General Motors Corp. v. National Highway Traffic Safety Admin., MERCEDES-BENZ

Decision Date27 February 1990
Docket Number88-1831,MERCEDES-BENZ,Nos. 88-1816,s. 88-1816
Citation898 F.2d 165
Parties, 20 Envtl. L. Rep. 20,595 GENERAL MOTORS CORPORATION, Petitioner, v. NATIONAL HIGHWAY TRAFFIC SAFETY ADMINISTRATION, Respondent, Mercedes-Benz of North America, Inc., Intervenor.OF NORTH AMERICA, INC., Petitioner, v. NATIONAL HIGHWAY TRAFFIC SAFETY ADMINISTRATION, Respondent.
CourtU.S. Court of Appeals — District of Columbia Circuit

Petition for Review of Orders of the National Highway Traffic Safety Administration.

John Gibson Mullan, Washington, D.C., with whom Thomas L. Arnett, Detroit, Mich., and Edward W. Warren were on the brief, for petitioner, General Motors Corp., in No. 88-1816. Arthur F. Sampson, III, Washington, D.C., also entered an appearance for petitioner, General Motors Corp.

David A. Vaughan, with whom Christopher F. Corr and Gregory J. Spak, Washington, D.C., were on the brief, for petitioner, Mercedes-Benz of North America, Inc., in No. 88-1831 and intervenor in No. 88-1816.

Kenneth N. Weinstein, Asst. Chief Counsel, Nat. Highway Traffic Safety Admin., with whom Stuart M. Gerson, Asst. Atty. Gen., Barbara C. Biddle, Dept. of Justice and Stephen P. Wood, Acting Chief Counsel, Nat. Highway Traffic Safety Admin., were on the brief, for respondents in Nos. 88-1816 and 88-1831. John F. Cordes and Mark B. Stern, Dept. of Justice, and Erika Z. Jones, Washington, D.C., and Susan L. Rives, Nat. Highway Traffic Safety Admin., also entered appearances for respondents in both cases.

Before WALD, Chief Judge, and RUTH B. GINSBURG, Circuit Judge, and ROBINSON, Senior Circuit Judge.

Opinion for the Court filed by Chief Judge WALD.

WALD, Chief Judge:

In November 1987, General Motors ("GM") petitioned the National Highway Traffic Safety Administration ("NHTSA") to amend the statutorily-imposed fuel economy standard for passenger cars manufactured in model year ("MY") 1985. Several months earlier, Mercedes-Benz of North America ("MBNA") had petitioned NHTSA for rulemaking to amend both the MYs 1984 and 1985 standards for passenger cars.

NHTSA denied both petitions, concluding that retroactive amendments, i.e., amendments made after the beginning of the model year in question, would be inconsistent with the statutory scheme of the fuel economy law. NHTSA also denied a second petition from GM which asked NHTSA to reconsider its previous decision, and grant a one-time-only retroactive amendment. Both GM and MBNA petitioned for review of their respective NHTSA orders, and MBNA intervened in GM's appeal.

We find that NHTSA's decision to deny the petitions based on its interpretation of the scope of its statutory authority was reasonable. Accordingly, we affirm NHTSA's orders and deny the petitions for review. 1

I. BACKGROUND
A. Statutory Framework

Congress enacted the Energy Policy Conservation Act ("EPCA" or "the Act") Pub.L. No. 94-163, 89 Stat. 871 (1975), as a comprehensive response to the energy crisis of 1973. The Act established a major program to bring about improved motor vehicle fuel efficiency. To meet those goals, Congress established a system of mandatory corporate average fuel economy ("CAFE") standards, which required manufacturers to improve by 50% the fuel economy of their fleets by MY 1980, and to double that target by MY 1985. See S.Rep. No. 94-179, 94th Cong., 1st Sess. 20 (1975) U.S.Code Cong. & Admin.News 1975, p. 1762.

At issue in this appeal are the CAFE standards for passenger automobiles manufactured in MYs 1984 and 1985. Congress itself set 27.5 mpg as the standard for passenger cars manufactured in MY 1985 and thereafter, see 15 U.S.C. Sec. 2002(a)(1), but delegated to the Department of Transportation ("DOT" or "the Secretary") responsibility for setting passenger car CAFE standards for MYs 1981 through 1984. See 15 U.S.C. Sec. 2002(a)(3) (requiring standards to be set at the maximum feasible average fuel economy level). DOT, in turn, delegated the task of administering the CAFE scheme to NHTSA. See 49 C.F.R. Sec. 1.50(f). Pursuant to that authority, NHTSA set the MY 1984 standard at 27.0 mpg. See 42 Fed.Reg. 33,534 (June 30, 1977). Congress also delegated authority to the agency to set standards for vehicles other than passenger automobiles, see 15 U.S.C. Sec. 2002(b) ("light trucks"), and to grant exemptions from the CAFE standards for manufacturers of fewer than 10,000 passenger cars, see 15 U.S.C. Sec. 2002(c).

NHTSA has substantial discretion in deciding whether to amend previously-established fuel economy standards. See Center for Auto Safety v. NHTSA, 793 F.2d 1322 (D.C.Cir.1986) ("CAS I "). When it decides to do so, however, it must comply with the Administrative Procedure Act, and it must set the amended standard at the maximum feasible average fuel economy level. 2 See 15 U.S.C. Sec. 2002(f)(1) (NHTSA may "by rule, from time to time," amend standards that it has prescribed for automobiles manufactured in MYs 1981 through 1984, for light trucks, or for manufacturers of fewer than 10,000 automobiles) and 15 U.S.C. Sec. 2002(a)(4) (NHTSA may, by rule, amend the congressionally-prescribed standard for MY 1985, or for any subsequent model year).

As to the timing of amendments, Congress specified that any amendment "which has the effect of making any average fuel economy standard more stringent shall be (A) promulgated ... at least 18 months prior to the beginning of the model year to which such amendment will apply." 15 U.S.C. Sec. 2002(f)(2) (emphasis supplied). This case involves petitions for rulemakings that sought to have the CAFE standards made less stringent, a type of adjustment not explicitly addressed in the statute.

B. Procedural History of the Case

This case requires us to examine NHTSA's decision not to initiate rulemaking proceedings to amend the industry-wide CAFE standards for passenger cars for MYs 1984 and 1985. As just described those standards were set at 27.0 and 27.5 mpg, respectively, and have never been amended.

1. MBNA's Petition. In 1986, NHTSA notified MBNA that it had not achieved the 27.0 mpg CAFE standard for its automobiles manufactured in MY 1984. Since MBNA had earned sufficient credits in previous years, no penalty was assessed. 3 On May 4, 1987, NHTSA notified MBNA that it would also not achieve the MY 1985 standard, and that it no longer had sufficient carryover credits to forestall a penalty. 4 In August 1987, MBNA petitioned for rulemaking requesting that NHTSA reduce the MY 1984 standard from 27.0 mpg to 26.0 mpg, and the MY 1985 standard from 27.5 mpg to 26.0 mpg.

MBNA claimed that due to the unforeseen decline in gasoline prices during the mid-1980s and the attendant shift in consumer demand away from more fuel-efficient models (events which occurred after the MY 1984 and MY 1985 standards were established), the CAFE levels set by Congress and by NHTSA exceeded the industry's actual "maximum feasible average fuel economy level" for those years. According to NHTSA's own data, the domestic fleet's actual average fuel economy in MY 1984 was 25.6 mpg, 51 Fed.Reg. 6,341, 6,342 (Feb. 21, 1986), and in MY 1985 it was 26.2 mpg, 52 Fed.Reg. 10,841, 10,842 (April 3, 1987). Accordingly, MBNA argued, the MY 1984 and 1985 standards must be reduced to comport with the statutory mandate that the standards be set at the "maximum feasible" level.

2. GM's Petition. GM was notified that it would fall short of the MY 1985 CAFE level in May 1987. GM submitted a carry-back plan for earning offsetting credits in future model years, which NHTSA approved. Nevertheless, faced with uncertainties as to whether it would actually earn sufficient credits in future years given pending legal challenges that might result in even more stringent standards for those future years, GM also petitioned for rulemaking to reduce the MY 1985 standard from 27.5 mpg to 26.0 mpg.

GM claimed that since the Act did not place any time limits on amendments that would lower the CAFE standards, NHTSA should grant its rulemaking petition even though MY 1985 had ended. Moreover, GM argued, lowering the MY 1985 CAFE standard was justified under the same rationale that led NHTSA to lower the congressionally-prescribed CAFE standard of 27.5 mpg for MYs 1986 through 1989. See Final Rule, 50 Fed.Reg. 40,528 (1985) (codified at 49 C.F.R. Sec. 531.5 (1986)) (setting the MY 1986 standard at 26.0 mpg); Final Rule, 51 Fed.Reg. 35,594 (1986) (codified at 49 C.F.R. Sec. 531.5 (1987)) (setting the MYs 1987 and 1988 at 26.0 mpg); Final Rule, 53 Fed.Reg. 39,275 (1988) (to be codified at 49 C.F.R. Sec. 531.5) (setting the MY 1989 standard at 26.5 mpg); 5 see also 54 Fed.Reg. 21,985 (1989) (terminating rulemaking to lower the MY 1990 CAFE standard). Each of those rulemakings, however, was concluded prior to the beginning of the model year in question.

3. NHTSA's Denial of the Initial Petitions. NHTSA denied both MBNA's and GM's petitions. See Denial of Petitions for Rulemaking, 53 Fed.Reg. 15,241 (1988). In so doing, NHTSA acknowledged that the MY 1985 standard may have exceeded "actual" industry capabilities for that model year. Nevertheless, NHTSA vehemently disputed the manufacturers' implication that it had any duty to amend the CAFE standards whenever the established CAFE standard differs from the level actually achieved by the industry. Particularly "in the absence of a timely petition for rulemaking from the regulated industry," NHTSA was unwilling to disrupt the CAFE scheme by amending a CAFE standard for a model year that had long since ended. 53 Fed.Reg. at 15,243. In so holding, NHTSA reaffirmed a position first espoused in 1984 that amendments reducing a standard may only be made before the beginning of the model year. 53 Fed.Reg. at 15,245.

4. GM's Second Petition. In response to NHTSA's decision, GM filed a petition for reconsideration of the agency's denial. GM sought clarification of the agency's rationale and also asked for a...

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