In one of its last acts before handing off the government reigns next week, the Trump administration has agreed to an auto industry request to delay the start of high penalties for companies that fail to mean stringent full fleet fuel economy targets.
The move is widely expected to save industry players hundreds of millions of dollars, if not more. The decision comes just eight days before President-elect Joe Biden takes office, and follows a ruling by the U.S. appeals court in August that overturned Trump’s 2019 decision to suspend planned regulation that doubled the penalties automakers would have to pay for failing to meet fuel efficiency requirements.
This has been an ongoing saga that dates back to before the Trump administration rose to power. In 2015, Congress ordered federal agencies to adjust the penalties to account for inflation, from there, the National Highway Traffic Safety Administration proposed to raise fines from $5.50 to $14 for every 0.1 mile per gallon of fuel new vehicles consume in excess of the standards.
According to Reuters, U.S. fuel economy fines have lost nearly 75% of their original value due to inflation. Since 1975 the fines had been increased only once, in 1997, when the penalty was increased from $5 to $5.50. Automakers obviously protested the 2016 hike, claiming the increased regulatory penalties could increase industry compliance costs by more than $1 billion annually.
In 2017, Fiat Chrysler Automobiles paid $79 million in fines for failing to meet fuel economy requirements that year, while the year before FCA shelled out $77.3 million for the same sin. Following the August decision by the U.S appeals court, FCA warned it would need to set aside more than $600 million to cover its fuel economy shortfall as a result.
The move is being billed as a last-minute favor for the auto industry. It’s unclear how long the delay will last once the new administration takes office, but it should buy at least enough time for automakers to get a few more electric or electrified vehicles to market.