When cars don’t meet minimum standards for fuel economy, the manufacturers pay fines to the federal government – sometimes millions of dollars a year.
The amount they pay has become a hot topic in Washington, and the focus of the latest fight between California officials and President Donald Trump’s administration over automobiles and how quickly they consume fuel.
California sued the federal government Monday over the Trump administration’s decision to postpone indefinitely a decision by former President Barack Obama to dramatically increase the penalties for violating federal fuel economy standards.
“More fuel-efficient cars on our roads mean cleaner air, better overall health for our children and savings at the pumps for consumers,” Attorney General Xavier Becerra said in a prepared statement.
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California was joined in filing the lawsuit by New York, Vermont, Maryland and Pennsylvania. Three environmental groups filed a similar lawsuit last week – the Natural Resources Defense Council, Sierra Club and Center for Biological Diversity.
Automakers’ fuel mileage is judged on a corporate “fleetwide” basis that requires passenger vehicles to average around 36 mpg. For every car they make that doesn’t meet the standard, they currently pay $5.50 for every tenth of a mile per gallon of violation. The fines add up to an average of $20 million a year for the past five years, according to figures compiled by the National Highway Traffic Safety Administration, which runs the mileage program.
The rate hadn’t been adjusted for years. Just before leaving office, the Obama administration raised the fine to $14 for every tenth of a mile, to account for inflation, although it hadn’t taken effect yet.
In July, the Trump administration announced it was delaying the increase indefinitely to reconsider the “potential economic consequences.” With fuel economy standards increasing each year, automakers asked the government to take a fresh look at the fines, arguing that the increased penalties would cost them $1 billion a year. That’s ten times as much as the Obama administration had estimated.
Environmentalists said the higher fines are justified and necessary to keep the carmakers on track to improve mileage.
“You want to make sure the fine is more than the cost of updating the technology,” said Irene Gutierrez, an attorney with the Natural Resources Defense Council, one of the environmental groups suing the Trump administration.
California’s lawsuit is the state’s second challenge to the Trump administration over automobile regulations.
Shortly after taking office, the president announced he might roll back federal rules requiring significant decreases in greenhouse gas emissions. The rules, enacted by the Obama administration, would gradually reduce emissions by one third from current levels while hiking average fuel mileage to 50.8 miles per gallon on new cars by 2025.
The federal government normally controls fuel mileage standards. But California has some leverage because the 1970 Clean Air Act, recognizing the state’s historically severe smog problems, says California can set tougher pollution standards within its borders, if it gets a waiver from the EPA. Also, the act allows other states to adopt California’s rules as their own.
In defiance of the Trump administration, the California Air Resources Board voted in March to stick with the Obama-era rules for greenhouse gases. That’s put automakers in a bind: They want the rules relaxed but are nervous about the possibility of having to build cars to two sets of standards – one for California and the 12 states that have adopted California’s greenhouse gas rules, and one for the other states. That would be enormously expensive.