Congress Eliminates Corporate Average Fuel Economy (CAFE) Penalties for Passenger Cars and Light Trucks
In one of its many changes, the One Big Beautiful Bill Act, enacted on July 4, 2025, eliminated civil penalties for noncompliance with federal fuel economy standards. Specifically, Section 40006 of the Act amends the language of the Corporate Average Fuel Economy (CAFE) statute to reset the maximum civil penalty to $0.00. Although the statute and its implementing regulations otherwise remain in place, this amendment removes any civil penalties for producing passenger cars and light trucks that do not meet fuel economy requirements.
National Highway Traffic Safety Administration Finalizes Next Set of Corporate Average Fuel Economy Standards
On Friday, June 7, 2024, the U.S. Department of Transportation National Highway Traffic Safety Administration (NHTSA) finalized its corporate average fuel economy (CAFE) standards for model years (MY) 2027 through 2032 passenger cars and light-duty trucks. The standards will push automakers to increase fleetwide fuel economy by approximately 2% each year, which is less aggressive than the 4% increase for light-duty trucks considered in NHTSA’s July 2023 proposed rule. Taken together, NHTSA predicts that the fleetwide average fuel economy across the industry will reach 50.4 miles per gallon by 2031, while increased upfront vehicle costs would offset lifetime fuel savings over time.
