April 23, 2018: Sierra Club, NRDC, and the Center for Biological Diversity scored a big win for the climate this week. On April 23, the United States Court of Appeals for the Second Circuit vacated a rule by the Trump Administration that indefinitely suspended the effective date of a final rule by the Obama Administration that updated the civil penalties for violating the corporate average fuel economy (CAFE) standards.
In 2015, Congress amended the Inflation Adjustment Act to require all federal agencies to adjust their civil penalties for inflation, mandating that such increases take effect no later than August, 2016. Following this congressional directive, in 2016 the National Highway Traffic Safety Administration (NHTSA) increased the penalty for CAFE violations, which had not been adjusted for decades, from $5.50 to $14 per tenth of a mile per gallon, starting with model year 2019. After Donald Trump took office, NHTSA indefinitely suspended the application of the penalty increase. The agency did so without identifying any statutory authority for the suspension, without providing the public with notice and an opportunity to comment, and without explaining why the suspension was warranted. For these reasons, Sierra Club and its allies filed a petition for review and asked the court to vacate this unlawful delay, which contradicts these principles and the Second Circuit’s own precedent.
The Court’s decision, issued by Judges Ralph Winter, Rosemary Pooler, and Barrington Parker, came shortly after it heard arguments on the merits of the case (which took place on April 12). At oral argument, we argued that a prompt ruling was important to ensure that automakers factor the correct penalty amount in their compliance decisions. The order provides that an opinion will follow in due course. The effect of the vacatur order is that the $14 penalty is now in effect.
At the same time as it unlawfully delayed the application of the $14 penalty, Trump’s NHTSA announced that it would reconsider the penalty amount in a new rulemaking, in response to industry’s claim that the penalties would cost automakers a billion dollars per year. The agency has proposed to return to the earlier penalty of $5.50. We will submit legal and technical comments, which are due on May 2, opposing this proposal.
Strong civil penalties are an important component of the fuel-economy program. As Obama’s NHTSA clearly stated when it increased the agency’s very outdated penalties, the main purpose of those civil penalties is to deter automakers from violating the CAFE standards. CAFE standards are critical to reduce the country’s dependence on oil, decrease greenhouse gas emissions from the transportation sector--one of the largest emitters domestically--,and protect public health.
Read the official press release here.