NHTSA Says New Light Truck CAFE Regs Will Save 10.7 Billion Gallons of Fuel.

On April 6, 2006, the National Highway Traffic Safety Administration published in the Federal Register a Final Rule on "Average Fuel Economy Standards for Light Trucks in Model Years 2008- 2011", [Docket No. NHTSA 2006-24306].

This Final Rule reforms the structure of the corporate average fuel economy (CAFE) program for light trucks and establishes higher CAFE standards for model years 2008-2011. NHTSA says that reforming the CAFE program will enable it to achieve larger fuel savings, while enhancing safety and preventing adverse economic consequences. This final rule concludes NHTSA's NPRM rulemaking action published in the Federal Register on August 30, 2005 and sets up two systems that can be used for compliance for model years 2008, 2009 and 2010 and a common system that all manufacturers will have to comply with for MY 2011.

Summary of the Final Rule

NHTSA has established a transition period for Model Years 2008-2010 during which manufacturers may comply with CAFE standards established under this reformed structure (Reformed CAFE) or with standards established in the traditional way (Unreformed CAFE). NHTSA says that this will permit both manufacturers and the agency to gain experience with implementing the Reformed CAFE standards. In MY 2011, all manufacturers will be required to comply with the Reformed CAFE standard. Either way, this rule becomes effective for all new light trucks beginning August 4th, 2006.

The currently required CAFE for light trucks for model year 1997 is 22.2 mpg. Under the Unreformed CAFE requirements, manufacturers will have to meet the following new standards for 2008, 2009 and 2010 as follows:

Model Year 2008: 22.5 mpg
Model Year 2009: 23.1 mpg
Model Year 2010: 23.5 mpg

Under the new Reformed CAFE requirements, fuel economy standards are restructured so that they are based on a measure of vehicle size called "footprint" which is the product of multiplying a vehicle's wheelbase by its track width. A target level of fuel economy is established for each increment in footprint. Smaller footprint light trucks have higher targets and larger ones, lower targets. A particular manufacturer's compliance obligation for a model year will be calculated as the harmonic average of the fuel economy targets for all of the manufacturer's vehicles, weighted by the distribution of that manufacturer's production volumes among the footprint increments. Thus, each manufacturer will be required to comply with a single overall average fuel economy level for each model year of production.

NHTSA says that the Reformed CAFE standard established for MY 2011 is set at a level that maximizes net benefits, which includes the increase in light truck prices due to technology improvements, the decrease in fuel consumption, and a number of other factors viewed from a societal perspective. NHTSA also says that all of these standards have been set at the maximum feasible level, while accounting for technological feasibility, economic practicability and other relevant factors.

Since a manufacturer's compliance obligation for a model year under Reformed CAFE depends in part on its actual production in that model year, its obligation cannot be calculated with absolute precision until the final production figures for that model year become known. Manufacturers are thus required to forecast and calculate their CAFÉ obligation in advance of a particular model year, based on their product plans for the year. Prior to and during the model year, the manufacturer must track all of the key variables in the formula used for calculating its obligation (e.g., distribution of production and the fuel economy of each of its models).

USA Department Of Transportation Secretary Mineta said that, "These new standards represent the most ambitious fuel economy goals for light trucks ever developed in the program's twenty-seven year history, and more importantly", he said, "they close loopholes that have long plagued the current system".