Natural Resources Defense Council v. National Highway Traffic Safety Administration

894 F.3d 95 (2nd Cir. 2018)

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Nature of the Case

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Facts

Congress passed a law requiring federal agencies to adjust their civil penalties to account for inflation so that those imposed by agencies today have approximately the same value as they did at the time the penalties were initially created by Congress. The Act applied to all executive agencies across the federal government. Congress passed the Energy Policy and Conservation Act (EPCA). The EPCA was to improve the energy efficiency of cars by the implementation of the CAFE standards for vehicles, which established fuel economy targets for different categories of vehicles, measured in miles per gallon. The statutory scheme includes civil penalties. When EPCA was passed in 1975, the CAFE penalty was set at $5.00 per tenth of an mpg. In 1997, a 10 percent adjustment raised the penalty to $5.50, and the penalty remained at that amount until 2016 when D published an interim final rule raising the penalty to $14 per tenth of an mpg. The new penalty was issued as an interim final rule (per the statutory directive), NHTSA set an effective date of August 4, 2016, but continued to accept petitions for reconsideration until August 19, 2016. On August 1, 2016, the Alliance of Automobile Manufacturers and the Association of Global Automakers petitioned D for partial reconsideration of the interim final rule. On August 3, 2016, Jaguar Land Rover also petitioned for reconsideration of the interim final rule. The petitioners conceded that 'D was obligated to take some action in response to the Improvements Act' and 'that D was not empowered to exempt the CAFE program from this directive. The petitioners raised concerns about the method used to calculate the new penalty and its retroactive application. On December 28, 2016, D published the final rule in the Federal Register, which modified the prior interim final rule in response to concerns raised by the industry petitioners in their requests for reconsideration. D determined that it would not apply the new penalty rates retroactively and would instead delay the implementation of the penalty rate until model year 2019. On January 20, 2017, Reince Priebus issued a Memorandum for the Heads of Executive Departments and Agencies, regarding a 'regulatory freeze pending review.' On January 20, 2017, Reince Priebus issued a Memorandum for the Heads of Executive Departments and Agencies, regarding a 'regulatory freeze pending review.' The memo directed, as permitted by applicable law, to temporarily postpone their effective date for 60 days from the date of this memorandum, for the purpose of reviewing questions of fact, law, and policy they raise. D published a final rule in the Federal Register that 'temporarily delayed for 60 days the effective date of the rule entitled 'Civil Penalties' published in the Federal Register on December 28, 2016.' On March 28, 2017, D published a new Final Rule delaying the effective date of the December 28, 2016, final rule by an additional 90 days. On June 27, 2017, D yet again delayed the effective date of the rule by an additional 14 days. On July 12, 2017, D published a final rule in the Federal Register that is the subject of the current petitions for review. This rule explained that D is now reconsidering the final rule because the final rule did not give adequate consideration to all of the relevant issues, including the potential economic consequences of increasing CAFE penalties by potentially $1 billion per year, as estimated in the Industry Petition. D is seeking comment on whether $14 per tenth of an mpg is the appropriate penalty level for civil penalties for violations of CAFE standards given the requirements of the Inflation Adjustment Act and the Energy Policy and Conservation Act (EPCA) of 1975, which authorizes civil penalties for violations of CAFE standards. This was called the Suspension Rule. The Natural Resources Defense Council and others (Ps) sued contending that the rule had been unlawfully issued.