Court Blocks Trump Administration Order to Delay Increase of Fuel Mileage Penalties

author: Jacky Ho   

WASHINGTON — A federal court in New York on Monday blocked the Trump administration's decision to delay a rule that would raise penalties for automakers who do not meet federal fuel efficiency requirements, Reuters has reported.

In an effort to roll back Obama era U.S. fuel economy requirements, the Trump administration sought to delay raising the penalties levied upon automakers whose vehicles do not meet fuel economy standards.

A three-judge panel of the United States Court of Appeals for the 2nd Circuit vacated the decision announced by the Department of Transportation last July, to postpone increases in the penalties that automakers are required to pay if they don't meet efficiency standards under the Corporate Average Fuel Economy (CAFE) regulations.

The regulation, set to take effect in September, would more than double penalties. Automakers protested the hike, saying it could increase industry compliance costs by $1 billion annually.

Corporate Average Fuel Economy rules were first put into place after the OPEC oil crisis in the 1970s. During the Obama administration, the CAFE rules were toughened in the wake of the 2008-2009 financial crisis and the bankruptcies of U.S car companies. The new standards called for an increased reliance on electric vehicles.

Congress ordered federal agencies in 2015 to adjust civil penalties to account for inflation. In response, NHTSA proposed raising fines for every gallon of fuel that new cars and trucks consume in excess of required standards under the Corporate Average Fuel Economy (CAFE) program, but delayed the effective date to September 2018.

NHTSA said in a statement on Monday it "is aware of the order issued today by the Second Circuit and will review the Court's opinion once it is available."

Last month, NHTSA said it was proposing to cancel the planned Obama administration hike in penalties for automakers whose vehicles fail to meet minimum fuel-economy standards - a move that could affect Monday's court decision.

Vera Pardee, senior counsel at the Center for Biological Diversity, one of the groups that sued, said the decision means "NHTSA must justify decreasing it – despite the Inflation Adjustment Act's clear command to prevent inflation-caused erosion of enforcement."

New York and California are among the states that had sued the federal government in the 2nd U.S. Circuit Court of Appeals for delaying the rollout of the higher penalties, as did several environmental groups.

NHTSA said previously the increases would potentially result in an additional $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.

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."

While the Trump administration looks to rollback U.S. fuel economy standards, other countries are moving away from internal combustion engines towards electric vehicles.

Several countries, including China, said they would ban the sale of gasoline vehicles altogether within decades. Many analysts believe that rolling back fuel standards could jeopardize the near term future for electric vehicles.

Jacky Ho