August 3, 2019 - SACRAMENTO – California Attorney General Xavier Becerra and New York Attorney General Letitia James, leading a coalition of 13 states, on Friday filed a lawsuit in the Second Circuit of Appeals challenging a final rule issued by the National Highway Traffic Safety Administration (NHTSA) that reduces necessary penalties for automakers that fail to meet corporate average fuel economy standards (CAFE). The rule repeals and replaces 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 reduce 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.

“Fuel efficient cars on our roads are good for the economy, the environment, and our health. Our nation’s CAFE standards have proven their value,” said Attorney General Becerra. “We were victorious in our earlier court battle against President Trump in maintaining the CAFE penalty level that accounts for inflation as required by law. Now the Trump Administration seeks to make these penalties meaningless. We’ll take on this latest wrong-headed maneuver with the same vigor that defeated the Administration’s first attempt at backsliding.” 

“This rule is just another misguided and reckless attempt by the Trump Administration to roll back the clock on our clean air standards, which is why we will stand up and fight to protect the health and well-being of New Yorkers and every person living in this country,” said Attorney General James. “Without strong penalties for violating these fuel efficiency standards consumers, our economy, and our environment all remain in danger. As we’ve done in the past, we will continue to fight this battle against the Trump Administration’s efforts to ignore the realities of climate change and we will win.”

In the lawsuit, the Attorneys General assert NHTSA’s new rule is unlawful and rewards automakers that fail to manufacture fuel-efficient vehicles. The coalition argues that the replacement rule:

• Violates the Inflation Adjustment Act, which mandated that public agencies update their civil penalties to account for inflation using a clear timetable and formula for adjustment;
• Is based on an incorrect interpretation of the NHTSA’s statutory obligations;
• Conflicts with the intent of Congress, which did not exempt the CAFE penalty from mandatory inflation adjustment requirements; and
• Is based on inaccurate assumptions of the economic impact of the inflation-adjusted penalties.

This replacement rule follows 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. 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.

On May 2, 2018, Attorney General Becerra and twelve other Attorney Generals submitted comments to NHTSA opposing this rollback of the CAFE penalty.

Joining California and New York in filing this lawsuit are the Attorneys General of Connecticut, Delaware, District of Columbia, Illinois, Maryland, Massachusetts, New Jersey, Oregon, Rhode Island, Vermont, and Washington.

A copy of the filed lawsuit is available here.
Source: CA. DOJ