Blog Post: Tripled CAFE Fine Highlights Differences in EPA and NHTSA Rules

WASHINGTON—On July 5, the National Highway Traffic Safety Administration (NHTSA) increased the fine associated with noncompliance under Corporate Average Fuel Economy (CAFE) standards for light duty vehicles—from $55 per mile per gallon (mpg) per vehicle to $140. The reason for the change given by the agency was to catch the fine up to the rate of inflation over the past 25 years. A blog posted by researchers from Resources for Future (RFF) today, Tripled CAFE Fine Highlights Differences in EPA and NHTSA Rules, argues that despite the large increase in the fine, the effect on many companies may be minimal. The majority of autos companies have not paid CAFE fines in the past and new related requirements from the US Environmental Protection Agency (EPA) appear to be even more binding than the new fines. But as the stringency of both standards increase overtime, paying the NHTSA fines could remain an option for some.

The CAFE penalty increase comes at a time of major changes in fuel economy standards. EPA now has authority to regulate CO2 emissions as a greenhouse gas (GHG) and in 2010 EPA joined NHTSA in setting higher fuel economy and GHG emissions standards on auto manufacturers. These requirements increase in stringency in every model year from 2012 to 2025. NHTSA and EPA are just beginning the formal midterm review process of the standards for that timespan.

In their new blog, RFF Fellow Benjamin Leard and Senior Fellow Virginia McConnell argue that although the two programs are supposed to be harmonized or require the same level of stringency, “there are differences between the programs that make complying with the two rules complex.” For example, the two rules each have different policies for earning and transferring credits for over-compliance. Another difference is whether they are allowed to pay fines in lieu of compliance.

Read the full blog: Tripled CAFE Fine Highlights Differences in EPA and NHTSA Rules.