NHTSA Intends to Drop Planned Hike in Gas-Guzzler Penalties

The National Highway Traffic Safety Administration proposes to cancel an Obama era ruling in 2016 that would have more than doubled the fines carmakers pay for failing to meet U.S. fuel economy rules.

In 2015 Congress ordered federal agencies to make inflation adjustments to their civil penalties, thereby ensuring that the fines will act as a deterrence to noncompliance.

Current penalties are $5.50 per 0.1 mpg shortfall, multiplied by the number of vehicles sold. The new fines would raise the fine to $14 per 0.1 mpg. Carmakers complained that the new fines would raise their annual cost of meeting corporate average fuel economy (CAFE) standards by $1 billion.

Under the Trump administration, NHTSA pushed back the new fee structure until the 2019 model year, which begins this September. Five states—California, Maryland, New York, Pennsylvania and Vermont—promptly sued the government for delaying the costlier fines. NHTSA now says it has tentatively concluded that imposing the fees would have a “negative economic impact.”

Opponents say failing to raise the penalty for noncompliance makes it cheaper for carmakers to pay fines rather than meet the CAFE regulation.