WASHINGTON (Reuters) - A federal court in New York on Monday blocked the Trump administration’s decision to delay a rule that would raise penalties for automakers who do not meet federal fuel efficiency requirements.
The 2nd U.S. Circuit Court of Appeals issued an order vacating the July 2017 decision of the National Highway Traffic Safety Administration (NHTSA) to suspend a 2016 Obama administration regulation.
The regulation, set to take effect in September, would more than double penalties. Automakers protested the hike, saying it could increase industry compliance costs by $1 billion annually.
Congress ordered federal agencies in 2015 to adjust civil penalties to account for inflation. In response, NHTSA proposed raising fines for every gallon of fuel that new cars and trucks consume in excess of required standards under the Corporate Average Fuel Economy (CAFE) program, but delayed the effective date to September 2018.
NHTSA said in a statement on Monday it “is aware of the order issued today by the Second Circuit and will review the Court’s opinion once it is available.”
Last month, NHTSA said it was proposing to cancel the planned Obama administration hike in penalties for automakers whose vehicles fail to meet minimum fuel-economy standards - a move that could eventually make Monday’s court ruling moot.
Vera Pardee, senior counsel at the Center for Biological Diversity, one of the groups that sued, said the decision means “NHTSA must justify decreasing it – despite the Inflation Adjustment Act’s clear command to prevent inflation-caused erosion of enforcement.”
New York, California and three other U.S. states in September had sued the federal government in the 2nd U.S. Circuit Court of Appeals for delaying the rollout of the higher penalties, as did several environmental groups.
NHTSA said previously the increases would potentially result in an additional $30 million in annual civil penalties. Automakers say the increases would dramatically raise costs since they would also boost the value of fuel economy credits used to meet requirements.
Some automakers historically have opted to pay fines instead of meeting fuel efficiency requirements. Jaguar Land Rover, owned by India’s Tata Motors, and Daimler AG, which makes Mercedes-Benz vehicles, paid the most in fines in recent years.
NHTSA said last July that many automakers were falling behind current fuel standards and face “the possibility of paying larger CAFE penalties over the next several years.”
Reporting by David Shepardson; editing by Jonathan Oatis