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Appeals court overturns Trump fuel economy penalty reduction

September 4, 2020
A U.S. court of appeals on Aug. 31 overturned a fuel economy regulatory rollback implemented under the Trump administration which sought to delay the more than doubling of penalties for automakers failing to meet the requirements.
The decision could increase automakers’ compliance costs substantially, the auto industry argued when the Obama administration adopted the hike in 2016. The industry at large has not met the country’s fuel efficiency requirements since 2015, despite more electric vehicles being offered.
In its 3-0 decision, the U.S. Court of Appeals for the Second Circuit said the National Highway Traffic Safety Administration’s rule in July 2019 that said the penalties no longer applied was far too delayed. It would have had to make that determination over their economic effects in January 2017 at the latest.
"We reject the NHTSA’s argument that, at the time it issued the 2019 Final Rule, it was permitted to reverse the penalty increase on the grounds that the increase would create a ‘negative economic impact,’ " Circuit Judge William Nardini wrote. "... We need not reach the merits of the NHTSA’s conclusions regarding negative economic impact because it was not authorized to undertake this reconsideration at the time it did so."
The NHTSA declined to comment.   
The Alliance for Automotive Innovation, a trade association for the automotive industry in Washington, D.C., did not immediately have comment.
As a part of wide-ranging reforms to civil penalties ordered in 2015 by Congress, the NHTSA issued rules to raise fines to $14 from $5.50 for every 0.1 mpg of fuel more that new vehicles use over the standards.
A group of states that did not include Michigan and two environmental groups challenged the Trump administration’s decision to ignore the increase. They noted that the penalties had increased once in more than 40 years — to $5.50 from $5 in 1997 — and that inflation had reduced their impact.
When automakers do not meet the standards, they can purchase credits from their competitors or pay the fines that have cost companies in the tens of millions of dollars.
Detroit manufacturers lagged behind foreign-owned competition in meeting the fuel economy standards. General Motors, Ford and Fiat Chrysler Automobiles ranked 12th, 13th and 14th, respectively, among the 14 manufacturers measured, according to data from the Environmental Protection Agency.
In a separate case, a group of 23 states sued the administration over its March decision to roll back annual increases in vehicle efficiency from 5% through 2026 to just 1.5%.