Feds Decide to Cut Automakers Some Slack Over Fuel Economy Penalties

Government regulators have heard the auto industry’s plea for clemency pertaining to the United States’ corporate average fuel economy (CAFE).

Responding to a petition from industry groups, the National Highway Traffic Safety Administration is putting the brakes on a planned increase in penalties for not complying with CAFE standards. Automakers won’t have to worry about their 2015, 2016 and 2017 model-year vehicles anymore, as the penalties will now begin with 2019 models.

According to Automotive News, NHTSA states that the postponement reflects “the reality that manufacturers design their products far in advance.”

NHTSA will also craft a more rigid rule-making process that should assist in sorting out the differences between the greenhouse-gas emission standards imposed by the EPA and the fuel-economy standards defined by the NHTSA. Automakers, understandably, want to ensure that they will not be penalized under one set of rules for attempting to comply with another.

A law passed last year pushed federal agencies to update their civil penalties, or risk having the impact eroded by inflation. That ruling increased CAFE retribution from $5.50 to $14.00 for each 0.1 mpg that an manufacturer failed to meet, multiplied by the total number of vehicles sold that year. The figure could cost a major automaker millions, even if they fall short of the target by the 0.1 mpg minimum.

While automakers with thirsty fleets could buy credits from other companies to stay in compliance, the penalty increase applied to vehicles that were already available for purchase. Many of the vehicles were on the market before the fuel economy standard had even been established.

The Alliance of Automobile Manufacturers wasn’t happy, calling the move “draconian” and suggesting that it that would make a 54.5 mpg corporate average by 2025 impossible to achieve. Meanwhile, environmental groups continued to demand hard-hitting penalties to make noncompliance less of an option.