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No New CAFE Ruling Until Obama Administration Takes Over

Approving the new, more demanding and far more controversial fuel efficiency requirements covering 2011-2015 model year vehicles has now officially been passed on to the incoming Obama administration. In a tersely worded one-paragraph statement issued today by the U.S. Department of Transportation (DOT), finalizing the new standards -- which the Bush administration originally promised would be done by the end of last year -- has now officially been added to the already daunting Obama agenda.

According to the DOT release: "The recent financial difficulties of the automobile industry will require the next administration to conduct a thorough review of matters affecting the industry, including how to effectively implement the Energy Independence and Security Act of 2007 (EISA). The National Highway Traffic Safety Administration (NHTSA) has done significant work that will position the next Transportation Secretary to finalize a rule before the April 1, 2009 deadline."

Under the EISA, Corporate Average Fuel Economy (CAFE) standards are slated to rise nearly 40 percent from their current levels, reaching a mandated fleet average of 35 mpg by 2020. However, automakers have been struggling with the specifics currently being proposed -- and of implementation costs that are expected to add $45-$50 billion to the industry's collective budget between now and then. The most contentious part of this new deal remains a requirement that fuel economy be increased on an annual basis, rather as being carried out as part of a model-cycle changeover as they do now. Continuing efforts by various individual states to mandate even more stringent emissions requirements also has added another level of complexity -- and potential cost -- to rebalancing the overall CAFE equation.

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