Trump wants to scrap Obama rule hiking penalties for violating car efficiency rules

The Trump administration is proposing to scrap an Obama administration rule that increased penalties for automakers who violate fuel efficiency standards by more than 150 percent.

The Department of Transportation’s National Highway Traffic Safety Administration (NHTSA) implemented the higher penalties under former President Obama in 2016, though they weren’t due to take effect until the 2019 model year.

The regulation was an attempt to implement a 2015 law mandating that federal agencies update their penalties to align with inflation, going back years.

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Now, NHTSA says the previous administration misinterpreted the 2015 law, and it doesn’t apply to fines under the Corporate Average Fuel Economy (CAFE) program.

“NHTSA’s previous Federal Register notices on its inflation adjustments under the 2015 Act did not consider whether the CAFE civil penalty rate fit the definition of a ‘civil monetary penalty’ subject to adjustment under the 2015 Act, instead proceeding — without analysis — as if the 2015 Act applied to the CAFE civil penalty rate,” the agency wrote in a Federal Register notice released Tuesday. “After taking the opportunity to fully analyze the issue, NHTSA tentatively concludes that the CAFE civil penalty rate is not covered by the 2015 Act.”

The decision comes days before the Trump administration is likely to take the first step toward potentially dialing back the efficiency rules.

The Environmental Protection Agency, which runs the program alongside NHTSA, is due soon to declare that the vehicle standards set for 2022 through 2025 are not achievable.

For years, NHTSA has fined automakers $5.50 for every tenth of a mile per gallon that each vehicle it sells exceeds federal standards.

The Obama administration’s rule would have increased the fine to $14.

In the document proposing the rollback, NHTSA made clear that the cost to automakers was a key factor in its decision.

It said the $14 fine “will lead to a negative economic impact” and “could potentially drastically increase manufacturers’ costs of compliance.”

The auto industry, represented by the Auto Alliance and Global Automakers, petitioned for a rollback of the rule, arguing that it would cost more than $1 billion to comply, costs that would be passed to consumers.

The Trump administration endorsed that $1 billion estimate in its Tuesday announcement.

NHTSA said it is leaving the door open to a new regulation to change penalties in compliance with the 2015 law, but it would limit any new fines to $10.