AGs Schneiderman And Becerra Lead 13-AG Coalition Challenging Trump Administration’s Proposed Rollback Of Penalties For Violating National Fuel Economy Standards

Administration Proposal Undermines CAFE Standards, Slashing by Over 60% Penalties That Incentivize Automaker Compliance

Comments Follow AGs’ Court Victory Last Week, Blocking Trump Administration’s Delay of the Penalty it Now Seeks to Roll Back 

CAFE Standards Designed To Reduce Carbon Emissions by 1.8 Billion Metric Tons and Save Individual Consumers $1,650 

NEW YORK – New York Attorney General Eric T. Schneiderman and California Attorney General Xavier Becerra, leading a coalition of 13 Attorneys General, filed comments challenging the Trump Administration’s proposal to cut by over 60 percent the penalty assessed to automakers for violating national fuel economy standards for their fleets, from $14 to $5.50 per tenth of a mile per gallon.  In comments submitted to the National Highway Traffic Safety Administration (NHTSA), the coalition not only argues that NHTSA has no authority to reduce the penalty, but that the rollback is “arbitrary and capricious,” and will undermine national fuel economy standards, known as Corporate Average Fuel Economy (CAFE) standards, by slashing the penalties that incentivize automaker compliance with them.  

Last week, on April 23, Attorneys General Schneiderman and Becerra secured a federal court order blocking the Trump Administration’s attempt last year to delay indefinitely the effective date of the $14 per tenth of a mpg penalty, which was adopted in 2016 to adjust the previous penalty amount for inflation.  

“Fuel economy standards are common sense: cutting pollution, fighting climate change, promoting energy independence, and saving drivers money at the pump,” Attorney General Schneiderman said.  “Rolling back the penalty would gut these critical standards by removing much of automakers’ incentive to comply – yet another Trump administration giveaway to special interests at the expense of New Yorkers’ health and wallets. Our coalition of Attorneys General hasn’t hesitated to take the Trump administration to court, and we’ll continue to do what it takes to protect those we serve.” 

“President Trump claims to support law and order, yet his Administration routinely ignores laws when it doesn’t like them,” said Attorney General Becerra. “Our coalition will not stand by idly. We will continue doing what is necessary to hold the Trump Administration accountable, especially for clear violations of the law that harm our families. More fuel-efficient cars on our roads means cleaner air, better overall health for our children, and savings at the pump for consumers.” 

In their new comments, the Attorneys General highlight the important role of ensuring automakers meet CAFE standards. These standards “will deliver enormous social benefits in terms of reducing carbon dioxide emissions, the main driver of climate change; protecting our national security by decreasing our dependence on foreign oil imports; reducing emissions of the criteria pollutants that cause air pollution and worsen public health; and providing consumers with savings at the gas pump.” 

Joining Attorneys General Schneiderman and Becerra in the comments are the Attorneys General of Delaware, the District of Columbia, Illinois, Iowa, Maryland, Massachusetts, New Jersey, Oregon, Vermont, Virginia, and Washington. 

To deter auto manufacturers from violating CAFE standards, the federal Energy Policy and Conservation Act imposed a penalty for every tenth of a mile per gallon (mpg) by which the average fuel economy of a manufacturer’s fleet of vehicles falls short of the applicable CAFE standard for the model year, multiplied by the number of vehicles in that manufacturer’s fleet.  In 2016, pursuant to amendments to the Federal Civil Penalties Inflation Improvements Act, NHTSA increased the penalty violating CAFE standards from $5.50 per tenth of a mpg to $14 per tenth of a mpg, an $8.50 increase.   This updated, inflation-adjusted penalty went into effect in August 2016 and applies to automakers beginning in model year 2019.  The previous $5.50 per tenth of a mpg penalty had been in place, without adjustment for inflation, since 1997, and over these nineteen years, it had lost much of its original value.  

On April 2 of this year, NHTSA proposed a rule that would roll the penalty for violating CAFE standards back to the 1997 level of $5.50 per tenth of a mpg, arguing that the amendments to the Federal Civil Penalties Inflation Improvements Act do not apply to these penalties.  In their comments, the Attorneys General charge that NHTSA has no authority to reduce the penalty.  The $14 penalty is simply the result of a “catch-up” inflation adjustment Congress directed all federal agencies to make in 2015 to restore the real value of federal civil penalties.  While NHTSA initially implemented the mandatory adjustment, it has now reversed course.  The Attorneys General argue that the agency’s justifications for such a reversal ignore basic canons of statutory construction, flout the statutory purposes of the applicable federal law, and “disregard the comprehensive, robust, and well-supported factual and technical record – which the Highway Administration itself helped create – regarding the achievability and social benefits” of the CAFE standards.  As federal law requires that agencies provide a “reasoned explanation” for changing or rescinding an existing rule, the coalition contends that NHTSA’s failure to do so in rolling back the penalties is arbitrary and capricious.   

The coalition calls on NHTSA to abandon its proposal to lower the $14 per tenth of a mpg penalty for model year 2019 and beyond.  It further urges the Administration to maintain the $25 per tenth of a mpg cap for discretionary increases of the penalty, and to adopt the annual adjustments for 2017 and 2018 which were mandated by the 2015 Act, but which the agency has not yet implemented.  

The current $14 per tenth of a mpg CAFE penalty provides increased incentive for auto manufacturers to achieve CAFE standards for upcoming model years.  NHTSA, together with EPA and the California Air Resources Board already concluded, in 2016, that these standards– for model years 2017 through 2025 – are technologically feasible at reasonable cost for auto manufacturers.  The standards would save approximately 1.8 billion metric tons of carbon dioxide emissions over the lifetimes of the vehicles sold.  The “Augural Standards” (model years 2022 through 2025) alone would reduce carbon dioxide emissions by 40 million tons a year in 2025, and by over 200 million tons a year in 2050, for a total of 1.8 billion over the lifetimes of the vehicles sold in model years 2017-25, compared to indefinitely maintaining the 2021 standards. 

The Environmental Protection Agency (EPA) has previously estimated that the Augural Standards would also lead to an annual reduction of 13,000 tons of smog-forming nitrogen oxides and of 2,000 tons of particulate matter emissions nationwide by 2030.  A consumer would save a net $1,650 with a model year 2025 vehicle that adheres to the Augural Standards, compared to one that complies with the model year 2021 standards.  These beneficial impacts are described in a NHTSA fact sheet. 

This matter is being handled for Attorney General Schneiderman by Assistant Attorney General Austin Thompson and Affirmative Litigation Section Chief Yueh-ru Chu.  The Environmental Protection Bureau is led by Bureau Chief Lemuel M. Srolovic and is part of the Division of Social Justice, which is led by Executive Deputy Attorney General for Social Justice Matthew Colangelo.  The matter is being handled for Attorney General Becerra by Supervising Deputy Attorney General David A. Zonana, and Deputy Attorneys General David Zaft and Laura Zuckerman.