(Bloomberg) -- The U.S. National Highway Traffic Safety Administration said it will more than double penalties for automakers that fail to meet fuel efficiency standards in 2019 and later models, a win for Tesla Inc., which has fought for the increase for years.
For 2019 to 2021 models, the penalty will rise to $14 from $5.50 for every 10th of a mile per gallon that the vehicles exceed the standard, the agency said in a final rule that will soon be published in the federal register. The fine is multiplied by the number of those vehicles sold. The rate rises to $15 for 2022 models.
The move “may cause manufacturers to more rapidly implement fuel-saving technology,” according to the rule, which will be open for public comment and becomes effective 60 days after it is published in the federal register.
The rule resolves a debate set in motion about seven years ago, when Congress passed a law calling on agencies to adjust civil fines to account for inflation. Since then, traditional automakers have fought an increase while electric carmaker Tesla has urged the agency to enforce more painful penalties.
NHTSA said in a statement the fine increase “is required by the 2015 law.”
The adjustment, first issued during former President Barack Obama’s administration, became tied up in a legal battle after a court overturned a decision by former President Donald Trump’s administration to postpone the hike in penalties.
The rule comes as the Biden administration is expected to finalize new fuel economy standards for cars this week.
The Transportation Department, which oversees NHTSA, said when it first proposed the new standards last year that they would increase fuel-efficiency 8% annually for model years 2024 to 2026, and increase the estimated fleet-wide average by 12 miles per gallon by model year 2026. The agency faces a March 31 deadline to finalize new rules for the 2024 model year.
President Joe Biden’s administration had previously replaced a Trump fuel economy rule that called for automakers to make a 1.5% increase in fuel economy annually.
Environmentalists embraced the move.
“NHTSA’s action is necessary to meet it’s legal obligations, and it will also help consumers save money at the pump,” Alex Tom, an attorney at the National Resources Defense Council, said in an emailed statement. “Now, with these inflation-adjusted fines, automakers are more likely to meet fuel economy standards with fuel-saving technology.”
The final rule was reported earlier by Reuters.
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