Trump administration freezes fuel efficiency penalties

WASHINGTON (Reuters) – The Trump administration said on Friday that it issued final rules to suspend a 2016 Obama management regulation that more than doubled penalties for automakers who did not meet fuel efficiency requirements.

Congress in 2015 ordered federal agencies to adjust civil penalties for inability to meet the company's average fuel economy requirement to anticipate inflation.

In response, the National Highway Traffic Safety Administration (NHTSA) issued rules to increase fines to $ 14 from $ 5.50 for every 0.1 mile per gallon of fuel that new cars and trucks consume beyond the required standards.

Car manufacturers protested on the hike, saying that it could increase industry compliance costs by $ 1 billion a year.

Following the filing of a group of states and environmental groups, the Trump administration began the process of formally rejecting the Obama Regulations in the 2018.

In a statement late on Friday, NHTSA said it was likely to follow Congress's intention to ensure that the sentence was set at the level required by law.

It is expected that this final rule will reduce the future burden on industry and consumers by up to $ 1 billion a year, it adds. Alliance of Automobile Manufacturers, a trading 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, says NHTSA's "own model clearly demonstrates the significant financial damage that such a dramatic and unjustified increase in penalties will have on automakers, workers and ultimately consumers."

The former administration had "failed to take into account the significant financial damage that would occur," she added.

Car manufacturers claimed that the increase would increase costs dramatically, as they would also increase the value of fuel economy credits used to meet the requirements.

In September 2017, three environmental groups and some US states, including New York and California, sued NHTSA to put the Obama rules on hold.

Last year, the states said: "If the penalty is not high enough, automakers lack an important incentive to produce fuel-efficient cars."

Some automakers have historically paid fines instead of meeting fuel efficiency requirements – including some luxury car manufacturers such as Jaguar Land Rover, owned by Indias Tata Motors ( TAMO.NS ) and Daimler AG (). DAIGn.DE ).

In February, Fiat Chrysler told Reuters that it paid $ 77 million in US civil penalties in 2018 not to meet the 2016 model year fuel economy requirements.

Fiat Chrysler welcomed the decision.

It "allows us to continue our significant investment plans in both the US manufacturing footprint and new technology required to maintain our path for improved fuel efficiency," the car manufacturer said in a statement late Friday.

The move comes as NHTSA, and the Ministry of the Environment is working to complete a rewrite of the Obama administration's fuel efficiency requirements through 2026 in the coming months.

In August 2018, the administration proposed freezing fuel efficiency and stripping California rights to set their own vehicle emissions regulations.

The final regulation is facing a multi-year legal battle that can leave car manufacturers in limbo about future emissions and fuel efficiency requirements.

The Obama era rules required an average fuel width of 46.7 miles per gallon in 2026, compared to 37 mpg under the Trump administration's preferred option.

Last year, 17 major automakers pushed a "midway" compromise between the Obama era standards, requiring annual reductions of about 5% in emissions and Trump management proposals.

In April, Reuters reported that officials expect the final rule to include a slight increase in annual fuel efficiency requirements.