WASHINGTON, June 5 (Reuters) - U.S. Senate Republicans

on Thursday proposed eliminating fines for failures to meet

Corporate Average Fuel Economy rules as part of a wide-ranging

tax bill - the latest move aimed at making it easier for

automakers to build gas-powered vehicles.

Last year, Chrysler-parent Stellantis ( STLA ) 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. GM previously paid

$128.2 million in penalties for 2016 and 2017.

Thursday's proposal also makes emissions credits sold by

Tesla 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 U.S.

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 (4.67 liters per 100 km) 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.