9th Circuit CAFE Ruling: Center for Biological Diversity v. NHTSA

Nov 15: In the U.S. Court of Appeals, Ninth Circuit, Case Nos. 06-71891, 06-72317, 06-72694, 06-73807, and 06-73826. As explained by the Appeals Court, eleven states, the District of Columbia, the City of New York, and four public interest organizations petition for review of a rule issued by the National Highway Traffic Safety Administration (NHTSA) entitled “Average Fuel Economy Standards for Light Trucks, Model Years 2008-2011,” 71 Fed. Reg. 17,566 (Apr. 6, 2006) (Final Rule) (codified at 49 C.F.R. pt. 533). Pursuant to the Energy Policy and Conservation Act of 1975 (EPCA), 49 U.S.C. §§ 32901-32919 (2007), the Final Rule sets corporate average fuel economy (CAFE) standards for light trucks, defined by NHTSA to include many Sport Utility Vehicles (SUVs), minivans, and pickup trucks, for Model Years (MYs) 2008-2011. For MYs 2008-2010, the Final Rule sets new CAFE standards using its traditional method, fleet-wide average (Unreformed CAFE). For MY 2011 and beyond, the Final Rule creates a new CAFE structure that sets varying fuel economy targets depending on vehicle size and requires manufacturers to meet different fuel economy levels depending on their vehicle fleet mix (Reformed CAFE).

Petitioners challenge the Final Rule under the EPCA and the National Environmental Policy Act of 1969 (NEPA). First, they argue that the Final Rule is arbitrary, capricious, and contrary to the EPCA because (a) the agency’s cost-benefit analysis does not set the CAFE standard at the “maximum feasible” level and fails to give due consideration to the need of the nation to conserve energy; (b) its calculation of the costs and benefits of alternative fuel economy standards assigns zero value to the benefit of carbon dioxide (CO2) emissions reduction; (c) its calculation of costs and benefits of alternative fuel economy standards fails to evaluate properly the benefit of vehicle weight reduction; (d) Reformed CAFE standards will depend on manufacturer fleet mix and not guarantee a minimum average fuel economy or “backstop”; (e) the transition period during which manufacturers may choose to comply with either Unreformed or Reformed CAFE is contrary to the “maximum feasible” requirement and unnecessary; (f) it perpetuates the “SUV loophole,” which allows SUVs, minivans, and pickup trucks to satisfy a lower fuel economy standard than cars; and (g) it excludes most vehicles rated between 8,500 and 10,000 pounds gross vehicle weight (comprised mostly of large pickup trucks) from any fuel economy regulation, even though these vehicles satisfy the statutory criteria for regulation.

Second, Petitioners argue that NHTSA’s Environmental Assessment is inadequate under NEPA because it fails to take a “hard look” at the greenhouse gas implications of its rulemaking and fails to analyze a reasonable range of alternatives or examine the rule’s cumulative impact. Petitioners also argue that NEPA requires NHTSA to prepare an Environmental Impact Statement.

NHTSA argues that the Final Rule is not arbitrary and capricious or contrary to the EPCA, the Environmental Assessment’s evaluation of the environmental consequences of its action is adequate, and an Environmental Impact Statement is not required.

The Ninth Circuit ruled that it has jurisdiction to review the Final Rule issued by NHTSA and said, "the Final Rule is arbitrary and capricious, contrary to the EPCA in its failure to monetize the value of carbon emissions, failure to set a backstop, failure to close the SUV loophole, and failure to set fuel economy standards for all vehicles in the 8,500 to 10,000 gross vehicle weight rating (GVWR) class. We also hold that the Environmental Assessment was inadequate and that Petitioners have raised a substantial question as to whether the Final Rule may have a significant impact on the environment. Therefore, we remand to NHTSA to promulgate new standards as expeditiously as possible and to prepare a full Environmental Impact Statement."

Sierra Club, one of the parties in the case issued a statement calling the decision, "a huge victory for the Sierra Club, several other environmental groups, and several states by voiding the Bush administration’s fuel economy standards for light trucks... This decision is a stinging rebuke to the Bush administration, its continued insistence on ignoring the law, and stubborn refusal to take meaningful steps to address global warming pollution from automobiles. NHTSA is free to use a cost-benefit analysis to set fuel economy standards, but today the court told them they cannot put a thumb on the scale by continuing to ignore the costs of failing to act on global warming."

The Alliance of Automobile Manufacturers (AAM) issued a statement saying, "Automakers support aggressive fuel economy increases that would raise the standards for all vehicles to as much as 35 miles per gallon by 2022. We share the goal of an energy bill and CAFE standard that is good for the consumer, environment and energy security. We continue to believe such a bill can be reached with industry support. The Energy Policy and Conservation Act directs the National Highway Traffic Safety Administration (NHTSA) to set national fuel economy standards at the ‘maximum feasible’ level taking into account key elements such as technological feasibility, affordability, safety, emissions controls, consumer choice, disparate impacts on manufacturers and effects on American jobs. A good balance of safety, higher fuel economy, and jobs benefits all Americans.

"Announced more than 19 months ago the MY 2008-2011 light truck fuel economy rule represented the largest fuel economy increase in the history of the CAFE program. It has become the basis for product planning through 2011. Any further changes to the program would only delay the progress that manufacturers have made towards increasing fleet wide fuel economy. Ongoing advancements by auto engineers are leading to even greater fuel economy gains. New models are increasingly available with highly fuel-efficient technologies like variable valve timing, continuously variable transmissions, cylinder deactivation and more. Advanced technology vehicles, including hybrid, fuel cell, hydrogen internal combustion engines and clean diesel vehicles, offer the promise of significant increases in fuel efficiency without sacrificing consumer needs for safety, performance, comfort and utility, but adequate lead time is necessary in order to fully integrate these technologies into the marketplace."

Access the complete opinion (click here). Access a statement from Sierra Club (click here). Access the statement from AAM (click here). [*Climate, *Energy]