Court Blocks Delay in Hiking Gas Guzzler Fines

A U.S. federal appeals court has overruled the Trump administration’s effort to delay a sharp increase in the fines carmakers pay for failing to meet U.S. fuel economy targets.

The decision resolves a lawsuit filed last September by five states (California, Maryland, New York, Pennsylvania and Vermont). They claimed that the tougher fines are necessary to encourage compliance with corporate average fuel economy targets.

For 40 years, carmakers have faced fines equal to $5.50 for each 0.1 mile per gallon of CAFE shortfall, multiplied by their annual unit sales for a given model year. Such penalties have totaled some $890 million.

In 2015 Congress directed all federal agencies to adjust their civil penalties for inflation. Calculations by the National Highway Traffic Safety Administration resulted in a mid-2016 decision to more than double fines for noncompliance to $14 per 0.1 mpg gap, effective retroactively to the 2015 model year.

The Alliance of Automobile Manufacturers trade group condemned the increase as “draconian.” Last year NHTSA under the Trump administration agreed. The agency delayed the new fee structure until at least the 2019 model year, arguing that higher fines would have a “negative economic impact.”