NHTSA proposes new MY2027-2032 corporate average fuel economy standards

NHTSA also proposed non-binding augural standards for MY 2032, the final year of the NPRM, for passenger cars and light trucks with a 2% and 4% YoY increase, respectively, to give its “best estimate” of future standards “to provide as much predictability as possible” to manufacturers and align with Environmental Protection Agency (EPA) greenhouse gas (GHG) standards. See NPRM (pre-pub version), at 17. The augural standards will not be binding unless adopted in a subsequent rulemaking, since NHTSA only has authority to issue CAFE standards for passenger cars and light trucks for five MYs in one action  NHTSA previously used this approach in the 2012 final rule establishing CAFE standards for MY 2017 and beyond.

The NPRM proposes increasing fleetwide average requirements by approximately 9 miles per gallon for MY 2032 compared to MY 2027. The proposal estimates the overall fleet average of CAFE levels achieved for passenger cars and light trucks combined under the proposed standards to be:

• MY 2027: 49.0 mpg

• MY 2028: 50.5 mpg

• MY 2029: 52.3 mpg

• MY 2030: 54.0 mpg

• MY 2031: 56.0 mpg

• MY 2032: 57.6 mpg

NHTSA CAFE standards provide fuel economy targets for the entire fleet of new vehicles, and separate targets for passenger cars and light trucks. The proposed standards are still based on vehicle footprint for passenger cars and light trucks; as well as based on the work-factor for HDPUV.

Estimated Required Average and Estimated Achieved Average of CAFE Levels (in mpg) for the Preferred Alternative

The NPRM also proposes the minimum domestic passenger car targets as follows:

• MY 2027: 54.1 mpg

• MY 2028: 55.3 mpg

• MY 2029: 56.4 mpg

• MY 2030: 57.5 mpg

• MY 2031: 58.7 mpg

• MY 2032: 59.9 mpg

As proposed, the NPRM does not significantly change the structure of the CAFE program and credit generation, trading, carry-forward/back or penalty provisions.  However, NHTSA proposes changes to the off-cycle program and seeks comment on a number of proposed changes in flexibilities.  Proposed changes to compliance flexibilities include:

• Eliminating AC efficiency and off-cycle menu fuel consumption improvement values (FCIV) for BEVs starting in MY 2027 under the light-duty program (PHEVs retain benefit);

• Eliminating 5-cycle and alternative approval pathways for off-cycle FCIVs under the light-duty program starting in MY 2027;

• Adding deadline for alternative approval process for MY 2025-2026 program;

• Eliminating off-cycle FCIV for HDPUV beginning MY 2030;

• Technical amendments to advanced technology credits (clarifying interim advanced technology credit multiplier can be used through MY 2027) for HDPUV.

The NPRM also includes vehicle footprint curves and coefficients covering MYs 2027-2032 (augural for 2032) for the proposed standards and alternatives.

In addition, NHTSA responded to a request made during the EIS scoping period to consider developing an optional compliance program for manufacturers who target higher fuel economy vehicle distribution in environmental justice (EJ) communities and declined to propose non-fuel savings credits or flexibilities, yet invited comments from stakeholders on potential structure for such a program.  See NPRM at 622-633.  Despite declining to propose additional compliance flexibilities, NHTSA outlined several substantive issues and questions – including continued increase in fleet fuel economy, avoiding double counting across programs, and impact of CAFE on communities – that would be helpful for stakeholders to address before moving forward submitting a proposal to NHTSA for EJ or similar credits. NPRM at 627.

Similar to prior rulemakings, the proposed rule acknowledges the rapidly-growing electric vehicle market and priorities of the Biden Administration.  NHTSA references continued coordination with EPA, but notes its emphasis on improving vehicle fuel economy (not reducing emissions) and the statutory prohibition against considering the fuel economy of dedicated alternative-fuel vehicles (including BEVs) and including the full fuel economy of dual-fuel vehicles to determine the maximum feasible fuel economy level that manufacturers can achieve.  Additionally, in determining the baseline scenario, the NPRM does not include the proposed standards from EPA’s recent Multi-Pollutant Proposed Rule, but rather applies the standards set by EPA for MY 2026 without change in subsequent MYs.  According to NHTSA, “[b]ecause the EPA and NHTSA programs were developed in coordination, and stringency decisions were made in coordination, NHTSA has not incorporated EPA’s proposed CO2 standards for MYs 2027-2032 as part of the analytical baseline for this proposal’s main analysis.”  See NPRM at 475.  Importantly, NTHSA acknowledges that consumers would pay more for new vehicles upfront as a result of the proposed rule.  However, the agency estimate that consumers would ultimately save money on fuel costs over the lifetime of the vehicles (according to NHTSA, lifetime fuel savings would exceed regulatory costs by roughly $100 on average for passenger cars and light truck buyers of MY2032 vehicles under the proposed rule).

NHTSA considered a range of regulatory alternatives for each fleet, including four regulatory alternatives for passenger cars and light trucks as well as a No-Action Alternative, as follows:

Regulatory Alternatives Under Consideration

In addition to feedback on the technical basis for the proposal and modelling, NHTSA requests comment on, among other things:

• The full range of standards proposed between the No-Action Alternative and Alternative PC6LT8;

• The proposed MY2032 augural standards;

• Proposed changes to compliance and flexibilities, including phasing out FCIV for the CAFE program;

• Approach to developing minimum domestic passenger car standard; and

• Alternatives approaches to simulate motor vehicle’s use (VMT) demand.

NHTSA will hold a public hearing on the proposed rule on a date yet to be announced and requests written comments 60 days after the NPRM is published in the federal register by October 16, 2023.

Corporate Average Fuel Economy Standards for Passenger Cars and Light Trucks for Model Years 2027-2032 and Fuel Efficiency Standards for Heavy-Duty Pickup Trucks and Vans for Model Years 2030-2035

Authored by Joanne Rotondi, Hannah Graae, and Allisa Newman.