The Safer Affordable Fuel-Efficient (SAFE) Vehicles Rule III for Model Years 2022 to 2031 Passenger Cars and Light Trucks

NHTSA has historically interpreted “the need of the United States to conserve energy” to mean “the consumer cost, national balance of payments, environmental, and foreign policy implications of our need for large quantities of petroleum, especially imported petroleum.” \822\

\822\ 42 FR 63184, 63188 (Dec. 15, 1977).

(1) Consumer Costs and Fuel Prices

Regarding NHTSA's consideration of the need for energy conservation, fuel purchases for vehicles are costly to vehicle owners and operators. Projections of future fuel prices help NHTSA to determine the value of fuel savings both to new vehicle buyers and to society and the amount of fuel economy that the new vehicle market is likely to demand in the absence of new standards. Future fuel prices also inform NHTSA about “the consumer cost . . . of our need for large quantities of petroleum.” \823\ In this final rule, NHTSA's analysis relies on fuel price projections from EIA's AEO for 2026, Alternative Electricity and Alternative Transportation Combination case.\824\ Federal agencies generally use EIA's price projections in their assessment of future energy-related policies.

\823\ Id.

\824\ EIA, Annual Energy Outlook 2026: Case Descriptions, EIA: Washington, DC (2026), available at https://www.eia.gov/outlooks/aeo/assumptions/pdf/case_descriptions.pdf (accessed: May 29, 2026). The Alternative Electricity and Alternative Transportation Combination case further explores the impact of policy uncertainty by combining the assumptions in the Alternative Electricity and Alternative Transportation cases. Those cases are described in more detail on page 6 of the Case Descriptions report.

(2) National Balance of Payments

The need of the United States to conserve energy has historically included consideration of the “national balance of payments” because of concerns that importing large amounts of oil created a significant wealth transfer to oil-exporting countries and left the U.S. economically vulnerable.\825\ In the 20th and early 21st centuries, the U.S. trade deficit was driven mainly by petroleum.\826\ As recently as 2009, almost half of the deficit was composed of petroleum imports.\827\ However, this concern has largely abated in the timespan of more recent CAFE rulemakings, in part because other factors besides petroleum consumption have since played a bigger role in the U.S. trade deficit, and because of the substantial rebalancing of international petroleum markets largely driven by shale oil productivity in the United States. In light of significant increases in U.S. oil production and corresponding decreases in oil imports, this concern is likely to remain less pronounced for the foreseeable future.\828\ Increasingly, changes in the price of fuel have come to represent transfers between domestic consumers of fuel and domestic producers of petroleum rather than gains or losses to foreign entities.

\825\ 42 FR 63184, 63192 (Dec. 15, 1977) (“A major reason for this need [to reduce petroleum consumption] is that the importation of large quantities of petroleum creates serious balance of payments and foreign policy problems. The United States currently spends approximately $45 billion annually for imported petroleum. But for this large expenditure, the current large U.S. trade deficit would be a surplus.”).

\826\ EIA, Today in Energy: Recent Improvements in Petroleum Trade Balance Mitigate U.S. Trade Deficit, last revised: July 21, 2014, available at: https://www.eia.gov/todayinenergy/detail.php?id=17191 (accessed: May 28, 2026).

\827\ Id.

\828\ Though future changes in trade policy and its potential macroeconomic impacts remain a source of uncertainty in EIA's outlooks, the most recent Short Term Energy Outlook projects U.S. crude oil production to increase from around 13.6 million barrels per day in 2025 to 13.8 million barrels per day in 2026, and U.S. crude oil inventories (excluding SPR) are expected to increase by about 5 percent from 2025 to 2026. See EIA, Short-Term Energy Outlook, last revised: July 7, 2026, available at: https://www.eia.gov/outlooks/steo/.

Though total energy independence is not possible for any country that participates in the global energy market, the fact that the U.S. is now a net oil exporter reduces risks from global price fluctuations. Even if the U.S. consumed only domestically produced petroleum and continued to export, the U.S. economy would still be subject to oil price fluctuations due to external events and situations. But changes in the oil market mean that the risk of damage to the U.S. economy and of potential strain on U.S. drivers is lower than it was in previous decades. To be sure, risk still exists, and both production and consumption of oil are relevant to how significant that risk might be. But the risk is much lower than it would have been in the absence of the rapid growth in U.S. oil production, and this diminished risk means that the need of the U.S. to conserve energy is significantly less than it was at earlier points in the history of the program.

PMI commented that the need of the United States to conserve energy should be given limited weight because the Nation's status as a net exporter of petroleum significantly reduces the energy security risks the statute was originally designed to address.\829\ PMI stated that conservation under EPCA should be viewed as insurance against global supply shocks rather than a mandate for scarcity, as domestic abundance provides the economic insulation once sought through more aggressive consumption reductions.\830\ One individual commenter also agreed that the energy conservation factor should be weighed differently now that the United States produces more energy than it consumes.\831\ The commenter noted that while energy security remains important, the geopolitical and security implications of U.S. energy usage underwent a revolution in 2019 when the shale boom transitioned the country from a net importer to a net exporter.\832\ The commenter argued that this fundamentally altered the landscape that existed when Congress originally passed EPCA in 1975 and EISA in 2007, during a 60-year period when the Nation consumed more energy than it produced.\833\

\829\ PMI, Docket No. NHTSA-2025-0491-5001-A2, at 33.

\830\ Id. at 34.

\831\ Diana Furchtgott-Roth, Docket No. NHTSA-2025-0491-5765-A1, at 4.

\832\ Id.

\833\ Id.

Conversely, commenters including NRDC et al., ZETA, and the Attorneys General, opposed the agency's reliance on the Nation's net exporter status to weigh less heavily the national balance of payments and foreign policy

considerations.\834\ First, these commenters asserted that the United States remains highly susceptible to global oil market volatility, arguing that increased domestic oil production does not insulate consumers from global price shocks.\835\ Commenters noted that the United States still relies heavily on foreign oil, importing millions of barrels of crude oil per day, with ZETA specifying approximately 8 million barrels per day,\836\ and NRDC et al. citing 6.48 million barrels per day in 2023.\837\ The Attorneys General emphasized that imports remain particularly critical for areas not well connected to domestic production, such as the West Coast and Hawai[revaps]i, the latter of which lacks domestic petroleum sources and relies on imports for roughly 80 percent of its energy consumption.\838\

\834\ NRDC et al., Docket No. NHTSA-2025-0491-5928-A2, at 52; ZETA, Docket No. NHTSA-2025-0491-6039-A1, at 6; Attorneys General, Docket No. NHTSA-2025-0491-6064-A2, at 72.

\835\ Id.

\836\ ZETA, Docket No. NHTSA-2025-0491-6039-A1, at 6.

\837\ NRDC et al., Docket No. NHTSA-2025-0491-5928-A2, at 54 (citing EIA, Frequently Asked Questions (FAQs): How Much Petroleum Does the United States Import and Export?, available at: https://www.eia.gov/tools/faqs/faq.php?id=727&t=6 (accessed: May 28, 2026)).

\838\ Attorneys General, Docket No. NHTSA-2025-0491-6064-A2, at 75-76.

Second, commenters pointed to recent geopolitical events as evidence of the Nation's ongoing vulnerability to supply shocks. NRDC et al. and the Attorneys General cited the surge in crude oil prices following Russia's 2022 invasion of Ukraine, as well as recent U.S. operations in Venezuela aimed at securing oil to reduce domestic prices.\839\ The Attorneys General further argued that NHTSA's premise of diminished energy risk is contradicted by the President's recent declaration of a “national energy emergency,” which explicitly cited inadequate domestic energy production and transportation capacity as an ongoing threat.\840\ Furthermore, the Attorneys General criticized NHTSA's rationale that fuel purchases represent a transfer between domestic consumers and producers; they argued it is implausible to treat increased profits for oil companies as an even trade for the negative economic consequences of adding cost pressures and price-shock exposure to everyday American households.\841\

\839\ NRDC et al., Docket No. NHTSA-2025-0491-5928-A2, at 53-4; Attorneys General, Docket No. NHTSA-2025-0491-6064-A2, at 75.

\840\ Attorneys General, Docket No. NHTSA-2025-0491-6064-A2, at 72.

\841\ Attorneys General, Docket No. NHTSA-2025-0491-6064-A2, at 76.

NHTSA has considered the comments regarding the need of the United States to conserve energy and the agency's assessment of how the Nation's transition to a net petroleum exporter affects the weighing of this factor. As an initial matter, the agency recognizes that the statutory landscape governing the CAFE program was shaped during periods of relative energy scarcity and significant reliance on foreign petroleum. NHTSA agrees with PMI and other commenters that the United States shale revolution and the Nation's subsequent shift in 2019 to a net exporter status represent a fundamental change in the national energy profile that the agency must account for when determining the maximum feasible average fuel economy levels.

Historically, the national balance of payments was a primary driver of the need to conserve energy, as the massive outflow of capital to oil-exporting nations created systemic economic vulnerabilities. With the U.S. now producing record levels of crude oil and experiencing a substantial rebalancing of international markets, the macroeconomic risk associated with a wealth transfer to foreign entities has diminished. This shift supports NHTSA's view that the agency may weigh the “need of the United States to conserve energy” differently than the agency had weighted it in 1975 or 2007.

NHTSA recognizes the persistence of global market volatility and its impact on American consumers. The agency acknowledges, as it did in the proposal, that net exporter status does not equate to total energy insulation or price immunity. Geopolitical conflicts, including those in or near oil producing regions,\842\ could result in short-term volatility in global oil markets because they introduce sudden uncertainty regarding supply continuity and maritime transit security. These events lead to price spikes driven by both physical disruptions and speculative trading, which could strain the domestic economy. That said, global energy markets are increasingly resilient in light of geopolitical conflicts compared to historic events.\843\ In contrast, the CAFE program is a long-term structural intervention designed to address the underlying demand for petroleum by establishing fuel efficiency of the national fleet. CAFE standards can lower the baseline energy intensity of the U.S. economy, providing a hedge against price trends over decades, but are neither intended nor suited to manage transient fluctuations of a global commodity market.

\842\ See, e.g., Domonoske, C., Why a War in the Middle East Hasn't Sparked an Oil Crisis, last revised: June 25, 2025, available at: https://www.npr.org/2025/06/25/nx-s1-5444030/oil-prices-iran-israel (accessed: May 29, 2026).

\843\ Id.

Regarding the criticism of the agency's characterization of fuel price changes as transfers between domestic producers and consumers, NHTSA clarifies that this perspective is not a dismissal of consumer hardship, but rather a recognition that, as discussed in more detail in TSD Chapter 6, from a national accounting perspective, when a domestic consumer pays more for fuel produced within the U.S., that money remains within the domestic economy rather than being transferred to a foreign producer. NHTSA emphasizes that the standards established in this final rule consider consumer impacts of fuel costs by giving weight to economic practicability in considering upfront vehicle costs.

Ultimately, NHTSA must strike a balance between the reality of increased domestic abundance and the lingering risks of global market integration. As discussed below regarding the level of final standards, NHTSA has weighed the conservation of energy not as a response to an era of scarcity, but as a strategic tool to enhance economic resilience and reduce the exposure to a volatile global commodity, in light of the Nation's status as a net exporter. (3) Environmental Effects

NHTSA has considered environmental effects in setting CAFE standards, in some cases in the context of the need of the United States to conserve energy, in the context of the agency's regulatory impact analysis and associated obligations under Circular A-4, and in the context of NEPA.\844\ In addition to discussing how these effects are weighted in NHTSA's balancing of maximum feasible standards for this final rule, discussed below, NHTSA also summarizes information related to the environmental effects of this final rule in Chapter 8.2.5 of the FRIA, and in the section below titled “National Environmental Policy Act.” For more detail on the NEPA analysis conducted in conjunction with this final rule, please refer to the accompanying Final SEIS.

\844\ 53 FR 33080, 33096 (Aug. 29, 1988); 53 FR 39275, 39302 (Oct. 6, 1988).

In the proposal, NHTSA sought comment on whether Congress had given it authority under EPCA to consider environmental effects when setting fuel economy standards. NHTSA stated that EPCA's charge is for the agency to set maximum feasible fuel economy standards to reduce national

vulnerability to supply shocks while balancing statutory factors--none of which includes environmental effects. Among those statutory considerations is the effect of other Federal Government standards on fuel economy. NHTSA stated that the agency had traditionally considered the fact that the vehicles NHTSA regulates are also subject to compliance obligations under EPA's criteria emission standards (e.g., mass attributable to adding a catalytic converter) in setting fuel- economy standards. This is appropriate since EPA is the Federal environmental regulator. NHTSA noted that the agency is not an environmental regulator, and Congress directed NHTSA to consider the impact of regulations established by Federal environmental regulators (i.e., in practice, primarily EPA) on fuel economy when establishing standards. NHTSA also stated that the question of the appropriateness of NHTSA's historic consideration of environmental effects when setting fuel economy standards has become more relevant considering the United States' recent emergence as a net petroleum exporter. NHTSA solicited comments on whether consideration of potential effects of upstream activity such as domestic extraction and refining of petroleum conflicts with or is otherwise not contemplated by Congress's delegation of fuel-economy regulatory authority to NHTSA, including because those upstream activities are subject to regulation by the EPA under the CAA. Considering EPCA's initial passage as an energy conservation statute and the United States being a net energy exporter, the agency sought comment on whether environmental effects should remain relevant under “the need of the United States to conserve energy,” or any other factor.

Despite this request for comment, NHTSA presented the results of selected environmental metrics in its discussion of maximum feasibility, specifically with regard to the need of the United States to conserve energy, and presented the full suite of modeled environmental metrics in the agency's PRIA accompanying the proposal. The agency also discussed the results of its Draft SEIS, which considered more environmental effects in accordance with the agency's NEPA obligations.

The agency received a variety of comments focusing on whether the agency possesses the authority to and should consider environmental effects. Commenters, such as PMI, argued that the “need to conserve energy” does not encompass environmental or global climate change considerations and that the agency should discontinue consideration of environmental effects.\845\ PMI argued that EPCA is fundamentally an energy security law, not an environmental statute, and pointed to the Supreme Court's decision in Massachusetts v. EPA to emphasize that environmental protection falls under the EPA's distinct mandate.\846\ PMI stated that the proper statutory mechanism for NHTSA to account for environmental regulation is through the “other motor vehicle standards of the Government” factor, which requires the agency to evaluate the physical fuel economy impacts of installing EPA-mandated emission control components.\847\ PMI also stated that even if NHTSA could consider environmental effects in setting CAFE standards, EPCA restricts that consideration to domestic effects.\848\ API commented that, though it “may be relevant to consider the environmental effects from the transportation sector, and related upstream activities on a lifecycle basis in considering the four statutory factors, NHTSA should not duplicate the policymaking and analysis of other agencies that regulate the environmental effects of activities linked to vehicles.” \849\ API stated that “[i]t is paramount that CAFE standards be cost- effective and technology-neutral, providing consumer choice in transportation. NHTSA's own policy making, in so far as it considers environmental effects and achieves environmental outcomes, should have the buy-in of vehicle, fuel, and equipment manufacturers, to reflect that the policy is achievable to implement and acceptable to consumers.” \850\ AFPM commented that the law prohibits NHTSA from considering environmental impacts, including upstream or downstream emissions, because the statute explicitly limits the agency to considering only technological feasibility, economic practicability, the effect of other motor vehicle standards, and the need of the Nation to conserve energy.\851\ Although AFPM acknowledged NEPA requires NHTSA to assess the environmental impacts of its proposed actions, it asserted that environmental modeling is not relevant to EPCA's central objective of conserving energy reserves and reducing reliance on energy imports.\852\ Citing the substantial deference Federal agencies receive to determine the scope of the environmental effects they consider, AFPM concluded that NHTSA's decision not to consider these environmental impacts in its standard-setting process is legally appropriate.\853\

\845\ PMI, Docket No. NHTSA-2025-0491-5001-A2, at 38.

\846\ Id.

\847\ Id.

\848\ Id.

\849\ API, Docket No. NHTSA-2025-0490-0053, at 4.

\850\ Id.

\851\ AFPM, Docket No. NHTSA-2025-0491-5964-A2, at 19-20.

\852\ Id.

\853\ Id.

An individual commenter stated that the “need of the Nation to conserve energy” factor as Congress wrote it “is both flexible and capacious enough to cover today's new energy reality, where the major geopolitical threat to U.S. energy security comes from China, rather than OPEC or the Arab League. However, this term is not capacious enough, and was never intended to be, to cover environmental effects unrelated to the energy security of the United States. To the extent that such environmental effects include vehicle electrification mandates that further strain the U.S. grid, and increase reliance on green energy and EV infrastructure from China, such environmental effects are not only unrelated to the statutory goals, but actively opposed to them. For these reasons, NHTSA's approach in this proposal represents important progress in advancing the energy conservation needs of the United States, as Congress intended.” \854\

\854\ Diana Furchtgott-Roth, Docket No. NHTSA-2025-0491-5765-A1, at 8.

Conversely, commenters, including NRDC et al. and the Attorneys General, opposed the potential interpretation, arguing that excluding environmental effects violates congressional intent, statutory text, and decades of agency practice.\855\ These commenters argued that the ordinary meaning of “conservation” inherently includes the long-term benefits of pollution reduction, and they pointed to legislative history from AMFA and EISA as evidence that Congress consistently recognized air quality improvements and greenhouse gas reductions as important justifications for strengthening the CAFE program.\856\ The Minnesota Pollution Control Agency and the Minnesota Department of Transportation strongly urged NHTSA to consider environmental impacts, arguing that Congress inherently directed agencies to consider such effects when it called for the more efficient use of energy, and noting the statutory requirement to consult with EPA. OCT similarly asserted a legal and

moral obligation to transition away from fossil fuels to prevent climate harm,\857\ while an individual commenter characterized the agency's reliance on a narrow statutory interpretation that ignores other environmental laws as misguided.\858\

\855\ NRDC et al., Docket No. NHTSA-2025-0491-5928-A2, at 19; Attorneys General, Docket No. NHTSA-2025-0491-6064-A2, at 78-81.

\856\ Id.

\857\ OCT, Docket No. NHTSA-2025-0491-4903, at 5.

\858\ Laura Georgi, Docket No. NHTSA-2025-0491-6028.

Both NRDC et al. and the Attorneys General criticized the agency for the potential departure from its historical precedent, stating that NHTSA has consistently evaluated environmental implications, including climate change, under the “need of the United States to conserve energy” factor since the late 1970s.\859\ They also noted that three separate court of appeals decisions over the last 40 years have explicitly affirmed this interpretation.\860\ Consequently, commenters asserted that abandoning this longstanding practice, especially given that the statute does not expressly prohibit the consideration of environmental and health impacts, would constitute a failure to consider an important aspect of the problem, thereby rendering the rule arbitrary and capricious.\861\

\859\ NRDC et al., Docket No. NHTSA-2025-0491-5928-A2, at 19-20; Attorneys General, Docket No. NHTSA-2025-0491-6064-A2, at 79.

\860\ Id.

\861\ Id.

Finally, commenters rejected several of the agency's potential administrative and policy rationales for excluding environmental effects. The Attorneys General countered the argument that environmental impacts should be handled solely via the “other motor vehicle standards” factor by noting that NHTSA's duty to account for EPA emission standards is legally distinct from its broader duty to consider the social importance of reducing fuel consumption.\862\ They added that relying on EPA regulations is particularly inadequate given EPA's (then) proposal to rescind its greenhouse gas standards.\863\ In addition, the Attorneys General and NRDC et al. argued that the status of the United States status as a net energy exporter does not override the statutory mandate to conserve energy,\864\ or diminish the pressing need to address climate considerations.\865\ The Attorneys General also asserted that it is arbitrary for the agency to ignore upstream environmental effects, such as emissions from petroleum extraction and refining, while simultaneously evaluating upstream foreign policy and supply chain implications under the same statutory factor.\866\

\862\ Attorneys General, Docket No. NHTSA-2025-0491-6064-A2, at 79-80.

\863\ Id.

\864\ NRDC et al., Docket No. NHTSA-2025-0491-5928-A2, at 52.

\865\ Attorneys General, Docket No. NHTSA-2025-0491-6064-A2, at 80.

\866\ Id.

NHTSA has carefully reviewed the comments regarding the scope of the “need of the United States to conserve energy” factor and the extent to which it may encompass environmental and climate change considerations. The agency continues to believe that its mandate under EPCA is focused on energy security and the reduction of petroleum consumption. Although some commenters point to a broad definition of the word “conservation” to include environmental conservation, NHTSA notes that in EPCA, Congress only uses “conservation” in the context of “energy conservation,” and specifically directs NHTSA to consider the need of the United States to “conserve energy.” \867\ NHTSA's consideration of environmental mandates and factors is properly situated under the “other motor vehicle standards of the Government” factor, where the agency evaluates how compliance with EPA emissions standards impacts manufacturers' ability to improve fuel economy. The Supreme Court has similarly acknowledged EPCA's focus on energy conservation in motor vehicle regulation, while distinguishing EPA's focus in the same space to protect public health and welfare.\868\ In addition, NHTSA considers environmental factors when assessing the effects of its actions under NEPA.

\867\ See, e.g., 49 U.S.C. 32912(c)(1)(A)(i) (discussing the circumstances in which the Secretary can increase the civil penalty rate; specifically, when it “will result in, or substantially further, substantial energy conservation for automobiles . . . .”).

\868\ Massachusetts v. E.P.A., 549 U.S. 497, 532 (2007) (“But that DOT sets mileage standards in no way licenses EPA to shirk its environmental responsibilities. EPA has been charged with protecting the public's “health” and “welfare,” 42 U.S.C. 7521(a)(1), a statutory obligation wholly independent of DOT's mandate to promote energy efficiency. See Energy Policy and Conservation Act, Sec. 2(5), 89 Stat. 874, 42 U.S.C. 6201(5). The two obligations may overlap, but there is no reason to think the two agencies cannot both administer their obligations and yet avoid inconsistency.”).

NHTSA does not agree that its interpretation constitutes an arbitrary departure from precedent. While the agency has discussed environmental impacts in the preambles of prior rulemakings, the agency's departure from that practice is not an arbitrary one, as NHTSA is not legally required to treat environmental impacts as a driver of the fuel economy levels under the “need to conserve energy” factor. NHTSA has concluded that the approach presented in the proposal and this final rule is appropriate because Congress directed the agency to set standards that are maximum feasible and has specified the four factors to be used in doing so. In focusing the application of this factor on energy conservation (as contrasted with the environmental consequences of energy conservation), NHTSA is ensuring that its decisions are based on the core energy-related objectives of the statute as Congress has directed. The agency has considered the relevant aspects of “the need to conserve energy” by focusing on the Nation's current energy posture, including the significant shift in the status of the United States to a net energy exporter, which fundamentally alters the domestic need to conserve energy compared to the era in which EPCA was originally enacted. Moreover, the referenced statements from EISA's legislative history do not evidence that CAFE standards were intended to address environmental factors, but rather that greenhouse gas emissions reductions were an ancillary byproduct of higher standards.

Regarding the assertion that NHTSA's consideration of environmental impacts under the “other motor vehicle standards” factor is inadequate, NHTSA believes this approach is consistent with the differing roles Congress created for NHTSA and EPA under their respective statutory schemes. The agency's obligation to consider the need to conserve energy is appropriately balanced alongside the other statutory factors, including economic practicability and technological feasibility. NHTSA disagrees that it is arbitrary to consider upstream energy security or supply chain implications while excluding upstream environmental effects; the former are directly tied to the availability and security of the Nation's energy supply, which is the central concern of EPCA, whereas the latter fall under the specialized expertise and regulatory jurisdiction of other Federal and State environmental agencies. Consequently, NHTSA believes its interpretation of the “need to conserve energy” is a reasonable and lawful exercise of its administrative discretion that remains consistent with the overarching goal of promoting energy independence, and that consideration of environmental factors is appropriate under the “other motor vehicle standards” factor, and also appropriate when fulfilling agency obligations under NEPA and when conducting analysis pursuant to E.O. 12866.

(4) Foreign Policy Implications

U.S. consumption and imports of petroleum products can impose costs on the domestic economy that are not reflected in the market price for crude petroleum or in the prices paid by consumers for petroleum products such as gasoline. These costs include the risk of disruptions to the U.S. economy caused by sudden increases in the global price of oil and its resulting impact on fuel prices faced by U.S. consumers.\869\ Higher U.S. consumption of crude oil or refined petroleum products could increase the magnitude of external economic costs, thus increasing the true economic cost of supplying transportation fuels above the resource costs of producing them. Conversely, reducing U.S. consumption of crude oil or refined petroleum products (by reducing motor fuel use) can reduce these external costs.

\869\ While the U.S. continues to maintain a significant military presence in critical maritime transit corridors, such as the Strait of Hormuz, to ensure the stability of global energy markets and the free flow of commerce, such deployments serve a broad range of strategic, diplomatic, and security objectives that extend far beyond the protection of petroleum supplies. The specific operational requirements and mission profiles of U.S. forces in these regions are dictated by complex geopolitical dynamics and defense obligations that remain independent of domestic fuel consumption levels. Consequently, the incremental reductions in oil demand projected to result from the CAFE standards are not of a magnitude that would reasonably be expected to alter the scale or necessity of existing military missions dedicated to safeguarding the production and transportation of energy resources across the globe.

While these costs are considerations, the United States has shifted to become a net petroleum exporter,\870\ as discussed above. The U.S. currently produces a surplus of petroleum relative to its needs and is projected to remain a net exporter for decades, though it continues to swap its light-grade oil for the heavier imports required by domestic refineries. In 1977, the U.S. consumed 18.43 million barrels of oil per day, producing 10.39 million, and importing 8.81 million. By 2007, when EISA was adopted, U.S. consumption had risen to 20.68 million barrels of oil per day, with production dropping to 7.85 million, and imports increasing significantly to 13.47 million. By 2022, the landscape had shifted dramatically, with U.S. production of total petroleum liquids skyrocketing to 20.08 million barrels per day, effectively matching domestic consumption of 20.01 million barrels of oil per day.\871\ While these figures indicate the U.S. has reached a net exporter status by volume, the Nation remains integrated into the global market. Specifically, the U.S. still imported 8.32 MMb/d in 2022.\872\ This continued importation is not driven by a lack of domestic volume, but rather that U.S. refineries are largely optimized to process heavy crude oil from abroad, while domestic shale production yields light crude, much of which is exported to international markets.\873\

\870\ EIA, U.S. Energy Facts Explained: The United States Has Been An Annual Net Total Energy Exporter Since 2019, available at: https://www.eia.gov/energyexplained/us-energy-facts/imports-and-exports.php (accessed: May 29, 2026).

\871\ EIA, Oil and Petroleum Products Explained, last revised: Jan. 19, 2024, available at: https://www.eia.gov/energyexplained/oil-and-petroleum-products/imports-and-exports.php (accessed: May 29, 2026).

\872\ Id.

\873\ See, e.g., EIA, Recent U.S. Imports of Oil Tend to Be Heavier Than Domestic Production, last revised: May 6, 2016, available at: https://www.eia.gov/todayinenergy/detail.php?id=26132 (accessed: May 12, 2026).

Further, as petroleum imports have declined substantially, the source of such imports has shifted away from more volatile sources in the Middle East and towards North America. In 1977, 8.64 million barrels of oil per day were imported from OPEC and Persian Gulf countries, while only 540 thousand barrels were imported from Canada.\874\ In 2007, 8.14 million barrels per day were imported from OPEC and Persian Gulf countries, but Canadian imports increased to 2.23 million.\875\ By 2022, OPEC and Persian Gulf imports dropped to only 2.23 million barrels per day, while Canadian imports jumped to 4.37 million.\876\ This significant change in circumstances has added new stable supply to the global oil market since the adoption of EPCA and EISA, even as U.S. imports shifted away from volatile and adversarial sources and toward North American sources. NHTSA's assessment of the weight of this factor in balancing the “need of the Nation to conserve energy” has shifted accordingly, as discussed in more detail below.

\874\ EIA, Oil and Petroleum Products Explained, last revised: Jan. 19, 2024, available at: https://www.eia.gov/energyexplained/oil-and-petroleum-products/imports-and-exports.php (accessed: May 29, 2026).

\875\ Id.

\876\ Id.

AFPM acknowledged that the United States cannot completely insulate itself from global oil price dynamics, noting that geopolitical disruptions such as Middle East conflicts, Russian supply shocks, or sanctions still ripple through the globally integrated oil market.\877\ However, AFPM argued that, as fuel economy stringency increases, the marginal petroleum savings from each additional increase decline because manufacturers have already applied the most cost-effective technologies.\878\ Because foreign policy benefits rely on actual petroleum reductions, AFPM concluded that these diminishing returns moderate the need for increasingly stringent standards.\879\

\877\ AFPM, Docket No. NHTSA-2025-0491-5964-A2, at 18.

\878\ Id.

\879\ Id.

Other commenters objected to NHTSA's conclusion that foreign policy considerations have diminished, arguing that the proposed rule will increase oil dependency and associated military costs. NRDC et al. and the Attorneys General emphasized that reducing fuel use is a critical mechanism for mitigating the foreign policy costs associated with oil consumption.\880\ The Attorneys General noted that relying on oil exacerbates vulnerabilities to supply disruptions, limits U.S. alliances, empowers hostile oil-exporting countries, and necessitates the costly maintenance of a U.S. military presence in regions like the Middle East.\881\ By conserving energy, they argued, strong standards increase resilience and reduce revenue to regimes opposed to U.S. interests.\882\

\880\ NRDC et al., Docket No. NHTSA-2025-0491-5928-A2, at 64-5; Attorneys General, Docket No. NHTSA-2025-0491-6064-A2, at 7.

\881\ Attorneys General, Docket No. NHTSA-2025-0491-6064-A2, at 7.

\882\ Id.

These commenters further stated that the premise of diminished risk is factually contradicted by America's continued exposure to international market volatility and its reliance on heavy crude imports, with the U.S. still importing 6.48 million barrels per day in 2023 and in light of the agency's own assumption that 90 percent of any change in domestic gasoline consumption merely shifts crude exports rather than altering domestic production.\883\ To illustrate these ongoing national security vulnerabilities, commenters highlighted the market shocks following Russia's 2022 invasion of Ukraine and the President's recent Executive Order aimed at safeguarding Venezuelan oil revenue to lower domestic prices.\884\ Because the U.S. cannot dictate prices in a global market, NRDC et al. cited the agency's prior 2022 statement that reducing consumption is the only effective protection for consumers from

foreign policy price shocks.\885\ The Attorneys General noted that NHTSA's proposal will instead raise fuel consumption by nearly 100 billion gallons through 2050, exacerbating demand that is inextricably linked to the estimated $81 billion spent annually on maintaining a U.S. military presence to secure imported oil.\886\ Commenters thus contended that the agency acted arbitrarily and capriciously by departing from longstanding reasoning and not giving weight to these military and foreign policy factors, especially while the administration simultaneously spends resources on military action to secure oil infrastructure in places like Venezuela.\887\

\883\ NRDC et al., Docket No. NHTSA-2025-0491-5928-A2, at 54.

\884\ NRDC et al., Docket No. NHTSA-2025-0491-5928-A2, at 53-4; Attorneys General, Docket No. NHTSA-2025-0491-6064-A2, at 75.

\885\ NRDC et al., Docket No. NHTSA-2025-0491-5928-A2, at 55.

\886\ Attorneys General, Docket No. NHTSA-2025-0491-6064-A2, at 77.

\887\ Id.

NHTSA has considered the comments regarding the role of foreign policy and national security relating to the “need of the United States to conserve energy.” The agency continues to believe that the fundamental shifts in the domestic energy landscape since the enactment of EPCA necessitate a re-evaluation of how these considerations influence the stringency of fuel economy standards. As noted by AFPM, the United States has achieved a level of energy independence that was largely unforeseen when the CAFE program was first established, and the Nation's status as a net energy exporter significantly mitigates the traditional energy security risks associated with oil consumption. While the agency acknowledges that global oil prices remain integrated and subject to international volatility, the marginal security benefits of additional fuel-economy increases have diminished as manufacturers have deployed the most effective fuel-economy-improving technologies widely across the fleet.

The agency disagrees with the characterization by NRDC et al. and the Attorneys General that the proposed standards will actively increase oil dependency or jeopardize national security. While commenters highlighted recent geopolitical shocks and U.S. military actions in regions such as Venezuela and the Middle East, these events involve a complex array of national security and diplomatic objectives that are not driven primarily by domestic fuel consumption levels. A U.S. military presence in critical maritime transit corridors protects global commerce and regional stability broadly Commenters provided no evidence that incremental fuel savings associated with more stringent standards would lead to a measurable reduction in these overarching defense obligations, and the agency remains unconvinced of such a direct relationship. Specifically, regarding requests for additional quantification of the connection between CAFE standards and military spending, NHTSA explains that the prevailing literature concludes that policies to moderately reduce oil imports over time, which did not entirely eliminate import dependency, would have little benefit in terms of reducing U.S. military spending in any particular region. For this reason, most recent economics articles that quantify energy security-related benefits associated with policies like CAFE standards do not include changes in military spending.

Furthermore, the agency's obligation is to set the maximum feasible average fuel economy level based on a realistic assessment of the Nation's current energy needs. Given the record-breaking domestic production levels, the significant strategic reserves currently held by the United States, and the shift away from imported petroleum from volatile regions, the agency believes that the standards established in this final rule strike the appropriate balance between promoting energy conservation and recognizing the diminished role of petroleum-based foreign policy vulnerabilities.

In addition, in response to comments regarding the continued exposure of the United States to international volatility and reliance on specific crude grades, NHTSA observes that these market dynamics are better addressed through broader energy and economic policies rather than fuel economy standards. The agency's analysis, including incorporation of the most up-to-date fuel price projections, indicates that the domestic market is currently far more resilient than in previous decades, and the costs of forcing further, more expensive fuel economy improvements would disproportionately impact American consumers without providing a corresponding increase in national security. NHTSA remains committed to setting standards that conserve energy but maintains that this goal must be pursued in a manner that is economically practicable, reflective of the geopolitical realities of 2026, and in conformance with law.

NHTSA discusses additional comments on how the agency balanced the need of the United States to conserve energy in arriving at the final standards below. e. Factors That NHTSA Is Prohibited From Considering

EPCA also provides that in determining the level at which NHTSA should set CAFE standards for a particular model year, the agency may not consider the fuel economy of dedicated automobiles, must consider dual-fueled automobiles to be operated only on gasoline or diesel fuel, and may not consider, when prescribing a fuel economy standard, the trading, transferring, or availability of credits under section 32903.\888\ Because restrictions are set forth in 49 U.S.C. 32902(h), these are referred to as the “subsection 32902(h)” limitations.

\888\ 49 U.S.C. 32902(h).

On June 11, 2025, NHTSA published in the Federal Register an interpretive rule titled “Resetting the Corporate Average Fuel Economy Program” (the “interpretive rule”), which set forth NHTSA's interpretation of how it could consider the subsection 32902(h) limitations when setting maximum feasible CAFE standards.\889\ That rule described the history surrounding EPCA's passage in 1975: EPCA was passed in the context of the Arab oil embargoes of the 1970s when American consumers and the U.S. economy were impacted by gasoline shortages and high fuel prices. The House report accompanying EPCA noted that, as a result, the legislation sought to address the national security dangers of America's dependence on foreign oil.\890\ Consistent with that context, the House report stated that the purpose of the CAFE program was to induce automakers into offering America's consumers more fuel-efficient vehicle options to advance the national goal of conserving energy, while simultaneously “recogniz[ing] that the automobile industry has a central role in our national economy and that any regulatory program must be carefully drafted so as to require of the industry

what is attainable without either imposing impossible burdens on it or unduly limiting consumer choice as to capacity and performance of motor vehicles.” \891\

\889\ 90 FR 24518 (June 11, 2025).

\890\ See H.R. Rep. No. 94-340, at 6-10, 87-88 (1975) (available in the docket for this rulemaking) (“In 1973 the embargo affected 14 percent of U.S. petroleum consumption and precipitated a $10- to $20-billion drop in GNP . . . In June of 1973 the average selling price for regular gasoline was reported to be approximately 38.8 cents per gallon, including tax. By June of 1974 that price had increased to 55.1 cents per gallon, an addition in excess of 42 percent. Yet in the same period, gasoline demand went from 6.8 million barrels per day to 7.0 million barrels per day. In other words, gasoline demand actually increased by 2.9 percent even though prices had jumped by over 42 . . . Part B of title V of the bill establishes a long range program for improving automobile fuel economy by requiring manufacturers and importers to meet increasingly stringent average fuel economy standards, and to disclose the fuel economy of each new automobile sold in the United States.”).

\891\ Id. at p. 87.

As originally enacted, EPCA did not specify matters that the Secretary may not consider when setting maximum feasible standards. The subsection 32902(h) limitations first appeared in the AMFA in 1988.\892\ AMFA aimed to displace energy derived from imported oil to help achieve energy security and improve air quality by encouraging the development and widespread use of methanol, ethanol, and natural gas as transportation fuels by consumers and the production of motor vehicles powered by these fuels. The statute specified that, in carrying out responsibilities to set maximum feasible fuel economy standards, “the Secretary shall not consider the fuel economy of alcohol powered automobiles or natural gas powered automobiles, and the Secretary shall consider dual energy automobiles and natural gas dual energy automobiles to be operated exclusively on gasoline or diesel fuel.” \893\ One member of Congress described AMFA's approach as “evenhanded” in that the bill did not favor one alternative fuel over another; rather, “[i]t allow[ed] the market to pick the non-petroleum alternative fuel of the future.” \894\

\892\ Alternative Motor Fuels Act of 1988, Public Law 100-494, 102 Stat. 2441 (Oct. 14, 1988).

\893\ Id. at 102 Stat. 2450.

\894\ 134 Cong. Rec. H25122 (Sept. 23, 1988) (statement of Rep. Sharp).

The conferees specifically noted their intent to ensure that the Secretary of Transportation did not erase the AMFA incentives by setting the CAFE standards for passenger or non-passenger automobiles “at a level that assumes a certain penetration of alternative fueled vehicles.” \895\ Specifically, “[i]t is intended that [NHTSA's maximum feasibility] examination will be conducted without regard to the penetration of alternative fuel vehicles in any manufacturer's fleet, in order to ensure that manufacturers taking advantage of the incentives offered by this bill do not then find DOT including those incentive increases in the manufacturer's `maximum fuel economy capability.' ” \896\

\895\ Id. at 25124 (statement of Rep. Dingell).

\896\ Id.

The Energy Policy Act of 1992 expanded the subsection 32902(h) limitations to include all dedicated alternative-fueled vehicles.\897\ The Energy Policy Act's accompanying House report acknowledged that the widespread use of alternative fuels faced several challenges, but expanded the AMFA requirements to keep the program “fuel neutral.” \898\ The Energy Policy Act's legislative history explained that this expansion occurred because “all the data, experience, and knowledge gathered concerning alternative fuels over the past two decades points to the fact that no one fuel is `the winner.”' \899\

\897\ Energy Policy Act of 1992, Public Law 102-486 (1992) (“Title V of the Motor Vehicle Information and Cost Savings Act (15 U.S.C. 2001 et seq.) is amended . . . in section 502(e)--(A) by striking `alcohol powered automobiles or natural gas powered' and inserting in lieu thereof `dedicated' ”).

\898\ H.R. Rep. No. 102-474, at 35 (1992).

\899\ Id.

There have been no subsequent substantive changes to the language in subsection 32902(h),\900\ including with the enactment of EISA in 2007.

\900\ In 1994, Congress restated the laws related to transportation in one comprehensive title in the recodification of title 49 of the United States Code, see S. Rep. No. 103-265 (1994); H.R. Rep. No. 103-180 (1993). The recodification, which was enacted to restate without substantive change all transportation laws in one title, substituted simple language for “awkward and obsolete terms,” and eliminated superseded, executed, and obsolete laws. The standard changes made uniformly throughout the revised section are explained in a report preceding the law. Important for this interpretation, “[t]he words `may not' are used in a prohibitory sense, as `is not authorized to' and `is not permitted to.' ”

In addition to examining the legislative history surrounding the subsection 32902(h) factors, the interpretive rule, among other things, set forth the bases for NHTSA's conclusion that the statute bars the agency from considering the fuel economy of dedicated automobiles in setting maximum feasible fuel economy standards. Specifically, NHTSA concluded that a lawful exercise of its standard-setting authority requires that the agency adhere to the prohibitions in subsection (h) at every stage of the standard-setting process. Consequently, when evaluating what level of fuel economy is “maximum feasible,” NHTSA must establish standards based solely on the capabilities of the gasoline-powered vehicle fleet. This interpretation differed from earlier approaches that considered the projected market penetration of alternative-fueled vehicles in establishing a baseline for considering and evaluating increasing stringency. NHTSA stated in the interpretive rule that if the agency were to set a standard that could be met by a manufacturer only through the production of electric vehicles or the purchase of credits, it would be effectively “considering” those very vehicles in contravention of subsection 32902(h). By ensuring that the “maximum feasible” level of standards is determined strictly by the performance and costs of gasoline and diesel vehicles, the agency avoids creating standards that serve as a mandate for electrification, rather than a production incentive as Congress intended.

The agency received a wide array of comments regarding its interpretive rule, and its underlying interpretation of the statutory restrictions in subsection 32902(h). Commenters were divided over whether the agency possesses the statutory authority to exclude alternative fueled vehicles entirely from the standard-setting process, with commenters providing feedback on both the procedural validity of the interpretive rule and substantive statutory interpretation.

Commenters including the Alliance, Hyundai, Kia, and Stellantis supported excluding EVs from the baseline analysis and standard-setting process.\901\ They concurred that subsection 32902(h) explicitly prohibits the agency from considering dedicated AFVs when establishing maximum feasible fuel economy standards.\902\ Stellantis emphasized that the legislative history of the Alternative Motor Fuels Act demonstrates Congress's intent to prevent the agency from using alternative fuel incentives to inflate an automaker's capability, noting that the prior inclusion of these vehicles exaggerated the fleet's capabilities and led to overly aggressive standards.\903\ Kia added that excluding EVs provides stability to the CAFE program, as the large unknowns regarding EV sales volumes and PEF variability introduce a high degree of compliance uncertainty.\904\

\901\ The Alliance, Docket No. NHTSA-2025-0491-5707-A2, at II-1; Hyundai, Docket No. NHTSA-2025-0491-4972, at 2; Kia, Docket No. NHTSA-2025-0491-5123, at 2; Stellantis, Docket No. NHTSA-2025-0491- 5968-A1, at 5.

\902\ Id.

\903\ Stellantis, Docket No. NHTSA-2025-0491-5968-A1, at 5.

\904\ Kia, Docket No. NHTSA-2025-0491-5123, at 2.

API, AFPM, and a joint coalition of fuel marketers (NACS, NATSO, SIGMA, and EMA (hereinafter referred to as NACS et al.)) echoed support for the exclusion.\905\ The joint coalition argued that the statute establishes a clear legislative boundary requiring fuel economy standards to be based exclusively on liquid or gaseous fuel consumption, which inherently

excludes electricity.\906\ AmFree and Corn Growers Associations further argued from an economic standpoint, contending that a standard becomes economically impracticable if it raises the cost of essential vehicles to subsidize luxury EVs, and that the statute does not permit the agency to consider EVs simply because they are produced in response to other regulations.\907\

\905\ API, Docket No. NHTSA-2025-0490-0053, at 3; AFPM, Docket No. NHTSA-2025-0491-5964-A2, at 3-6; NACS et al., Docket No. NHTSA- 2025-0491-6034, at 2-3.

\906\ NACS et al., Docket No. NHTSA-2025-0491-6034, at 3.

\907\ AmFree and Corn Growers Associations, Docket No. NHTSA- 2025-0491-6000-A1, at 7.

A coalition of States, including the Commonwealth of Kentucky, the State of West Virginia, and 22 other States (Joint States), alongside the U.S. Chamber of Commerce, PMI, and the Institute for Energy Research (IER), agreed that standards must be entirely feasible and practicable for gas-powered vehicles without regard to non-gas-powered alternatives or compliance credits.\908\ PMI emphasized that the statutory command that the Secretary “may not consider” EVs admits of no discretion, meaning the agency cannot read unwritten exceptions into the law to permit considering EVs at any point in the process.\909\ Furthermore, PMI urged the agency to extend this regulatory exclusion to high-range PHEVs, arguing that treating them as gasoline-powered vehicles in regulatory modeling arbitrarily bypasses statutory constraints because their internal-combustion engines function primarily as a redundancy rather than a prime mover.\910\

\908\ Joint States, Docket No. NHTSA-2025-0491-6017, at 2; U.S. Chamber of Commerce, Docket No. NHTSA-2025-0490-0030, at 2; PMI, Docket No. NHTSA-2025-0491-5001-A2, at 21; IER, Docket No. NHTSA- 2025-0491-6029, at 3.

\909\ PMI, Docket No. NHTSA-2025-0491-5001-A2, at 22.

\910\ Id. at 55.

API, IER, the U.S. Chamber of Commerce, PMI, and individual commenters also argued that the prior inclusion of EVs functioned as an unlawful backdoor attempt to force the electrification of the vehicle fleet and a “de facto technology mandate.” \911\ They and other commenters asserted that the previous methodology substituted the agency's policy preferences for Congress's clear instructions, violating the major questions doctrine by exerting highly consequential economic and political power without the required clear congressional authorization.\912\

\911\ API, Docket No. NHTSA-2025-0490-0053, at 3; IER, Docket No. NHTSA-2025-0491-6029, at 3; U.S. Chamber of Commerce, Docket No. NHTSA-2025-0490-0030, at 2; PMI, Docket No. NHTSA-2025-0491-5001-A2, at 57-8; Diana Furchtgott-Roth, Docket No. NHTSA-2025-0491-5765-A1, at 1-4.

\912\ U.S. Chamber of Commerce, Docket No. NHTSA-2025-0490-0030, at 2; API, Docket No. NHTSA-2025-0490-0053, at 3; IER, Docket No. NHTSA-2025-0491-6029, at 3; PMI, Docket No. NHTSA-2025-0491-5001-A2, at 58; Diana Furchtgott-Roth, Docket No. NHTSA-2025-0491-5765-A1, at 1-4; NACS et al., Docket No. NHTSA-2025-0491-6034, at 2-5.

Several commenters concluded that removing consideration of prohibited technologies and credits from every aspect of the standards development process correctly restores the CAFE program to its statutory foundation.\913\

\913\ Joint States, Docket No. NHTSA-2025-0491-6017, at 5-7; API, Docket No. NHTSA-2025-0490-0053, at 3; AFPM, Docket No. NHTSA- 2025-0491-5964-A2, at 4-6; PMI, Docket No. NHTSA-2025-0491-5001-A2, at 21; Competitive Enterprise Institute (CEI)/Marlo Lewis, Docket No. NHTSA-2025-0491-6038, at 10-14; U.S. Chamber of Commerce, Docket No. NHTSA-2025-0490-0030, at 2; Diana Furchtgott-Roth, Docket No. NHTSA-2025-0491-5765-A1, at 1-4.

Conversely, several commenters, including NRDC et al., Attorneys General, South Coast AQMD, ZETA, a coalition of local governments and the Sabin Center for Climate Change Law at Columbia, C40 Cities, Climate Mayors, ICLEI--Local Govts for Sustainability USA (Sabin et al.), and NACAA, objected to the agency's reliance on the interpretive rule, on both procedural and substantive grounds.\914\ NRDC et al. and the Attorneys General argued that the agency incorrectly characterized the action as an interpretive rule to evade various APA requirements when it in fact constituted a substantive, legislative rule that drastically altered decades of agency policy and bound regulated entities.\915\ These commenters also emphasized that the interpretive rule is currently the subject of consolidated legal challenges, making it an improper and arbitrary foundation for the current rulemaking.\916\

\914\ NRDC et al., Docket No. NHTSA-2025-0491-5928-A2, at 13; Attorneys General, Docket No. NHTSA-2025-0491-6064-A2, at 38; South Coast AQMD, Docket No. NHTSA-2025-0490-0064, at 1-2; ZETA, Docket No. NHTSA-2025-0491-6039-A1, at 9; Sabin et al., Docket No. NHTSA- 2025-0491-5808, at 8; NACAA, Docket No. NHTSA-2025-0491-5884, at 2, 11-12.

\915\ NRDC et al., Docket No. NHTSA-2025-0491-5928-A2, at 13-4; Attorneys General, Docket No. NHTSA-2025-0491-6064-A2, at 38.

\916\ Id.

Substantively, these commenters argued that the agency's interpretation of subsection 32902(h) is flawed, is contrary to the plain text of the statute, and arbitrarily distorts the agency's modeling. NRDC et al., the coalition of local governments and Sabin et al., ZETA, and the Attorneys General noted that the text of subsection 32902(h) limits its prohibition to when the agency is “carrying out subsections (c), (f), and (g),” which govern setting standards and subsequent amendments and the weighing of feasibility factors, but not the baseline calculation.\917\ ZETA argued that Congress's deliberate omission of subsections 32902(a), (b), (d), and (e) from subsection 32902(h) demonstrates that the statute does not prohibit the agency from considering existing EVs when establishing the baseline of what the real-world fleet has already achieved.\918\ By applying the restriction to “any point in the process,” the Attorneys General asserted that the agency is unlawfully erasing over 4 million actual EVs from its model and pretending those vehicles do not exist.\919\ Citing administrative law principles, they noted that reliance on facts that an agency knows are false at the time it relies on them is the “essence of arbitrary and capricious decision-making.” \920\

\917\ NRDC et al., Docket No. NHTSA-2025-0491-5928-A2, at 16; Sabin et al., Docket No. NHTSA-2025-0491-5808, at 7-8; ZETA, Docket No. NHTSA-2025-0491-6039-A1, at 10; Attorneys General, Docket No. NHTSA-2025-0491-6064-A2, at 43-47.

\918\ ZETA, Docket No. NHTSA-2025-0491-6039-A1, at 10.

\919\ Attorneys General, Docket No. NHTSA-2025-0491-6064-A2, at 47.

\920\ Id.

Also with regard to the analytical modeling supporting standards, ZETA and an individual commenter echoed that the agency is unlawfully creating a counterfactual scenario, while other commenters pointed out the internal inconsistency of the agency eliminating EVs from real- world baseline calculations while simultaneously acknowledging them when forecasting future fleet compositions.\921\ AEG argued that because BEVs take up an increasing share of the fleet, completely excluding their emissions and fuel use makes the CAFE estimates increasingly unreliable.\922\ A pair of individual commenters also stated that excluding EVs from the analysis contravenes D.C. Circuit precedent and longstanding administrative guidance (OMB Circular A-4), which requires that a regulatory baseline be the “best assessment of the way the world would look absent the proposed action.” \923\ Lucid commented that the agency's assumption that there are no EVs permeates the entire rulemaking and forces NHTSA to calculate that complying with present CAFE standards is not “economically

practicable.” Furthermore, Lucid pointed out that by assuming manufacturers have not used credit trading to comply with prior standards, the agency overstates the costs manufacturers will incur to adopt new ICE technologies. MECA agreed that the statute does not allow the agency to factor alternative fueled vehicles into the design of standards but warned that completely omitting full-vehicle electrification from the baseline causes market distortion.\924\ MECA argued this artificially reduces stringency so much that automakers might remove fuel-efficiency technologies from their internal combustion engine vehicles.\925\

\921\ ZETA, Docket No. NHTSA-2025-0491-6039-A1, at 9; Oakley Vincent (O Kevin Vincent), Docket No. NHTSA-2025-0491-6036, at 1-2; NACAA, Docket No. NHTSA-2025-0491-5884, at 12.

\922\ AEG, Docket No. NHTSA-2025-0491-5981, at 1.

\923\ Will Schmidt and Juan Fernandez, Docket No. NHTSA-2025- 0491-3469, at 3.

\924\ MECA, Docket No. NHTSA-2025-0491-5331, at 6,.

\925\ Id.

NRDC et al. and the Attorneys General commented that excluding millions of highly efficient vehicles from the baseline artificially lowers the starting point of the agency's analysis, resulting in proposed maximum feasible standards that fall far below the fuel- economy levels the fleet is already achieving in the real world.\926\ Furthermore, NRDC et al. pointed out that the interpretation would lead the agency to set a minimum standard for domestic passenger cars under subsection 32902(b)(2) that is mathematically higher than the “maximum” standard applicable to the entire fleet.\927\ The Attorneys General expanded on this argument, asserting that the domestic minimum is already projecting five mpg higher than the maximum feasible standard, an anomaly they argued is contrary to common sense and irreconcilable with congressional intent.\928\ These commenters concluded that the interpretive rule unlawfully and textually expands the statutory restrictions on dedicated EVs, dual-fueled vehicles, and credit trading in a manner that produces absurd results and undermines the long-term integrity of the CAFE program.\929\ Several commenters also asserted that this new interpretation departs from years of established agency practice without adequate explanation and leads to nonsensical results that frustrate the purpose of EPCA.\930\

\926\ NRDC et al., Docket No. NHTSA-2025-0491-5928-A2, at 18; Attorneys General, Docket No. NHTSA-2025-0491-6064-A2, at 47.

\927\ NRDC et al., Docket No. NHTSA-2025-0491-5928-A2, at 18.

\928\ Attorneys General, Docket No. NHTSA-2025-0491-6064-A2, at 52.

\929\ NRDC et al., Docket No. NHTSA-2025-0491-5928-A2, at 18-9; Attorneys General, Docket No. NHTSA-2025-0491-6064-A2, at 47.

\930\ NRDC et al., Docket No. NHTSA-2025-0491-5928-A2, at 17; Attorneys General, Docket No. NHTSA-2025-0491-6064-A2, at 44-49; GreenLatinos, Docket No. NHTSA-2025-0491-4967, at 1.

Lastly, the Attorneys General and ZETA commented that NHTSA improperly relied on the elimination of the credit trading program to justify reducing the stringency of the fuel economy standards starting in MY 2028.\931\ They asserted that this approach directly violates the statutory prohibition against considering the trading, transferring, or availability of credits when prescribing a fuel economy standard.\932\

\931\ Attorneys General, Docket No. NHTSA-2025-0491-6064-A2, at 109, 103-104; ZETA, Docket No. NHTSA-2025-0491-6039-A1, at 12.

\932\ Id.

NHTSA has carefully considered the comments regarding the interpretive rule and the subsequent incorporation of its legal conclusions into the current rulemaking. The agency continues to believe that the interpretive rule provides a correct and necessary clarification of the mandatory restrictions set forth in subsection 32902(h). As noted by Joint States and the U.S. Chamber of Commerce, the statutory text explicitly prohibits the agency from considering the fuel economy of dedicated automobiles, the alternative-fuel capabilities of dual-fueled automobiles, or the availability of compliance credits when determining the maximum feasible average fuel economy level. The agency agrees that the phrase “may not consider” functions as a strict legislative boundary, divesting the agency of discretion to include dedicated AFVs at any stage of the maximum feasibility determination. By centering the analysis exclusively on technologies the law allows to be considered--that is, vehicles powered exclusively by gasoline or diesel fuels--the agency avoids creating the “de facto technology mandate” described by commenters and ensures that standards remain economically practicable without the distortive effects of cross-subsidization. This approach addresses concerns regarding the major questions doctrine--i.e., that the CAFE program was being misused to force the conversion of the vehicle fleet to electrification without the necessary congressional mandate--by restoring the program to its original statutory foundation, providing the industry with the stability and legal certainty required for long- term compliance planning.

Moreover, NHTSA agrees that EPCA, as amended, does not provide a directive to use the CAFE program as a mechanism for mandating a wholesale transition from internal combustion engines to electric vehicles. Instead, the statutory text directs the agency to establish standards that are maximum feasible based on the technological and economic realities of the vehicles being regulated. By adhering to these defined criteria, the agency ensures that its standards remain consistent with its legal obligation to establish maximum feasible fuel economy standards without extending its regulatory reach into areas not specifically authorized by the text.

NHTSA disagrees with the contention raised by NRDC et al., Sabin et al., and the Attorneys General that these restrictions are limited only to a single step in the process or restricted to the carrying out of subsections (c), (f), and (g) by setting maximum feasible standards for vehicles only above a baseline that includes factors explicitly identified in subsection 32902(h). In establishing or amending maximum feasible fuel economy standards and determining the baseline by which those standards are established, NHTSA is, by definition, carrying out subsections (c), (f), and (g). A standard that is determined based on a baseline or analysis that includes prohibited factors considers those factors, in contravention of the statutory requirements regarding what NHTSA may not consider. To comply with the congressional mandate that standards be technologically feasible and economically practicable for the internal combustion engine fleet, the agency must exclude alternative fueled vehicles at every stage of its standard-setting calculus.

NHTSA believes that the statutory command in subsection 32902(h) is clear: the agency is restricted from considering these vehicles when “carrying out” its duty to set maximum feasible fuel economy standards. Inclusion of even a small number of electric vehicles in the baseline analysis fleet upon which stringency increases are applied has a serious impact upon fuel economy standards--an effect that has become apparent in recent years with increased fleet electrification. Specifically, the MY 2024 gasoline- and diesel-fueled analysis fleet achieves a combined 35.4 mpg, while the MY 2024 fleet including PHEV full fuel economy and EVs achieves 36.2 mpg, with the effect increasing significantly in the passenger car fleet, which achieves 43.2 mpg based solely on gasoline- and diesel-fueled vehicles, and 45 mpg considering all vehicles. These values would only continue to diverge if EV fuel economy became a greater portion of total fuel economy. If the agency were to include electric vehicles in its baseline, the resulting standard would inevitably be higher than what is

technologically feasible or economically practicable for the petroleum- powered fleet alone.

The nearly one-mile-per-gallon increase in standard stringency, representing an almost 2.5-percent increase in stringency between the MY 2024 gasoline- and diesel-powered fleet and the total fleet, and the nearly two-mile-per-gallon increase in stringency for the passenger car fleet, representing a 4.2-percent increase in stringency for the passenger car fleet, denotes what would otherwise be a substantial technological gap that places an immediate compliance burden squarely on the remaining internal combustion engine-powered fleet. This would thereby circumvent the very protections Congress prescribed to prevent the standard-setting process from being used to mandate a shift away from internal combustion engines. This approach does not create a counterfactual baseline but rather ensures that the regulatory burden is calibrated solely to the vehicles the agency is authorized to regulate under subsection 32902(h). The agency's interpretation of subsection 32902(h) likewise does not produce non-sensical results regarding the MDPCS because NHTSA correctly interprets the MDPCS to be set based on a projection of the standard, as discussed above.

Regarding comments that NHTSA's analysis approach breaks with years of established agency precedent, NHTSA disagrees. Dedicated vehicles were only included in appreciable numbers in recent rulemakings, and in fact NHTSA's assessment of maximum feasible fuel economy standards has considered the capabilities of the gasoline- and diesel-powered vehicle fleet for decades prior to assessments that included dedicated vehicles. In addition, NHTSA disagrees that the new interpretation frustrates the purpose of EPCA. As discussed in more detail below, excluding dedicated vehicles from the analysis does not limit NHTSA's ability to set maximum feasible standards; rather, it prevents artificially inflating the baseline and best aligns with EPCA's language and intent. Under a combined baseline, a manufacturer that produces gasoline and diesel vehicles would be inherently disadvantaged against one producing those vehicles and electric vehicles, and would be forced to react to more stringent standards simply because dedicated vehicles were considered in the baseline. To address compliance benefits for dedicated alternative fueled vehicles without distorting standard-setting, Congress enabled the Department of Energy to adjust the petroleum equivalency factor to ensure dedicated vehicles do not exert a disproportionate impact.

In response to the procedural concerns raised by NRDC et al., South Coast AQMD, and Attorneys General, NHTSA maintains that the interpretive rule was properly classified as such. The rule did not create new legal obligations or alter existing regulatory text; rather, it set forth the agency's best understanding of its existing statutory constraints under EPCA. Because the rule explains what the statute has required of the agency since its enactment, it does not constitute a legislative rule requiring notice-and-comment procedures under the APA. Furthermore, while the agency acknowledges that the interpretive rule is currently the subject of litigation, NHTSA is not required to stay its regulatory activities or revert to a prior, incorrect interpretation of the law pending a judicial resolution. The agency's current reliance on this framework is intended to provide the regulatory stability requested by many stakeholders and to ensure that the resulting standards are legally robust and grounded in the plain text of the statute. Finally, the agency rejects the contention that incorporating the legal reasoning of the interpretive rule by reference into the standards proposal was procedurally defective, as this proposal's explicit identification of that rule as a prerequisite for the analytical updates provided all interested parties with a meaningful opportunity to evaluate the agency's logic and submit comments on its application within the scope of this rulemaking. NHTSA notes that several commenters did provide such comments on the subject from a number of different perspectives, which the agency considered in finalizing this rule. Should the interpretive rule be invalidated on procedural grounds, NHTSA would reach the same conclusions with respect to how to interpret the statute, as the agency articulated in the proposal and now this final rule.

Finally, NHTSA disagrees with the Attorneys General and ZETA's assertion that the agency improperly considered the removal of credit trading in MY 2028 when determining the proposed standards. NHTSA's tentative determination in the proposal was limited to the subsection 32902(f) factors; any discussion of the removal of credit trading in MY 2028 was part of a broader structural discussion of the program and had no bearing on any particular fuel economy level that NHTSA proposed or tentatively selected as the maximum feasible standard. The same holds true for the final standards set in this final rule, and the basis for those standards are discussed in more detail below.

Accordingly, NHTSA's conclusion from the interpretive rule and proposal remains that the statutory prohibition was clear at the time of enactment and has remained clear: it is impermissible for NHTSA to consider the fuel economy of dedicated automobiles in setting maximum feasible fuel economy standards. NHTSA's previous consideration of such vehicles has had a significant impact on the ability of gasoline- and diesel-fueled vehicles to achieve standards. NHTSA affirms that it did not consider any of these statutorily prohibited factors in determining the maximum feasible standards finalized in the present rulemaking. f. Additional Considerations Relevant to NHTSA's Statutory Determination of Maximum Feasibility

There are additional considerations relevant to NHTSA's determination of maximum feasible standards that the agency evaluates in its analysis of the four enumerated subsection 32902(f) factors.

NHTSA historically has considered the potential for adverse safety consequences in setting CAFE standards,\933\ including as a subset of economic practicability and the effect of other motor vehicle standards of the Government on fuel economy, utilizing NHTSA's experience as a safety regulator. NHTSA assesses the potential safety impacts of alternative standards and considers them in balancing the statutory considerations and determining the maximum feasible level of the standards. Courts have upheld NHTSA's implementation of EPCA in this manner.\934\

\933\ See 42 FR 33534, 33551 (June 30, 1977).

\934\ See Center for Biological Diversity v. NHTSA, 538 F.3d 1172, 1203-04 (9th Cir. 2008) (upholding NHTSA's analysis of vehicle safety issues associated with weight in connection with the MYs 2008-2011 light truck CAFE rulemaking).

NHTSA received a comment from the Attorneys General stating that a non-statutory factor like safety may not lawfully displace the subsection 32902(f) factors that Congress specified.\935\ In addition to objecting to NHTSA's projections of safety effects from different levels of standards, the Attorneys General stated that the presentation and description of safety effects signaled that this consideration played a driving role in the maximum

feasibility determination.\936\ The Attorneys General stated that NHTSA cannot substitute this goal for EPCA's explicit statutory criteria.\937\

\935\ Attorneys General, Docket No. NHTSA-2025-0491-6064-A2, at 89-91.

\936\ Id.

\937\ Id.

NHTSA disagrees with the characterization that safety considerations have displaced the four statutory factors and maintains that its maximum feasibility determination is the result of a rigorous balancing of the criteria specified in subsection 32902(f). The agency is committed to ensuring that fuel economy improvements do not come at the expense of public safety, and the extensive analysis provided throughout this preamble demonstrates that the agency has focused appropriately on the enumerated statutory factors of technological feasibility, economic practicability, the effect of other Government standards, and the need to conserve energy. As detailed in the following sections, safety considerations have not displaced the statutory factors but rather the agency has included them in a comprehensive assessment of the effects of the final standards.

NHTSA also considers consumer demand, which is “not specifically designated as a factor, but neither is it excluded from consideration; the factors of `technological feasibility' and `economic practicability' are each broad enough to encompass the concept.” \938\ As the D.C. Circuit has recognized, NHTSA “is directed to weigh the `difficulties of individual automobile manufacturers;' there is no reason to conclude that difficulties due to consumer demand for a certain mix of vehicles should be excluded.” \939\

\938\ Ctr. for Auto Safety v. Nat'l Highway Traffic Safety Admin., 793 F.2d 1322, 1338 (D.C. Cir. 1986).

\939\ Id. at 1339.

In concert with E.O. 12866, NHTSA also considers net benefits as relevant to determining maximum feasible CAFE standards. EPCA does not mandate that NHTSA set standards at the point at which net benefits are maximized, and NHTSA does not believe it is compelled to do so.\940\ That said, this final rule is net beneficial, which fulfills NHTSA's responsibility under the DOT rule, Administrative Rulemaking, Guidance, and Enforcement Procedures, to make a reasoned determination that the benefits outweigh the costs,\941\ and as required by DOT Order 2100.7, Ensuring Reliance Upon Sound Economic Analysis in Department of Transportation Policies, Programs, and Activities.\942\ While E.O. 12866 states that agencies should, “in choosing among alternative regulatory approaches, . . . select those approaches that maximize net benefits,” \943\ even if NHTSA believed it could quantify enough relevant factors to determine the CAFE levels at which net benefits were maximized with reasonable accuracy, there may be other considerations that would lead the agency to conclude that maximum feasible CAFE standards are not the ones that maximize net benefits. For example, in 2012, NHTSA rejected the regulatory alternative that appeared to maximize net benefits (and all alternatives more stringent than that one) based on the conclusion that, even though estimated net benefits were maximized, the “resultant technology application and cost” were simply too high, and thus made those standards economically impracticable, and thus beyond maximum feasible.\944\ In addition, NHTSA has historically considered that some manufacturers may choose to pay a civil penalty rather than meet their applicable CAFE standard if the cost of paying the civil penalty is less than the cost of adding fuel economy technology. NHTSA did so through an option in the CAFE Model's Market Data Input file that would stop applying additional technology to this manufacturer's product line when cost-effective technology solutions were exhausted.\945\ NHTSA had historically justified programming the CAFE Model's technology selection algorithm accordingly because some manufacturers did choose to pay a civil penalty rather than apply technology, and NHTSA believed that its modeling was intended to reflect manufacturer decision-making in response to standards, even if that decision was to pay penalties.

\940\ See the 2010 final rule, which considered among the regulatory alternatives one that maximized net benefits, but explained that nothing in EPCA or EISA mandated that NHTSA choose CAFE standards that maximize net benefits (75 FR 25324, 25606 (May 7, 2010)); the 2012 final rule, which also considered among the regulatory alternatives one that maximized net benefits, and also explained that nothing in EPCA or EISA mandated that NHTSA choose CAFE standards that maximize net benefits, in fact, directly rejecting the regulatory alternative that maximized net benefits as beyond maximum feasible for the MYs 2017-2025 timeframe (77 FR 62624 (Oct. 15, 2012)); and the 2020 final rule, which stated that if the difference in net benefits between regulatory alternatives was within $20 billion, it was relatively small in the total context of the program and therefore the agency did not believe that the point at which net benefits were maximized was meaningful for determining maximum feasible CAFE standards in that final rule.

\941\ 91 FR 22431 (Apr. 27, 2026); 49 CFR 5.13.

\942\ See DOT, Ensuring Reliance Upon Sound Economic Analysis in Department of Transportation Policies, Programs, and Activities, DOT Order 2100.7, DOT: Washington, DC (2025), available at: https://www.transportation.gov/mission/ensuring-reliance-upon-sound-economic-analysis-department-transportation-policies-programs (accessed: May 29, 2026), which requires DOT rulemaking activities to be based on sound economic principles and analysis supported by rigorous cost-benefit requirements and data-driven decisions regardless of whether the rulemaking falls below the economic threshold required for review by the Office of Information and Regulatory Affairs.

\943\ 58 FR 51735 (Oct. 4, 1993).

\944\ 77 FR 63050 (Oct. 15, 2012).

\945\ See CAFE Model Documentation for 2024 FRM, at 82.

In July 2025, Congress eliminated CAFE civil penalties by setting the statutory penalty rate to $0. In the proposal and in this subsequent final rule, notwithstanding the change in the CAFE penalty rate, NHTSA assumed, based upon its review and analysis of the relevant statutory provisions, that manufacturers will endeavor where practicable to attempt to comply with the finalized standards. “Practicable” in this context means subject to real-world constraints on technology application such as refresh and redesign cycles and technology applicability, concepts discussed in detail in Section II. This reading of EPCA's provisions best effectuates the statute's command that NHTSA establish maximum feasible standards that achieve industry-wide fuel economy improvements.\946\

\946\ NHTSA notes that in all modern CAFE analyses NHTSA employed a threshold at which regulatory costs (technology costs plus civil penalty payments) would be indicative that a standard exceeded maximum feasibility. NHTSA's longstanding position that a standard that would require significant civil penalty payment would exceed maximum feasibility remains unchanged.

To be clear, this does not mean NHTSA assumes all manufacturers will comply fully with standards for all fleets. For example, if a manufacturer could not redesign a portion of their fleet within the standard-setting years or if their baseline compliance position were simply lower than that of the rest of the industry, the CAFE Model would not assume that the manufacturer would nevertheless comply at any cost. This approach appropriately places the focus in standard setting on whether manufacturers could meet the standards through vehicle production decisions, consistent with the statutory direction to set maximum feasible standards without regard to the possible availability of compliance pathways that Congress has proscribed NHTSA from considering.\947\

\947\ 49 U.S.C. 32902(h). It could be considered evading the statutory prohibition to instead consider an alternative means of addressing a shortfall, such as through the use of credit application.

NHTSA's modeling assumption that manufacturers will make maximum practicable efforts to comply with CAFE standards despite the $0 penalty rate is supported by longstanding real-world experience. For example, the 1979 “Automotive Fuel Economy Program Third Annual Report to the Congress” issued by DOT stated in its recommendation that the statutory scheme be amended to allow a longer period for credit carry- forward and carry back that “[a] number of manufacturers have raised the point that failure to meet the fuel economy standards involves a violation of the law, regardless of whether the short fall involves a penalty or involves the use of credits being carried forward or backward. The manufacturers have expressed strong reluctance to engage in any corporate planning that would involve violations.” \948\

\948\ 44 FR 5742 (Jan. 29, 1979).

Many manufacturers also have formal corporate policies committing themselves to complying with applicable legal standards. For example, JLR states in its Code of Conduct that the products and services that they offer “shall comply with applicable laws, including emissions and safety standards.” \949\ In the proposal preceding the 2024 final rule, NHTSA sought comment on its manufacturer fine payment preference assumptions--which are differentiated by specific manufacturer and model year--and JLR commented that they do “not view fine payment as an appropriate compliance route or as a flexibility in the regulation.” \950\ NHTSA changed this assumption for JLR for the 2024 final rule. Similarly, GM's global environmental policy states that the company is “committed to complying with all applicable laws and regulations,” \951\ and Toyota's Code of Conduct states that Toyota will comply with “applicable laws and regulations” and “international environmental standards.” \952\ Honda's corporate responsibility statement likewise states that Honda shall comply with all applicable environmental laws and regulations in all jurisdictions in which they operate,\953\ and Stellantis' code of conduct and most recent Climate Policy Report state that the company is both committed to complying with applicable laws and to CAFE compliance specifically.\954\ NHTSA does not assume that all companies listed have treated civil penalty payment as a violation of CAFE standards, but rather that when an applicable standard is in effect, manufacturers have reasons to give that standard due consideration even with a $0 penalty rate. NHTSA thus believes that it is reasonable to assume in its analysis of maximum feasibility that manufacturers will endeavor to comply with the applicable standards.

\949\ Jaguar Land Rover Automotive PLC, Jaguar Land Rover Code of Conduct, Jaguar Land Rover Automotive PLC: Coventry, England, p. 16 (2026), available at: https://www.jlr.com/download-centre?_gl=1*1nnalls*_ga*MTkyNDk3NDUzNy4xNzUyNTk3MDE4*_ga_G78VTFVFM0*czE3NTI1OTcwMTckbzEkZzEkdDE3NTI1OTcwNTYkajIxJGwwJGgw (accessed: May 29, 2026).

\950\ JLR, Docket No. NHTSA-2023-0022-57296, at 5.

\951\ GM, General Motors Global Environmental Policy (2023), available at: https://investor.gm.com/static-files/f5f872bd-9612-47f9-a5e1-d6c0ce1e6772 (accessed: May 29, 2026).

\952\ Toyota, Toyota Code of Conduct, pp. 14 and 17 (2023), available at: https://www.toyota.com/content/dam/tusa/usa/our-story/code-of-conduct-en.pdf (accessed: May 29, 2026).

\953\ Honda, Honda Corporate Responsibility Statement, available at: https://csr.honda.com/longform-content/honda-corporate-responsibility-statement/ (accessed: May 29, 2026).

\954\ Stellantis, Code of Conduct, Stellantis: Hoofddorp, The Netherlands (2026), available at: https://www.stellantis.com/content/dam/stellantis-corporate/group/governance/code-of-conduct/Stellantis_CoC_EN.pdf (accessed: May 29, 2026); Stellantis, 2024/ 2025 Climate Policy Report, Stellantis: Hoofddorp, The Netherlands, available at: https://www.stellantis.com/content/dam/stellantis-corporate/sustainability/csr-disclosure/stellantis/2024/Stellantis-2024-Climate-Policy-Report.pdf (accessed: May 29, 2026).

NHTSA sought comment on this assumption. JLR commented that the company does not consider civil penalty payment to be an acceptable route to compliance, consistent with their corporate Code of Conduct and as acknowledged in the proposal.\955\ Similar to NHTSA's assessment presented in the proposal, ICCT reviewed the commitments of several automakers and found that “industry is consistently committed to fully complying with environmental laws and regulations in markets where they operate.” \956\ Porsche recommended that NHTSA consider amending future fuel economy standards should Congress revisit and amend the civil penalty rate, though Porsche also recognized that was out of scope for this particular rulemaking.\957\

\955\ JLR, Docket No. NHTSA-2025-0491-5196, at 4.

\956\ ICCT, Docket No. NHTSA-2025-0491-5240-A2, at 24-26.

\957\ Porsche, Docket No. NHTSA-2025-0490-0044, at 3.

On the other hand, MECA commented that the $0 civil penalty rate raises serious concern that manufacturers could choose non-compliance as a business strategy and recommended that NHTSA evaluate the impact of the $0 civil penalty rate on compliance with CAFE standards.\958\ NACAA similarly commented that “without meaningful financial consequences for non-compliance, manufacturers face no economic imperative to meet fuel economy targets, potentially rendering CAFE standards aspirational and failing to drive any real-world improvements in vehicle efficiency and associated air quality benefits.” \959\ NACAA stated that the proposal does not address the absence of a regulatory driver for meeting fuel economy standards, and proposed instead that NHTSA consider “alternative regulatory approaches that create meaningful regulatory drivers for fuel economy improvement even in the absence of civil penalties.” \960\ Finally, the NY DEC commented that by eliminating penalties, there is little reason for manufacturers to adhere to the standard, defeating the purpose of establishing standards in the first place.\961\

\958\ MECA, Docket No. NHTSA-2025-0491-5331, at 3.

\959\ NACAA, Docket No. NHTSA-2025-0491-5884, at 16.

\960\ Id.

\961\ NY DEC, Docket No. NHTSA-2025-0491-5058, at 4.

NHTSA has carefully considered the comments expressing concern over the potential for non-compliance as a business strategy in light of the $0 civil penalty rate. As a preliminary matter, the agency emphasizes that the current civil penalty rate is established by legislative action that is outside of NHTSA's discretion to alter. NHTSA's task is to ensure that the standards are modeled using appropriate assumptions about how the industry may choose to respond to the penalty rate. While commenters like MECA and NACAA expressed concern that the absence of a financial penalty removes the imperative to comply, the agency's modeling must be grounded in the existing law, and NHTSA believes its approach represents an appropriate one. The agency agrees with commenters such as JLR and ICCT who observed that for many manufacturers, compliance is not merely a matter of financial calculation but a corporate commitment. Internal codes of conduct that manufacturers have chosen to adopt provide reasons to attempt to meet CAFE standards, independent of whether a shortfall results in a monetary fine.

NHTSA would reach the same results regarding the stringency of the standards regardless of the applicable civil penalty level. NHTSA maintains an independent statutory obligation to establish standards at the maximum feasible level without regard to penalty

rates--which are not a statutorily prescribed factor under EPCA--and must base its feasibility determination upon a careful balancing of statutory factors. By modeling compliance based on the assumption that manufacturers will strive to achieve the standards, NHTSA is carrying out EPCA's charge and providing the agency's best assessment of maximum feasible standards.

In response to recommendations that the agency pursue alternative regulatory drivers or redo its analysis of the penalty's impact, NHTSA notes that it must adhere to its delegated statutory authority. The agency is not empowered to create enforcement mechanisms that may impose consequences despite the $0 penalty rate. The agency has chosen modeling assumptions based on available indicia of manufacturers' likely choices regarding compliance. NHTSA will continue to monitor compliance trends and may revisit its modeling assumptions if facts and circumstances warrant doing so. Also, as suggested by Porsche, should Congress choose to revisit and amend the civil penalty structure in the future, NHTSA will assess future regulatory needs accordingly.

Regarding additional considerations relevant to NHTSA's maximum feasibility determination, the ME DEP commented that in addition to the subsection 32902(f) factors, NHTSA must “also consider the stated statutory goal of EISA, to increase energy independence and security, to increase the production of clean renewable fuels, to protect consumers, to increase the efficiency of products, buildings, and vehicles, to promote research on and deploy greenhouse gas capture and storage options, and to improve the energy performance of the Federal Government.” \962\ NHTSA acknowledges the broad, overarching goals of EISA as cited by the ME DEP but maintains that its specific authority to set CAFE standards is governed by section 32902. Adherence to the operative language of section 32902 reflects an interpretation of the statute that the specific and detailed requirements of the text must take precedence over the generalized goals or prefatory remarks found in a statute's preamble. NHTSA properly considers factors related to the statutory goals of EPCA, as amended by EISA, that have been listed in the statutory text, and through the agency's regulatory impact assessment, which properly considers environmental effects relevant to NHTSA's CAFE standard-setting action.

\962\ ME DEP, Docket No. NHTSA-2025-0490-0026, at 1.

The APA governs agency rulemaking generally and provides the standard of judicial review for agency actions. To be upheld under the “arbitrary and capricious” standard of judicial review under the APA, an agency rule must be rational, based on consideration of the relevant factors, and within the scope of authority delegated to the agency by statute. The agency must examine the relevant data and articulate a satisfactory explanation for its rulemaking, including a “rational connection between the facts found and the choice made.” \963\ The APA also requires that agencies provide notice and comment to the public when proposing regulations,\964\ as NHTSA did with this final rule and its accompanying materials.\965\

\963\ Burlington Truck Lines, Inc. v. U.S., 371 U.S. 156, 168 (1962).

\964\ 5 U.S.C. 553.

\965\ NHTSA is finalizing a few additional technical amendments in this final rule that were not included in the NPRM. NHTSA's conclusion that there is good cause to finalize these without notice and comment is discussed in this section.

NHTSA received some comments raising procedural concerns regarding the rulemaking process. NRDC et al. commented that the process violated the APA due to an inadequate sixty-day comment period that overlapped with Federal holidays, the decision to hold only a single public hearing, the imposition of an arbitrary fifteen-page limit on comment letters, and the omission of relevant OMB correspondence from the public docket.\966\ Furthermore, IPI and NRDC et al. requested that NHTSA disclose whether and how artificial intelligence (AI) tools were utilized in the drafting or analysis of the proposed rule, citing requirements under executive orders, OMB memoranda, and the APA to ensure transparency, prevent hidden biases, and maintain accountability in agency decision-making.\967\

\966\ NRDC et al., Docket No. NHTSA-2025-0491-5928-A2, at 110-1.

\967\ IPI, Docket No. NHTSA-2025-0491-6015-A3, at 1-2; NRDC et al., Docket No. NHTSA-2025-0491-5928-A2, at 118-20.

As evidenced by the numerous extensive comments received addressing a wide array of issues, NHTSA believes 60 days to be adequate for commenters to have reviewed fully and commented meaningfully on the proposed rule and on the Draft SEIS.\968\ This length of time comported with prior NHTSA CAFE comment periods and comment periods for other significant rules,\969\ while balancing the public interest in timely completion of the final rule. NHTSA reserved two days for the agency's virtual public hearing to accommodate all potential requests to testify, but the agency received requests to testify that only covered part of one day. Given the number of requestors to testify, and that a virtual public hearing format allows the most flexibility for diverse public comments from commenters in multiple locations across the country, NHTSA did not need to extend the virtual public hearing into an additional day, nor did the agency schedule additional in-person public hearings. NHTSA also concluded that, given the ongoing opportunity for written comment, the requesters did not demonstrate a need for additional public hearings.

\968\ 91 FR 1494 (Jan. 14, 2026).

\969\ 86 FR 49602 (Sept. 3, 2021); 88 FR 56128 (Aug. 17, 2023). See also Regulations.gov, Learn About the Regulatory Process, available at: https://www.regulations.gov/learn (accessed: May 28, 2026) (“In a typical case, an agency will allow 60 days for public comment. However, in some cases, they provide either shorter or longer comment periods.”).

The APA provides an exception to providing notice and opportunity for comment, at 5 U.S.C. 553 when the agency for good cause finds (and incorporates the finding and a brief statement of reasons therefore for the rules issued) that notice and public procedure thereon are impracticable, unnecessary, or contrary to the public interest. In this final rule, NHTSA is finalizing a few additional technical amendments that were not included in the NPRM. NHTSA finds that the agency has good cause that notice and public procedure are unnecessary. The most notable of these technical amendments is an amendment to 49 CFR part 578 that revises the civil penalty amount for fuel economy shortfalls to $0, in accordance with OB3. Since the technical amendment merely aligns NHTSA's regulation on civil penalties with statute and NHTSA has no discretion, NHTSA finds that it is unnecessary to seek public comment.

In addition, NHTSA has made an update to language regarding manufacturers' submission of CBI material to align with current practice and to eliminate outdated language requiring that CBI requests be submitted on CD-ROM and mailed to NHTSA. The new language instructs manufacturers to submit CBI requests using NHTSA's new portal, in line with how manufacturers are instructed to submit other CBI material. NHTSA is also making technical amendments to

include definitions where terms are referenced but not defined, using definitions that are already included in NHTSA's CAFE regulations. NHTSA finds that it has good cause that providing an opportunity for public comment is unnecessary and is finalizing these minor, clarifying technical amendments as described in Section VI.

Next, NHTSA has previously received comments on its requests that primary comments in response to proposed regulations be limited to 15 pages,\970\ and the agency emphasizes that commenters have always been free to submit attachments without any page limit, which these commenters did. NHTSA's proposal specifically stated, as the agency has in all prior rules, that the agency established the page limit to encourage commenters to write primary comments in a concise fashion.\971\ NHTSA also stated that commenters could attach additional documents to their comments, and there is no limit on the length of attachments.\972\ NHTSA considered both primary comments and their attachments in this rulemaking as demonstrated by the response to comments discussed throughout this final rule. No commenter was prevented from submitting comments based on NHTSA's page limit for primary comments.

\970\ See, e.g., 85 FR 24174, at 25155 (Apr. 30, 2020).

\971\ 90 FR 56438, at 56622 (Dec. 5, 2025).

\972\ Id.

Lastly, in response to comments from IPI and NRDC et al. regarding the transparency and legality of AI use and the APA, NHTSA clarifies that while AI tools were not utilized in the proposed rule, the agency did leverage AI capabilities to assist with drafting and document synthesis for this final rule. NHTSA emphasizes that these tools were used in a strictly assistive and administrative capacity--such as organizing comment summaries--and did not perform independent regulatory analysis or make policy determinations. All AI-assisted tasks operated under the supervision of Departmental reviewers. Because every substantive analytical conclusion and textual formulation was subject to human review, this approach maintains accountability, prevents algorithmic bias, and fully satisfies the requirements for reasoned decision-making.

NHTSA also received several comments referencing the agency's obligation under the APA in various respects related to substantive issues presented in the proposal and those comments are addressed throughout this preamble in the relevant subject matter discussion area. 2. National Environmental Policy Act

NEPA directs that environmental considerations be integrated into the Federal decision-making process, considering the purpose and need for agencies' actions. To explore the potential environmental consequences of this action, NHTSA prepared a Draft SEIS to accompany the proposal and has prepared a Final SEIS to accompany this final rule. Though NHTSA is finalizing MYs 2022-2031 CAFE standards, the main analyses of reasonably foreseeable impacts of the final rule and alternatives presented in the Final SEIS cover expected environmental impacts associated only with the finalized MYs 2027-2031 standards because no change in manufacturer behavior is possible for MYs 2022- 2026 passenger car and light truck fleets.

EPCA and EISA require that the Secretary of Transportation determine the maximum feasible levels of CAFE standards in a manner that disregards the potential use of CAFE credits or application of alternative fuel technologies toward compliance in model years for which NHTSA is issuing new standards.\973\ NEPA, however, does not impose such constraints on analysis; instead, NEPA requires Federal agencies to consider reasonably foreseeable environmental impacts of their proposed actions.\974\ NHTSA's Final SEIS therefore presents results of an “unconstrained” analysis that considers manufacturers' potential use of CAFE credits and application of alternative fuel technologies (including PHEVs using their charge depleting fuel economy values, BEVs and FCEVs) to allow consideration of real-world environmental consequences of the final rule and alternatives.\975\ The rest of this preamble, and importantly NHTSA's balancing of relevant EPCA/EISA factors explained in Section V.C.1 and 2, employs the “standard setting” modeling to avoid consideration of the prohibited factors in subsection 32902(h) in determining maximum feasible standards. As a result, the impacts reported in Section V.C.3 may differ from those reported elsewhere in the preamble. NHTSA conducts modeling both ways (“standard setting” and “unconstrained”) to reflect the various statutory requirements of EPCA/EISA and NEPA, respectively.

\973\ 49 U.S.C. 32902(h). See Resetting the Corporate Average Fuel Economy Program; Interpretive Rule, 90 FR 24518 (June 11, 2025).

\974\ 42 U.S.C. 4332(2); DOT Order 5610.1D, sec. 13.f.

\975\ See Appendix C of the Final SEIS for a discussion of the full range of modeled electrified technologies.

NHTSA's Final SEIS describes the reasonably foreseeable impacts across a variety of environmental resources, including energy, air quality, emissions effects, and historic and cultural resources. The impacts of NHTSA's action and alternatives are discussed in proportion to their significance, as applicable.\976\ The findings of the analysis are summarized in Section V.C.3, and more detailed discussion--in particular for any qualitative resource assessment--can be found in the Final SEIS.

\976\ Section 13.h(2) of DOT Order 5610.1D.

The Final SEIS is one input among many into NHTSA's decision-making process in setting CAFE standards. In preparing the Final SEIS, NHTSA has considered and taken into account the Supreme Court's opinion in Seven County Infrastructure Coalition v. Eagle County, Colorado and its progeny.\977\ Agencies are granted substantial deference to determine the scope of the environmental effects that they address and may decide whether to evaluate environmental effects from separate projects upstream or downstream from this action.\978\ Because the final rule amends standards for vehicle model years for which CAFE standards have previously been established, the Final SEIS discusses certain potential environmental effects from sectors that EPCA does not delegate authority to NHTSA to regulate. NHTSA's prior CAFE EISs contained analysis of the potential environmental impacts from these sectors. Seven County made clear, however, that NEPA does not require NHTSA to analyze potential environmental effects from these sectors. Analysis of such effects is not necessary for reasoned decision-making with respect to setting CAFE standards, because Congress has not directed

NHTSA to consider those when setting CAFE standards.

\977\ Seven Cnty. Infrastructure Coal. v. Eagle Cnty., Colorado, 145 S. Ct. 1497 (2025); see also Sierra Club v. FERC, 145 F.4th 74, 88-9 (D.C. Cir. 2025).

\978\ See Seven Cnty. Infrastructure Coal. v. Eagle Cnty., Colorado, 145 S. Ct. 1497, 1504 (2025) (“Courts should defer to agencies' discretionary decisions about where to draw the line when considering indirect environmental effects and whether to analyze effects from other projects separate in time or place. See Department of Transportation v. Public Citizen, 541 U.S. 752, 767, 124 S. Ct. 2204, 159 L.Ed.2d 60. In sum, when assessing significant environmental effects and feasible alternatives for purposes of NEPA, an agency will invariably make a series of fact-dependent, context-specific, and policy-laden choices about the depth and breadth of its inquiry--and also about the length, content, and level of detail of the resulting EIS. Courts should afford substantial deference and should not micromanage those agency choices so long as they fall within a broad zone of reasonableness.”).

AFPM commented that the agency lacks the authority to consider environmental impacts when establishing maximum feasible fuel economy standards under EPCA.\979\ AFPM emphasized that EPCA explicitly lists only four statutory factors for determining maximum feasible standards, and there is no mention of environmental impacts or upstream and downstream emissions.\980\ While AFPM acknowledged that NEPA requires the agency to assess the environmental impacts of its proposed actions, they asserted that environmental modeling is not relevant to EPCA's central objective of conserving energy reserves and reducing reliance on energy imports.\981\ Citing the substantial deference federal agencies receive to determine the scope of the environmental effects they consider, AFPM concluded that NHTSA's decision not to consider these environmental impacts in its standard-setting process is legally appropriate.\982\

\979\ AFPM, Docket No. NHTSA-2025-0491-5964-A2, at 19-20.

\980\ Id.

\981\ Id.

\982\ Id.

Some commenters, however, disagreed with NHTSA's interpretation of Seven County and argued that the Final SEIS should contain analyses of potential environmental effects from sectors that EPCA does not delegate authority to NHTSA to regulate.\983\ NHTSA appreciates these comments, but reemphasizes that the Supreme Court's ruling in Seven County made it clear that Federal agencies are not required to analyze environmental impacts from other projects separate in time, or separate in place, or that fall outside of the agencies' regulatory authority, or that would have to be initiated by a third party. As such, NHTSA disagrees with these commenters and maintains its interpretation of Seven County, as discussed in more detail in Appendix C of the Final SEIS.

\983\ NRDC et al., Docket No. NHTSA-2025-0491-5948, at 3; Attorneys General, Docket No. NHTSA-2025-0491-6064-A2, at 109-110.

In addition, other commenters requested that NHTSA consider broader impacts in its Final SEIS, such as battery production supply chains, national security risks from overseas sourcing, lifecycle vehicle emissions, localized community health disparities, and the ecological stresses of fossil fuel extraction.\984\ As further explained in Appendix C of the Final SEIS, NHTSA reassessed its scope of analysis in light of these comments and determined that it has appropriately refined the scope of the proposed action in line with the Supreme Court's holding of Seven County and the DOT Order 5610.1D.

\984\ See CPAC-CRF, Docket No. NHTSA-2025-0491-5054, at 9, 11; China WTO/TBT National Notification & Enquiry Center (China WTO/ TBT), Docket No. NHTSA-2025-0491-5056, at 4; Daniel Anderson, Docket No. NHTSA-2025-0491-5042.

In addition, in light of the Seven County opinion, together with the 2023 legislative amendments to the NEPA statute and the 2025 rescission of Council on Environmental Quality (CEQ) NEPA regulations, NHTSA sought comment on whether the agency is required to prepare an EIS for any similar CAFE standard-setting action--that is to say, whether Congress has given NHTSA discretion, when setting CAFE standards, to take into account the potential environmental effects of its CAFE standards in terms of the environmental effects from the sector that those standards directly regulate (i.e., the regulated vehicles themselves).

Several commenters, including NRDC et al., as well as the Minnesota Pollution Control Agency and the Minnesota Department of Transportation (Minnesota state agencies), and ZETA, commented that NHTSA must prepare an EIS because CAFE standards are major Federal actions that significantly affect the human environment.\985\ Minnesota state agencies noted that neither judicial deference, nor the 2023 legislative amendments to NEPA, nor the 2025 rescission of CEQ's NEPA regulations absolve the agency of its environmental review responsibilities.\986\ They also highlighted that the Department of Transportation recently promulgated updated NEPA procedures specifically applicable to NHTSA to replace its rescinded 1975 procedures.\987\

\985\ NRDC et al., Docket No. NHTSA-2025-0491-5948, at 4; Minnesota state agencies, Docket No. NHTSA-2025-0491-5847, at 5-6; ZETA, Docket No. NHTSA-2025-0491-6039-A1, at 11; Anonymous, Docket No. NHTSA-2025-0491-5040.

\986\ Minnesota state agencies, Docket No. NHTSA-2025-0491-5847, at 6.

\987\ Id.

NHTSA appreciates these comments and has prepared the Final SEIS for this proposed action.