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WASHINGTON (Reuters) – The Trump administration announced Friday that it was issuing the latest rules to suspend the Obama administration's enforcement in 2016, which more than doubled the penalties imposed on car manufacturers who do not meet the requirements for fuel economy.
In 2015, Congress ordered federal agencies to adjust civil penalties for non-compliance with the average fuel economy requirements imposed by the company in order to account for inflation. In response, the National Highway Traffic Safety Administration has issued rules to eventually increase fines of $ 5.50 to $ 14 worth of fuel that new cars and trucks consume beyond the required standards.
Car manufacturers have protested the rise, saying it could increase industry compliance costs by $ 1 billion a year. After a group of states and environmental groups filed lawsuits, the Trump administration began the process of permanently canceling the Obama settlement in 2018.
NHTSA said Friday in a statement Friday that she "faithfully followed Congress's intent to ensure that the penalty rate be set at the level required by law" and added that she "expects this final rule to dramatically reduce the future burden on industry and consumers by up to $ 1 billion a year."
The Alliance of Automobile Manufacturers, a trade group representing General Motors Co (GM.N), Volkswagen AG (VOWG_p.DE), Toyota Motor Corp. (7203.T), Fiat Chrysler Automobiles NV (FCHA.MIand others, said it could increase industry compliance costs by $ 1 billion a year.
On Friday night, Gloria Bergquist, spokesperson for the group, welcomed the decision: "The NHTSA model clearly shows the considerable economic damage that such a dramatic and unjustified increase in penalties would have for builders cars, workers and ultimately consumers ". the previous administration "did not take into account the significant economic damage that would result".
Automakers have argued that the increases would significantly increase costs, since they would also increase the value of the fuel economy credits used to meet the requirements.
In September 2017, three environmental groups and some US states, including New York and California, sued NHTSA for suspending Obama's rules.
Historically, some manufacturers have paid fines instead of meeting fuel efficiency requirements, including luxury automakers such as Jaguar Land Rover, owned by Tata Motors (TAMO.NS) and Daimler AG (DAIGn.DE).
In February, Fiat Chrysler told Reuters that it had paid $ 77 million in civil fines in 2018 in the event of non-compliance with the fuel economy requirements of the 2016 model year.
This decision comes as NHTSA and the Environmental Protection Agency are working to finalize a rewriting of the Obama administration's fuel economy requirements until 2026 in the coming months.
In August 2018, the administration proposed requirements for fuel economy and removal of California's right to set its own rules on vehicle emissions.
The final settlement faces a multi – year legal battle that could leave automakers in stalemate over future emissions and fuel economy requirements.
The rules of the Obama era provided fuel economy savings of 46.7 miles per gallon by 2026, against 37 miles per gallon according to the preferred option of the Trump administration.
Last month, 17 major automakers advocated a compromise "halfway" between the Obama era standards, which require an annual emissions reduction of about 5%, and the Trump administration's proposal.
Reuters reported in April that the authorities expect the final rule to include a slight increase in annual fuel consumption requirements.
Report by David Shepardson; Edited by Jacqueline Wong
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