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SACRAMENTO, August 31, 2020 – California Attorney General Xavier Becerra today secured a critical victory in a multistate lawsuit challenging the National Highway Traffic Safety Administration’s (NHTSA) final rule dramatically slashing the penalty paid by automakers that fail to meet corporate average fuel economy standards (CAFE). As a result of today’s decision by the Second Circuit Court of Appeals to vacate the rule, the penalty rate will be $14 starting with model year 2019 vehicles, rather than the $5.50 penalty sought by the Trump Administration.

“The Trump Administration sought to make these penalties meaningless,” said Attorney General Becerra. “This wrong-headed maneuver ignored the facts: our nation’s CAFE standards have proven their value and fuel efficient cars on our roads are not only good for the economy and our environment, but our health.”

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On August 2, 2019, Attorney General Becerra and New York Attorney General Letitia James led a coalition of 13 states in filing a lawsuit challenging a final rule issued by NHTSA that reduced necessary penalties for automakers that failed to meet CAFE standards. The rule repealed and replaced a rule adopted under the Obama Administration which imposed an inflation-adjusted penalty of $14 for every tenth of a mile-per-gallon (mpg) that an automaker falls below the CAFE standards, as required by the 2015 Federal Civil Penalties Inflation Adjustment Act. NHTSA’s replacement rule would have reduced the penalty for automakers violating standards to $5.50 per tenth of an mpg, an amount far below the inflation-adjusted penalty required by law.

This replacement rule followed a previous attempt by the Trump Administration to delay the updated penalty. Specifically, on July 12, 2017, NHTSA published a notice in the Federal Register to announce an indefinite delay of the penalty increase. However, following a lawsuit led by California and New York, the U.S. Court of Appeals for the Second Circuit ruled against the Administration on April 24, 2018.

A copy of today’s decision is available here.