Regulations

A U.S. court blocks government order to delay implementation of hike in fuel efficiency fines

A U.S. federal court has blocked an attempt to delay a rule that would raise penalties for automakers failing to meet U.S. federal fuel efficiency standards.

The Second U.S. Circuit Court of Appeals issued an order vacating the July 2017 decision of the National Highway Traffic Safety Administration (NHTSA) to suspend a 2016 Obama administration regulation.

New York, California and three other U.S. states in September had sued the federal government in the Second U.S. Circuit Court of Appeals for delaying the rollout of the higher penalties. Schneiderman and four other state attorneys general were joined in the case by the Sierra Club, the Natural Resources Defense Council and the Center for Biological Diversity.

NHTSA said previously the increases would potentially result in an additional USD 30 million in annual civil penalties. Automakers say the increases would dramatically raise costs since they would also boost the value of fuel economy credits used to meet requirements.

U.S. Congress enacted the standards known as Corporate Average Fuel Economy (CAFE) in 1975 to increase fuel efficiency in U.S. vehicles. The U.S. Environmental Protection Agency (EPA) followed up later with another rule, this time targeted at greenhouse gases (GHG).

The fee amount has only increased once since the original CAFE standards were passed in the 1970s, from USD 50 to USD 55.

The U.S. Congress ordered federal agencies in 2015 to adjust civil penalties to account for inflation, leading to the newest proposed penalty of USD 140 per shorted miles per gallon (mpg). In response, the National Highway Traffic Safety Administration (NHTSA) proposed raising the fine for every gallon of fuel that new cars and trucks consume in excess of the CAFE standards, but delayed the effective date to September 2018.

Last month, NHTSA announced proposing to cancel the planned Obama administration hike in penalties for automakers whose vehicles fail to meet the minimum fuel-economy standards.

NHTSA said last July that many automakers were falling behind current fuel standards and face “the possibility of paying larger CAFE penalties over the next several years.”

“The fuel efficiency standards penalty rule is a common-sense measure that would protect consumers’ pocketbooks while reducing the carbon emissions that harm our health and drive climate change,” said New York Attorney General Eric Schneiderman. “Today’s court order is a big win for New Yorkers’ and all Americans’ health and environment.”

Schneiderman’s office lauded the most recent iteration of the rules as saving “approximately 1.8 billion metric tons of carbon dioxide emissions over the lifetimes of the vehicles sold.”

“Once again, the Trump administration has failed in court. Neither the American people nor the judicial system will allow Donald Trump and his administration to haphazardly weaken the civil penalties for companies violating the life-saving clean air standards just to help the auto industry pad its pockets,” Sierra Club senior attorney Alejandra Nunez said in a statement Monday.

“These updated fines must remain in place to ensure that automakers do not cheat the system,” she added.

U.S. Circuit Judges Ralph Winter, Rosemary Pooler and Barrington Parker concurred in Monday’s brief order. An opinion is expected to follow.

A federal court ruled today that the Department of Transportation must implement a new, inflation-adjusted fine for failure to comply with federal fuel efficiency standards.

This ruling confirms that automakers will have to pay the full, updated fine for failing to meet efficiency standards. The Department of Transportation’s attempted rule would have let them pay less than 40% of the legally required 􀂡ne.

The penalty for automakers not meeting efficiency standards was originally set in the 1970s, at USD5 per tenth of a mile per gallon. It was updated in 1997, but only slightly, increasing the penalty to USD 5.50. In 2016, the NHTSA finally recommended that the fine be updated to a reasonable level based on inflation calculations, up to USD14. However, that adjustment was blocked last summer, which led to this lawsuit being led by the NRDC, Center for Biological Diversity and Sierra Club.

According to the NRDC, full implementation of the 2012-2025 fuel efficiency standards would avoid production of 570 million tons of CO2, the equivalent of taking 85 million cars off the roads or closing 140 coal-fired power plants. Reducing the fine to less than half of the legally required level would have given automakers a cheap way to skip out on compliance with the law, and would have jeopardized these emissions reductions.

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