Congress Enacts Legislation to Incentivize Natural Gas Vehicles

On December 19, President Obama signed into law the National Defense Authorization Act (NDAA), which includes significant non-defense provisions, including one that reforms the process by which the National Highway Safety Traffic Administration (NHTSA) awards Corporate Average Fuel Economy (CAFE) credits for natural gas vehicles.  The language included in the defense bill largely mirrors, although it is not identical to, S. 2065, bi-partisan legislation introduced by Senators Jim Inhofe (R-OK) and Carl Levin (D-MI) who, respectively, represent natural gas producing and auto manufacturing states. 

Under the new law, auto makers will have an additional compliance tool to meet CAFE targets based upon incentives provided for in the sale of natural gas vehicles (NGVs).  When the Obama administration promulgated regulations in 2012 for fuel efficiency and greenhouse gas emissions for light-duty vehicles, it awarded strong greenhouse gas credits for NGVs, but CAFE credits were constrained statutorily.  The newly enacted provision eliminates the previous statutory cap on fuel economy credits for dual-fuel NGVs and lowers the minimum driving range requirement for dual-fuel NGVs from 200 to 150 miles, thus providing automakers an additional incentive for the production of light-duty NGVs.



DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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