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The mistake of setting corporate fuel-economy penalties just a little too low can be magnified by automakers’ decisions to produce millions of cars with worse fuel-economy. And the Trump penalty appears to be way too low to motivate compliance. Here’s a breakdown of the reduced penalty and how it will likely affect cars, consumers, and our climate.

The National Highway Traffic Safety Administration (NHTSA) recently finalized a rule that significantly reduces the penalties that automakers pay for violating the corporate average fuel economy (CAFE) standards. In reducing the penalty, NHTSA rolled back an adjustment that had been made to the penalty under the Inflation Act, a statute requiring agencies to adjust civil monetary penalties to account for decades of inflation. We submitted an amicus brief in the Court of Appeals for the Second Circuit focusing on NHTSA’s faulty economic justifications for the rule, arguing that this repeal was unlawful.

We filed a petition requesting that the National Highway Traffic Safety Administration (NHTSA) reconsider and rescind a new rule reducing penalties for automobile manufacturers that fail to meet corporate fuel economy standards. Our petition explains how NHTSA’s analysis ignores financial and environmental benefits forgone by the rule and relies on flawed, even contradictory evidence. NHTSA’s weakened fuel economy penalties deprive the public of substantial benefits and should be rescinded.

The Environmental Protection Agency (EPA) and the National Highway Traffic Safety Administration (NHTSA) are proposing to weaken key fuel economy and greenhouse gas emissions standards for future vehicle models. In October, we highlighted our concerns with some of the economic analysis supporting the proposal. The Alliance of Automobile Manufacturers submitted comments that included economic analysis supporting the proposed rule prepared by NERA Economic Consulting and Trinity Consultants. In December, we wrote supplemental comments rebutting NERA and Trinity’s analysis, identifying serious flaws and unexplained departures from longstanding practices. NERA recently responded.

Our latest comments detail how NERA’s response does not address many of the problems we previously discussed. As our comments explain, the analysis relies on unreliable modeling and methodologies, for which NERA still has not provided critical details. NERA also misstates or fails to respond to our points on a number of topics, such as scrappage and fuel savings benefits. We point out the shortcomings in NERA’s response and provide more detail on each of the topics.

In October, we submitted comments to the National Highway Traffic Safety Administration (NHTSA) and Environmental Protection Agency (EPA) critiquing the proposed Safer Affordable Fuel-Efficient Vehicles Rule. We now have also submitted supplemental comments rebutting an analysis, prepared by NERA Economic Consulting and Trinity Consultants and submitted by the Alliance of Automobile Manufacturers, in support of the proposed rule.

In August 2018, the Trump administration issued a proposal to dramatically weaken federal emissions standards for cars and light trucks, and to revoke the waiver that allows California to set its own standards. Federal emissions standards have been enormously successful at reducing greenhouse gas pollution and lowering fuel costs for consumers, and we recently submitted five separate sets of comments detailing the flaws with the Trump administration’s proposal.

In December 2016, pursuant to the Inflation Adjustment Act of 2015, the National Highway Traffic Safety Administration (NHTSA) finalized a rule that adjusted civil penalties for car manufacturers that violate fuel economy standards, in order to line them up better with inflation. That rule put the penalties at $14 per tenth of a mile per gallon. NHTSA is now proposing a new rule to lower the penalties from $14 per tenth of a mile per gallon back to the previous rate of $5.50 per tenth of a mile per gallon, claiming that the $14 penalty would have a significant negative economic impact. Our May 2018 comments argue that NHTSA should explain why it is justified in reducing the penalty from $14 to $5.50 and consider the forgone benefits when considering whether the civil penalties will have a “negative economic impact.” Because NHTSA has not provided this explanation, the proposed reduction is arbitrary and capricious.

In 2017, the National Highway Traffic Safety Administration (NHTSA) suspended its 2016 Civil Penalties Rule, which adjusted the penalties for automobile manufacturer non-compliance with fuel economy standards for the first time in decades to reflect inflation. In issuing its suspension, NHTSA claimed that it was causing no harm. Our brief in the case challenging this suspension shows that NHTSA’s claim of no harm was inaccurate.

Federal agencies continue to request the public’s suggestions for rules to repeal or reform, tacitly implying that most regulations stifle economic growth. In comments to several agencies, we argue that regulatory review should consider the public benefits of regulation, not just the costs to regulated industries, and should prioritize review of rules for which actual costs and benefits diverge significantly from predicted costs and benefits. We also recommend that agencies develop prospective plans for regulatory review going forward. The agencies for which we recently filed comments include Small Business Administration, Department of Transportation, National Credit Union Administration, Food and Drug Administration, and Customs and Border Control Bureau.

In December 2016, the National Highway Traffic Safety Administration (NHTSA) finalized a rule that updates civil penalties for car manufacturers that violate fuel economy standards. NHTSA is now reconsidering the rule, claiming it would have a significant negative economic impact. The agency provides no evidence that economic circumstances have changed since the rule’s finalization to make the rule more costly. Our comments argue that the agency should not proceed with the proposed reconsideration, because it inadequately explained why it changed positions. If the agency does continue with the reconsideration, both the Inflation Adjustment Act and economic cost-benefit analysis would justify an update to the penalties rates rather than maintaining the original penalty rate from 1975.