CAFE

Corporate Average Fuel Economy (CAFE) is the sales weighted average fuel economy, expressed in miles per gallon (mpg), of a manufacturer's fleet of passenger cars or light trucks with a gross vehicle weight rating (GVWR) of 8,500 lbs. or less, manufactured for sale in the United States, for any given model year. Fuel economy is defined as the average mileage traveled by an automobile per gallon of gasoline (or equivalent amount of other fuel) consumed as measured in accordance with the testing and evaluation protocol set forth by the Environmental Protection Agency (EPA).

The Secretary of Transportation has delegated authority to establish CAFE standards to the Administrator of the National Highway Traffic Safety Administration (NHTSA). NHTSA is responsible for establishing and amending the CAFE standards; promulgating regulations concerning CAFE procedures, definitions and reports; considering petitions for exemption from standards for low volume manufacturers and establishing unique standards for them; enforcing fuel economy standards and regulations; responding to petitions concerning domestic production by foreign manufacturers and all other aspects of CAFE, including the classification of vehicle lines as either cars or trucks; collecting, recording and cataloging Pre- and Mid-model year reports; adjudicating carry back credit plans; and providing program incentives such as credits for alternative fueled vehicle lines.

EPA is responsible for calculating the average fuel economy for each manufacturer. CAFE certification is done either one of two ways:

1) The manufacturer provides its own fuel economy test data,
2) the EPA will obtain a vehicle and test it in its Office of Transportation & Air Quality facility in Ann Arbor, MI.

EPA will do actual tests on typically about 30% of the existing vehicle lines, using the same laboratory test that they use to measure exhaust emissions. The entire certification test procedure, including the vehicle test preparation, the actual running of the test on the dynamometer, the recording of the data, etc.

Congress specified that CAFE standards must be set at the "maximum feasible level". Congress provided that the Department's determinations of maximum feasible level be made in consideration of four factors:

(1) Technological feasibility;
(2) Economic practicability;
(3) Effect of other standards on fuel economy; and
(4) Need of the nation to conserve energy

Manufacturers can earn CAFE "credits" to offset deficiencies in their CAFE performances. Specifically, when the average fuel economy of either the passenger car or light truck fleet for a particular model year exceeds the established standard, the manufacturer earns credits. The amount of credit a manufacturer earns is determined by multiplying the tenths of a mile per gallon that the manufacturer exceeded the CAFE standard in that model year by the amount of vehicles they manufactured in that model year. These credits can be applied to any three consecutive model years immediately prior to or subsequent to the model year in which the credits are earned. The credits earned and applied to the model years prior to the model year for which the credits are earned are termed "carry back" credits, while those applied to model years subsequent to the model year in which the credits are earned are known as "carry forward" credits. Failure to exercise carry forward credits within the three years immediately following the year in which they are earned will result in the forfeiture of those credits. Credits cannot be passed between manufacturers or between fleets, e.g., from domestic passenger cars to light trucks.

Authority to establish vehicle classifications for the purposes of calculating CAFE was delegated to NHTSA. Specifically, the definitions are as follows:

1. Passenger Car – any 4-wheel vehicle not designed for off-road use that is manufactured primarily for use in transporting 10 people or less.

2. Truck – A vehicle can be classified as a truck if it meets one of the following criteria:

• It is 4-wheel drive or it is rated at 6,000 pounds gross vehicle weight AND has at least four of the following characteristics:

1. Approach angle of not less than 28 degrees
2. Breakover angle of not less than 14 degrees
3. Departure angle of not less than 20 degrees
4. Running clearance of not less than 20 centimeters
5. Front and read axle clearances of not less than 18 centimeters each

• It can perform at least one of the following functions:

1. Transport more than 10 people;
2. Provide temporary living quarters;
3. Transport property in an open bed;
4. Permit greater cargo-carrying capacity than passenger-carrying volume;
5. Can be converted to an open bed vehicle by removal of rear seats to form a flat continuous floor with the use of simple tools.