In one of its many changes, the One Big Beautiful Bill Act, enacted on July 4, 2025, eliminated civil penalties for noncompliance with federal fuel economy standards. Specifically, Section 40006 of the Act amends the language of the Corporate Average Fuel Economy (CAFE) statute to reset the maximum civil penalty to $0.00. Although the statute and its implementing regulations otherwise remain in place, this amendment removes any civil penalties for producing passenger cars and light trucks that do not meet fuel economy requirements.
First established in 1975 in response to the gas crisis of the early 1970s, the CAFE statute empowers the Department of Transportation to set average fuel economy standards for vehicle fleets. Acting by delegation, the National Highway Traffic Safety Administration (NHTSA) has periodically promulgated rules that set CAFE standards for vehicle model years. Recent rulemakings have attracted considerable attention, including debates over whether standards may account for the production of electric vehicles, based on those vehicles’ petroleum-equivalent fuel economy values calculated by the Department of Energy.
NHTSA finalized its most recent standard-setting rulemaking in 2024, covering passenger cars and certain types of trucks and vans for upcoming model years. The standard set in that rulemaking culminated in requiring model year 2031 passenger cars to achieve an average fuel economy of about 50.4 miles per gallon.
I think there might be a silver lining to this. One of the reasons American cars have been getting bigger and bigger and bigger is that CAFE fuel economy standards are more generous for bigger cars - so instead of building more efficient engines, manufacturers built cars with bigger footprints.
In the long run, I’d certainly want internal combustion engines phased out. But in the short term, we might get actual small pickups again 😆
