The Trump administration on Sept. 28 released new Corporate Average Fuel Economy (CAFE) standards, easing the fuel economy requirements that were strengthened under President Biden. Transportation Secretary Sean Duffy stated that the rollback will increase American auto manufacturing, cut unnecessary regulations, and reduce car prices.

Proponents, including National Economic Council Director Kevin Hassett, further stated that implementing President Biden’s fuel economy targets would have increased electricity consumption in the United States. Critics, meanwhile, maintain the move will increase fuel costs in the long run, setting the United States back in the race to develop green technology, and significantly add to pollution.

These lower standards come at a time when Congress in July 2025 eliminated any civil penalties associated with the CAFE standards as part of the budget bill. The final rule for CAFE standards now lowers the fuel economy target for passenger vehicles and light trucks to a fleetwide average of 34.9 miles per gallon by model year 2031, and the administration estimates that it will reduce the average price of a new vehicle by $1,300. But environmental groups warn that this will add an extra 90 tons of soot particles and 4,870 additional tons per year of smog components, including nitrogen oxides.

The final rule arose from the rulemaking NHTSA began with its December 5, 2025, proposal. In February 2026, a coalition of 21 state attorneys general, four cities, and one county challenged the proposal as unlawful on several grounds, including alleged flaws in NHTSA’s analyses of vehicle affordability and sales, fleet turnover, fuel savings, and vehicle safety. Environmental groups, including the Sierra Club, separately argued that the proposal improperly covered 10 model years, although the law limits fuel-economy rulemakings to five model years at a time. These objections likely preview the arguments that will be raised in legal challenges to the final rule.

Overall, this rollback is less a one-off event than another sign that the federal government is stepping back from vehicle regulation. Between lower fuel economy targets, no penalties for missing them, and the EPA’s disavowal of its Clean Air Act Section 202(a) authority over vehicle greenhouse gases, the federal floor is now lower, unenforced, or gone altogether.

In practice, that means enforcement power will keep shifting to the states. Going forward, the real question is no longer what federal regulators will require, but whether state courts and state enforcers can step in and fill the gap they leave behind in environmental areas like emissions standards.

The NHTSA’s full regulatory analysis regarding the revised CAFE Standards can be found here.