Trump administration freezing fuel efficiency penalties

Business News July 13, 2019 / 2:02 PM / Updated an hour ago Trump administration freezing fuel efficiency penalties David Shepardson 5 Min Read WASHINGTON (Reuters) - The Trump administration said late on Friday it was issuing final rules to suspend a 2016 Obama administration regulation that more than doubled penalties for automakers failing to meet fuel efficiency requirements. FILE PHOTO: Traffic is pictured at twilight along 42nd St. in the Manhattan borough of New York, U.S., March 27, 2019. REUTERS/Carlo Allegri

WASHINGTON (Reuters) – The Trump administration said late on Friday it was issuing final rules to suspend a 2016 Obama administration regulation that more than doubled penalties for automakers failing to meet fuel efficiency requirements.

Congress in 2015 ordered federal agencies to adjust a wide range of civil penalties to account for inflation and, in response, the National Highway Traffic Safety Administration (NHTSA) under President Barack Obama issued rules to eventually raise fines to $14 from $5.50 for every 0.1 mile per gallon of fuel that new cars and trucks consume in excess of the required standards.

Automakers protested the hike, saying it could increase industry compliance costs by $1 billion annually.

After a group of states and environmental groups filed suit, the Trump administration began the process of formally undoing the Obama regulation and first proposed the freeze in 2018.

In a statement late on Friday, NHTSA said it was faithfully following the intent of Congress to ensure the penalty rate was set at the level required by statute.

It expected this final rule to significantly cut the future burden on industry and consumers by up to $1 billion a year, it added.

The Alliance of Automobile Manufacturers, a trade group representing General Motors Co (GM.N), Volkswagen AG (VOWG_p.DE), Toyota Motor Corp (7203.T), Fiat Chrysler Automobiles NV (FCHA.MI) and others, had said it could increase industry compliance costs by $1 billion annually.

Late on Friday, Gloria Bergquist, a spokeswoman for the group, praised the decision, saying NHTSA’s “own model clearly shows the significant economic harm that such a dramatic and unjustified increase in penalties would have on auto manufacturers, workers, and ultimately consumers.”

The prior administration had “failed to take into account the significant economic harm that would result,” she added.

Automakers argued the increases would dramatically raise costs, since they would also boost the value of fuel economy credits that are used to meet requirements.

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