Center for Biological Diversity v. NHTSA

Center for Biological Diversity v. NHTSA, No. 06-71891 (9th Cir. 2007).

Eleven states, the District of Columbia, the City of New York, and four public interest organizations challenged a rule promulgated by the National Highway Traffic Safety Administration (NHTSA).  The rule was entitled “Average Fuel Economy Standards for Light Trucks, Model Years 2008-2011” and set corporate average fuel economy (CAFE) standards pursuant to the Energy Policy and Conservation Act (EPCA) – prior to the passage of the new energy bill (EISA).  The rule was significant in three ways.  The rule set CAFE standards for light trucks, including SUVs, minivans, and pickup trucks, for the model years 2008-2001.  The rule set new CAFE standards using its traditional method, fleet-wide average, for model years 2008-2010.  The rule also created a new CAFÉ 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.”  The rule was challenged by the petitioners under the EPCA and the National Environmental Policy Act (NEPA).   

The petitioners’ complaint argued that the NHTSA 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.”

The petitioners also argued that NHTSA’s Environmental Assessment (EA) under NEPA was inadequate because it fails to sufficiently examine greenhouse gas implications.  Petitioners also claimed the EA failed to analyze a reasonable range of alternatives or examine the rule’s cumulative impact.  Additionally, petitioners argued that NEPA requires that an Environmental Impact Statement be prepared as opposed to the less exhaustive EA, because a properly performed EA would have shown “significant impacts” which would then trigger the requirement of an Environmental Impact Statement.  

The court found in an unanimous decision that “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.”  The court first rejected the rule because the cost-benefit analysis did not include the cost of climate change caused by carbon dioxide.  The court also discredited contrary precedent by stating more is now known about climate change, and Mass. v EPA is more relevant than past cases where climate change science was allowed to be ignored.  The rule was then criticized for not having a “backstop” that would prevent companies from simply building bigger vehicles, which would then be allowed to produce higher emissions under the rule’s system.  The court rejected NHTSA’s arguments that this was done to account for consumer preferences stating that consumer demand cannot be the sole factor dictating the necessity of a “backstop.”  The court then challenged the “SUV loophole,” which allows SUV’s and minivans to be characterized as “light trucks” instead of “passenger automobiles” despite being predominantly used for the transportation of passengers.  The court ordered NHTSA to reexamine the classifications and provide new definitions or sufficient reasons for the SUV and minivan classification.  

The court also found “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” because the “impact of greenhouse gas emissions on climate change is precisely the kind of cumulative impact analysis that NEPA requires agencies to conduct.”  The court found that climate change’s global nature and influence of actions outside of NHTSA’s control did not allow the agency to avoid considering the effects of the rules impact.  Additionally, the court rejected NHTSA’s argument that an EA was adequate because the CAFE standards were reducing carbon.  The court countered that the standards merely decrease the rate of carbon contribution from new cars and that NHTSA does not offer sufficient analysis to support its finding of no significant impact.  The court then remanded the case to “NHTSA to promulgate new standards as expeditiously as possible and to prepare a full Environmental Impact Statement.”  

View the case document here