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Appeals Court Blocks Reduction in Fines for Automakers

By George Khoury, Esq. on April 24, 2018 | Last updated on March 21, 2019

The Second Circuit Court of Appeals has overturned the federal Department of Transportation's decision to suspend the increase of the fine amount for automakers that are found to be out of compliance with CAFE standards.

Under the Corporate Average Fuel Economy program, automakers are required to meet certain average fuel economy numbers, and if they don't they must pay a fine of $55 per mpg per car the automaker missed the requirement on. The increased fine amount of $140 per mpg per car was indefinitely suspended last summer by the DOT, but has now just been un-suspended.

Reasoning to Follow

Interestingly, the appellate court issued a brief announcement of their decision, explaining that a full decision will follow. The court's announcement of the decision is due to the fact that the increased fines are set to take effect for the 2019 model year vehicles, which automakers are currently getting ready to sell this year.

Notably, the increase in the fine amount was originally justified, and approved by Congress, as an overall directive to federal agencies to adjust fines and penalties for inflation. The fine for exceeding the CAFE standards have been the same since 1970s, which explains the large increase in the fine due to inflation.

While there may be a rather staunch fight over this issue along partisan lines, it's likely that the increased penalties, which are still rather nominal, will simply be passed along to the consumer public in the form of slightly higher new car prices.

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