U.S. declares Biden fuel economy rules exceeded legal authority
The department made the declaration as it published a final 'Resetting the Corporate Average Fuel Economy Program' rule.
Removing EVs from the calculations for credits and the regulatory mandates will likely result in lower overall fuel economy requirements.
A future separate rule from the administration of President Donald Trump will revise the specific fuel economy requirements.
Senate Republicans on June 5 proposed eliminating fines for automakers who fail to meet Corporate Average Fuel Economy rules as part of a wide-ranging tax bill, a boost to Detroit automakers selling gasoline-powered vehicles.
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Last year, Chrysler parent Stellantis paid $190.7 million in civil penalties for failing to meet U.S. fuel economy requirements for 2019 and 2020 after paying nearly $400 million for penalties from 2016 through 2019. General Motors previously paid $128.2 million in penalties for 2016 and 2017.
Thursday's proposal also makes emissions credits sold by Tesla Inc. less valuable as rivals won't have to pay Tesla to meet requirements. The lawmakers estimated it would save automakers $200 million. GM and Chrysler did not immediately comment.
U.S. House Republicans are pursuing similar aims but with a different approach. Last month they proposed repealing planned hikes in fuel economy requirements as well as vehicle emissions rules adopted under the Biden administration.
The House bill would also kill a $7,500 tax credit for new electric vehicles, impose a new $250 annual fee on EVs for road repair costs and would phase out EV battery production tax credits in 2028.
The two chambers have also voted to bar California's landmark plan to end the sale of gasoline-only vehicles by 2035 which has been adopted by 11 other states representing a third of the U.S. auto market. That bill is currently awaiting President Donald Trump's signature.
The Transportation Department is expected to declare that fuel economy rules issued under Biden exceeded the government's legal authority by including EVs.
Last year, the National Highway Traffic Safety Administration said it would hike fuel economy rules to an average of 50.4 miles per gallon by 2031 — up from 39.1 mpg for light-duty vehicles. It warned the auto industry collectively was expected to face a total of $1.83 billion in fines through 2031.
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