Updated October 11, 2018
Vehicle Fuel Economy and Greenhouse Gas Standards
The Trump Administration proposed on August 24, 2018,
One National Program
amendments to the federal standards that regulate fuel
Based on EPA’s 2009 findings, the Obama Administration
economy and greenhouse gas (GHG) emissions from new
brokered an agreement among major stakeholders in the
passenger cars and light trucks. These standards include the
automotive and truck industries, the states, and other
Corporate Average Fuel Economy (CAFE) standards
interested parties to develop and implement vehicle GHG
promulgated by the U.S. Department of Transportation’s
emission standards. Because carbon dioxide (CO2) from
National Highway Traffic Safety Administration (NHTSA),
vehicle fuel combustion is a major source of GHG
and the Light-Duty Vehicle GHG Emission Standards
emissions, President Obama directed EPA to work with
promulgated by the U.S. Environmental Protection Agency
NHTSA to align the GHG standards with the CAFE
(EPA).
standards.
CAFE Standards
EPCA and CAA generally preempt states from adopting
The origin of federal fuel economy standards dates to the
their own fuel economy and emission standards for new
mid-1970s. The oil embargo of 1973-1974 imposed by
motor vehicles. However, CAA Section 209(b) allows the
Arab members of the Organization of the Petroleum
State of California to request a preemption waiver for its
Exporting Countries (OPEC) and the subsequent tripling in
motor vehicle emission standards provided that they are at
the price of crude oil brought the fuel economy of U.S.
least as stringent as federal standards and, among other
automobiles into sharp focus. The fleet-wide fuel economy
things, are necessary to meet “compelling and extraordinary
of new passenger cars had declined from 15.9 miles per
conditions.” EPA granted California a waiver for its state
gallon (mpg) in model year (MY) 1965 to 13.0 mpg in MY
GHG standards in July 2009, and President Obama directed
1973. In an effort to reduce dependence on imported oil, the
EPA and NHTSA to align the federal GHG and fuel
Energy Policy and Conservation Act (EPCA; P.L. 94-163)
efficiency standards with those developed by California.
established CAFE standards for passenger cars beginning in
EPA and NHTSA finalized a joint rulemaking affecting
MY 1978 and for light trucks beginning in MY 1979. The
MY 2012-2016 light-duty motor vehicles on April 1, 2010
standards required each auto manufacturer to meet a target
(Phase 1 standards). The Obama Administration referred to
for the sales-weighted fuel economy for its entire fleet of
the coordinated effort as the One National Program.
vehicles sold in the United States in each model year.
CAFE standards, and new vehicle fuel economy, rose
Current Standards
steadily through the late 1970s and early 1980s. After 1985,
EPA and NHTSA promulgated a second (current) phase of
Congress did not revise the legislated standards for
CAFE and GHG emission standards for vehicle MYs 2017-
passenger cars, and they remained at 27.5 mpg until 2011.
2025 on October 15, 2012 (Phase 2 standards). As with the
The light truck standards were increased to 20.7 mpg in
Phase 1 rulemaking, the Phase 2 standards were preceded
1996, where they remained until 2005. NHTSA
by a multiparty agreement, brokered by the Obama
promulgated two sets of standards in the mid-2000s for
Administration, including the State of California, 13 auto
MYs 2005-2007 and MYs 2008-2011, increasing light truck
manufacturers, and the United Auto Workers union. The
standards to 24.0 mpg.
manufacturers agreed to reduce GHG emissions from their
fleets by about 50% by 2025, compared to 2010, with fleet-
GHG Standards
wide fuel economy rising to nearly 50 miles per gallon.
Whether and how EPA could regulate GHGs through
existing Clean Air Act (CAA) authority was debated for
The Phase 2 standards apply to the new fleet of passenger
more than a decade before the agency took action. In the
cars and light trucks—including most sport utility vehicles,
April 2007 decision Massachusetts v. EPA, the Supreme
vans, and pickup trucks—sold by a manufacturer within the
Court held that EPA has the authority to regulate GHGs as
United States during a given model year. As with the Phase
“air pollutants” under the CAA. In the 5-4 decision, the
1 standards, the agencies used the concept of a vehicle’s
Court determined that GHGs fit within the CAA’s
“footprint” to set differing targets for different-sized
“unambiguous” and “sweeping definition” of “air
vehicles. These “attribute-based” standards differ
pollutant.” The Court’s majority concluded that EPA must,
structurally from the original CAFE standards, which
therefore, decide whether GHG emissions from new motor
grouped domestic passenger cars, imported passenger cars,
vehicles contribute to air pollution that may reasonably be
and light trucks into three broad categories. Generally, the
anticipated to endanger public health or welfare, or provide
larger the vehicle footprint, the lower the corresponding
a reasonable explanation why it cannot or will not make
vehicle fuel economy target and the higher the CO2-
that decision. On December 15, 2009, EPA promulgated
equivalent emissions target. This allows auto manufacturers
findings that GHGs endanger both public health and
to produce a full range of vehicle sizes, as opposed to
welfare, and that GHG emissions from new motor vehicles
focusing on making the entire fleet lighter and smaller to
contribute to that endangerment.
meet categorical targets.
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Vehicle Fuel Economy and Greenhouse Gas Standards
Manufacturers comply with the standards by reporting to
Some auto manufacturer associations and other industry
the agencies annually with information regarding their MY
groups criticized the results of the federal and California
fleet production and sales numbers, their MY fleet
reviews and have sought to ease the MY 2022-2025
characteristics, and the fuel economy and emissions results
requirements and/or to better align NHTSA’s and EPA’s
from the EPA-approved test cycles. This information allows
requirements.
the agencies to calculate each manufacturer’s CAFE and
GHG standards given their specific fleets. The agencies
Trump Administration
compare the calculated standards against the manufacturer’s
On March 15, 2017, EPA and NHTSA reopened the
fleet-wide adjusted test results to determine compliance.
midterm evaluation process to reconsider the prior
Administration’s final determination. After receiving more
To facilitate compliance, the agencies provide
than 290,000 comments, EPA released a revised final
manufacturers various flexibilities under the standards. A
determination on April 2, 2018, stating that the MY 2022-
manufacturer’s fleet-wide performance (as measured on the
2025 standards are “not appropriate and, therefore, should
test cycles) can be adjusted through the use of flex-fuel
be revised” in a new rulemaking. Until a new rulemaking is
vehicles, air-conditioning efficiency improvements, and
completed, and any legal challenges resolved, the existing
“off-cycle” technologies (e.g., active aerodynamics, thermal
standards remain in effect.
controls, and idle reduction). Further, manufacturers can
generate credits for overcompliance with the standards in a
Proposed Standards
given year. They can bank, borrow, trade, and transfer these
On August 24, 2018, EPA and NHTSA proposed
credits, both within their own fleets and among other
amendments to the existing CAFE and GHG emission
manufacturers. Figure 1 compares CAFE standards for
standards. The Safer Affordable Fuel-Efficient (SAFE)
both passenger cars and light trucks against the U.S. fleets’
Vehicles Rule for MY 2021-2026 Passenger Cars and Light
adjusted performance data as reported by NHTSA.
Trucks (SAFE Vehicle Rule) offers eight alternatives. The
agencies’ preferred alternative, if finalized, is to retain the
Figure 1. CAFE Standards and Achieved Fuel Economy
existing standards through MY 2020 and then to freeze the
standards at this level for both programs through MY 2026.
The preferred alternative also removes CO2 equivalent air
conditioning refrigerant leakage, nitrous oxide, and
methane requirements after MY 2020. Further, EPA
proposes to withdraw California’s CAA preemption waiver
for its vehicle GHG standards applicable to MYs 2021-
2025. NHTSA contends that EPCA preempts California’s
standards because the statute preempts state laws related to
federal fuel economy standards. NHTSA argues that state
laws regulating or prohibiting tailpipe CO2 emissions are
related to fuel economy and can therefore be preempted.
The agencies are accepting comments on the proposal
through October 26, 2018.
Observers have had difficulty comparing the costs and
benefits reported under the proposed SAFE Vehicle Rule to
Source: CRS, from EPA and NHTSA.
those reported under the existing standards because each set
of standards employs different modeling, inputs, and
Midterm Evaluation
underlying assumptions. For example, not only has the
focus of the analysis changed (i.e., from GHG emission
As part of the Phase 2 rulemaking, EPA and NHTSA
impacts under the existing standards to fuel use, vehicle
committed to conduct a midterm evaluation of the standards
miles traveled, and highway accidents under the proposal),
that would apply in MYs 2022-2025. Through the
but the primary computer model and the modeling agency
evaluation, EPA was to determine whether these standards
has changed (i.e., from the ALPHA and OMEGA models at
were still appropriate given the latest available data and
EPA to the VOLPE model at NHTSA). Further, certain
information. The rulemaking required a final determination
modeling assumptions have been amended (e.g., the social
on these standards by April 1, 2018. The Obama
Administration’s EPA
cost of carbon, new technology costs) and others have been
proceeded with the midterm
added (e.g., a dynamic stock model to estimate the effects
evaluation, issuing a draft Technical Assessment Report in
of new vehicle sales and existing vehicle scrappage). These
June 2016 and a final determination on January 12, 2017,
changes and their impacts may likely shape the debate
stating that the MY 2022-2025 standards remained
during the proposal’s comment period and beyond.
appropriate and that a rulemaking to change them was not
warranted. Also, on March 24, 2017, the California Air
Resources Board, after conducting its own midterm
Richard K. Lattanzio, Specialist in Environmental Policy
evaluation, voted to retain the state’s Advanced Clean Car
Linda Tsang, Legislative Attorney
program—which includes MY 2017-2025 vehicle GHG
Bill Canis, Specialist in Industrial Organization and
standards in line with EPA’s 2017 final determination and
Business
the 2012 rulemaking.
IF10871
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Vehicle Fuel Economy and Greenhouse Gas Standards


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