States sue Trump administration over fuel economy penalties

SACRAMENTO, Calif. (AP) — A coalition of states sued the Trump administration today for the second time to block a planned reduction in the penalties automakers pay when they fail to meet fuel economy standards.

Twelve states and the District of Columbia sued the National Highway Traffic Safety Administration for replacing an Obama-era regulation that imposed a penalty of $14 for every tenth of a mile-per-gallon that an automaker falls below the standards.

The lawsuit came a week after four major automakers announced a deal with California to toughen standards for gas mileage and greenhouse gas emissions. The agreement involving Ford, BMW, Honda and Volkswagen bypasses the Trump administration's push to relax mileage standards nationwide.

The new federal rule would keep the penalty at $5.50, where it has been since the mid-1970s.

The legal challenge led by the attorneys general in California and New York argues the new rule would keep the penalty far below the inflation-adjusted rate required by a 2015 law.

The new Trump rule says that 2015 law doesn't apply to the mileage penalties, and if it did, nearly tripling the civil penalty rate would have a negative economic impact.

The U.S. Department of Transportation, which includes the highway safety administration, said it expects the Trump penalty would reduce the future burden on the industry and consumers by as much as $1 billion a year.

The states sued in the 2nd U.S. Circuit Court of Appeals in Manhattan. The same court last year decided the administration could not delay the penalty increase.

California Attorney General Xavier Becerra said in a statement the new Trump rule "seeks to make these penalties meaningless."