Automakers Catch a Break on Fuel Economy Rules

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The National Highway Transportation Safety Administration (NHTSA) today announced that it is postponing a sharp increase in penalties for automakers found to be in noncompliance with federal corporate average fuel-economy (CAFE) standards. The proposed penalty, which was originally set to be applied to model year 2015 vehicles, has now been postponed and will not take effect until model year 2019.

This is a big deal for carmakers who would have seen penalties rise from $5.50 for each 0.1 mpg the manufacturer’s fleet fell short of the CAFE standard multiplied by the number of vehicles sold in a given year to a new penalty of $14 per 0.1 mpg that the fleet rating fell short.

The Alliance of Automobile Manufacturers had complained bitterly in July about the penalty increase, calling it a “draconian” rule that would have made it harder to reach an agreed fleet rating of 54.5 mpg by 2025. Automakers agreed to the high standard in 2012.

The proposed penalty increase would have applied to vehicles already for sale, including those for which CAFE standards had not yet been determined. The NHTSA agreed to postpone the change because carmakers have already finished their compliance plans for the 2018 model year and enforcing a higher penalty would do nothing to improve fuel-economy.

In a separate ruling, the NHTSA agreed to the carmakers’ request for a formal rule-making process that would eliminate the discrepancies between greenhouse-gas emissions standards enforced by the Environmental Protection Agency and the fuel-economy standard enforced by the NHTSA.