The new emission limits apply to new passenger cars, light trucks and large pickups and vans, and set increasingly stringent fleet-wide emission limits covering carbon dioxide and other pollutants for Model Years 2027-2032. EPA is relying on performance-based standards that do not require automakers to adopt specific technologies, and instead allow for a mix of technologies to meet the limits.

The US Environmental Protection Agency (EPA) finalized new motor vehicle emissions standards on March 20, 2024, adopting the most stringent federal regulations for carbon dioxide, hydrocarbon, nitrogen oxide and particulate matter emissions from vehicles to date.¹ The standards require that vehicle manufacturers achieve progressively lower emissions for new vehicles in model years 2027 through 2032, extending EPA's 2021 rule that set emissions standards for model years 2023 through 2026. The standards apply to all new light-duty and medium-duty vehicles, which includes passenger vehicles, light trucks and large pickups and vans.

The final rule ("Multi Pollutant Emissions Standards for Model Years 2027 and Later Light-Duty and Medium-Duty Vehicles") largely adopts EPA's proposed rule for carbon dioxide emissions from vehicles published on May 5, 2023, but eases requirements in earlier model years in response to public comments. 2032 standards remain near the same level as originally proposed. The standards require an industry-wide average target for light-duty vehicles of 85 grams of carbon dioxide per mile in model year 2032, a nearly 50% reduction from the 2026 standard. Medium-duty vehicles must achieve a final standard of 274 grams of carbon dioxide per mile by 2032, a 44% reduction from the 2026 standard.

For non-greenhouse gas ("GHG") pollutant emissions, the standards require an industry-wide average target for light-duty vehicles of 15 milligrams of non-methane organic gases and nitrogen oxides per mile by 2032, and 0.5 milligrams of particulate matter per mile, by 2032. Medium-duty vehicles must achieve a final standard of 75 micrograms of non-methane organic gases and nitrogen oxides per mile by 2032.

EPA regulates motor vehicle emissions through performance-based standards that impose fleet-wide average emissions limits—individual vehicles with higher emissions are allowable if the fleet average achieves EPA's emissions targets. The standards do not require the adoption of specific technologies. Automakers may decide which technologies to achieve the standards, such as advanced gasoline engines and transmissions, improvements to tailpipe controls, and electrification. Nonetheless, EPA projects that the influence of these standards, in conjunction with other market developments like incentives available under the Inflation Reduction Act, will result in plug-in electric vehicles accounting for 68% of new light-duty vehicles by model year 2032.

The final rule will take effect 60 days after publication in the Federal Register. However, the latest standards will likely spark legal challenges. The American Petroleum Institute and American Fuel & Petrochemical Manufacturers indicated that their "organizations are certainly prepared to challenge it in court."² Consolidated cases brought by a number of states challenging the 2023 standards remain pending in the US Court of Appeals for the District of Columbia Circuit.³

Furthermore, the interplay between the EPA's latest standards and California's standards remains uncertain. California is attempting to implement state level requirements phasing out all sales of new gas-powered cars in the state by 2035. California is also attempting to require that 35% of all new passenger vehicles sold in the state be zero emission by 2026, 51% by 2028 and 68% by 2030. While all US states must comply with federal standards, California has historically been granted a waiver that allows it to set its own, more stringent standards.⁴ Historically, other states have adopted California's stricter standards, including Colorado, Connecticut, Delaware, Maine, Maryland, Massachusetts, New Jersey, New Mexico, New York, Nevada, Oregon, Pennsylvania, Rhode Island, Virginia, Vermont and Washington. Because these states represent a substantial proportion of the total US auto market, auto manufacturers have similarly tended to follow California's standards, rather than bifurcating their fleets to separately comply with federal and California standards. However, EPA is currently reviewing public comments it received regarding its recent request for comments on granting California a waiver for its most recent proposed standards.

1 Final Rule: Multi-Pollutant Emissions Standards for Model Years 2027 and Later Light-Duty and Medium-Duty Vehicles, ENV'T PROT. AGENCY (Mar. 20, 2024).
2 API & AFPM: EPA Vehicle Regulation Will Eliminate Most New Gas Cars in Less Than a Decade, AMERICAN PETROLEUM INST. (Mar. 20, 2024).
3 State of Texas v. EPA, No. 22-01031 (D.C. Cir. Feb. 28, 2022).
4 42 U.S.C. § 7543(b).