National Road Safety Administration ruled that increased fines for automakers that fail to meet company average fuel economy requirements on 2019 and later vehicles would be reinstated. The decision is a major success for the high-polluting automakers and the lobby group that backs them, and a win for electric vehicle makers.
The decision comes after years of fighting over a policy passed in 2016 under President Obama that would apply to 2019 and later model year cars. The policy increased fines for missing average fuel economy goals from $5.50 to $14 per 0.1 mpg per vehicle, in response to a 2015 law to catch up old government penalties up to the ‘inflation. This is the first significant increase in this penalty since the CAFE rules were first established in 1975 (the penalty was originally $5, then $5.50 since 1997).
Automakers who manage to stay within the limits earn credits that can be sold to other automakers that would otherwise be penalized. Compliance or lack of compliance by vehicle manufacturers can be found in DOT CAFE Dashboardwhere we can see that the FCA missed the 40.9 miles per gallon target by nearly 11 mpg in 2020 (CAFE mpg is not calculated the same way as normal mpg and is more generous, d ‘where the high numbers).
While automakers have long argued that meeting such lofty CAFE targets is technologically impossibledashboard says Tesla outmoded the same target of 40.9 mpg per 685 mpg. Surely other automakers with a century of experience can do better than 1/20th of Tesla’s efforts?
The 2016 policy was challenged by the Alliance of Automobile Manufacturers and the Association of Global Automakers, auto industry lobby groups representing virtually all automakers except electric vehicle startups. The groups have since merged into the Automotive Innovation Alliance – although both systematically to lobby against Iinnovation.
They estimated that the rule would cost the industry $1 billion a year – but it should be noted that they are known to lie and that pollution from fossil fuels cost in usa $650 billion annually according to the IMF, slightly more than their $1 billion figure. NHTSA estimates that these fines “will likely exceed $100 million in at least one of the affected years,” and it estimates an increase of about $178.5 million in fines for the 2019 model year alone.
Over the next few years, the rule withstood several challenges, including attempts to suspend it indefinitely. Although already in effect for three model years (’19-’21), the policy was ultimately overturned in an interim decision issued without opportunity for public comment on January 14, 2021, at the end of the occupation of the White House by Donald Trump. after losing his second election.
That interim decision was then quickly challenged following President Biden’s Jan. 20 executive order to reassess the actions of federal agencies over the previous four years, which failed to properly consider the environment. It has also been formally challenged by the Natural Resources Defense Council, the Sierra Club, several other environmental groups, 16 state attorneys general and Tesla.
While the Automotive Innovation Alliance and the National Auto Dealers Association supported the interim ruling, Tesla suggested an immediate withdrawal of this last-minute indulgence for polluters.
NHTSA’s final rule took into account those comments, as well as public comment solicited over the course of a month. In their final reasoning, they take to task the arbitrary and capricious regulation of the previous administration and the legal reasoning of the automakers. They point to the blatant attempt to delay compliance and then argue that it is “unfair” to expect them to comply with rules for which they themselves have forced compliance delays.
Automakers have complained that applying the penalties retroactively would be unfair — but NHTSA notes that the penalties were introduced in 2016 for the 2019 model year, when they were still prospective and not retroactive. The NHTSA also points out that “automakers who made their plans for model years 2019 through 2021 believing penalties would not increase did so at their peril” and in defiance of court rulings upholding the rule. .
This risk seems to have gone awry for automakers, as they will soon be writing big checks for non-compliance. The final rule takes effect 60 days after it is published in the Federal Register, and automakers that have not properly planned to increase their efficiency and integrate more electric vehicles into their fleet will continue to pay these penalties for years to come – much of which is likely to end up in the pockets of their EV competitors via credit trading.
FTC: We use revenue-generating automatic affiliate links. Continued.
Subscribe to Electrek on YouTube for exclusive videos and subscribe to podcast.