NHTSA Proposes to Retain Corporate Average Fuel Economy Penalty Rate

National Highway Traffic Safety Administration
27 March 2018

The U.S. Department of Transportation’s National Highway Traffic Safety Administration (NHTSA) today issued a notice of proposed rulemaking in the Federal Register (docket number NHTSA-2018-0017) proposing to retain the existing penalty rate applicable to automobile manufacturers that fail to meet Corporate Average Fuel Economy (CAFE) standards.

The notice issued today seeks comment on one element of the CAFE penalty program, the penalty rate, and allows stakeholders to provide input and additional information to inform the agency’s decision.

DOT and NHTSA are seeking feedback to ensure that all potential impacts concerning today’s proposal are fully considered.

Background

Penalties are paid by auto manufacturers who exceed the allowable fuel economy targets under the CAFE program. The industry projected that an increase in the penalty rate would result in at least $1 billion in increased costs annually.

The Inflation Adjustment Act requires all federal agencies to adjust their monetary civil penalties for inflation annually. A rote application of the law resulted in NHTSA initially significantly increasing the $5.50 CAFE penalty rate to $14 beginning with Model Year 2019 vehicles.