Civil Penalties rule (2022)
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The Civil Penalties rule is a significant rule issued by the National Highway Traffic Safety Administration (NHTSA), U.S. Department of Transportation (DOT) effective May 31, 2022, that required annual adjustments to the civil penalties for car manufacturers that violate the corporate average fuel economy standards to reflect inflation rates. The rule applied the adjustment requirements to vehicles in Model Year 2019. This rule is in accordance with the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015.[1]
Timeline
The following timeline details key rulemaking activity:
- May 31, 2022: The final rule took effect.[1]
- April 1, 2022: NHTSA issued the final rule.[1]
- September 20, 2021: The comment period closed.[2]
- August 20, 2021: NHTSA issued the proposed rule and opened the comment period.[2]
Background
A 1975 statute instituted civil penalties for corporate average fuel economy (CAFE) violations, and in 1997 began calculating the penalties with the equation (penalty rate, in $ per 0.1 mpg per vehicle) × (amount of shortfall, in tenths of an mpg) × (# of vehicles in manufacturer's fleet). Manufacturers are authorized to use credits to avoid these civil penalties in accordance with the Energy Independence and Security Act of 2011. In 2015, the Federal Civil Penalties Inflation Adjustment Act required federal agencies to create "an initial 'catch-up' adjustment" to civil penalties up to 150% of the current penalty to account for inflation. The NHTSA issued an interim final rule to institute inflation adjustments in accordance with the 2015 Act, then, after a series of petitions and legal decisions, issued the final rule that "increased CAFE civil penalty rate beginning with Model Year 2019."[1]
Summary of the rule
The following is a summary of the rule from the rule's entry in the Federal Register:
| “ | On January 14, 2021, NHTSA published an interim final rule in response to a petition for rulemaking from the Alliance for Automotive Innovation. The interim final rule applied the adjusted civil penalty rate applicable to automobile manufacturers that violate relevant corporate average fuel economy (CAFE) standards beginning with vehicle Model Year (MY) 2022. The interim final rule also requested comment. In light of a subsequent Executive order and the agency's review of comments, NHTSA reviewed and reconsidered that interim final rule, a process that included a supplemental notice of proposed rulemaking (SNPRM) to consider the appropriate path forward and to allow interested parties sufficient time to provide comments. As a result of this review and reconsideration, including a careful consideration of the comments received in response to the SNPRM, NHTSA is repealing the interim final rule and reverting to the December 2016 final rule that would apply the adjustment for the CAFE civil penalty rate beginning with Model Year 2019. In this rule, NHTSA is also applying the statutorily required annual adjustments through 2022. Going forward, NHTSA will continue to make the mandatory adjustments to the CAFE civil penalty rate, as required by law for all civil monetary penalties.[1][3] | ” |
Summary of provisions
The following is a summary of the provisions from the rule's entry in the Federal Register:[1]
| “ | NHTSA is repealing the interim final rule and reverting to the December 2016 final rule that would apply the adjustment for the CAFE civil penalty rate beginning with Model Year 2019. In this rule, NHTSA is also applying the statutorily required annual adjustments through 2022. Going forward, NHTSA will continue to make the mandatory adjustments to the CAFE civil penalty rate, as required by law for all civil monetary penalties.[3] | ” |
Significant impact
- See also: Significant regulatory action
Executive Order 12866, issued by President Bill Clinton (D) in 1993, directed the Office of Management and Budget (OMB) to determine which agency rules qualify as significant rules and thus are subject to OMB review.
Significant rules have had or might have a large impact on the economy, environment, public health, or state or local governments. These actions may also conflict with other rules or presidential priorities. Executive Order 12866 further defined an economically significant rule as a significant rule with an associated economic impact of $100 million or more. Executive Order 14094, issued by President Joe Biden (D) on April 6, 2023, made changes to Executive Order 12866, including referring to economically significant rules as section 3(f)(1) significant rules and raising the monetary threshold for economic significance to $200 million or more.[1]
The text of the Civil Penalties rule states that OMB deemed this rule economically significant under E.O. 12866:
| “ | The Office of Information and Regulatory Affairs (OIRA) has determined that this rulemaking is “economically significant” and a “major rule” as NHTSA believes that the difference in the amount of penalties received by the government as a result of this rule are likely to exceed $100 million in at least one of the years affected by this rulemaking and that there may be additional economic effects as discussed below.[3] | ” |
Text of the rule
The full text of the rule is available below:[1]
See also
External links
Footnotes
