By on August 18, 2021

The National Highway Traffic Safety Administration is considering increasing penalties for automakers that fail to meet fuel-efficiency requirements. Though this could be considered a restoration of older standards, depending upon your perspective.

Shortly before leaving office, President Donald Trump postponed a regulation from the last days of the Obama administration that would have effectively doubled fines for vehicle manufacturers failing to meet Corporate Average Fuel Economy (CAFE) requirements. Automakers had been complaining that the rule would have dramatically increased operating costs, suggesting that would trickle down to vehicle pricing and give manufacturers selling carbon credits an unfair advantage. 

Though there are plenty of people who already believe the idea of paying a rival business to “offset emissions” in order to pollute more is kind of a silly premise.

A U.S. appeals court in overturned the former administration’s decision to suspend the 2016 regulation in the summer of 2020. While Obama originally wanted the increased penalties to take effect for the 2019 model year, Trump managed to get them delayed until 2022. But the original plan was to suspend the increased fines indefinitely, since the previous administration was focused on deregulation as its main method of spurring the domestic economy. This seems to be counter to the Biden administration’s strategy and the NHTSA has been fairly aggressive in pursuing new regulatory actions since the change in leadership.

According to Reuters, Congress ordered federal agencies to adjust CAFE-related civil penalties in 2015 to account for inflation. This led the NHTSA to raising fines to $14.00 (from $5.50) for every 0.1 mile per gallon new cars and trucks consume in excess of required standards. Since then, the interested parties have been throwing in their two cents.

From Reuters:

In March, Tesla urged a U.S. appeals court to reinstate the higher fuel economy penalties and said the Biden administration ignored the ongoing impact of the Trump rule on the credit-trading market.

Tesla, whose electric cars produce zero emissions, sells credits to other automakers to reduce their burden of complying with regulations and argued the Trump rule change makes those credits less valuable.

FCA paid a total of nearly $150 million for failing to meet 2016 and 2017 requirements.

NHTSA said its analysis showed reinstating the earlier hike could boost penalties for the 2019 model year alone by $178.5 million, a figure that does not include the impact on credit trading.

Stellantis said earlier this month in a securities filing costs related to potential higher CAFE penalties could be about 521 million euros ($609 million).

Meanwhile, the NHTSA proposed increasing CAFE requirements by 8 percent annually for 2024 through 2026, reversing a Trump-era policy that rolled back higher requirements to ensure consumer vehicle choices remained robust and pricing remained low (at least that’s how it was framed). While the above is fine with just about any manufacturer that prioritizes EVs, legacy brands that still need to sell hundreds of thousands of gas-burning vehicles have less to celebrate. Automotive lobbies generally oppose the hike and have been begging regulators not to retroactively apply penalties to vehicles already produced all summer.

The Department of Transportation and NHTSA will be giving the public 30 days to comment on whether the government should reinstate the 2016 rules imposing higher penalties — which would include vehicles from the 2019 model year.

[Image: LanaElcova/Shutterstock]

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23 Comments on “NHTSA Considers Increasing Fines for Emission Violations...”

  • avatar
    Art Vandelay

    I’m confused. I thought the current administration was unable to deviate from policy that it inherited from the previous one. There was this whole press conference and everything where he said that was the case.

  • avatar
    SCE to AUX

    A serious EV development program costs billions and could result in developing unsellable turds, so why not just spend millions on fines instead?

  • avatar

    Where does the penalty money go?
    Who ends up paying for the penalty? The company or the consumer?
    How does a carbon credit become a currency?

    My final thought is that this is too intrusive to the market. Favors high fuel economy companies, that may just be a low ratio of the market, and then just incentivizes companies with low fuel economy to increase the cost of their (already large market share) vehicles.

    • 0 avatar
      SCE to AUX

      While I don’t know how the credits become currency, they allow a company with low CAFE to buy their way up to a higher CAFE figure.

      Tesla gets the spotlight for benefiting from these credits, but for years it was Nissan (thanks to the Leaf) that actually received the most credit, and GM has received a fair bit as well.

      Obviously the cost is borne by the consumer, but it’s a very small amount when amortized per vehicle.

      I am no fan of this system, but in fairness, no company is forced to remain in its ‘caste’ of high or low CAFE figures. But per my comment above, sometimes it’s just not worth the risk of trying.

  • avatar

    Good. It’ll just force automakers into building more gas guzzlers, less compacts. Not just the Big 3, but Honda, Toyota, Nissan, Subaru, Hyundai and the rest. The Euro brands of course. Follow the corrupt racketeering.

  • avatar

    Are SUVs and pickups still exempt from the gas-guzzler tax in the United States?

  • avatar
    Jeff S

    “The Gas Guzzler Tax is assessed on new cars that do not meet required fuel economy levels. These taxes apply only to passenger cars. Trucks, minivans, and sport utility vehicles (SUV) are not covered because these vehicle types were not widely available in 1978 and were rarely used for non-commercial purposes.Sep 18, 2020”

    Gas Guzzler Tax | US EPA › fueleconomy › gas-guzzler-tax

    This is one of the reasons Ford and GM have cut most of their passenger cars.

    • 0 avatar

      @Jeff S – that’s why we no longer have F100’s, C100’s and D100’s. It fostered the birth of the “heavy-half” to avoid regulations. It also spawned large SUV’s.

  • avatar

    Or we could just let consumers decide what sort of MPG’s they want?

    CAFE has been a disaster and is responsible for SUV’s/Full Size trucks being a default family hauler.

    Electric cars will eventually take over, why punish consumers over the next 10 years with punitive taxes?

    These fees distort the market in more ways than people realize. It’s part of the reason a Suburban now starts at nearly $75,000.

  • avatar

    As someone who has to assess civil money penalties as part of their job, changing them annually has been a huge pain in the ass to get them right. Hell, it probably resulted in hundreds of new government jobs just to enact the new ones annually. Congress should have gone with adjustments every 3-4 years.

  • avatar
    Jeff S

    Lou exactly and that is why trucks are bigger and taller and why midsize trucks have grown in size. That is also why station wagons have become crossovers. I do not blame manufacturers for gaming the system but on the other hand they also are responsible for it. As you had mentioned a while back in the comments about the efficiency standards making vehicles with larger dimensions in order to get around them. I have nothing against larger vehicles, everyone should have a choice but I don’t really need or want a large vehicle. I do not want to impose my own biases and beliefs on others.

  • avatar

    Once again the only solution proposed by the libs to address their obsession with the ever present yet never provable bogeyman of global warming is to take money.

    They never offer any tenable or reasonable solutions just higher taxes and fines.

  • avatar

    I thought peak oil was still a thing, shouldn’t the electric vehicle issue become fix itself any day now since the oil tap should be dry any day now?

  • avatar
    Jeff S

    I doubt we will ever reach the point of peak oil as a resource but with Government regulations and artificial supply constraints we will see less refined product available and higher prices. With many European nations banning the production of ICE vehicles by 2030 or after gas or petrol stations will eventually disappear. That could happen as well in the US but it will be years after Europe.

    • 0 avatar

      I’m really starting to believe my thesis of last year was indeed correct and the major events of the 21st Century: 9/11, Iraq, 2008, fracking, the Plandemic™, and probably the jabs are all related to Peak Oil. Afghanistan had to do with pipelines which never happened, opium, and control of rare earths the first two of which I suppose didn’t matter anymore to them and the nation is being ceded to the Communist Bloc with Taiwan likely being in play.

  • avatar

    “According to Reuters, Congress ordered federal agencies to adjust CAFE-related civil penalties in 2015 to account for inflation. This led the NHTSA to raising fines to $14.00 (from $5.50) for every 0.1 mile per gallon new cars and trucks consume in excess of required standards. Since then, the interested parties have been throwing in their two cents.”

    Interesting CONgress not only acknowledged inflation but ordered I suppose the NHSTA to triple their Yet Another Tax (YAT) which has not changed since 1997. I’m not sure who came up with the exact figure, but it seems whomever did was expected an inflation rate to be ***triple*** by 2030 in 2015 if we roughly use an assumed 15 year period between adjustments. If what’s punitive in 1997 was a joke by 2015, what’s punitive in 2015 should be a joke by 2030/32. Long in the future 2008 will be viewed as the beginning of the end of Pax Americana and perhaps Western Civilization.

    “NHTSA sets [4] and enforces [5] corporate average fuel economy (CAFE) standards for the United States light-duty automobile fleet, and in doing so, assesses civil penalties against manufacturers that fall short of their compliance obligations and are unable to make up the shortfall with credits obtained for exceeding the standards.[6] The civil penalty amount for CAFE non-compliance was originally set by statute in 1975, ***and beginning in 1997, included a rate of $5.50 per each tenth of a mile per gallon*** (0.1) that a manufacturer’s fleet average CAFE level falls short of its compliance obligation. This shortfall amount is then multiplied by the number of vehicles in that manufacturer’s fleet.”

  • avatar

    Yes, let’s increase fines so manufacturers produce products that no one wants. I thought America is the last land where market economy rules. Supply and Demand. No one wants these electric turds.

    I travel between Savannah Georgia and Atlanta Georgia every two weeks for past five years, even during COVID. In all this time, on 4-5 hours driving, I have seen only 3 Teslas on I-16 connecting those two cities. There are considerable number of Teslas within Atlanta metro but not once you go out of town.

    See my children, plan is to force people to live in cities because these electric vehicle’s range, and the charging station infrastructure does not support our lives in this vast beautiful land. Or perhaps we have to go back to using Greyhound buses to travel.

    Meanwhile ,Taliban have brand new ICE vehicles that this administration abandoned and they will use for a very very long time. I wonder why our military did not use electrics in Afghanistan???

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