interpretation narrowing the scope of CAA Section 177. EPA concluded that Section 177 does not extend to California’s GHG standards because this section applies only to California standards that address criteria pollutants that affect regional or local air quality.113 EPA reasoned that Section 177 was intended to assist states in reducing emissions of pollutants that are subject to the NAAQS, which tend to have more local effects, and “not to address global air pollution” such as GHGs.114 Therefore, if EPA were to grant California a waiver in the future for new motor vehicle standards for a global pollutant such as GHGs, states would not be able to adopt those standards under EPA’s current interpretation of Section 177’s applicability. In its 2021 reconsideration, EPA seeks comment on, among other things, whether the agency properly interpreted CAA Section 177 in the 2019 Part One rule, and whether GHG emissions standards adopted by states pursuant to Section 177 may have both criteria emissions and GHG emissions benefits and purposes.115 Litigation of SAFE Vehicles Rule, Part One Various stakeholders, 23 states, the District of Columbia, and the cities of Los Angeles and New York are challenging the final Part One rule in the U.S. Court of Appeals for the District of Columbia Circuit.116 The petitioners seek to vacate EPA’s waiver withdrawal and Section 177 111 42 U.S.C. §7507. 112 States that have adopted both California’s low emission vehicles (LEV) GHG standards and ZEV mandates are Colorado, 5 COLO. CODE REG. §1001-24; Connecticut, CONN. AGENCIES REGS. §22a-174-36c; Maine, 06-096-127 ME. CODE R. §§1-12; Maryland, MD. CODE REGS. 26.11.34.09; Massachusetts, 310 MASS. CODE REGS. 7.40; New Jersey, N.J. ADMIN. CODE §7:27-29; New York, N.Y. COMP. CODES R. & REGS. tit. 6, §§218-4.1, 218-8.1-8.5; Oregon, OR. ADMIN. R. 340-257-0040, -0050, -0080; Rhode Island, 250-120 R.I. CODE R. Part 37; Vermont, 12-031-001 VT. CODE R. §5-1106(6); Virginia, 2021 Va. Leg. Serv. 1st Sp. Sess. ch. 263 (H.B. 1965) (West); and Washington, WASH. REV. CODE §70A.30.010, WASH. ADMIN. CODE 173-423-050. States that adopted LEV GHG standard only are Delaware, 7-1000-1140 DEL. ADMIN. CODE §5; Pennsylvania, 25 PA. CODE §126.411; and the District of Columbia, D.C. CODE §50-731. Minnesota, Nevada, and New Mexico are considering adopting California’s vehicle GHG standards. See Proposed Permanent Rules Relating to Clean Cars; Notice of Intent to Adopt Rules with a Hearing, 45 Minn. Reg. 663 (Dec. 21, 2020); Clean Cars Nevada, NEV. DIV. OF ENV’T. PROT., https://ndep.nv.gov/air/clean-cars-nevada (last visited Jan. 27, 2021); Exec. Order 2019-003, Executive Order on Addressing Climate Change and Energy Waste Prevention, Gov. Michelle Lujan Grisham (Jan. 29, 2020), https://www.governor.state.nm.us/wp-content/uploads/2019/01/EO_2019-003.pdf. See supra Figure 3. 113 SAFE Vehicles Rule, Part One, 84 Federal Register at 51350. 114 SAFE Vehicles Rule, Part One, 84 Federal Register at 51351. 115 EPA, “California State Motor Vehicle Pollution Control Standards; Advanced Clean Car Program; Reconsideration of a Previous Withdrawal of a Waiver of Preemption; Opportunity for Public Hearing and Public Comment,” 86 Federal Register 22421, April 28, 2021. 116 Union of Concerned Scientists v. NHTSA, No. 19-1230 (D.C. Cir. 2019) (consolidating all petitions of review). The state and local government petitioners are California, Colorado, Connecticut, Delaware, Hawaii, Illinois, Maine, Congressional Research Service 22 Vehicle Fuel Economy and Greenhouse Gas Standards: Frequently Asked Questions determination as unlawful, and NHTSA’s preemption rule as exceeding NHTSA’s authority.117 They also argue that NHTSA violated the National Environmental Policy Act (NEPA) by failing to prepare any environmental review documents for its preemption rule.118 Twelve states intervened in support of the agencies.119 Various entities, including some Members of Congress, submitted amici curiae briefs in support of the petitioners or in support of EPA and NHTSA.120 Parties submitted their final briefs to the court on October 27, 2020. On February 8, 2021, the D.C. Circuit granted the agencies’ request to pause the litigation pending the conclusion of the agencies’ review and potential rescission or revision of the SAFE Vehicles Rule.121 In seeking the pause, the agencies asserted that the rule review was required under Executive Order 13990, which specifically directed the agencies to “consider publishing for notice and comment a proposed rule suspending, revising, or rescinding” the SAFE Vehicles Rule, Part One by April 2021 and Part Two by July 2021.122 The court has ordered the agencies to file status reports on their review of the SAFE Vehicles Rule every 90 days and notify the court and the parties within seven days of any agency action resulting from the review.123 Maryland, Minnesota, Michigan, Nevada, New Jersey, New Mexico, New York, North Carolina, Oregon, Rhode Island, Vermont, Washington, and Wisconsin; the Commonwealths of Massachusetts, Pennsylvania, and Virginia. Brief of State & Local Government Petitioners & Public Interest Petitioners at i, Union of Concerned Scientists v. NHTSA, No. 19-1230 (D.C. Cir. June 29, 2020). Several of the D.C. Circuit petitioners also filed a complaint challenging NHTSA’s preemption rule in U.S. District Court for the District of Columbia, arguing that the D.C. Circuit lacks jurisdiction to review the rule. Complaint at 8, California v. Chao, No. 1:19-cv-02826 (D.D.C. Sept. 20, 2019); Brief of State & Local Government Petitioners & Public Interest Petitioners at 73, Union of Concerned Scientists v. NHTSA, No. 19-1230 (D.C. Cir. June 29, 2020). The D.C. federal district court stayed the case pending resolution of the D.C. Circuit litigation. Order, California v. Chao, No. 1:19-cv-02826 (D.D.C. Feb. 11, 2020). Further discussion of the legal arguments raised in the litigation is beyond the scope of this report. 117 Brief of State & Local Government Petitioners & Public Interest Petitioners at 22-26, Union of Concerned Scientists v. NHTSA, No. 19-1230 (D.C. Cir. June 29, 2020). 118 Brief of State & Local Government Petitioners & Public Interest Petitioners at 108-109, Union of Concerned Scientists v. NHTSA, No. 19-1230 (D.C. Cir. June 29, 2020). 119 Brief of Intervenors the States Ohio, Alabama, Arkansas, Georgia, Indiana, Louisiana, Missouri, Nebraska, South Carolina, Texas, Utah, and West Virginia, Union of Concerned Scientists v. NHTSA, No. 19-1230 (D.C. Cir. Sept. 21, 2020). 120 See, e.g,, Brief of Amici Curiae Members of Congress in Support of Petitioners, Union of Concerned Scientists v. NHTSA, No. 19-1230 (D.C. Cir. July 6, 2019); Brief of Amicus Curiae Chamber of Commerce of the United States of America in Support of Respondents, Union of Concerned Scientists v. NHTSA, No. 19-1230 (D.C. Cir. Sept.161, 2020). The Coalition for Sustainable Automotive Regulation, Inc. and Automotive Regulatory Council, Inc. filed a motion to withdraw as respondent-intervenors from the lawsuit. Union of Concerned Scientists v. NHTSA, No. 19-1230 (D.C. Cir. Feb. 2, 2021). The Coalition for Sustainable Automotive Regulation is a group of automobile manufacturers and dealer groups, which include FCA US LLC, Hyundai, Kia, Mazda, Mitsubishi, National Automobile Dealers Association, Subaru, and Toyota. Coalition for Sustainable Automotive Regulation, “About Us,” https://www.coalitionforsustainableautoregs.org/about-the-coalition. The Automotive Regulatory Council is a trade association representing the automotive safety industry. Automotive Regulatory Council, “About Us,” https://www.automotivesafetycouncil.org/about-us/. 121 Order at 1, Union of Concerned Scientists v. NHTSA, No. 19-1230 (D.C. Cir. Feb. 8, 2021). 122 Motion to Hold Cases in Abeyance Pending Implementation of Executive Order and Conclusion of Potential Reconsideration at 3-4, Union of Concerned Scientists v. NHTSA, No. 19-1230 (D.C. Cir. Feb. 1, 2021). See also EPA, “Protecting Public Health and the Environment and Restoring Science to Tackle the Climate Crisis.” 86 Federal Register 7037, 7037-38, January 25, 2021. 123 Order at 1-2, Union of Concerned Scientists v. NHTSA, No. 19-1230 (D.C. Cir. Feb. 8, 2021). Congressional Research Service 23 link to page 14 Vehicle Fuel Economy and Greenhouse Gas Standards: Frequently Asked Questions The Final SAFE Vehicles Rule, Part Two The agencies finalized the second part of the SAFE Vehicles Rule on April 30, 2020.124 The new rule required a 1.5% increase in fuel economy each year from MY 2021 to MY 2026, attaining a projected fleet-wide fuel economy target of 40.4 mpg in MY 2026. (This compares to an approximate 5% increase each year under the Phase 2 standards.)125 The new rule retained many of the flexibilities of the Phase 2 standards, including the credit system and the adjustments for air conditioning improvements, methane and nitrous oxide emissions reductions, and off-cycle technologies. The new rule phased out the GHG credit multiplier for electric vehicles in MY 2022 (as did the Phase 2 standards). However, it extended the multiplier for natural gas vehicles through MY 2026. Table 3. SAFE Vehicles Rule MY 2017-2026 Combined Average Passenger Car and Light Truck CAFE and GHG Emissions Standards 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 GHG Standard (grams per mile) 261 248 236 224 214 211 207 204 202 199 Fuel Economy (CAFE) Standard (miles 33.8 34.8 35.7 36.8 37.3 37.9 38.5 39.1 39.8 40.4 per gallon) Source: CRS, from EPA and NHTSA, “The Safer Affordable Fuel-Efficient (SAFE) Vehicles Rule for Model Years 2021-2026 Passenger Cars and Light Trucks; Final Rule,” 85 Federal Register 24174, April 30, 2020. Notes: The values are based on projected sales of vehicles in different size classes (see notes for Table 1). The CAFE and GHG numbers are based on NHTSA’s projection using the MY 2016 fleet as the baseline. In their regulatory impact analysis,126 NHTSA and EPA estimated the changes attributable to the SAFE Vehicles Rule over the lifetime of the vehicles projected to be sold through MY 2029 in comparison to the Phase 2 standards. The agencies estimated that the SAFE Vehicles Rule would reduce total costs by $200 billion (including a $100 billion reduction in automakers’ compliance costs), reduce the average price of a new vehicle by $1,000, reduce highway fatalities by 3,300, and increase new vehicle sales by 2.7 million. However, the agencies projected that vehicles would consume an additional 2 billion barrels of oil, emit an additional 867-923 million metric tons of GHGs, and cause an additional 440 to 1,000 premature deaths due to air pollution. Further, the agencies estimated that the SAFE Vehicles Rule would reduce auto-sector jobs by 10,000 to 20,000 job years annually through MY 2030 due to the reduced focus on fuel-saving 124 EPA and NHTSA, “The Safer Affordable Fuel-Efficient (SAFE) Vehicles Rule for Model Years 2021-2026 Passenger Cars and Light Trucks; Final Rule,” 85 Federal Register 24174, April 30, 2020. 125 According to EPA and NHTSA, “When the agencies state that stringency will increase at 1.5 percent per year, that means that the footprint curves which actually define the standards for CAFE and CO2 emissions will become more stringent at 1.5 percent per year. Consistent with Congress’s direction in EISA to set CAFE standards based on a mathematical formula, which EPA harmonized with for the CO2 emissions standards, the standard curves are equations, which are slightly different for CAFE and CO2, and within each program, slightly different for passenger cars and light trucks. Each program has a basic equation for a fleet standard, and then values that change to cause the stringency changes are the coefficients within the equations.” See EPA and NHTSA, “The Safer Affordable Fuel-Efficient (SAFE) Vehicles Rule for Model Years 2021-2026 Passenger Cars and Light Trucks; Final Rule,” 85 Federal Register 24188, April 30, 2020. 126 EPA and NHTSA, “Final Regulatory Impact Analysis: The Safer Affordable Fuel-Efficient (SAFE) Vehicles Rule for Model Year 2021-2026 Passenger Cars and Light Trucks,” March 2020. Congressional Research Service 24 Vehicle Fuel Economy and Greenhouse Gas Standards: Frequently Asked Questions technologies. In summary, NHTSA and EPA estimated that the cumulative effects to society of the SAFE Vehicles Rule could range from a net benefit of $16.1 billion to a net cost of $22.0 billion, dependent upon the program specifics, input assumptions, and discount rate modeled. Various states, local governments, and environmental and consumer organizations filed petitions for review in the D.C. Circuit challenging EPA’s revised GHG emissions standards and NHTSA’s revised CAFE standards for light-duty vehicles in the 2020 SAFE Vehicles Rule, Part Two.127 The Competitive Enterprise Institute also filed a petition for review in the D.C. Circuit, alleging that the agencies failed to adequately consider the adverse traffic safety impacts of their standards.128 On April 2, 2021, the D.C. Circuit granted the agencies’ request to pause the litigation pending the conclusion of the agencies’ review and potential rescission or revision of the SAFE Vehicles Rule, Part Two.129 The court has ordered the agencies to file status reports on their review of the rule every 90 days and notify the court and the parties within 7 days of any agency action resulting from the review.130 California’s Regulatory Activities EPA and NHTSA under the Trump Administration met with California to discuss the MTE, the MY 2022-2025 GHG standards, and post-2025 GHG standards. Efforts focused on establishing a single national standard for fuel economy and GHG emissions in order to avoid a situation in which manufacturers must deal with a patchwork of competing state regulations.131 California restated its continued support for the federal Phase 2 and its state’s standards. On March 24, 2017, CARB passed a resolution to accept its staff’s midterm evaluation of the state’s Advanced Clean Car program—which included MY 2017-2025 vehicle GHG standards in line with EPA’s 2017 final determination and the 2012 rulemaking.132 Effective December 12, 2018, CARB adopted a regulatory amendment to clarify that automakers must still comply with the state’s existing light-duty vehicle GHG standards through MY 2025 even if EPA and NHTSA approve a rollback of the equivalent national rules.133 Premised on an expectation that CARB and the Trump White House would not reach an accord on the revisions, California announced on July 25, 2019, that the state reached agreements with four major automakers to implement voluntary fuel economy and GHG limits through MY 2026 127 See, e.g., Petition for Review, California v. Wheeler, No. 20-1167 (D.C. Cir. May 27, 2020), consolidated under Competitive Enterprise Institute v. NHTSA, No. 20-1145 (D.C. Cir.). Further discussion of the legal arguments raised in the litigation is beyond the scope of this report. 128 Petition for Review, Competitive Enterprise Institute v. NHTSA, No. 20-1145 (D.C. Cir. May 1, 2020). 129 Order at 1, Competitive Enterprise Institute v. NHTSA, No. 20-1145 (D.C. Cir. Apr. 2, 2021). 130 Order at 1-2, Competitive Enterprise Institute v. NHTSA, No. 20-1145 (D.C. Cir. Apr. 2, 2021). 131 In response to questions about the CAFE/GHG standards and California’s waiver status, then-EPA Administrator Scott Pruitt stated that “there are ongoing discussions with CARB in California, the agency that oversees these matters. It is our hope that we can come to a resolution as we visit about these standards in April of this year. Senator, federalism doesn’t mean that one State can dictate to the rest of the Country, that we recognize California’s special status on the statute. And we are working with them to find consensus around these issues.” U.S. Congress, Senate Committee on Environment and Public Works, Oversight Hearing to Receive Testimony from Environmental Protection Agency Administrator Scott Pruitt, 115th Cong., January 30, 2018, p. 72. 132 CARB, “2017 Midterm Review Report,” at https://ww2.arb.ca.gov/resources/documents/2017-midterm-review-report. 133 See documents related to CARB’s amendments at CARB: Proposed Amendments to the Low- Emission Vehicle III Greenhouse Gas Emission Regulation,” https://ww2.arb.ca.gov/rulemaking/2018/proposed-amendments-low-emission-vehicle-iii-greenhouse-gas-emission-regulation. Congressional Research Service 25 Vehicle Fuel Economy and Greenhouse Gas Standards: Frequently Asked Questions that fell roughly midway between the Phase 2 standards and the Trump Administration’s proposal.134 The companies were BMW, Ford, Honda, and Volkswagen, which represent approximately one-third of the U.S. new vehicle market. Volvo subsequently joined the agreement.135 The terms of the agreements were as follows:  “Revised Greenhouse Gas Standards: GHG standards, beginning in the 2022 model year (MY) and extending through the 2026 MY, with increasing stringency at a nationwide average annual rate of 3.7% (year-over-year). Of the 3.7% annual stringency, 1% can be achieved using the advanced technology multiplier credits, below.  “Appropriate Flexibilities to Promote Zero Emission Technology: Continue current advanced technology multipliers that now expire after MY 2021, extending them through MY 2024 at the current 2.0x for Battery Electric and Fuel Cell Electric Vehicles (BEV/FCEV), and 1.6x for Plug-in Hybrid Electric Vehicles (PHEV), tapering off at the current MY 2020 and MY 2021 levels in MY 2025 and MY 2026, respectively.  “Simplify Accounting: Remove the requirement to account for upstream emissions of fuels, as these can be addressed by other programs.  “Increase Innovation: Raise the current cap on off-cycle menu credits, which account for actions taken outside the formal test cycle framework, from 10 grams [CO2e] per mile to 15 grams per mile starting in MY 2020.  “Streamlining and Process Improvements: Improve the off-cycle credit program to facilitate timely review and decision-making regarding the approval of new off-cycle technologies.  “Recognize California’s Authority: Participating companies are choosing to pursue a voluntary agreement in which California accepts these terms as compliance with its program, given its authority, rather than challenge California’s GHG and ZEV programs.”136 It remains unclear how California would proceed with the agreement under the final SAFE Vehicles Rule, which withdrew California’s waiver under the CAA and preempted state GHG standards related to tailpipe emissions under EPCA. However, under the Biden Administration, discussion has turned to using the California agreement as a model for the rules’ revisions.137 134 Office of the Governor, “California and Major Automakers Reach Groundbreaking Framework Agreement on Clean Emission Standards,” July 25, 2019, https://www.gov.ca.gov/2019/07/25/california-and-major-automakers-reach-groundbreaking-framework-agreement-on-clean-emission-standards/. 135 See the automakers’ agreements at CARB, “Framework Agreements on Clean Cars,” at https://ww2.arb.ca.gov/news/framework-agreements-clean-cars. 136 Office of the Governor, “California and Major Automakers Reach Groundbreaking Framework Agreement on Clean Emission Standards,” July 25, 2019. 137 For example, on November 12, 2020, CARB Chairperson Mary Nichols said California’s framework deal with automakers on emissions, announced in July 2019 and finalized in August 2020, “is a good template and then we should be moving on to the next generation of regulation.” As reported by Nichola Groom and David Shepardson, “California official sees state auto emissions deal as ‘template’ for Biden,” Reuters, November 12, 2020. Congressional Research Service 26 link to page 31 link to page 34 Vehicle Fuel Economy and Greenhouse Gas Standards: Frequently Asked Questions How Do Manufacturers Comply with the Standards? Under the regulations, manufacturers must report the characteristics of the vehicles they sell in each model year. This information allows EPA and NHTSA to calculate each manufacturer’s CAFE and GHG targets under the standards given the specific pattern of sales. The agencies compare the calculated targets against the vehicles’ fuel economy and emissions results from EPA-approved test cycles to determine each manufacturer’s compliance with the applicable standards. Figure 5 compares CAFE standards, as promulgated for both passenger cars and light trucks over MYs 1978-2026, against the U.S. fleets’ adjusted performance data as reported by NHTSA for the given model years. Table 4 lists the most recent adjusted performance projections reported by the agencies—MY 2019—for each manufacturer and its fleets. Figure 5. CAFE Standards and Achieved Fuel Economy, MYs 1978-2026 Sources: CRS, from NHTSA, Manufacturer Projected Fuel Economy Performance Report, October 11, 2019; EPA, The 2020 EPA Automotive Trends Report: Greenhouse Gas Emissions, Fuel Economy, and Technology Since 1975, January 2021. Notes: “CAFE Achieved” mpg are the values reported under Table 2 of NHTSA’s annual Manufacturer Projected Fuel Economy Performance Reports. “CAFE Standards” are as they were projected at the publication of the respective final rules, including “Original” (NHTSA’s CAFE program); “Phase 1” (75 Federal Register 25324, May 7, 2010); “Phase 2” (77 Federal Register 62624, October 15, 2012); and “SAFE Rule” (85 Federal Register 24174, April 30, 2020). Because of the “attribute-based” standards, compliance targets are different for each manufacturer depending on the vehicles it produces. As stated by NHTSA: “Manufacturers are not compelled to build light-duty vehicles of any particular size or type, and each manufacturer will have its own Congressional Research Service 27 link to page 36 link to page 37 Vehicle Fuel Economy and Greenhouse Gas Standards: Frequently Asked Questions standard which reflects the vehicles it chooses to produce.”138 The agencies contend: “Under the National Program automobile manufacturers will be able to continue building a single light-duty national fleet that satisfies all requirements under both programs while ensuring that consumers still have a full range of vehicle choices that are available today.”139 To facilitate compliance, the agencies provide manufacturers various flexibilities under the standards. A manufacturer’s fleet-wide performance (as measured on EPA’s test cycles) can be adjusted through the use of flex-fuel vehicles, air-conditioning efficiency improvements, and other “off-cycle” technologies (e.g., active aerodynamics, thermal controls, and idle reduction).140 Further, manufacturers can generate credits for overcompliance with the standards in a given year. They can bank, borrow, trade, and transfer these credits, both within their own fleets and among other manufacturers, to facilitate annual compliance. They can also offset current deficits using future credits (either generated or acquired within three years) to determine final compliance.141 A CAFE credit is earned for each 0.1 mpg in excess of the fleet’s standard mpg. A GHG credit is earned for each megagram (Mg, or metric ton) of CO2-equivalent saved relative to the standard as calculated for the projected lifetime of the vehicle. Table 5 summarizes GHG credits that are available to each manufacturer after MY 2019, reflecting all completed trades and transfers, as reported by EPA. (NHTSA’s CAFE credit balances by manufacturer for MY 2019 have not been reported.) The auto manufacturers completed MY 2019 compliance with 229 million metric tons of GHG credits under EPA’s program. Many manufacturers chose to use credits for their MY 2019 compliance. It was the fourth consecutive model year that the auto manufacturers depleted total industry credits after four years of the industry accumulating credits (Figure 6). In addition to the industry-wide credit balance, factors that may affect future compliance include credit expiration and distribution. Credits earned by manufacturers in MY 2017 or beyond have a five-year lifespan, while all prior credits (67% of the total) are to expire at the end of MY 2021.142 Under the CAFE program, manufacturers can comply with the standards by paying a civil penalty. The CAFE penalty began as $5.50 per 0.1 mpg over the standard, per vehicle.143 Historically, some manufacturers have opted to comply with the standards in this way, especially for low-volume, luxury imported vehicles.144 Beginning with MY 2019, NHTSA was scheduled to assess a civil penalty of $14 per 0.1 mpg over the standard as provided by the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015 within the Bipartisan Budget Act of 2015 (P.L. 114-74) and subsequent rulemaking.145 On August 26, 2019, NHTSA finalized a 138 NHTSA, “Fact Sheet: NHTSA and EPA Propose to Extend the National Program to Improve Fuel Economy and Greenhouse Gases for Passenger Cars and Light Trucks,” p. 3, https://morningconsult.com/wp-content/uploads/2017/06/2017-25_CAFE_NPRM_Factsheet.pdf. 139 EPA and NHTSA, “2017 and Later Model Year Light-Duty Vehicle Greenhouse Gas Emissions and Corporate Average Fuel Economy Standards; Final Rule,” 77 Federal Register 62624, October 15, 2012. 140 “Off-cycle” refers to technologies that result in real-world emissions and fuel economy benefits, but where the benefits are not adequately captured on the test procedures used by manufacturers to demonstrate compliance. 141 Both NHTSA and EPA consider total vehicle miles traveled (VMT) for the different vehicle compliance categories (DPC, IPC, LT) when calculating credit values. EPA incorporates this calculation prior to awarding credits. NHTSA employs an adjustment factor during the trading or transferring of credits across compliance categories. 142 EPA, “The 2020 EPA Automotive Trends Report: Greenhouse Gas Emissions, Fuel Economy, and Technology Since 1975,” January 2021. 143 49 U.S.C. §32912. 144 NHTSA reports annually the amounts paid in civil penalties by manufacturer. See https://one.nhtsa.gov/cafe_pic/CAFE_PIC_Fines_LIVE.html. 145 The goal of the 2015 law is to adjust federal penalties for inflation in line with the original intent of underlying Congressional Research Service 28 Vehicle Fuel Economy and Greenhouse Gas Standards: Frequently Asked Questions rule to retain the existing penalty rate of $5.50 applicable to automobile manufacturers that fail to meet CAFE standards, having proposed that increasing the CAFE civil penalty rate would have a negative economic impact.146 Various states and environmental groups successfully challenged the 2019 rule in court. In 2020, the U.S. Court of Appeals for the Second Circuit vacated the 2019 rule. The court concluded that the Improvements Act does not permit agencies to reconsider the economic effects of their inflation adjustments once certain statutory time frames had passed, and that NHTSA had therefore exceeded its statutory authority when it reversed its prior decision and returned the CAFE penalty to $5.50.147 The court declared that NHTSA’s 2016 rule raising the CAFE base penalty rate to $14 is now in force.148 On January 14, 2021, NHTSA issued an interim final rule, applying the $14 penalty rate beginning with MY 2022 vehicles.149 NHTSA reasoned that “applying the increased civil penalty rate to completed or largely completed model years would raise serious retroactivity concerns” and would be “inappropriate to apply the adjustment to model years that could have no deterrence effect and promote no additional compliance with the law.”150 Various environmental groups and a coalition of 15 states separately filed petitions for review in the U.S. Court of Appeals for the Second Circuit, challenging the 2021 interim final rule.151 On April 6, 2021, the Second Circuit granted the parties’ motions to pause the litigation.152 Under the CAA, manufacturers that fail to comply with the GHG emissions standards are also subject to civil enforcement. The EPA Administrator and the U.S. Attorney General determine the amount of the civil penalty based on numerous factors, but it could be as high as $37,500 per vehicle per violation.153 Due to the existing credit flexibilities, EPA has never determined any manufacturer to be out of compliance with the light-duty vehicle GHG emissions standards. statutes. NHTSA, “Civil Penalties: Final Rule,” 81 Federal Register 95489, December 28, 2016. 146 NHTSA, “Civil Penalties: Final Rule,” 84 Federal Register 36007, August 26, 2019. 147 New York v. NHTSA, 974 F.3d 87, 101 (2d Cir. 2020). 148 Ibid. 149 NHTSA, “Civil Penalties: Interim Final Rule, Request for Comments, Response to Petition for Rulemaking,” 86 Federal Register 3016, 3019, January 14, 2021. 150 Ibid. at 3020. 151 Petition for Review of a Final Rule of the NHTSA, New York v. NHTSA, No. 21-339 (2d Cir. Feb. 16, 2021); Petition for Review of a Final Rule of the NHTSA, Natural Res. Def. Council v. NHTSA, No. 21-139 (2d Cir. Jan. 25, 2021); Petition for Review, Tesla, Inc. v. NHTSA, No. 21-593 (Mar. 16. 2021). The court consolidated these cases into the lead case, Natural Res. Def. Council v. NHTSA, No. 21-139. Order, Natural Res. Def. Council v. NHTSA, No. 21-139 (2d Cir. Apr. 6, 2021). 152 Order, Natural Res. Def. Council v. NHTSA, No. 21-139 (2d Cir. Apr. 6, 2021). 153 42 U.S.C. §7524. Congressional Research Service 29 Vehicle Fuel Economy and Greenhouse Gas Standards: Frequently Asked Questions Table 4. MY 2019 Manufacturer Fuel Economy and GHG Values (Data are projected. Values show performance data after the two-cycle test and, in most instances, after adjustments,* but before the manufacturer’s use of compliance flexibilities.) CAFE CAFE GHG GHG Standard Performance Standard Performance Manufacturer Fleet (mpg) (mpg) (g/m) (g/m) BMW * IPC 40.7 36.1 229 234 LT 31.1 29.8 Daimler/Mercedes * DPC 40.9 35.6 IPC 39.8 32.5 231 282 LT 31.7 28.7 Fiat Chrysler DPC 39.3 31.0 IPC 41.8 33.0 275 303 LT 29.9 28.1 Ford DPC 41.0 36.6 IPC 46.1 42.9 272 280 LT 28.4 27.3 General Motors DPC 41.1 36.9 IPC 45.1 43.5 265 282 LT 28.7 27.1 Honda DPC 41.8 45.0 IPC 43.9 43.1 227 212 LT 32.1 33.3 Hyundai IPC 41.7 38.1 200 223 LT 32.8 26.8 Jaguar Land Rover IPC 39.1 33.0 274 274 LT 31.5 29.4 Kia IPC 42.2 41.5 218 226 LT 32.9 30.8 Mazda IPC 42.8 39.1 223 242 LT 33.6 33.9 Mitsubishi IPC 45.3 45.0 210 212 LT 35.9 35.7 Nissan * DPC 42.2 42.2 IPC 41.8 39.1 225 241 LT 31.1 27.7 Subaru * IPC 43.2 37.2 234 222 LT 34.6 36.6 Congressional Research Service 30 Vehicle Fuel Economy and Greenhouse Gas Standards: Frequently Asked Questions CAFE CAFE GHG GHG Standard Performance Standard Performance Manufacturer Fleet (mpg) (mpg) (g/m) (g/m) Tesla DPC 39.7 762.7 214 -236 Toyota DPC 41.4 44.9 IPC 42.0 43.6 239 247 LT 31.3 29.7 Volkswagen DPC 41.1 41.5 IPC 42.7 40.7 233 235 LT 31.8 30.5 Volvo IPC 38.8 35.2 264 254 LT 31.8 32.8 Sources: CRS, from NHTSA, “Manufacturer Projected Fuel Economy Performance Report,” October 11, 2019, Table 1; EPA, “The 2020 EPA Automotive Trends Report: Greenhouse Gas Emissions, Fuel Economy, and Technology Since 1975,” January 2021, Table 5.11. Notes: CAFE values in miles per gallon (mpg); GHG values in grams per mile (g/m). CAFE compliance is divided into three fleets: domestic passenger cars (DPC), import passenger cars (IPC), and light trucks (LT); GHG compliance is not divided. GHG performance values—and most CAFE performance values—are after fleet adjustments but before credit banking, borrowing, trading, or transferring by manufacturer. A higher CAFE performance value than CAFE standard value is in compliance; a lower GHG performance value than GHG standard value is in compliance. Values listed in italics show performance data that do not meet the standards after the two-cycle test and adjustments, but before the manufacturer’s use of compliance flexibilities. Manufacturers may be in compliance for one program but out of compliance for the other due to the classification of fleets and the differences in the programs’ adjustments. * The MY 2019 CAFE performance data for BMW, Daimler/Mercedes, Nissan, and Subaru, as reported by NHTSA, have not been adjusted for air-conditioning efficiency improvements, other “off-cycle” technologies, and advanced ful -size pickup technologies. Congressional Research Service 31 Vehicle Fuel Economy and Greenhouse Gas Standards: Frequently Asked Questions Table 5. GHG Credit Balances After MY 2019 Total Credits Carried Forward to MY 2020 Manufacturer (Metric Tons) Fiat Chrysler 47,069,423 Honda 41,544,806 Toyota 35,440,768 Subaru 20,701,475 General Motors 19,463,876 Nissan 19,451,210 Hyundai 12,292,480 Ford 9,267,929 Mazda 8,943,710 BMW 6,013,161 Volkswagen 2,629,693 Kia 2,488,012 Mitsubishi 2,039,380 Volvo 1,283,407 Daimler/Mercedes 304,261 Ferrari 111,994 Karma Automotive 56,011 Tesla 52,161 Jaguar Land Rover 48,478 Aston Martin 16,842 BYD Motors 5,568 Source: CRS, from EPA, “The 2020 EPA Automotive Trends Report: Greenhouse Gas Emissions, Fuel Economy, and Technology Since 1975,” January 2021, Table 5.19. Notes: A GHG credit is earned for each megagram (Mg, or metric ton) of CO2-equivalent saved relative to the standard as calculated for the projected lifetime of the vehicle. EPA estimates the lifetime of a passenger car to be 14 years and the lifetime of a light truck to be 16 years. Accordingly, outstanding credits for all manufacturers carried forward to MY 2020 are equivalent to 229 mil ion metric tons CO2-equivalent saved. For comparison, CO2-equivalent emissions from all on-road passenger cars and light trucks in the United States in 2017 were 1,054 mil ion metric tons (EPA, “Inventory of U.S. Greenhouse Gas Emissions and Sinks 1990-2017,” April 11, 2019, Table 3-13). EPA calculates credit balances to include early credits earned 2009-2011, net credits earned 2012-2019, and credits purchased; less credits expired, credits forfeited, and credits sold. Some companies on the list produced no vehicles for the U.S. market in the most recent model year, but the credits generated in previous model years continue to be available. Manufacturers can offset current deficits using future credits (either generated or acquired within three years) to determine final compliance. Congressional Research Service 32 Vehicle Fuel Economy and Greenhouse Gas Standards: Frequently Asked Questions Figure 6. Industry GHG Credit Generation and Use Source: EPA, “The 2020 EPA Automotive Trends Report: Greenhouse Gas Emissions, Fuel Economy, and Technology Since 1975,” January 2021, Figure 5-17. Notes: One teragram carbon dioxide (Tg CO2) is equivalent to one mil ion metric tons (MMT). What Is Meant by “Harmonizing” or “Aligning” the Standards? Many auto manufacturers and industry stakeholders have argued that the CAFE and GHG emissions standards are intended to be a joint set of rules that would allow auto manufacturers to comply with both programs through a single unified fleet. In practice, however, differences in the test procedures, flexibilities, and credit systems used by NHTSA and EPA have created the possibility that a manufacturer’s fleet may be in compliance with one agency’s program but not the other’s. Although the agencies have acted to integrate the standards, differences remain. Some stakeholders argue for statutory or regulatory changes to further integrate—or what they refer to as “harmonize” or “align”—the standards. Congressional Research Service 33 link to page 38 Vehicle Fuel Economy and Greenhouse Gas Standards: Frequently Asked Questions Table 6 outlines a selection of the differences between the federal programs. Many of NHTSA’s requirements are statutory; thus, many potential adjustments to NHTSA’s CAFE program would require legislation. Lawmakers have introduced bills in the 114th, 115th, 116th, and 117th Congresses to address some of the statutory limitations of the CAFE program vis-à-vis the GHG program. For example:  S. 667 (117th) would revise Chapter 329 of the United States Code for certain vehicles that are able to operate on something other than petroleum-based fuel, such as electric vehicles.  S. 581 (116th) would have revised Chapter 329 of the United States Code for certain vehicles that are able to operate on something other than petroleum-based fuel, such as electric vehicles and to extend NHTSA’s credit banking period.  H.R. 431 (116th) would have repealed Title 49, Chapter 329, of the United States Code.  S. 1273/H.R. 4011 (115th) would have amended Title 49, Chapter 329, of the United States Code to extend NHTSA’s credit banking period, ease the limits on credit trading and transferring between fleets, and allow for Phase 1 off-cycle credits.  S.Amdt. 3251 to S. 2012 (114th) would have modified the calculation of fuel economy for gaseous fuel, dual-fueled automobiles under Title 49, Chapter 329, of the United States Code. Table 6. Selected Differences Between NHTSA’s CAFE and EPA’s GHG Programs (citations to the U.S.C. and C.F.R. are provided where appropriate) Item NHTSA CAFE Program EPA GHG Program Authority EPCA, EISA CAA Citations 49 U.S.C. §§32901-32919; 49 C.F.R. 42 U.S.C. §§7521-7554; 40 C.F.R. Parts 523, 531, 533, and 600 Parts 85, 86, and 600 Stated Purpose “To increase domestic energy To prevent the “emission of any air supplies and availability; to restrain pol utant from any class or classes energy demand; [and] to prepare of new motor vehicles or new for energy emergencies” (EPCA motor vehicle engines, which … 1975) cause, or contribute to .. air pol ution which may reasonably be anticipated to endanger public health or welfare” (CAA 1970) Congressional Research Service 34 link to page 40 Vehicle Fuel Economy and Greenhouse Gas Standards: Frequently Asked Questions Item NHTSA CAFE Program EPA GHG Program Considerations EPCA requires that NHTSA CAA requires that EPA consider establish separate passenger car and issues of technical feasibility, cost, light truck standards (49 U.S.C. and available lead time. Standards §32902(b)(1)) at “the maximum under Section CAA 202 (a) take feasible average fuel economy level effect only “after providing such that it decides the manufacturers period as the Administrator finds can achieve in that model year” (49 necessary to permit the U.S.C. §32902(a)), based on the development and application of the agency’s consideration of four requisite technology, giving statutory factors: “technological appropriate consideration to the feasibility, economic practicability, cost of compliance within such the effect of other motor vehicle period” (42 U.S.C. §7512 (a)(2)) standards of the Government on fuel economy, and the need of the United States to conserve energy” (49 U.S.C. §32902(f)) Compliance Categories “Passenger car” and “light truck” as “Light-duty vehicle,” “light-duty defined in 49 C.F.R. Part 523 truck,” and “medium-duty passenger vehicle” as defined in 40 C.F.R. §86.1803-01 Control Fleet average fuel economy as Fleet average CO2-equivalenta measured by vehicle miles per emissions as measured by grams gallon (49 U.S.C. §32901(11)) per mile Duration Five years (49 U.S.C. EPA’s duration is unlimited under §32902(b)(3)(B)); MYs 2017-2021 the CAA. MYs 2017-2025 under and the proposal of nonfinal Obama Administration’s Phase 2 “augural” standards for MYs 2022- Rule. MYs 2022-2026 under the 2025 under Obama SAFE Vehicles Rule Administration’s Phase 2 Rule. MYs 2022-2026 under the SAFE Vehicles Rule Minimum Standard Minimum Fleet Standard: 35 mpg by None MY 2020 (49 U.S.C. §32902(b)(2)(A)); Minimum Domestic Passenger Car Standard: 27.5 mpg or 92% of the average fuel economy of the combined domestic and import passenger car fleets in that model year, whichever is greater (49 U.S.C. §32902(b)(4)) Cost of Non-compliance Fines can be paid to satisfy Civil enforcement; unknown compliance. Fee of $5.50 per 0.1 penalty, but could be as high as mpg over the standard, per vehicle $37,500 per vehicle per violation of (49 U.S.C. §32912); starting 2019, the CAA (42 U.S.C. §7524) $14 per 0.1 mpg over the standard (NHTSA, “Civil Penalties: Final Rule,” 81 Federal Register 95489, December 28, 2016) Credits Definition of Credit 0.1 mpg above manufacturer's 1.0 megagram (or metric ton) of required mpg standard for fleet (49 CO2-equivalent as estimated over U.S.C. §32903(d)) the lifetime of the vehicle below the manufacturer's standard Congressional Research Service 35 Vehicle Fuel Economy and Greenhouse Gas Standards: Frequently Asked Questions Item NHTSA CAFE Program EPA GHG Program Compliance Categories Domestic Passenger Cars; Import Passenger Cars; Light Trucks Passenger Cars; Light Trucks (49 U.S.C. §32903(g)(6)(b)) Credit Banking Five-year banking period (49 U.S.C. Five-year banking period with the §32903(a)(2)) exception that credits earned between MYs 2010-2016 can be carried forward through MY 2021 Credit Borrowing Three-year carryback period (49 Three-year carryback period U.S.C. §32903(a)(1)) Limits Limits on credits that can be No limits on credits transferred transferred between compliance between compliance categories; fleet categories; adjustment factors VMT calculation incorporated into placed on traded or transferred definition of credit credits to preserve "fuel savings" over the vehicle miles traveled (VMT) of the vehicle (49 U.S.C. §32903(f-g)) Provisions for Alternative-Fueled Credits for ethanol and methanol Allows manufacturers to count Vehicles fuels; electricity use in electric each alternative-fueled vehicle as vehicles is converted to "equivalent more than a single vehicle— gallons of gasoline" and only 15% of multipliers range from 1.3 to 2.0 that is counted for compliance (49 depending on the extent of U.S.C. §§32905-32906) alternative fuel used and the model year; emissions from battery electric vehicles assumed to be zero Exemptions Secretary of Transportation’s Temporary Lead-Time Allowance decision on exemptions for Alternative Standards for manufacturers with limited manufacturers with limited product production lines of fewer than lines through MY 2015 10,000 passenger automobiles in the model year two years before the model year for which the application is made (49 U.S.C. §32902(d)); generally, fines can be paid to satisfy compliance Sources: CRS, from EPA and NHTSA, “2017 and Later Model Year Light-Duty Vehicle Greenhouse Gas Emissions and Corporate Average Fuel Economy Standards; Final Rule,” 77 Federal Register 62624, October 15, 2012; EPA and NHTSA, “ for compliance with tailpipe CO₂ standards."

Table 5. Selected Differences between NHTSA's CAFE and EPA's GHG Programs

Table 6. Selected Technology Penetrations to Meet the MY 2025 Standards