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States sue Trump administration over delayed fuel-economy fines

By David Shepardson

By David Shepardson

WASHINGTON (Reuters) - New York, California and three other U.S. states said on Monday they sued the federal government for delaying the rollout of higher "gas-guzzler" penalties for automakers whose vehicles fail to meet minimum fuel-economy standards.

The lawsuit, which also includes Vermont, Maryland and Pennsylvania, is the highest profile legal challenge to the Trump administration's vehicle policy to date. As part of a broad deregulation push under President Donald Trump, regulators are debating whether to grant automakers significant reductions in fuel economy requirements.

Fuel-efficient cars mean "cleaner air, better overall health for our children, and savings at the pump ... We will hold the Trump administration accountable," California Attorney General Xavier Becerra said in a statement.

The lawsuit was filed in the U.S. Court of Appeals in New York and follows a separate suit by three environmental groups over the delay.

The U.S. Transportation Department declined comment.

The states and environmental groups are challenging the National Highway Traffic Safety Administration’s (NHTSA) decision in July to suspend a 2016 Obama administration regulation that more than doubled penalties.

Automakers protested the hike, saying it could increase industry compliance costs by $1 billion annually.

Congress ordered federal agencies in 2015 to adjust civil penalties to account for inflation and, in response, NHTSA proposed raising fines to $14 from $5.50 for every 0.1 mile per gallon of fuel that new cars and trucks consume in excess of required standards under the Corporate Average Fuel Economy (CAFE) program.

"State attorneys general have made clear: we won't hesitate to act when those we serve are put at risk," New York Attorney General Eric Schneiderman said in a statement.

In June, Schneiderman and attorneys general from 12 other state vowed to take legal action to block rolling back vehicle emission requirements.

In March, Trump ordered a review of U.S. vehicle fuel-efficiency standards for 2022-2025 put in place by the Obama administration, saying they were too tough.

NHTSA has said the increases would potentially result in an additional $30 million in annual civil penalties. Automakers say the increases would dramatically raise costs since they would also boost the value of fuel economy credits used to meet requirements.

Some automakers including some luxury makers historically have opted to pay fines instead of meeting fuel efficiency requirements. Jaguar Land Rover, owned by India’s Tata Motors <TAMO.NS>, and Daimler AG <DAIGn.DE>, which makes the Mercedes, paid the most in fines in recent years.

NHTSA said in July many automakers were falling behind current fuel standards and face "the possibility of paying larger CAFE penalties over the next several years."

In 2011, the Obama administration estimated that doubling fuel efficiency requirements to a fleetwide average of 54.5 miles per gallon would save motorists $1.7 trillion in fuel costs over the life of the vehicles, but cost automakers $200 billion over 13 years.

(Reporting by David Shepardson; Editing by Mary Milliken and Jeffrey Benkoe)