Competitive Enterprise Institute v. National Highway Traffic Safety Admin., No. 89-1422

CourtUnited States Courts of Appeals. United States Court of Appeals (District of Columbia)
Writing for the CourtBefore MIKVA; STEPHEN F. WILLIAMS; MIKVA
Citation956 F.2d 321
Parties, 22 Envtl. L. Rep. 20,542 COMPETITIVE ENTERPRISE INSTITUTE and Consumer Alert, Petitioners, v. NATIONAL HIGHWAY TRAFFIC SAFETY ADMINISTRATION, Respondent, General Motors Corporation, Intervenor.
Decision Date19 February 1992
Docket NumberNo. 89-1422

Page 321

956 F.2d 321
294 U.S.App.D.C. 35, 22 Envtl. L. Rep. 20,542
COMPETITIVE ENTERPRISE INSTITUTE and Consumer Alert, Petitioners,
v.
NATIONAL HIGHWAY TRAFFIC SAFETY ADMINISTRATION, Respondent,
General Motors Corporation, Intervenor.
No. 89-1422.
United States Court of Appeals,
District of Columbia Circuit.
Argued May 21, 1991.
Decided Feb. 19, 1992.

Page 322

[294 U.S.App.D.C. 36] Petition for Review of an Order of the National Highway Traffic Safety Administration.

Sam Kazman, Washington, D.C., for petitioners.

Paul Jackson Rice, Chief Counsel, National Highway Traffic Safety Admin., with whom Stuart M. Gerson, Asst. Atty. Gen., and Barbara C. Biddle, Attorney, Dept. of Justice, Kenneth N. Weinstein, Asst. Chief Counsel, Enid Rubenstein and Eileen T. Leahy, Attys., National Highway Traffic Safety Admin., Washington, D.C., were on the brief, for respondent. Susan L. Rives, Atty., National Highway Traffic Safety Admin., and John F. Cordes, Attorney, Dept. of Justice, Washington, D.C., also entered appearances for respondent.

Thomas L. Arnett, Detroit, Mich., Edward W. Warren and John G. Mullan, Washington, D.C., entered appearances, for intervenor.

Before MIKVA, Chief Judge, WILLIAMS and THOMAS, * Circuit Judges.

Opinion for the Court filed by Circuit Judge WILLIAMS.

Opinion dissenting in part filed by Chief Judge MIKVA.

STEPHEN F. WILLIAMS, Circuit Judge:

Choice means giving something up. In deciding whether to relax the previously established "corporate average fuel economy" ("CAFE") standard for model year 1990, the National Highway Traffic Safety Administration ("NHTSA") confronted a record suggesting that refusal to do so would exact some penalty in auto safety. Rather than affirmatively choosing extra energy savings over extra safety, however, NHTSA obscured the safety problem, and thus its need to choose. Because NHTSA failed to reason through to its decision, see Greater Boston Television Corp. v. FCC, 444 F.2d 841, 850-52 (D.C.Cir.1970), we remand the case for further consideration.

* * * * * *

The Energy Policy and Conservation Act, Pub.L. No. 94-163, 89 Stat. 871, codified at 15 U.S.C. § 2001 et seq. (1988), requires every major carmaker to keep the average fuel economy of its fleet, in each model year, at or above a prescribed level. The Act holds manufacturers to a standard of 27.5 miles per gallon for model year 1985 and each model year thereafter, but authorizes NHTSA to modify the standard, up or down. Where the agency chooses to modify, it must set the replacement standard at the "maximum feasible average fuel economy level". 15 U.S.C. § 2002(a)(4). In determining "feasibility", NHTSA has always taken passenger safety into account, see Competitive Enterprise Inst. v. NHTSA, 901 F.2d 107, 120 n. 11 (D.C.Cir.1990) ("CEI I"), and the agency maintains that safety concerns are relevant to whether the agency should adopt one CAFE standard over another.

Page 323

[294 U.S.App.D.C. 37] In August 1988, at the behest of various parties, including several major carmakers and petitioner Competitive Enterprise Institute ("CEI"), NHTSA initiated a rulemaking proceeding on whether to reduce the CAFE standards for model years 1989 and 1990. See 53 Fed.Reg. 33080. The agency quickly lowered the standard for model year 1989 to 26.5 mpg, but it continued to hear public comment on whether to reduce the 1990 standard as well. Then, in May 1989, NHTSA terminated its proceedings on that issue and left the statutory standard in place.

While the agency rejected a variety of attacks on that standard, we are concerned with only one of the defeated arguments: the contention that the standard will force carmakers to produce smaller, less safe cars, thus making it more difficult and expensive for consumers to buy larger, safer cars. We find that the agency has not coherently addressed this concern.

* * * * * *

As a threshold matter, NHTSA claims that neither of the petitioners has standing to bring this action. In all respects but one, NHTSA's arguments rehash those rejected in CEI I, and we need only refer it to that decision. 901 F.2d at 111-19. The only novel claim arises from our decision in General Motors Corp. v. NHTSA, 898 F.2d 165 (D.C.Cir.1990), issued a few weeks after CEI I, that NHTSA may properly refuse to entertain a petition, filed long after the beginning of a model year, to amend the standard for that year. From this NHTSA leaps to the view that this court cannot redress any wrong to Consumer Alert's members. But nothing in General Motors undermines our power to order retroactive reconsideration of a standard where necessary to "grant appropriate relief" to aggrieved parties under 15 U.S.C. § 2004(a). See City of Los Angeles v. NHTSA, 912 F.2d 478, 485 (D.C.Cir.1990); CEI I, 901 F.2d at 117-18.

* * * * * *

On the merits, we must determine whether NHTSA has offered a reasoned explanation for terminating its inquiry into whether to relax the 27.5 standard. The statute does not specify criteria for when NHTSA must persevere in a rulemaking it has already initiated, but the agency does not dispute that there is "law to apply". The parties do disagree on the appropriate degree of deference owed to an agency's decision to terminate a rulemaking proceeding. Cf. Williams Natural Gas Co. v. FERC, 872 F.2d 438, 443-44 (D.C.Cir.1989) (suggesting that more deference than usual is owed in such contexts). But the exact degree is unimportant. Petitioners' essential claim is an attack not on NHTSA's judgment call, but on NHTSA's attempt to paper over the need to make a call. We cannot defer to mere decisional evasion. Cf. SEC v. Chenery Corp., 332 U.S. 194, 196-97, 67 S.Ct. 1575, 1577-78, 91 L.Ed. 1995 (1947).

When the automaking firms petitioned for a reduction in the model year 1990 standard down to 26.5 mpg [see J.A. 60], and petitioners pressed the argument that failure to reduce the standard would cost lives, NHTSA had three basic choices. First, it might have concluded that the statute does not require it to consider safety effects when deciding whether to embark on a modification proceeding. It could then have dismissed petitioners' claims without further ado. While a court might have reversed, the statutory framework is so loose and deference under Chevron U.S.A. v. NRDC, 467 U.S. 837, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984), so broad that the agency would have had a fair shot at being upheld.

Second, NHTSA might have seriously examined the record data. On its face this suggested (as we shall see) the overwhelming likelihood that a 27.5 mpg standard reduces the supply of safe cars available to American consumers. Conceivably, of course, a sophisticated analysis might have overcome the record's apparent implications, but even if it did not, all NHTSA would have had to do was face the trade-off. It could have said that while the 27.5 standard might cost, say, 200-to-500 American lives a year for ten years, it would also reduce American oil imports by, say, 50,000-to-400,000 barrels a year, and that in

Page 324

[294 U.S.App.D.C. 38] its judgment the trade-off was worth it. And it could have expressed any such trade-off in less numerical terms.

Finally, NHTSA could have fudged the analysis, held the standard at 27.5, and, with the help of statistical legerdemain, made conclusory assertions that its decision had no safety cost at all. That is what it chose. The people petitioners represent, consumers who do not want to be priced out of the market for larger, safer cars, deserve better from their government.

We must remand this case to NHTSA if the agency has not adequately explained why one of the following is false: (1) adopting a 27.5 standard (as opposed to a lower standard) will have some constraining effect on carmakers; (2) carmakers will, as one consequence of the standard, decrease the average size of their cars below what it would have been absent the standard; (3) this decrease will make it more difficult for consumers to drive large cars; and (4) all other things being equal, a large car is safer than a small car. The agency actually admits the truth of the fourth proposition (see p. 326 below), and we can find no passage in the record where the agency has coherently explained the falsehood of any of the others.

Constraining automakers

As the agency conceded at oral argument, the 27.5 mpg standard obviously affects carmakers' behavior--if not in model year 1990, at least in subsequent years. Under the statute, if a carmaker exceeds the applicable CAFE standard in one year, it earns credits that it may use to offset CAFE deficiencies over the next three years. See 15 U.S.C. § 2002(l ). At the very least, keeping the 1990 standard at 27.5 mpg reduces the number of carryover credits that GM can use to blunt the effect of the CAFE standards for model years 1991-93. Accordingly, NHTSA expressed its quite reasonable belief that "the potential actual [sic] impacts on energy conservation [from retention of the 27.5 mpg standard for model year 1990] are largely related to multi-year considerations." NHTSA, Passenger Automobile Average Fuel Economy Standards for Model Year 1990, Termination of Rulemaking, 54 Fed.Reg. 21985, 21994/3 (1989). In fact, NHTSA recently declared that it would be unlawful for it to set "CAFE standards deliberately low enough to be 'nonconstraining' ". NHTSA, Passenger Automobile Average Fuel Economy Standards for Model Years 1989 and 1990, Notice of Proposed Rulemaking, 53 Fed.Reg. 33080, 33094/3 (1988). It seems obvious, then, that the 27.5 mpg standard is constraining in one way or another.

Automakers' likely choice to downsize

Second, the agency insisted at oral argument that even if the 27.5 standard constrains the behavior of carmakers, it will not lead to smaller cars. Yet nowhere has the agency actually justified this claim or even purported to make such a finding. It came closest in the following passage:

[T]here are still a number of...

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