The federal Motor Vehicle Fuel Consumption Standards Act (the Act) recently came into force. Although the Act was originally passed in 1982, it was not brought into force earlier owing to a voluntary commitment by automobile manufacturers to produce vehicles that meet U.S. tailpipe emissions standards. The Act provides a framework for the federal government to regulate fuel consumption for certain vehicle classes. The government plans to set regulatory fuel consumption standards for light-duty road vehicles beginning in 2010, the year of expiry of the government’s current Memorandum of Understanding with the Canadian automotive industry regarding the reduction of greenhouse gas (GHG) emissions from automobiles. The Act establishes fines for vehicle makers or importers whose “company average fuel consumption” (CAFC) levels (litres of fuel used per 100 km) are higher than the emissions standards set for a particular class of vehicles. Companies with CAFC levels lower than the prescribed standards for particular vehicle classes could earn credits, which they could use within three years to offset any penalties for exceeding the regulatory standards. For more information, please see