Richard Revesz, a law professor at New York University, said the agency’s action was “directly inconsistent” with a ruling last year by a federal appeals court in New York.
“In an administration that has taken many outrageous actions to compromise the health of the American people and the environment, this one stands out as an example of rampant lawlessness,” said Revesz, director of the Institute for Policy Integrity, which was involved in the litigation.
The new order is one among many environmental rollbacks the Trump administration has sought to finalize in its waning days. It follows last year’s rules significantly weakening the emissions standards themselves, a change the government’s own analysis forecasts will result in vehicles pumping hundreds of millions of tons of additional carbon dioxide into the atmosphere.
The Biden administration has pledged to restore environmental rules and is expected to chart a new course on regulating the fuel efficiency of cars and SUVs. President-elect Joe Biden’s transition team did not respond to a request for comment on the fines, but experts said there could be an opportunity for the administration to undo the order after a public comment period ends this month. Environmental groups also are likely to mount a challenge in court.
The emissions standards fines are intended to push the industry to make more efficient cars, but fines have barely increased since they first were set in the 1970s, effectively making it cheaper each year to flout rules. Holding down the fines also reduces the value of credits automakers can sell if they exceed standards.
Fines initially were set at $5 for each tenth of a mile per gallon that a manufacturers’ vehicles fell short of standards, multiplied by the number of vehicles the company produced.
Fiat Chrysler paid almost $80 million in 2019 as a result of missing the targets, and paid a similar sum a year earlier.
The fine increased by 50 cents in 1997, and the Obama administration raised it to $14 after Congress passed a law in 2015 requiring the federal government to increase civil penalties in line with inflation.
The auto industry argued the higher rates could cost businesses $1 billion a year.
The Trump administration initially tried to delay the increase indefinitely, but was told by the courts that it could not. The administration then said it would scrap the increase, concluding the 2015 law did not apply to the emissions fines.
A coalition of Democratic-led states, supported by environmental groups and electric-car manufacturer Tesla, filed another lawsuit. A panel of three appeals court judges, all of whom were appointed by President Trump, ruled in favor of the states and ordered the higher fines to go into effect.
After that ruling, the Alliance for Automotive Innovation petitioned NHTSA to delay the new rates until the 2022 model year, arguing that model years 2019 and 2020 were effectively over and it was too late to make changes to 2021’s cars to improve fuel efficiency.
In its order this week, the agency said it would adopt that approach.
“NHTSA agrees with the petitioner that it would be inappropriate to apply the adjustment to model years that could have no deterrence effect and promote no additional compliance with the law,” the order reads. The agency also cited the economic hardship the industry has faced during the coronavirus pandemic as a reason for delay.
The Alliance said in a statement it appreciated NHTSA’s conclusion.
“Auto companies continue investing in cleaner, safer and smarter technologies to provide customers with a record number of fuel-efficient and zero-emission vehicles,” the group said.
The rate at which the fines are set also affects a market for emissions credits.
Manufacturers whose vehicles exceed targets are allowed to sell the credits, which others in the industry can buy to avoid fines. The value of the credits is determined by a market and not publicly disclosed. But NHTSA’s order spells out their value is linked to the rate of fines because manufacturers can choose whether to pay the penalty or buy a credit.
For Tesla, selling those credits, and others awarded overseas and by California, is a lucrative business. In its most recent quarterly earnings, the company reported revenue of $397 million from trading credits.
Tesla did not respond to a request for comment. But in a filing in the lawsuit, the company’s lawyers said holding down fines would “interrupt and continue to diminish the incentive to innovate under the standards as the potential sanction faced by technologically stagnant manufacturers fails to keep pace with inflation.”