TRENTON – Attorney General Gurbir S. Grewal today joined a multi-state coalition of Attorneys General in new comments opposing a federal plan that would weaken air quality enforcement efforts by significantly reducing the penalty for car manufacturers that violate national fuel economy standards.

The current penalty for failing to meet the nation’s fleet-wide Corporate Average Fuel Economy (CAFE) standard is $14 for every tenth-of-a-mile-per-gallon missed. The National Highway Traffic Safety Administration (NHTSA) set that penalty in 2016 after a law required agencies to update their penalties in light of inflation. Now the Trump Administration is moving to roll back the penalty to just $5.50. 

“The federal government’s proposal would make our air less safe to breathe, and New Jersey’s residents deserve better,” said Attorney General Grewal. “But instead, the federal government is yet again violating the law in its efforts to undermine the rules that improve our air quality and reduce greenhouse gas emissions. Since the 1970s, the linchpin of efforts to reduce our nation’s fuel consumption and tackle climate change has been the CAFE standards. But in order for those standards to make a difference, the penalties need to have some bite. The federal government is wrong to try to cut back on these penalties for bad behavior. We need to do more, not less, to confront climate change and air pollution.”

“Federal fuel efficiency standards are important tools in driving manufacturers to work toward development of cleaner and more efficient vehicles that benefit the quality of our air,” said Department of Environmental Protection Acting Commissioner Catherine R. McCabe. “The notion of scrapping the penalties that are critical to the success of national fuel efficiency standards is a huge step in the wrong direction, especially in the face of the realities of climate change and sea-level rise.”

The comments on behalf of Attorney General Grewal and the Attorneys General of New York, California and nine other states explain that the current CAFE penalty is an important tool for improving air quality and combating climate change, and call NHTSA’s arguments to reduce it unreasonable and unlawful.

In response to the energy crisis of the 1970s, Congress enacted the Energy Policy and Conservation Act (EPCA), a comprehensive energy policy that also included an effort to reduce the country’s fuel consumption.

EPCA established the CAFE standards and imposed a civil monetary penalty for any violations of those standards. EPCA set the initial penalty at $5 per tenth-of-a-mile-per-gallon, and that was increased to $5.50 in 1997.

After Congress adopted a law in 2015 that required agencies to update their civil penalties in light of inflation – recognizing that a penalty amount in the 1970s does not carry the same weight today – NHTSA increased the CAFE civil penalty to $14. As part of the action, NHTSA carried out an analysis of the economic impact such an increase would have and found it would not be significant.

Last year, however, the Trump Administration delayed renewal of the $14 CAFE violation penalty amount and said the old $5.50 penalty would apply while the penalty set in 2016 was “re-evaluated” – an action that effectively suspended the $14 penalty. A multi-state coalition challenged the action, however, and a federal appeals court vacated the suspension and reinstated the $14 penalty.

 Now the Administration is attacking the issue through the federal rulemaking process, subjecting its proposal to return the CAFE penalty to $5.50 to public notice and comment. As part of their comment, the participating Attorneys General have explained that the law requires NHTSA to maintain the $14 adjusted penalty, and that rolling back CAFE penalties to the decades-old rates violates Congressional intent.

The letter also contends that, contrary to the federal government’s current arguments, NHTSA was previously correct when it found the CAFE penalty will not harm the economy.

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