Reports have revealed today that the US National Highway Traffic Safety Administration, NHTSA ruled that heightened fines on automakers that fail to meet Corporate Average Fuel Economy requirements in 2019 and later vehicles would be reinstated.
The rule represents a major setback for high-polluting automakers and the lobbying group that promotes them, as well as a victory for electric vehicle manufacturers.
The decision comes after years of debate over a policy enacted by President Obama in 2016 that would apply to vehicles manufactured in 2019 and later model years.
In response to a 2015 regulation aimed at bringing existing government sanctions up to date, the policy increased the fines for failing to meet average fuel economy standards from $5.50 to $14 per.1 mpg per car.
This is the first large rise in the penalty since the 1975 implementation of CAFE guidelines (the penalty was originally $5, then $5.50 in 1997).
Automakers who keep inside the limitations earn credits, which they can sell to other automakers who would otherwise face penalties. The Department of Transportation’s CAFE dashboard shows that FCA missed the 40.9 mile-per-gallon benchmark by over 11 mpg in 2020.
The Alliance of Automobile Manufacturers and the Association of Global Manufacturers, car industry advocacy groups that represent practically all automakers except EV startups, contested the 2016 legislation. The two organizations have subsequently united to become the Alliance for Automotive Innovation, however, they continue to oppose innovation.
The NHTSA predicts that fines will likely exceed $100 million in at least one of the affected years, with a total increase of over $178.5 million in fines for the model year 2019.
The rule withstood multiple challenges over the next few years, including attempts to put it on hold indefinitely. Despite having been in existence for three model years (’19-’21), the policy was eventually pulled back on January 14, 2021, in the final days of Donald Trump’s presidency after losing his second election, in an interim decision given without time for public debate.
President Biden’s executive order on January 20th to re-evaluate federal agency activities from the preceding four years, which did not adequately account for the environment, rapidly overturned that interim judgment. The Natural Resources Defense Council, the Sierra Club, many other environmental groups, attorneys general from 16 states, and Tesla all filed official challenges.
While the Alliance for Automotive Innovation and the National Automobile Dealers Association backed the interim judgment, Tesla advocated for the removal of the polluters’ last-minute reprieve.
These suggestions, as well as public comments received over the course of a month, were considered in the NHTSA’s final regulation. They criticize the previous administration’s arbitrary and capricious rule-making as well as the automakers’ legal reasoning in their final argument.
They point out the obvious attempt to postpone compliance, then say that it’s unfair to ask them to follow standards for which they themselves imposed delays.
Automobile manufacturers protested that implementing these fines retroactively would be unfair; however, the NHTSA points out that the penalties were enacted in 2016 for the 2019 model year when they were still prospective, not retroactive.
NHTSA also reminds out that automakers who planned for Model Years 2019 through 2021 on the assumption that penalties would not rise did so at their own risk and in defiance of court rulings upholding the rule.