New Jersey joins court fight over federal fuel economy standards

The new federal rule lowers the projected 2031 fleet average to 34.9 mpg, compared with 50.4 mpg under the previous standards.

New Jersey joined a multistate lawsuit Friday challenging the Trump administration’s rollback of vehicle fuel economy standards, arguing that weaker requirements would leave drivers paying more at the pump and increase pollution.

Attorney General Jennifer Davenport joined officials from 20 other states, the District of Columbia and five cities and two counties in asking the U.S. Court of Appeals for the First Circuit to review the National Highway Traffic Safety Administration’s new rule.

The challenge centers on whether federal regulators are meeting Congress’ requirement to set fuel economy standards at the highest level automakers can feasibly achieve. The lawsuit argues that the administration has understated potential improvements in vehicle efficiency and discounted the costs of increased fuel consumption and climate change.

The rule, published Sept. 30, revises requirements for new passenger cars and light trucks for model years 2022 through 2031. Federal transportation officials estimate it would produce a fleetwide average fuel economy of 34.9 miles per gallon by model year 2031.

When federal officials adopted the previous standards in 2024 under President Joe Biden, they projected a fleetwide average of about 50.4 miles per gallon by 2031. The new rule changes both the efficiency requirements and how regulators account for vehicles in the program.

Federal officials contend theat the changes would reduce vehicle prices and give automakers greater flexibility to produce cars consumers want. Transportation Secretary Sean Duffy said Monday that the change, promoted by the Trump administration as “Freedom means affordable cars,” will lower the average price of a new vehicle by about $1,300, savinf drivers about $138 billion over five years.

Davenport disputes the administration’s assessment of the savings. In announcing the lawsuit, she argued that the rollback would eliminate nearly $220 billion in fuel savings under previous standards.

“Every mile driven impacts our children’s future,” Davenport said in a statement. “When we set high fuel efficiency standards, we cut the carbon emissions that contribute to climate change while saving families money at the pump—proof that protecting the environment and consumers go hand in hand.”

The federal Corporate Average Fuel Economy program, commonly known as CAFE, regulates the average fuel efficiency of automakers’ vehicle fleets. The requirements apply to manufacturers, rather than individual drivers, and do not require motorists to replace vehicles they already own.

The program is intended to reduce the amount of fuel vehicles consume. It is separate from federal limits on vehicle emissions, although burning less gasoline also reduces carbon dioxide emissions.

Congress established the program through the Energy Policy and Conservation Act of 1975. The law directs regulators to set “maximum feasible” standards for fuel economy, taking into account technological feasibility, economic practicality, other vehicle standards and the need to conserve energy.

There is debate about how regulators account for electric vehicles when calculating what automakers can achieve.

Davenport argues that federal regulators improperly excluded millions of existing electric vehicles from the baseline fleet used to develop the standards. That approach distorts the assessment of how much manufacturers can improve fuel economy, she said.

Federal transportation officials defend the change as necessary to comply with statutory restrictions on considering alternative-fuel vehicles when setting standards. Duffy has characterized the previous requirements as a “backdoor electric vehicle mandate.”

Davenport is also challenging the administration’s analyses of vehicle affordability, sales, replacement of older vehicles, fuel savings and safety. She argues that regulators treated future climate damages from increased fuel use and greenhouse gas emissions as having no cost.

The rule will also end the CAFE credit trading program in 2028. The program allows manufacturers that exceed their fuel economy requirements to sell surplus compliance credits to other automakers that need them to meet their obligations.

Those sales provide revenue to manufacturers of highly efficient vehicles, including electric vehicles. Davenport argues that ending the program will harm electric vehicle businesses and the workers they employ.

Davenport also says the rule violates both the Energy Policy and Conservation Act and the Administrative Procedure Act, which governs federal agency rulemaking.