On December 5, 2025, the National Highway Traffic Safety Administration (NHTSA) published a proposed rule to weaken its Corporate Average Fuel Economy (CAFE) Standards for Model Years 2022 to 2031 Passenger Cars and Light Trucks, referred to as the ​​Safer Affordable Fuel-Efficient Vehicles Rule III or SAFE Rule III. The proposed rule would rescind the existing CAFE standards for light-duty vehicles set in 2024, and replace them with significantly weaker fuel economy requirements.

This week the Sabin Center partnered with Climate Mayors, C40 Cities, and ICLEI-USA to file comments urging NHTSA not to move ahead with the proposed rule. As we explain, weaker CAFE standards have significant implications for cities, resulting in increased greenhouse gas emissions and local air pollution. Our comments also address NHTSA’s failure to account for current levels of EV and PHEV production in its proposal, the ways in which the new rule undermines local investments in EV infrastructure, and how robust CAFE standards fill a regulatory gap in cities.

NHTSA’s own Preliminary Regulatory Impact Analysis (PRIA) acknowledges that allowing new vehicles to consume more fuel per mile driven will increase carbon dioxide emissions and other tailpipe pollution over the lifetime of the national vehicle fleet, but it fails to meaningfully evaluate or weigh the consequences of those increases. The increase in emissions resulting from weakened CAFE standards will have especially severe consequences in cities, where vehicle density, congestion, and population exposure are highest. Many urban areas continue to register unhealthy concentrations of ground-level ozone and PM2.5 that exceed National Ambient Air Quality Standards, and these pollutants are linked to increased asthma attacks, cardiovascular disease, and premature mortality in exposed populations. The proposed SAFE Rule III fails to adequately consider those consequences, and would instead exacerbate health disparities in vulnerable communities, increase fuel costs for city residents, and interfere with local governments’ ability to achieve their climate and clean air commitments.

The proposed SAFE Rule III’s analysis of economics of fuel efficiency is predicated on a new interpretation of NHTSA’s statutory authority that breaks a decade of precedent. The agency’s statutory authority prevents it from considering electric vehicles when setting the standard for how much fuel economy manufacturers were technically capable of achieving. In the past, NHTSA followed that instruction when it set standards, but when conducting its broader analysis of trends in the market and assessing the economics of fuel efficiency, the agency also acknowledged the various electrification efforts being done in states and the impacts of those efforts on manufacturers’ bottom lines. In 2025, NHTSA decided that it would not consider electric vehicles for any purposes at all, reflecting a narrow reading of the law that artificially inflates the costs of achieving higher average fuel economy across whole fleets of vehicles. 

For cities, CAFE standards that appropriately consider the viability and growing role of EVs and PHEVs are critical. Federal regulation supports local strategies to electrify vehicle fleets, expand transit, and build out vehicle charging networks. Many cities have themselves invested in electric vehicle charging infrastructure, as well as enacted policies that incentivize private property owners to do so. In 2024, nearly 350 mayors worked with Climate Mayors to commit to electrifying at least 50 percent of their municipal fleets by 2030. While local efforts to support a shift to EVs may appear distinct from federal policy, their success is incumbent upon NHTSA acknowledging the importance of standards that reflect EVs’ and PHEVs’ imputed fuel economy and regulating accordingly. Moreover, under the U.S. Energy Policy and Conservation Act, or EPCA, local governments are preempted from “adopt[ing] or enforce[ing] a law or regulation related to fuel economy standards or average fuel economy standards for automobiles” already regulated by a NHTSA CAFE standard. As a result, cities cannot directly regulate vehicle fuel economy, even though the use of vehicles – especially gasoline- and diesel-powered vehicles – impose enormous costs on them. Cities must therefore rely on NHTSA to set strong nationwide CAFE Standards that accurately account for the harms vehicles impose on cities across the U.S.

Our shared comments implore NHTSA to maintain the stronger 2024 CAFE standards, rather than adopt the weaker standards proposed in the SAFE Rule III. Without robust federal regulation, cities are left without the vital support they need to protect their residents. Local governments are forced to pay the price for the climate and pollution impacts of the nation’s passenger cars and light trucks, just as they are investing heavily in EVs and charging infrastructure. These significant investments rely on robust CAFE standards that appropriately account for imputed EV and PHEV fuel economy. Maintaining strong CAFE standards is essential to ensuring that federal policy aligns with, rather than undermines, the climate, air quality, and transportation investments being made by cities across the country.