MANHATTAN (CN) — The Second Circuit blocked the Trump administration on Monday from rolling back Obama-era monetary penalties on automakers that violate fuel-efficiency standards.
A panel of three Trump-appointed judges delivered the unanimous ruling Monday, saying the National Highway Traffic Safety Administration had a limited time window that it failed to meet for reconsidering penalty rate applied to car models that exceed standards for fuel efficiency.
While the NHTSA is authorized to ensure that its CAFE penalties, short for Corporate Average Fuel Economy, do not lose ground due to inflation, the agency asserted in 2017 that its economic assessment empowered it to reverse the increase adopted two years earlier when President Barack Obama had been in power.
To catch up with the Consumer Price Index, the NHTSA under Obama had increased the CAFE penalty from $55 for every mile per gallon below the standard to $140.
Automakers balked that the hike could increase annual industry compliance costs by up to $1 billion, and President Donald Trump’s NHTSA attempted to reinstate the lower penalty in 2019.
As the federal appeals court determined Monday, however, the window for readjustments was already long closed by then.
“Even if we agreed with NHTSA that the Improvements Act permitted reconsideration of the catch-up increase following its publication of an interim final rule, the window for that reconsideration was narrow and limited to the year 2016 — or more precisely, two weeks into the next year, before the next required increase due by January 15, 2017,” U.S. Circuit Judge William Nardini wrote for the panel.
U.S. Circuit Judges Richard Sullivan and Michael Park concurred, granting the petition for review that was led by California Attorney General Xavier Becerra and New York Attorney General Letitia James.
Attorneys General from Connecticut, Delaware, Illinois, Maryland, Massachusetts, New Jersey, Oregon, Rhode Island, Vermont, Washington, and Washington, D.C., are also part of the coalition.
A separate suit by the Natural Resources Defense Council and the Sierra Club was consolidated with the states’ appeal.
The Trump administration had previously tried to delay the adjusted rates, but this effort failed before the Second Circuit as well.
“As we have stated before: The Civil Penalties Rule…raising the CAFE base penalty rate to $14, is now in force,” Nardini wrote today.
A National Highway Traffic Safety Administration spokesperson declined to comment Monday.
Congress enacted fuel-efficiency standards in 1975 to achieve energy independence from an OPEC embargo that wrought havoc on U.S. drivers during the Arab-Israeli War.
If Trump’s move had succeeded, manufacturers could opt to pay fees instead of producing more fuel-efficient vehicles.