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The U.S. Department of Energy (DOE) has reviewed the petroleum-equivalency factor (PEF) for electric vehicles (EVs) used by the Environmental Protection Agency (EPA) in calculating light-duty vehicle manufacturers' compliance with the Department of Transportation's (DOT) Corporate Average Fuel Economy (CAFE) standards. DOE has determined that revisions to the PEF are necessary. The interim final rule was published under RIN 1904-AF47.

Statement of Need:

In Iowa v. Wright, several states and the American Free Enterprise Chamber of Commerce (AmFree) petitioned the Eighth Circuit Court of Appeals to review the 2024 PEF Final Rule that revised DOE’s methodology to calculate the PEF used in determining the equivalent petroleum-based fuel economy values of EVs. On September 5, 2025, the Eighth Circuit issued a decision that vacated and remanded the 2024 PEF Final Rule to Doe for further consideration.

In addition, on January 20, 2025, the President issued Executive Order 14154, Unleashing American Energy (E.O. 14154). 90 FR 8353 (Jan. 29, 2025). E.O. 14154 stated the policy of the United States with regard to energy production and management. Among the stated elements of this policy, section 1(e) of E.O. 14154 cite the intent to eliminate the EV mandate and promote true consumer choice by removing regulatory barriers to motor vehicle access, ensuring a level regulatory playing field for consumer choice in vehicles, and eliminating unfair subsidies and other ill-conceived government-imposed market distortions that favor EVs over other technologies. 

In response to the Eighth Circuit Court of Appeals decision in Iowa v. Wright, and to implement E.O. 14154, the Department, among other actions, is first publishing a notice of technical amendment to remove the revisions adopted in the 2024 PEF Final Rule from 10 CFR part 474. In addition, DOE is proposing revisions to procedures for calculating a value for the petroleum-equivalent fuel economy of electric vehicles (EVs).

Summary of the Legal Basis:

Title III of the Energy Policy and Conservation Act, Pub. L. 94-163, (EPCA), amended the Motor Vehicle Information and Cost Savings Act (the Motor Vehicle Act) by mandating fuel economy standards for automobiles produced in, or imported into, the United States. This legislation, as amended, requires every manufacturer to meet applicable specified corporate average fuel economy standards for their fleets of light-duty vehicles under 8,500 pounds that the manufacturer manufactures in any model year. The Secretary of Transportation is responsible for prescribing the CAFE standards and enforcing the penalties for failure to meet these standards. 49 U.S.C. 32902. The Administrator of the EPA is responsible for calculating each manufacturer’s fleet CAFE value. 49 U.S.C. 32902 and 32904.

If an automobile manufacturer manufactures an EV, the Administrator of EPA shall include in the manufacturer’s calculation of average fuel economy the equivalent petroleum based fuel economy values determined by the Secretary of Energy for various classes of EVs. 49 U.S.C. 32904(a)(2). The petroleum-equivalency factor is used to convert the energy efficiency of EVs to an equivalent petroleum-based fuel economy and is measured in Watt hours per gallon of gasoline.

This rulemaking advances the objectives of E.O. 14154 by ensuring that the Department‘s regulations relating to the calculation of equivalent petroleum-based fuel economy do not create an unlevel playing field in favor of EVs while preserving consumer choice and minimizing regulatory burdens.

Alternatives:

DOE will issue a notice of proposed rulemaking (NOPR) considering revisions to the petroleum equivalency factor consistent with the Eighth Circuit Court of Appeals decision in Iowa v. Wright and the Administration’s policies. In determining how to revise the current PEF value, DOE may consider alternatives such as taking no further action.

Anticipated Costs and Benefits:

DOE anticipates that the total costs are zero or will reduce regulatory burden to society.

Risks:

N/A