Court for second time strikes down Trump admin rollback of automaker penalties

A court has for the second time struck down a Trump administration attempt to limit the penalties faced by automakers who do not meet mileage standards.

A Monday ruling from the U.S. Court of Appeals for the 2nd Circuit found there is “no ambiguity in the statute” that requires agencies to periodically increase penalties in order to keep track with inflation. 

The decision throws out a 2019 rule from the National Highway Traffic Safety Administration (NHTSA) that sought to freeze penalties for automakers to levels not seen since the 1970s. 

The administration finalized the rule after the same court ruled it could not delay an increase in those penalties agreed to by Congress in 2015 under the Obama administration. 

“The statutory purpose of the Improvements Act is to adjust civil monetary penalties to keep pace with inflation,” the three-judge panel wrote in its decision, noting that inflation “can take the bite out of fines.”

Penalties for automakers are charged for every tenth of a mile per gallon automakers exceed fuel economy standards, a figure that can prove substantial when applied across a company’s entire fleet of vehicles.  

The Trump administration rule would have frozen the penalty to $5.50 for every tenth of a mile per gallon rather than $14, cutting by almost two-thirds the fine automakers would be expected to pay.

NHTSA said it would not comment on the lawsuit.

“Once again, the U.S. Court of Appeals for the Second Circuit has ruled that the Trump Administration cannot give away polluting passes to automakers who lag behind on meeting standards required by law,” the Sierra Club, which sued over the rule alongside other environmental groups and 13 states, wrote in a release.

“This is yet another reminder to Donald Trump’s NHTSA that the agency must comply with the law and set strong civil penalties that promote fuel economy and encourage automakers to meet the clean car standards.”

The Trump administration has since rolled back fuel economy standards entirely — another rule that has already generated a number of lawsuits.

In March the Trump administration finalized corporate average fuel economy standards requiring automakers to produce fleets averaging 40 miles per gallon by 2026, rather than nearly 55 miles per gallon by 2025 as required under the Obama administration.

California has since signed a deal with five major automakers to produce fleets that hew much closer to the Obama-era standards, undercutting the Trump administration rollbacks.