Trump administration freezes fuel efficiency penalties, fines to remain at decades-old level

The Trump administration said late last week it was suspending an Obama-era regulation that increased penalties for automakers failing to meet fuel efficiency requirements.

The National Highway Traffic Safety Administration (NHTSA) under Obama raised fines to $14 for every 0.1 mile per gallon consumed beyond the required standards for new cars and trucks, to take effect in the 2019 model year. This new ruling will freeze the penalty at the prior rate of $5.50 per 0.1 mile per gallon.

While $14 was a big jump from $5.50, that previous penalty dated back to 1997, and it was originally set at $5 back in the 1970s. So the $14 fine was a long-awaited adjustment to match inflation.

A federal court ruled last year that Trump’s Department of Transportation could not delay the new penalties, so the administration set about to undo the regulations, and that’s now been finalized.

The NHTSA said this new final rule would “significantly cut the future burden on industry and consumers by up to $1 billion a year,” according to Reuters. The Alliance of Automobile Manufacturers, an automaker trade group, praised the freeze of the fine.

The freeze got specific praise from Fiat Chrysler (FCA), which told Reuters the rule “enables us to continue our significant investment plans in both our U.S. manufacturing footprint and new technologies required to maintain our trajectory of improved fuel-efficiency.”

FCA paid $77 million in 2018 for failing to meet fuel economy requirements for its 2016 models — an EPA report earlier this year revealed FCA was the worst major automaker in both fuel economy and CO2 emissions output in 2017. The automaker is giving Tesla $2 billion to help it meet emission standards in Europe by pooling their fleets together.

This looks to be a prelude to the eventual unveiling of the Trump administration’s fuel economy rollback plan, which is expected to be finalized soon. Automakers are increasingly concerned about the “split market” the regulations could cause, and some states are expressing their intention to stick with the higher Obama-era fuel economy standards.

Last week, 24 governors signed a letter in favor of halting the rollback, and of California’s right to use the stricter standards. If all of those states are willing and able to follow the Obama-era standards, the market will almost truly be split.

Electrek’s Take

The fines will now remain at 1990s (and basically 1970s) standards, which is a joke and a shame. It’s clear why the automakers are happy, but it’s embarrassing and odious on their part. Again, they wish to hold back progress instead of embracing it — and it’s now become a case of “be careful what you wish for” when it comes to the greater fuel economy rollback plan.

This is just another sign the Trump administration will go ahead with that greater plan as expected, despite the pleas of state governments and now automakers alike.

The move to freeze the increased fines attracted lawsuits in the past, both from states like California and environmental groups. There’s no reason to think the same thing can’t happen this time around, though we’ll have to see what ultimately comes of it.