The CAFE law provides for special treatment of vehicle fuel economy calculations for dedicated alternative fuel vehicles and dual-fuel vehicles. The fuel economy of a dedicated alternative fuel vehicle is determined by dividing its fuel economy in equivalent miles per gallon of gasoline or diesel fuel by 0.15. Thus a 15 mpg dedicated alternative fuel vehicle would be rated as 100 mpg. For dual-fuel vehicles (vehicles that can use the alternative fuel and gasoline or diesel interchangeably), the rating is the average of the fuel economy on gasoline or diesel and the fuel economy on the alternative fuel vehicle divided by .15. For example, this calculation procedure turns a dual fuel vehicle that averages 25 mpg on gasoline or diesel with the above 100 mpg alternative fuel to attain the 40 mpg value for CAFE purposes. Several limitations are established for CAFE credits for dual fuel vehicles. For MYs 1993-2004, the maximum CAFE increase attributable to dual fueled vehicles in a manufacturer’s passenger car or light truck fleet is 1.2 mpg.

The Alternative Motor Fuels Act (AMFA) directed the Secretary of Transportation, in consultation with the EPA Administrator and the Secretary of Energy, to conduct a study and submit a report to Congress evaluating the success of the policy decision to offer CAFE credit calculation incentives for dual-fuel and gaseous dual-fuel vehicles. The report was transmitted to Congress in March 2002.

The statutory language also requires that the Department of Transportation either extend the incentive program for dual-fuel vehicles beyond MY 2004 for up to four more years with a maximum allowable increase in average fuel economy for a manufacturer of 0.9 miles per gallon; or issue a Federal Register notice that justifies termination of the incentive program. In March 2002, NHTSA issued an NPRM proposing to extend the availability of the CAFE credit incentive for dual-fueled vehicles for four years, through the end of the 2008 model year. A final rule will be issued in 2003.