Trump Administration Set to Freeze Automaker Fuel Efficiency Penalties

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【Summary】In another push to fight vehicle emissions standards set in place by President Obama, the Trump Administration announced that it would be suspending regulations that would double the fines for automakers that fail to meet fuel efficiency requirements.

Original Vineeth Joel Patel    Jul 20, 2019 6:00 AM PT
Trump Administration Set to Freeze Automaker Fuel Efficiency Penalties

Overturning Obama-era vehicle emissions standards is something that President Donald Trump ran on and has been one of the Trump Administration's focal points since taking office. 

Last May, the Trump Administration, via the EPA, announced a rollback to vehicle efficiency standards that were introduced by the Obama Administration back in 2012. While that decision was met with some pushback, 17 states sued the Trump Administration over the decision, automakers are sure to like the administration's latest rollback of Obama-era regulations.

Penalties Returning To '97 Levels

According to Reuters, the Trump administration stated it was suspending regulations put in place by the Obama administration in 2016 that saw penalties for automakers that failed to meet fuel efficiency requirements double. With the administration's decision, fines for automakers would only be $5.50 for every 0.1 mpg of fuel new vehicles consume in excess of the mandatory standards. That fine originally matches a price set in 1997. Under President Obama, the NHTSA wrote a rule that required automakers to pay $14 for every 0.1 mpg above the standards.

At the time of President Obama's rule, automakers protested the fine. Some went so far as to claim that it would increase costs to meet compliance by $1 billion annually. The final rule was issued earlier this month and was praised by automakers. Gloria Bergquist, a spokeswoman for the Alliance of Automobile Manufacturers, which includes General Motors, Volkswagen, Toyota, Fiat Chrysler Automobiles, and a few more, praised the decision. According to Bergquist, the Obama administration "failed to take into account the significant economic harm that would result."

Easy Penalties For Automakers

Earlier this February, FCA told Reuters that it had paid $77 million in penalties in 2018 for failing to meet fuel economy requirements for vehicles from 2016. Obviously, FCA is happy about the Trump administration's rollback of the penalties, as it means the automaker can continue to sell vehicles that don't meet regulations, but won't have to pay such a high price for doing so anymore.

Automakers might be happy, but environmental groups sure aren't. They're currently urging the administration to retain the fines, fuel economy requirements, and emissions regulations. Their major issue with fines is that they've barely increased in 40 years. The last time the fines went up was back in 1997 when the fine went from a staggering $5 to $5.50.

This new rule will probably find its way into a court battle somewhere, as environmental groups are sure to put up a fight. Regardless of what happens in court, California will probably stick to the Obama administration's rule. And since some states follow California, it's likely that a handful of other states will follow suit.

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