Corporate Average Fuel Economy (Cafe) Standards

There are many injuries on American roadways because national fuel economy standards raise the price of cars, disincentivizing people from purchasing newer, safer vehicles.

Congress requires the Secretary of Transportation to set national fuel economy standards for new motor vehicles sold in the United States. This mandate was established in the Energy Policy and Conservation Act of 1975 (EPCA),6 a law passed in the wake of the Arab oil embargo to promote greater energy efficiency and lessen the national security threat of U.S. dependence on foreign oil.

The statute directs DOT to prescribe the “maximum feasible” mileage requirements for different categories of internal-combustion engine (ICE) automobiles for each model year. The standards must be achievable using available ICE technologies running on gasoline, diesel fuel, or similar combustible fuels and must not be set so high as to prevent automakers from profitably producing new vehicles at sufficient volume to meet consumer demand.

Congress recognized that the ICE-powered automobile has been instrumen- tal to advancing the mobility and prosperity of the American people and that the domestic mass production of new ICE vehicles generates millions of jobs and remains critical to the overall health of the U.S. economy and the strength of the nation’s industrial base. Accordingly, Congress took care to ensure that the mileage requirements issued by DOT would not undermine the vitality of America’s auto industry or interfere with the market economics that drives consumer demand for new vehicles.

This rulemaking authority, which has been delegated by the Secretary to the National Highway Traffic Safety Administration, is exclusive to DOT. EPCA expressly preempts states from adopting or enforcing any different requirement “related to fuel economy standards” for new motor vehicles. While the statute instructs DOT to consult with the Department of Energy and the Environmental Protection Agency (EPA) in formulating its standards, no other federal agency, including EPA, has clear authority to set fuel economy requirements in place of NHTSA.

The Clean Air Act7 gives EPA general authority to establish emissions limits for new motor vehicles for air pollutants that are found to pose a danger to humans. However, there is no reason to believe Congress ever contemplated that EPA’s authority to address automotive air pollution might be used to displace or supersede NHTSA’s fuel economy mandate under EPCA.

Congress chose to assign the power to set fuel economy standards to DOT rather than EPA. This was not only because DOT understands the technologies and economics of the auto industry, but also because NHTSA is the nation’s leading motor vehicle safety regulator, and Congress sought to ensure that fuel economy requirements would not adversely affect highway safety. Unfortunately, the Biden Administration has flouted these statutory limitations in nearly every respect. The predictable result is higher expected transportation costs for Americans.

Moreover, and contrary to Congress’s design, the Biden EPA has been given preeminence in the regulation of fuel economy through the setting of carbon dioxide emissions limits for new motor vehicles under the Clean Air Act. Because carbon dioxide emissions levels correspond to mileage in automobiles powered by fossil fuels, these EPA rules are de facto fuel economy requirements that apply independently of NHTSA’s standards. The Biden Administration has also granted California a special waiver under the Clean Air Act that permits the California Air Resources Board (CARB) to issue its own fuel economy directives, notwithstanding EPCA’s prohibition on state standards. Under this waiver, CARB has ordered automakers to phase out the sale of ICE-powered automobiles in California and transition to the production of zero-emission vehicles by 2035. The Clean Air Act allows other states to follow California’s requirements; thus, CARB is effectively determining fuel economy policies for the entire nation. As a result of these regulatory actions, automobiles will be significantly more expensive to produce, there will be fewer affordable new vehicle options for Amer- ican families, and fewer new vehicles will be sold in the U.S. That will do more than

In pursuit of an anti–fossil fuel climate agenda never approved by Congress, the Biden Administration has raised fuel economy requirements to levels that cannot realistically be met by most categories of ICE vehicles. The purpose is to force the auto industry to transition away from traditional technologies to the production of electric vehicles (EVs) and compel Americans to accept costly EVs despite a clear and persistent consumer preference for ICE-powered vehicles. In further support of this agenda, federal regulators administer a scheme of generous fuel economy credits that subsidize EV producers such as Tesla at the expense of legacy automakers.

translate into a loss of auto industry jobs for American workers: It will also mean a significant increase in traffic deaths and injuries. As fewer new cars are purchased, the price of used cars will rise, and more Americans will be left driving older cars, which traffic statistics show are much less safe than newer vehicles. NHTSA itself has acknowledged that the Biden Administration’s fuel economy standards will generate hundreds of additional fatalities and thousands of additional injuries on U.S. highways. Because older cars also produce more harmful air pollution, the aging of America’s fleet will also have negative consequences for air quality. In addition, the Biden Administration’s efforts to accelerate EV sales by reg- ulatory fiat work against the national security interests of the United States in contravention of Congress’s goals under EPCA. Increasing the production of EVs will make the U.S. more dependent on China and other foreign countries that control the supply and processing of rare earth minerals that are needed for EV batteries. And the faster deployment of EVs will put a major strain on America’s vulnerable power grid, requiring large investments in critical infrastructure and a big boost in the nation’s electricity production, including from gas-fired and oil- fired power plants.

In exchange for all of these harmful effects—on traffic safety, consumer choice, American jobs, the nation’s air quality, and U.S. national security—the Biden fuel economy regulations are predicted to have no meaningful effect on global tem- perature trends over the long term.8 The next Administration must return the federal fuel economy program to the limits established by Congress. The standards issued by NHTSA must be reset at reasonable levels that are technologically feasible for ICE automobiles and con- sistent with an increase in domestic auto production and healthy growth in the sale of safer and more affordable new vehicles. To achieve these goals, the next Administration should:

Reduce proposed fuel economy levels. The Administration should consider returning to the minimum average fuel economy levels specified by Congress for model year 2020 vehicles: levels aimed at achieving a fleet-wide average of 35 miles per gallon. Consideration should be given to maintaining the standards at those levels for the near term in order to promote the objectives laid out by Congress.

Ensure that DOT again exercises priority in the setting of fuel economy standards. Any EPA limits on carbon dioxide emissions, even if authorized under the Clean Air Act, must support and work in harmony with DOT standards and must not override them or usurp DOT’s regulatory role under EPCA. For example, EPA could regulate air conditioning systems and leave engine standards to DOT.

Revoke the special waiver granted to California by the Biden Administration. California has no valid basis under the Clean Air Act to claim an extraordinary or unique air quality impact from carbon dioxide emissions, and EPCA is clear that under no circumstances may a state agency regulate fuel economy in place of DOT. The federal government should therefore exercise its preemptive authority over CARB and take all steps necessary to invalidate any inconsistent fuel economy requirements imposed by CARB, including its ban on sales of internal combustion engines.