Corporate Average Fuel Economy

The Corporate Average Fuel Economy (CAFE) standards are regulations in the United States, first enacted by the United States Congress in 1975, after the 1973-74 Arab Oil Embargo, to improve the average fuel economy of cars and light trucks (trucks, vans and sport utility vehicles) produced for sale in the United States.

The Energy Policy and Conservation Act (EPCA), as amended by the 2007 Energy Independence and Security Act (EISA), requires that the U.S. Department of Transportation (DOT) establish standards separately for passenger automobiles (passenger cars) and nonpassenger automobiles (light trucks) at the maximum feasible levels in each model year, and requires that DOT enforce compliance with the standards. DOT has delegated the responsibilities to the National Highway Traffic Safety Administration (NHTSA). Through EPCA and EISA, U.S. law (49 U.S. Code § 32919) also preempts state or local laws: "a State or a political subdivision of a State may not adopt or enforce a law or regulation related to fuel economy standards or average fuel economy standards."

The CAFE achieved by a given fleet of vehicles in a given model year is the production-weighted harmonic mean fuel economy, expressed in miles per USgallon (mpg), of a manufacturer's fleet of current model year passenger cars or light trucks with a gross vehicle weight rating (GVWR) of 8,500 pounds (3,856 kg) or less (but also including medium-duty passenger vehicles, such as large sport-utility vehicles and passenger vans, with GVWR up to 10,000 pounds), produced for sale in the United States. The CAFE standards in a given model year define the CAFE levels that manufacturers' fleets are required to meet in that model year, specific levels depending on the characteristics and mix of vehicles produced by each manufacturer. If the average fuel economy of a manufacturer's annual fleet of vehicle production falls below the applicable requirement, the manufacturer must either apply sufficient CAFE credits (see below) to cover the shortfall or pay a penalty, currently $5.50 per 0.1 mpg under the standard, multiplied by the manufacturer's total production for the U.S. domestic market. Congress established both of these provisions explicitly in EPCA, as amended in 2007 by EISA. In addition, a Gas Guzzler Tax is levied on individual passenger car models (but not trucks, vans, minivans, or SUVs) that get less than 22.5 miles per US gallon (10.5 l/100 km).

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