Trump administration loses bid to put off fuel economy penalties

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On April 23, 2018, the Second Circuit Court of Appeals vacated the Trump administration’s indefinite delay of higher penalties for automakers that don’t meet certain fuel efficiency standards. 

A three-judge panel in a one-page order granted a bid by attorneys general from New York, California, Maryland, Pennsylvania and Vermont, as well as the Natural Resources Defense Council, Sierra Club and Center for Biological Diversity, to set aside a National Highway Traffic Safety Administration rule from July. The July rule would have indefinitely delayed an earlier rule that increased the civil penalties for exceeding Corporate Average Fuel Economy standards from $5.50 to $14 per tenth of a mile per gallon to account for inflation.


The decision comes just weeks after the agency proposed to hold the CAFE penalties steady at $5.50 per tenth of a mile per gallon. In 2015, Congress told agencies to update civil penalties for inflation, leading to the NHTSA issuing a December 2016 final rule imposing an increase. The Alliance of Automobile Manufacturers and the Association of Global Automakers jointly petitioned the NHTSA to reconsider, saying the agency used the wrong base year to calculate the inflation adjustment and raising concerns about applying the new penalties retroactively.


Before the rule was finalized, the NHTSA addressed the latter issue by delaying application of the increase until the 2019 model year. Then in July, the NHTSA announced the indefinite delay of the increase. At the time, the agency said it opted to hold off because it hadn’t adequately considered “all of the relevant issues.” That prompted lawsuits in September from the state attorneys general and environmental groups who claimed the NHTSA had violated the Administrative Procedure Act because it skipped a notice-and-comment period on the delay.


At oral arguments on April 12, the government argued the delay was justified because the changes were insignificant, and any alleged harms depended on the future decisions of automakers. The government also urged the appeals court to delay its ruling until the 2019 model year of cars was rolled out, but U.S. Circuit Judge Rosemary Pooler threw cold water on that request.


“We don’t have to do what NHTSA did, which is essentially delay everything,” Judge Pooler said.


The Second Circuit joins several other federal courts that have struck down attempts by the Trump administration to delay implementation of energy and environmental rules finalized by the Obama administration, from provisions in U.S. Environmental Protection Agency methane rules for new oil and gas infrastructure and compliance with EPA formaldehyde emissions standards to a U.S. Bureau of Land Management venting and flaring rule for gas wells on public and tribal lands.


Last month, the NHTSA issued a notice of proposed rulemaking that would keep the CAFE civil penalty at $5.50 per tenth of a mile per gallon, claiming the penalty isn’t a “civil monetary penalty” as defined by a 2015 law directing federal agencies to update civil penalties to reflect inflation and therefore isn’t covered by it.


Judges Rosemary Pooler, Ralph Winter and Barrington Parker sat on the panel for the Second Circuit.


The cases are Natural Resources Defense Council et al. v. National Highway Traffic Safety Administration et al., case number 17-2780, and State of New York v. National Highway Traffic Safety Administration et al., case number 17-2806, in the U.S. Court of Appeals for the Second Circuit.

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