The Trump administration on Friday informed that it will formally scrap an Obama-era regulation, which imposed penalties on automakers who didn’t meet the fuel efficiency requirements. After Congress ordered federal agencies to adjust federal agencies to adjust existing penalties in 2015, the National Highway Traffic Safety Administration (NHTSA) issued rules that multiplied fines from $5.50 per 0.1 mile to $14 for the same distance.
The imposition of such fines casted problems for automakers who consumed more fuel than standards allow. As per the Obama-era policy, the fuel efficiency average of 46.7 miles per gallon by 2026 was the bare minimum for automakers, which the trump administration has revised to 37 gallons’ miles per gallon.
The move came after automakers demanded implementation, saying that Obama’s policy could raise compliance costs. The alliance of Auto mobile 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) including some others, put that cost at around $1billion annually. The process finally got formally underway after the Trump administration began to unravel the regulation in 2018.
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.”
However, despite the Trump administration’s announcement, the NHTSA in its statement said that it was following Congress’s initial intent that made sure that fuel standard was set at law-mandated levels.
Contrarily, New York and California have joined environmental groups in suing NHTSA for changing the Obama-era rules. They argue that automakers need motivation to make fuel-efficient vehicles.
Last year, the states said, “If the penalty is not sufficiently high, automakers lack a vital incentive to manufacture fuel-efficient vehicles.”
Some automakers including Jaguar Land Rover, and Fiat Chrysler have already paid penalties for failing to comply with fuel efficiency requirements.